The two worlds of WorkChoices

WorkChoices has been hailed (and criticised) as a business wish list. But is this actually the case? We need to learn some lessons from history.

The history of employment regulation in Australia shows swings between centralisation and decentralisation. Stagflation in the 1970s, combined with strong unionism in key industry sectors led to a breakdown of the centralised arbitration system. Many employers preferred, and could afford to, strike pay deals with unions which were outside the Commission’s wage guidelines. And the penal powers of the Commission had been rendered meaningless by the unwillingness of anyone to enforce them, after the creation of a few martyrs.

One of the reasons for the complexity of WorkChoices is the unprecedented power it gives the minister. In a perfectly ideological world, firms would always seek common law damages from striking workers, and would hold the line against union demands. But in the real world, some employers can see the value and the savings in transaction costs of negotiating with unions. Other firms are alert to the need to maintain a continuing bargaining relationship, and indeed good relations with their staff, the sort of good relations that a modern workplace cannot do without in a tight labour market and a hyper competitive global economy.

The papers in the last week before the proclamation of the Act were full of reports of employers seeking to tie up the loose ends of enterprise bargaining agreements before WorkChoices comes into force. No unfair dismissal provisions, no union input into organisational change or workplace grievances, and so on. And if the employer won’t act against striking workers, the Minister will, or will seek to ensure that the AIRC will.

Common law deeds are being entered into in order to entrench provisions which cannot now be the subject of formal bargaining. Just as the centralised institutions of the 1970s lost legitimacy because the rules were honoured in the breach rather than the observance, so too, even before WorkChoices takes effect, employers as well as unions were seeking ways to evade the long hand of ministerial reach into their choices.

It’s as if there are two worlds of WorkChoices. In the real world, private sector unionisation is low, and most employers recognise the competitive value and productivity edge a flexible but satisfied workforce can give them.

In the ideological utopia of WorkChoices, a political agenda seeking the destruction of unionism imposes on employers, just as much as workers, a huge regulatory burden. Managers and professional salaried employees will be treated as if they were waged workers, with records of daily starting and finishing times being required to be kept for seven years. Demarcation disputes loom in the mining industry, and the enterprise awards which form the basis of the employment relations approach of companies like Rio Tinto are being torn up.

Disputes will be resolved in the Federal Magistrates’ Courts. HR Managers and consultants will busy themselves interpreting 600 pages of legislation and 400 pages of regulations. In pursuit of an illusory utopia of freedom of contract, the Howard Government has deprived employers of the freedom to manage their own businesses.

There is plenty of research evidence that suggests that productivity gains are related strongly to co-operative workplace relations. Managers know this. Another irony of WorkChoices is that it seeks to make workplace relations either conflictual, or heavily controlled and regulated by law. Flexibility is buried by mountains of regulation, in a paradise only for industrial lawyers and consultants.

Almost a hundred years ago, the German social scientist Max Weber observed that the great danger to freedom in the modern world was the iron cage of bureaucracy. Weber also observed that the more you try to control human action, the more you multiply the unintended consequences. Weber’s hypothesis is about to be tested, as WorkChoices slams shut the cage door on freedom in the workplace for business as well as employees. It would not be surprising if the unintended consequence of its actions were to be large scale private sector evasion of WorkChoices’ provisions. The real world has a way of defeating the most ambitious of ideological agendas.