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	Alternative Law Journal

The future of Australians at work^[1]

New rules and institutions need to be considered that better reflect and address the realities of the changed world of work and work organisation.

Ron Callus

Ron Callus is Director, Australian Centre for Industrial Relations Research & Training (ACIRRT), University of Sydney.

The past 15 or so years have seen dramatic changes in how Australian workers’ conditions and wages are regulated and determined. During this time our industrial relations institutions have also been transformed. The trade union movement, for example, through amalgamations and a decline in membership, has effectively been restructured. Another key player in our system — the Australian Industrial Relations Commission (AIRC) has, during this time, seen its powers fundamentally redefined. Our system of industrial relations has moved from one that was based largely on a system of collective bargaining to one that now also provides for individuals and their employers to privately enter into agreements that set minimum wages and conditions that may be different to those in awards or collective agreements. While our regulatory system has responded to the call for more labour market flexibility by shifting the arena for industrial regulation towards the enterprise or workplace and away from industry-wide or multi-employer bargaining, the labour market has also been undergoing a transformation. As a result of the blossoming of non-standard forms of work engagement, the current reform debate is essentially failing to address the restructuring of the labour markets that are taking place. New rules and institutions need to be considered that better reflect and address the realities of the changed world of work and work organisation.

The role of further IR reform

Earlier volumes of the Alternative Law Journal (particularly, Vol 23, No 2) have canvassed the operation and impact of the coalition government’s Workplace Relations Act 1996 (Cth). Recently, the Minister for Industrial Relations, Peter Reith, has indicated that further changes can be expected under the so called second wave of amendments to the Workplace Relations Act. If these come to pass we would see, amongst other things, changes to the procedural requirements for registering Australian Workplace Agreements, the introduction of secret ballots prior to any industrial action, further simplification of allowable matters in awards and changes to the operation of the AIRC, including charging for conciliation services and widening the opportunity for private mediation provided by private mediators. Whatever may be the merits of the proposed amendments, they reflect a model of a labour market that is less and less relevant.

The current trajectory of labour market reform has been widely labelled one of deregulation. As discussed elsewhere,[2] there is no such thing as a deregulated labour market. Rules about workers’ entitlements, expected behaviour or conduct are to be found in every organisation. The reform debate is really about how, and by whom, rules should be formulated. What ‘de-regulationists’ seek is a reduced role for, so called ‘third parties’ in rule-making by limiting the role of the AIRC and full-time union officials. Rule-making, according to the proponents of labour market reform, should be a matter between the parties — employees and employers. As such, the arena for resolving conflict over the rules is the civil courts, as with any other commercial contract. The problem with this view is that the employment relationship is not akin to a commercial contract. In industrial relations, third parties have a long and legitimate tradition of involvement in the making of rules, not just administering them. External forms of rule-making are the only way to guarantee some fairness in the outcome of negotiations where there are clear and often extreme differences in the bargaining power of the parties involved. In addition, externally imposed regulations ensure that minimum community standards are applied. Without these there is no guarantee that the free market will tame or discipline the unscrupulous employer who seeks to provide sub-standard wages or conditions. There will always be some people who feel that they have no choice but to accept wages and conditions that are well below what is fair and acceptable by community standards.

While a great deal of attention in the policy debate is paid to the relative merits of external or internal (enterprise) rule-making, the dramatic changes that have occurred in our labour market have been largely ignored. It seems to be assumed that the labour market and organisational changes that are occurring and are transforming work relations can be incorporated into the existing legal framework. Rule-making, however, needs to be re-conceptualised in the light of the changing nature of the labour market, work organisations and how people are engaged to work over their life time.

The changing labour market

Patterns of employment in Australia have changed dramatically over the past quarter of a century. For many, employment no longer necessarily means full-time work, five days a week, for 7–8 hours a day between the hours of 9am and 5pm. Once workers could expect to stay in the one occupational career for most of their working life, often with the same employer, but this is no longer true. In the future, people may be expected to make three or more career changes during their working life and work in up to ten different organisations. While part of these changes has reflected changing preferences by workers, most have been the result of employer demands for more flexible work patterns and the desire for many employers to reduce or increase their workforce as market or demand conditions change. As a result, most new jobs in the economy are part time. While part-timers made up 18% of the workforce in 1984, by 1995 they made up 25% of the workforce.

Another major labour market development has been the increased levels of casual employment. In 1984 nearly 16% of the workforce were casuals. By 1996 this had risen to almost 26%. Table 1 shows how rates of ‘casualisation’ have increased in a number of key industries.

Table 1: Levels of casualisation: key industries, Australia, 1984, 1996

Source: Unpublished ABS data from the Employee Benefits Survey[3]

Australia now has the highest proportion of temporary workers of any OECD country except Spain.

Finally, there has been the rise in contractors relative to employed wage and salary earners. Between 1978 and 1990 both forms of employment grew at roughly the same rate, but from 1990 through to at least 1993, the absolute number of wage and salary earners fell while contractors continued to grow. The federal government’s Australian Workplace Relations Survey in 1995 found that 35% of organisations, also surveyed in 1990, had contracted out some services that were previously performed by employees.

Implications

With the downsizing and the decrease in employment size of many organisations during the 1980s and 1990s, combined with the growth of contractors, reliance on part-time workers and increasing outsourcing has come, amongst other things, a fall in employers’ commitment to providing formal training to employees. The decrease has been particularly significant in manufacturing as illustrated in Table 2. The changes also reflect the effect the abolition of the Training Guarantee Levy has had on the provision of formal training.

Table 2: Training provided by employers 1993-1998

Source: ABS: Employer Training Expenditure Cat No 6353.0

The longer term problem of outsourcing and growing reliance on part-time and casual workers is that the workforce becomes less dependable, less trained in firm, specific skills and less committed to the organisation. The employer– worker relationship becomes more instrumental and precarious. Employers continue to seek commitment from their workforce but are less likely to provide them with security or guaranteed employment. Loyalty and effort is expected from former employees who are re-engaged as contractors, but the contracting organisations will no longer provide sick leave or holidays or other employment benefits. Employers expect workers to be highly skilled and trained but are now less likely to provide them with structured training.

The policy imperative

These developments present a major challenge to labour market regulation in Australia. The new world of work requires new policy settings. While some people may seek to recreate the past and others believe we need to go further down the present policy road, both of these views about policy reform seem misguided.

Despite the changes that have been outlined, public policy continues to assume most workers are employees, who work full time at one organisation on a permanent basis. But the traditional employer–employee model is increasingly becoming irrelevant. While policy has been concerned with decentralising the regulation of employment conditions, what is needed is an approach that recognises that the enterprise or single organisation alone can no longer provide the level of training, job security and a range of employment conditions for many workers. Workers also are demanding more flexibility and life time choices by being able to move in and out of the labour force without the negative effects that often come with such a move. A better policy mix is needed that provides organisations with the flexibility they need and workers with security, opportunities and life choices. The solution perhaps lies beyond the workplace or enterprise focus to which current policy is directed.

A more appropriate regulatory environment

The status of workers

For most of this century rights for most workers have been defined on the basis of their status as an employee, that is, a person employed on the basis of a contract of service by an employer. The development of legal rights, obligations and protections comes from being an employee. Currently, debate about the future of work is structured around a number of dichotomies. These include: employee/ contractor; full-time/part-time; and casual/permanent worker. Often workers having these different legal statuses differ little in most other substantive aspects of their jobs. As working hours are restructured, more workers are working irregular hours making the full-time and part-time distinction unhelpful in determining workers’ rights entitlements. Similarly, the differences between permanent and casual status appear to mean little in practice for many workers. For example, many ‘casuals’ have highly predictable hours of work, while growing numbers of permanents have no predictability in the number and spread of hours worked from week to week.

Traditional policy and employment law based on a permanent full-time employee is becoming increasingly irrelevant as the labour market is restructured into contract, casual and part-time employment. A broader definition for employment status is needed. The legal concept of ‘employee’ needs to be replaced with a broader, though less precise, concept of ‘worker’. This would cut through fictions of ‘contracts of service’ and ‘contracts for service’, award free employees and casual workers. The definition of ‘work’ currently applied by s.106 of the New South Wales Industrial Relations Act 1996 could provide a starting point for a new approach. This approach has been applied in New South Wales for over 40 years because of that State’s experience in dealing with independent contractors, especially in road transport.

Increasing portability and pooling arrangements

Account also needs to be taken of the growing insecurity of employment. When workers transfer between jobs in different organisations, or when firms close down, workers’ entitlements are often lost. Work-based entitlements can be freed from the rigidity of relying on one employer to manage or honour the entitlement. This approach would benefit both workers and employers. The entitlements built up by a worker would become less vulnerable, and employers would be relieved of the responsibility of managing entitlements. The issue of portability and security of entitlements is particularly important for workers, rights to sick leave, long service leave and redundancy payments. These rights rarely accrue for workers moving regularly between organisations or enterprises. It is important that such entitlements earned by workers are enforceable against more secure entities. An example of such an arrangement is provided by the long- service leave arrangements that apply in the construction industry. These provide that all workers, employees and contractors, accrue long service leave entitlements on the basis of hours worked. Given the unstable and transient nature of many employers in the industry and the high turnover of staff, this offers the best way of protecting building workers’ rights. Given that more industries are taking on the characteristics of the unstable forms of employment characteristic of construction this provides a useful model for other sectors. Superannuation is another example of how entitlements are becoming transferable.

The notion of ‘pooling risk’ is also one that needs further exploration. This is important because most of the risks associated with flexible employment are borne by those relying on precarious forms of employment. Group training schemes currently in operation for entry level training, provide a good working model of a fairer sharing of risk. This system has the advantage of offering more attractive conditions of employment than other types of working arrangements (labour hire and temporary agencies). Employers and management could also have additional flexibility, without the ongoing costs and uncertainty of the current arrangements if the group training model became a more widespread basis for managing temporary forms of employment .

We also need to find more effective ways of managing the risks associated with employment on a fairer, shared basis. Formally organised ‘employment pools’ offer a way of addressing this problem. An example of how employment pools operate is provided by group training schemes. Under these arrangements, apprentices and trainees are indentured to a group scheme, but their training and employment is provided by a host employer who hires them out to undertake certain blocks of work. The schemes work well to ensure that organisations have access to the labour they need, when they need it. They also ensure that a larger number of employers are involved in training new labour than would otherwise be the case. Group training arrangements currently only work for people at entry level. The phenomenon of labour hire agencies and temporary work agencies is also growing. They provide a similar pooling service but often at less attractive conditions of employment for the workers involved. The group training schemes offer a superior model of how such labour pooling arrangements could work in the future.

Life cycle rights

A major challenge in the future is how to manage the growing movement by workers in and out of the labour market at different stages in their life as they try and match work with different life priorities such as education, parenting, care for aged relatives and retirement. These developments in both the nature of jobs available and the changing aspirations of workers raise questions about how the access to entitlements such as quality part-time work, flexible career paths and rights to leave for key life transitions are to be managed. This requires a better and broader social policy approach by governments.

Gunter Schmid, a West German researcher, believes policy needs to take seriously the challenge of establishing ‘transitional labour markets’, that is institutional arrangements which provide decent job opportunities for those wishing to deviate from ‘standard time employment’ at various stages of their lives. If workers are to have a real choice in balancing work and other commitments/interests, it is essential that supportive structures are established to minimise the losses associated with such choices. Key transitions that need to be addressed include:

Conclusion

It has been argued that the emphasis on labour market reform has failed to address the realities of changes to the nature of work and organisation. While the decentralisation of industrial relations has put the focus on the enterprise or workplace, the ability of organisations to achieve the labour flexibility they seek and also provide workers with employment security, training and ongoing entitlements is becoming increasingly difficult. At the same time, for a variety of reasons, workers are increasingly moving in and out of the workforce during their life-time and will continue to find themselves working for a range of organisations on a temporary basis.

While our industrial laws need to re-examine the applicability of the traditional contract of employment, the need for innovative approaches to labour market regulation may require more innovative policies. We need to examine the costs and benefits of portability of entitlements, employment pools that provide ongoing employment training and long-service leave, but not necessarily with the same employer, and social policies that better manage the blurring of work and non-work.

References

[1] It is the changing nature of work in Australia and the need for a policy framework for the new environment that is the subject of a recently published book titled Australia at Work, written by ACIRRT (the Australian Centre for Industrial Relations Research & Training) at the University of Sydney and recently published by Prentice Hall. This article draws on material presented in that book. Some of this material has also appeared in the CCH HR Report
[2] Buchanan, J. and Callus, R., ‘Efficiency and Equity at Work: The Need for Labour Market Regulation in Australia’, (1993) 35(4) Journal of Industrial Relations 515-38.
[3] Campbell, I., ‘The Growth of Casual Employment in Australia: Towards an Explanation’, in J. Teicher, Non-Standard Employment in Australia and New Zealand, Monograph No 9, National Key Centre in Industrial Relations, Monash University, 1996.

Further resources
ACIRRT (1999), Australia at Work, Prentice Hall, Melbourne.
Morehead, A. et al., Changes at Work: The 1995 Australian Workplace Industrial Relations Survey, Addison Wesley Longman, 1997.
Schmid, G., ‘Is Full Employment Still Possible? Transitional Labour Markets as a New Strategy of Labour Market Policy’, (1995) 16(3) Economic and Industrial Democracy.