Monday, April 12, 2021
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Government’s IR ‘shock doctrine’ will be worse than the Accords

The government’s flagged major reforms to industrial relations will be bad for workers, but to understand why unions lack bargaining power it’s essential to trace the blame back to the Accords under the Hawke and Keating Labor governments.

Prime Minister Scott Morrison said on Friday creating jobs was the national cabinet’s “singular agenda”, but what sort of jobs will they be?

“Accords 2.0” or not, the Federal Government is flagging major industrial relations changes with or without union consent which, at a time when unions are at their weakest point in history, should strike fear into the heart of workers everywhere.

The government wants to bring unions and business to the negotiating table but it has been clear which side it is on, intervening on behalf of employers to slash worker conditions in the McDonald’s fast food award case and vowing to change legislation to suit business after a casual worker was found to be entitled to paid leave and redundancy payouts.

“Business and conservative elites in Australia do not want this crisis to go to waste, they will try to implement their own version of ‘Shock Doctrine‘ no doubt about that, and we’re already seeing it in all kinds of areas including IR but other areas as well,” Jim Stanford, economist and director of The Australia Institute’s Centre for Future Work, told Voice of Action.

The Centre for Future Work has been keeping a log of extraordinary IR measures taken during COVID-19 and most of them are to the disadvantage of workers.

Jim Stanford and Dan Nahum at The Australia Institute’s Centre for Future Work

“Right across the board we will see business and conservatives trying to use the fear and insecurity of this moment to ram through things they’ve always wanted but couldn’t get when Australians were more prepared and more confident,” said Stanford.

Regarding the government’s talk of economic reform, Stanford said “in this case it’s a code word for more trickle down economics, there’s nothing reformist about it but they portray it as a neutral technocratic effort to improve productivity and ignite growth – that of course is nonsense”. The reform was always the same: tax cuts, deregulation and decreased labour costs and conditions.

Morrison told the National Press Club on Tuesday that the current IR system “is not fit for purpose” and had “settled into a complacency of unions seeking marginal benefits and employers closing down risks, often by simply not employing anyone”.

His solution is to bring employers and unions together in a room to negotiate on IR reform, but Morrison refused to guarantee existing pay and conditions would be protected and Industrial Relations Minister Christian Porter has said the government’s IR reform agenda will be implemented “one way or the other“, regardless of whether unions and employers can agree to a compromise.

Anthony Forsyth, Professor of Workplace Law at RMIT, said the Morrison government was simply recasting an agenda that business groups have pushed for the past decade, and inviting unions into the room.

“There’s nothing in the Government’s list [of IR reform priorities] about issues of major concern to workers and unions prior to the pandemic: wage stagnation, the need for sectoral and supply chain bargaining, and worker exploitation in the gig economy,” said Forsyth.

Or, as Australian National University history professor Frank Bongiorno put it, “there’s not much for unions to get their teeth into here, but plenty that ought to worry them in the hands of a government that has been relentlessly anti-union since the moment it took office”.

While Morrison and IR experts reject the comparison, many have compared Morrison’s process of IR reform to the Accords of the Hawke and Keating Labor governments.

How the Accords crippled unions

Understanding the Accords and their aftermath is essential to understanding why unions are in such a weak bargaining position today.

Between 1983 and the early 1990s, a militant trade union movement, at its strongest point in history, became incorporated into the Hawke and Keating Labor governments’ neoliberal economic transformation.

A series of Accords were struck with the Australian Council of Trade Unions (ACTU) to suppress wage demands and industrial action.

Paul Keating (far right) with ACTU leaders Ian Ross,
Bill Kelty and Martin Ferguson in 1991

Unions got in on the act of policing themselves and Labor received consent to implement its neoliberal economic reforms including privatisation, deregulation of the labour market and finance sector, tariff reductions, the replacement of centralised wage-fixing with enterprise bargaining, and the floating of the dollar.

In return the “social wage” was expanded including the introduction of compulsory superannuation for all workers, the reinstitution of Medicare (which was scrapped by the preceeding Fraser government), and an increase in family and childcare payments.

The Accords were a “mistake” which crippled unions, says Australia’s leading expert on the subject, Elizabeth Humphrys, who argues that incorporating workers into a national project of restructuring and suppressing wages and industrial action had “terrible consequences”.

Humphrys, a political economist at the University of Technology, Sydney, lays out the case with compelling evidence in her book, How Labour Built Neoliberalism, which shows how the Accord caused a fundamental disorganisation of the labour movement.

UTS political economist Elizabeth Humphrys

Unions represented over 50% of workers in 1983 and were much more powerful, with organised militant action and strikes. This declined to 40% in 1992 and 30% in 1997, while today around 14% of workers are in a union (single digits in the private sector).

“The Accord process took wage and conditions bargaining out of the hands of workers and local unions and handed it to union leaders and the government — confirmed by arbitration system — some way from the shop floor,” Humphrys told Voice of Action.

“Workers were no longer organising, and after years that way you can’t simply switch that back on.”

Union leaders and workers who backed the Accord did so because, in an economic environment of declining real wages and increasing inflation and unemployment, they thought it would save jobs and address the economic crisis.

As unions became weaker many of the promised benefits for workers did not materialise.

ACTU leadership sold out rank and file

In his book Island off the Coast of Asia, University of New South Wales professor of international and political studies, Clinton Fernandes, includes evidence showing the Accord increased income inequality and decreased wages in the 1980s, before the drop in union membership began in the 1990s.

Fernandes writes that while officials at the top levels of the ACTU bureaucracy benefited from the Accords (by having a seat at the table in economic policymaking and on boards of government bodies), shop stewards and local delegates were “disempowered”.

“The union bosses apparently accepted that growth was more important than re-distribution; as such, the profitability of major corporations became more important than quality of life for workers,” writes Fernandes.

It was not just the decline of union density contributed to by the Accord, but general economic trends since the 1980s which led to a significant decline in sectors that were once heavily unionised (such as metals, manufacturing, textiles and footwear). New jobs were created in industries like food and retail that were much less unionised.

Humphrys argues that today’s profoundly disorganised and weak union movement would not be able to strike a compelling bargain in any new social contract being negotiated today, nor would they be in a position to deliver the majority of workers into some sort of Accord-like deal

“The unions were at one of their strongest points in history in entering into the Accord and even then it was a disaster,” Humphrys told Voice of Action.

Today unions would have to risk breaking the law and hefty fines to take effective industrial action, and they have a lot less bargaining power.

Morrison made that clear when asked whether an Accord 2.0 would have anything to offer for workers comparable to the social wage benefits of the original Accord, and he responded effectively saying workers would at best have a chance to keep the conditions they already have.

The declining influence of unions, even within the Labor party they created, can be seen in comments from the likes of former Victorian premier Steve Bracks, who said in May that Labor should largely ignore the trade union movement as it develops its policy ideas for the economic recovery.

If the IR system is broken, it’s broken for workers, not businesses, with wage theft endemic, union militancy close to extinct and industrial disputes at record lows. As industrial relations lawyer Josh Bornstein points out, wages have stagnated for 8 years, employee share of growth is at record lows, Australia has the worst job insecurity and union density in the OECD and IR laws have eliminated collective bargaining for most employees.

ACTU secretary Sally McManus said one in three workers “have no sick leave, no annual leave and no jobsecurity”, due to the increasing use of casual workers, labour hire, gig economy and fixed term contract employees.

Many union leaders believe it is a win that the government, as a show of “good faith”, decided to temporarily shelve its union-busting Ensuring Integrity Bill, which was always unreasonable as it would allow unions to be deregistered for minor mishaps. But the move seems more like coercion than anything else.

The Hawke and Keating Labor governments were the architects of neoliberalism in Australia

Humphrys said a new social contract was not required. Social contracts were about holding down wages and stopping industrial action both of which are not an issue today as unions are not in a militant phase.

“Fighting for wages and conditions by workers builds workers’ power and organising capability, and making deals for the social wage does not,” said Humphrys.

In a roundtable discussion on Humphrys’ book as part of the May 2020 edition of the Journal of Labour History, there was broad agreement with her main thesis from ANU history professor Frank Bongiorno, Macquarie University professor Ian Hampson, former NSW senator and activist Lee Rhiannon and former ACTU assistant secretary Tim Lyons.

“To what extent can we interpret public disillusionment with politics in the present as a product of the working-class demobilisation that Humphrys sees as attributable to the Accord?,” ponders Bongiorno.

“And to what extent is our capacity to do anything about it limited by the drastic decline in union power that has occurred especially since the Accord era and, at least partly, as a result of the Accord itself, if Humphrys is right?”

Hampson writes that unions should have withdrawn from the Accord when it became clear they would not get everything they were promised on industry policy, but they “fell prey to a strategic dilemma”.

“On the one hand, staying in the Accord risked eroding the movement’s trust in its leadership, since workers were being asked for wage restraint in return for gains that were nebulous, hard to sell, or non-existent,” writes Hampson.

“On the other, breaking out of the Accord risked the wrath of the government, and/or the ALP losing power – and an anti-union crusade by the Liberal–National Party government and the New Right.”

Hampson said union leaders stuck with the Accord and limited their militancy, partly because they had their eyes on careers within the government or the ALP.

‘The forces of neoliberalism prevailed’

Rhiannon writes that the events during the time of the Accord “exposed the tension between those who believe progressive change is achieved by people’s collective action and those who put their faith in the upper echelons of governments and unions to deliver the reforms they deem people need”.

Rhiannon agrees with Humphry’s main thesis saying “the loss of on-the-job union activism” as a result of the Accord meant the union movement “effectively lost a generation – and probably more than one – of young worker activists, who previously learnt from on-the-job organising and actions”.

“The forces of neoliberalism prevailed as the ability of the union movement to engage in radical political action was largely curtailed through the Accord agreement and by legislation,” writes Rhiannon.

Rhiannon contrasts the lack of industrial action around the climate strike rallies in Australia with the active role unions played in causes such as fighting apartheid, which was acknowledged by Nelson Mandela just after he was released from prison in 1990.

Australian unions also had militant involvement in the Green Bans, Women’s Liberation and the Vietnam War movements, but “the role of unions in social movements in the post-Accord years is very limited”.

“This style of campaigning involving political industrial action that helps build social movements has reduced markedly since the Accord,” writes Rhiannon.

“History demonstrates that unions play a key role in driving progressive change when they work with social movements.”

Rhiannon argues the Accord agreement between the ACTU and Labor “was a setback for workers and their families” – neoliberals knew “that limiting the ability of unions to take political industrial action will consolidate the power of capital, boost company profits and greatly limit the ability of people to organise and agitate for the greater good”.

“A hallmark of neoliberalism around the world is that industrial struggle is curtailed through legal means and increasingly outright violent suppression,” writes Rhiannon.

Rhiannon points out that union officials effectively took on the role of policing union members and curtailing their industrial activity which sought to improve wages and conditions.

Rhiannon says that union power needs to be built outside of electoral politics as recent union campaigns had amounted to little more than campaigns to elect the Labor party, which when in power often did not implement the changes desired by workers.

“History has taught us time and time again that electing a social democratic government and then waiting for them to deliver on their promises is a recipe for frustration and often failure,” writes Rhiannon.

“Where legislation was needed to enshrine progressive change, MPs acted in response to public pressure. They were not the initiators of change.”

Lyons agrees with Humphrys that it was a “mistake” for unions to support the suppression of wages and industrial militancy in the Accord, which “reduced avenues for rank-and-file activism”. Unions “were unilaterally disarmed with no concession whatever from capital”.

“The evidence of the Accord period and since (as evidenced by disputes at Mudginberri, Robe River, Dollar Sweets, Patricks and so many others) is that Australian capital is unwilling to reach an accommodation with organised labour,” writes Lyons.

“Indeed, it is, and remains, committed to its destruction.”

Lyons, who was a union leader in the aftermath of the Accords, wrote “there must be a reckoning with what the ALP, the ACTU, and individual union leaders did to dismantle the structural power of unions over the course of 13 years”. Working class communities and unions had “ended up as something akin to desiccated husks”

“The Accords ended in WorkChoices and subsequently in the milquetoast sensible centrism of the Fair Work Act 2009,” writes Lyons.

“What started as macroeconomically justifiable, and maybe even necessary, collective wage restraint in return for a social wage dividend ended in bargaining atomised to the individual level, social wage improvements be damned.”

With the Accord and earlier bans on secondary boycotts blocking solidarity and militancy across the union movement, Lyons believes an urgent task for the union movement is to seek changes to labour law that expressly permits industrial conduct, promotes the building of solidarity between groups of workers, and facilitates organising at scale.

“For the most part, unions are still not structured to build the power working people so desperately need to win, but rather are structured around forgotten power,” says Lyons.

Lyons made similar comments in a 2016 piece for Meanjin in which he described unions as being “in a state of profound crisis” due to “a collective failure of leadership”. Unions were wrong to be pre-occupied with electoral politics at the expense of building “permanent organised power in workplaces and communities”.

“Real social movements drive electoral politics, they don’t respond to it. Most politicians are followers, not leaders,” Lyons wrote in Meanjin.

“The narrow focus on politics permanently damages unionism … The union becomes not something about your work and your life, but an organisation that periodically tells you how to vote.”

Unions which did not support the Accord’s plan to deliver wage cuts in return for deferred superannuation, such as the militant Builders Labourers Federation (BLF), were deregistered and smashed by the Labor government and the ACTU.

Dave Kerin, who worked with union legend Jack Mundey on the BLF and the green bans, told Voice of Action that with the Accords, Hawke and Keating said neoliberalism was inevitable but Labor would implement the free market without the inhumane edges.

“That was never going to happen, the one way that could happen was if organised labour had the power to stop it,” said Kerin.

Even as ACTU leader, Hawke was opposed to Mundey’s militancy, and he drew up laws against the BLF while in federal parliament.

Many current and former union leaders believe organised labour can only make gains if unions “burn the village and go to war”, breaking laws preventing strikes and secondary boycotts even if it means fines and economic devastation.

Colin Long, former president of the Victorian Trades Hall Council (VTHC) and former state secretary of the NTEU, said the enterprise bargaining system sapped huge amounts of union time and reduced their capacity to organise and achieve outcomes across whole industries. Workers could benefit from the gains made even if they were not a member of the union.

Next frontier: organising for ownership

Godfrey Moase, executive director of the United Workers Union (UWU), told Voice of Action the Accord was “a response to a profitability crisis within capitalism” which sought to lower the price of labour. He said a new Accord-like deal would be “a farcical repeat of a tragic episode”.

UWU executive director Godfrey Moase

Moase said unions organising around income was inherently limited today because we’re reaching the limits to growth under the capitalist system and it could no longer support an organised working class. He said the next stage of the battle for unions would lie in shifting from campaigning for incomes to campaigning for worker ownership.

Moase said the challenge would be in figuring out how to organise for ownership while incorporating this into the “bread and butter element of everyday organising and people struggling to feed their families within the capitalist system”.

Moase said the first step to unions winning their power back was realising they were now “outsiders”, and the yearning to return to their place as insiders in the political system was “a barrier to proactive and strategic action”.

“The first step to an insurgent winning is to recognise that they’re in a position of insurgency,” Moase told Voice of Action.

Jeff Borland, professor of economics at the University Of Melbourne, says there is no basis for thinking that extensive reforms to the IR system can provide major efficiency benefits to the Australian economy.

He notes the Productivity Commission found in its report in 2015 that the Australian labour market performance and flexibility was “relatively good by global standards”; the workplace relations system was “not dysfunctional”.

“Claims that Australia’s current IR system does not allow sufficient flexibility in employment arrangements hold little water,” writes Borland.

“There are no better examples than how the system allowed for adjustment to mining boom without a major break-out in wage growth; and accommodated the end of the mining boom without rigidities in wage-setting and negative impacts on employment some had feared.”


  • Lots of important history in this article. It’s a sad tale, but seeing such thoughtful and militant voices in a union like the UWU which is so central to so many aspects of the contemporary economy has to give us some hope.

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