Employment Relations in Australia
Introduction Traditionally Australia has had government involvement in employment relations through laws governing terms and conditions of employment such as Work Choices and Fair Work Act - Employment Relations in Australia introduction. Australian workers have in general worked under “Awards” which set out minimum conditions for employment.
The last few years have seen almost constant change in the nature of the Australian workforce and the regulations with the introduction of new legislation, and disagreement over the extent to which the state should be involved in the modern Australia workplace, ranging from the extremes of strict government control in employment relations or the government taking no part and leaving negotiations entirely to employer and employees.
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This essay will critically analyse the advantage and disadvantage of state involvement in employee relations and finally leads to the discussion and conclusion of how to balance worker and employer’s interest in the extent to which government should be involved. There are three sections covered in the essay, firstly beginning with the framework of Government Issue and the central issue appear in employee relations, secondly describing the benefit of the state involvement in resolving the problems in employer and employee relations, and finally the alleged disadvantages of state involvement.
Industrial relations in modern Australia have been facing a number of challenges. The traditional conflict has been between wages and work conditions for employees versus the demands of management. This conflict revolves around the distribution of national income and productivity gains in the economy. With major changes in the regulatory framework, important factors in Australian employment relations in recent years have been the extent to which trade unions protect worker’s rights and how much should be left to the individual employee.
Southerland and Riley (2010) noted the Work Choices Act and Fair Work Act have been enacted to clarify the extent of individual responsibility in negotiating conditions in the major areas of minimum wages, work hours, unfair dismissal and Occupational health and safety (OHS). Work Choices attempted to reduce government and trade union involvement by introducing individual contracts negotiated between employer and employee. Concerns were raised that employees often did not have either the knowledge or the strength to negotiate these contracts.
Employers normally have a higher bargaining power over employees and will press for decreased wages and conditions in the pursuit of increased profits. Work Choices become extremely unpopular to the extent that it became a major contributor to a change of government. In 2009, the Fair Work Act was introduced to maintain flexibility in the workplace and protect workers as highlighted in Southerland and Riley (2010). The Fair Work Act addressed the issues of minimum wage rates, OHS standards, unfair dismissals and collective bargaining.
However employers claim that the high implementation costs discourage employing workers and reduce business flexibility and competitiveness. The employers in general, would prefer a more de-regulated industrial relations system with more flexible labour market. There are various arguments in support of state involvement in employment relations including the control of industrial disputes and worker protection where the rights of workers in general are protected in the areas of minimum wages, OHS, unfair dismissal, weekly work hours and maternity leave.
Government involvement can reduce disputes in general. In this context, the impact of government legislation on number of working days lost due to industrial disputes has decreased. According to official government statistics, the number of working days lost due to industrial disputes has been falling between the years 2004-2008, which was the lowest number ever recorded in history ABS (2008). This would suggest the likely success of the Work Choices Act 2005 in relation to minimizing direct conflict between employers and employees.
Although state involvement was reduced under the Work Choice Act and the number of strikes was minimized, it is hard to determine whether this is just the result of a booming mining led economy, during these years where employers and employees were prospering and conflict declining. Nevertheless while reducing government involvement, Work Choices still maintained government-involved industrial resolution processes. The Fair Work Act 2009 has attempted to create an environment for conflict resolution.
During 2009, a 48 hour strike was carried out by the Construction, Forestry, Mining and Energy Union based on workers lacking adequate accommodation mentioned in Brigden (2010), the federal government interfered directly to warn the CFMEU against organized strike action and employers went on the legal offensive to stop further action after the establishment of Fair Work Act Perpich (2008). Another argument favouring state involvement in employment relations demonstrated by Brigden (2010) is that the state provides a basis for resolving conflict that might otherwise result in strikes and absenteeism.
Templer (2012) argued when collective action occurs it tends to be of a short duration and industrial disputations seem to be reduced. For example, the dispute between Telstra’s employees and management where management sought to impose strict anti union conditions on employees prior to the introduction of Fair Work Act, the Act eventually resolved the dispute through the process of good faith collective bargaining Hannan (2009a).
It should also be noted that the strategic importance of the telecommunications agreement influenced the four major banks to engage in collective bargaining with the Finance Sector Union to resolve outstanding issues mentioned by Hannan (2009b). Subsequently the Labour Party has proclaimed a willingness to give primacy to collective bargaining, and its new laws have created a more balanced environment for trade unions. Its policies and legislation remain primarily concerned with the rights and freedoms of individual workers (Templer 2012).
Two important issue dealt with by the legislation are minimum wage and OHS, a major consideration in favour of state involvement concerns the distribution of income and the provision of a living wage. Traditionally disputes in Australia concerning wage increases based on productivity and general work conditions have been resolved or settled by the process of state-sponsored arbitration and conciliation discussed in (Lucio and Stuart 2011). A second important issue concerns the issue of national OHS standards.
The deaths at the Pilbara mining site in 2009 mentioned in Barrett and Thomson (2012) caused the State to draw up strict OHS standards for the economy as an important contributor to the health and productivity of the workforce. A final important aspect of the Fair Work Act concerns the problem of unfair dismissal, in this context; government legislation regarding unfair dismissal law has helped workers facing problems when their employer has prematurely terminated them. As noted by Southey (2008), lower skilled workers have a higher chance of achieving justices in unfair dismissal arbitration.
Without government involvement, employees who remain in public sector employment may suffer corrosion in job security and a reduction in work opportunities (Bray, Cooper and Waring 2012). In highlighting the difference between Work Choices and Fair Work, Heffernan (2012) reported recently that research shows employers were more likely to lose unfair dismissal cases under the Fair Work Act, with claims under the Fair Work; employees having 10 percent higher success rate under the Work Choices. Incidents of workplace misbehaviour have often been related to a feeling of being treated unfairly.
Southey (2010) argues that the prime reason leading to misbehaviour in an organization is the result of poor communication and poor employer practice that is due to the lack of implementing a policy or procedure. Justice theories mentioned by Greenburg and Baron (2007) suggest that to get employees to reduce their misbehaviour, a first step is to rationalise their misbehaviour. The State has introduced collective bargaining and provides assistance to employees to control and rationalise their misbehaviour in order to solve the problem with their employers.
Modern awards Fair Work (2012a) and National Employment Standards Fair Work (2012b) were formally introduced under the Fair Work Act by the state, some entitlements include maximum working hours, superannuation and base rate of pay was implemented to protect employee’s rights. The Act further sought to minimize the chance of strike action and absenteeism while reducing the quantum of over working. Without state intervention, employees cannot always protect their rights. This may result in poverty level wages, excessive overtime, lack of job stability and unsafe work environments.
The State has a major role in protecting vulnerable sections of the community: without this protection, social problems and ill feelings may be increased. This position argues that whilst State involvement in industrial relations legislation may be conduct with good intentions, in general State involvement is believe to exert a negative impact on Australian business and economy. The arguments against state involvement in employer-employee relations are predominantly economic factors. A major critique of state involvement concerns the labour market and employment levels.
In neo-classical and traditional monetarist theory, unemployment is directly caused by both minimum wage legislation and the impact of trade unions in creating excessively high wage rates. The labour market is essentially treated as a goods market in that there is a market clearing equilibrium wage rate. In monetarist theory there is a ‘natural rate of unemployment determined by Walrasian general equilibrium equation, which is negatively impacted upon by the existence of trade unions and minimum wage legislation’ (Peterson 1997, p. 733). John Maynard Keynes provided the counter theoretical argument.
Keynes agreed with the neo-classical position that cutting money wage rates would stimulate employment levels in a single enterprise. However across the board ‘cuts in money wage rates would cause the aggregate level of demand to fall and hence decrease both investment and employment’ Stewart (1967, p 128). For Keynes there existed an ‘under-utilised productive capacity in the capitalist system for which wage growth was essential to erode’ (Trevithick (1977, p. 51). It should be noted that neo-classical micro theory is also a driving force behind the need to have a more flexible work force.
State involvement is said to reduce employment and legislation is considered to erode job progression and opportunity and to reduce the overall level of employment, therefore it is better to have low cost employment with low wages that encourages employers to employ more workers. According to Todd (2010) state involvement in employment relations may reduce business profitability and productivity. The introduction of the Fair Work Act has proven too costly for many employers. The legislative changes impacted negatively on employers’ human resource practices such as the right to request flexible work arrangements and annual leave.
Legislation is also considered to weaken the productivity level of the workforce because the Fair Work Act limits workplace flexibility such as work hours as argued by Borland (2012). Therefore state involvement can be critically viewed as an added level of expense in addition to the wage bill. Conclusion It has been argued that state involvement in employment relations’ legislations has generally been a positive force, in terms of workdays lost due to industrial disputes, to maintain a reasonably fair distribution of national income, strength in OHS standards.
State involvement has also been important in mitigating against countering the rise in incidence of unfair dismissal cases, and in improving National Employment Standards and Modern Award. In more general terms too little government involvement can create result in a more volatile industrial relations environment, increase in inequalities and negatively impact on those with little on bargaining power. The main arguments against state involvement are rests mainly on economic factors such as harming productivity and employment levels, as well as reducing workforce flexibility.
However, it has been showed that the economic theory underpinning labour market de-regulation is seriously flawed. Finally, it is noted that as the economy operating in the context of globalization mentioned in Giulio (2009), one can expect to see an increase in sub-contracting, individual work agreements and the continuation of the de-unionisation of the workforce. This will make effective state legislation difficult. Reference Australian Bureau of Statistics (ABS) 2008, Industrial Disputes, Australia, Mar 2008, cat. no. 6321. 0, ABS, Canberra. Barrett, L. and Thomson, L. Returning dignity to labour: workplace safety as a human right’, New Zealand Journal of Employment Relations, vol. 37, no. 1, pp. 82-89 Bray, M. , Cooper, R. and Waring, R. 2012, Employment relations: theory and practice, 2nd ed. , McGraw-Hill Australia, Australia. Borland, J. 2012, ‘Industrial relations reform: chasing a pot of gold at the end of rainbow? ’, The Australian Economic Review, vol. 45, no. 3, pp. 269-289, viewed 2 October 2012, Google Scholar. Brigden, C. 2010, ‘Unions and Collective Bargaining in 2009’, Journal of Industrial Relations, vol. 52, no. 3, pp. 21-334, viewed 2 October 2012, Business Source Premier. Fair Work 2012a, Modern Award, Fair Work, Australia, viewed 5 October 2012, <http://www. fairwork. gov. au/awards/modern-awards/pages/what-is-in-a-modern-award. aspx> Fair Work 2012b, National Employment Standards, Fair Work, Australia, viewed 5 October 2012, < http://www. fairwork. gov. au/employment/national-employment-standards/pages/what-are-the-10-nes-entitlements. aspx> Giulio, S. 2009, ‘Industrial Relations and the World Economic Crisis in the Context of Globalisation’, The Economic and Labour Relations, vol. 0, no. 1, pp. 111-122, ProQuest Central Greenberg, J. and Baron, R. 2007 Behavior in Organizations, 6th ed. Hillsdale, NJ: Prentice Hall. Hannan, E. 2009a, ‘Telstra calls truce with unions over negotiation’, The Australian, 26 May, viewed 4 October 2012, < http://www. theaustralian. com. au/business/telstra-calls-truce-with-unions-over-negotiations/story-e6frg8zx-1225716198859 > Hannan, E. 2009b, ‘ANZ sits down with union after decade without talks’, The Australian, 15 June, viewed 4 October 2012, http://www. theaustralian. com. u/business/ANZ-sits-down-with-unions-after-decade-without-talks/story-e4hgfsx-1435715197755 Lucio, M. and Stuart, M. 2011, ‘The state, public policy and the renewal of HRM, The International Journal of Human Resource Management’, The International Journal of Human Resource Management, Vol. 22, No. 18, viewed 3 October 2012, Business Source Premier Perpitch, N. 2009, ‘Gillard warns union on snap strikes’, The Australian, 2 December, viewed 2 October 2012, <http://theaustralian. newspaperdirect. com/epaper/viewer. aspx> Peterson, W. C. and Estenson, P. S. 996, Income, employment and economic growth, 7th ed. , W. W. Norton & Company, New York. Stewart, M. 1967, Kaynes and after, 2nd ed. , Penguin Books Ltd, New York Southey, K. 2010, ‘A typology of employee explanations of misbehavior: an analyze of unfair dismissal case’, Journal of Industrial Relations, vol. 52, no. 1, pp. 81-102, viewed 5 October 2012, Business Source Premier. Southey, K. 2008, ‘Forward with unfair dismissal claims’, Journal of Labour and Industry, vol. 19, no. 1, pp. 25-48, viewed 5 October 2012, ProQuest Central. Sutherland, C. and Riley, J. 010, ‘Industrial legislation in 2009’, Journal of Industrial Relations, vol. 52, no. 3, pp. 275-287, viewed 2 October 2012, Business Source Premier. Templer, L. 2012, ‘Good Faith in Collective Bargaining Communications in Australia and New Zealand” New Zealand Journal of Employment Relations, vol. 31, no. 1, pp. 30-43, Google Scholar. Todd, P. 2010, ‘Employer and employer association matters in 2009’, Journal of Industrial Relations, vol. 52, no. 3, pp. 305-319, viewed 1 October 2012, Business Source Premier. Trevithick, J. A. 1997, Inflation: a guide to the crisis in economics, Penguin Books Ltd, New York.