The Impact of the WorkChoices Amendments on Industrial Relations and Skill Formation

1. The Impact of the WorkChoices Amendments on Industrial Relations and Skill Formation Professor Julian Teicher

2. INTRODUCTION • Three important questions? • Is WorkChoices the latest instalment in a process of workplace reform, a necessary modernisation of the Australian industrial relations system • Is it part of the process of preparing Australia to be globally competitive in the 21st century? • Is WorkChoices about creating a flexible and fair workplace in which the rights of employer and employees are appropriately balanced?

3. What is WorkChoices? • Some have described it as a ‘fundamental break’: • The government casts it as an evolutionary process. • The break is the shift from a system based on equity to ‘fairness’ • What follows? • Marginalisation of third parties (AIRC, unions) • Compulsory conciliation and arbitration negligible • National standard setting machinery abolished • Systemic bias to individual agreements

4. So what has WorkChoices got to do with skill formation? • At one level WorkChoices is the next instalment in a process of reform that commenced under the auspices of the Australian Industrial Relations Commission • Award restructuring and enterprise bargaining had job redesign and skill formation as the centrepiece • The Training Reform Agenda was interlocked with the process of Industrial Relations Reform • But WorkChoices is a departure from all that preceded it and it will have implications for the process of skill formation BOTH directly and indirectly

5. THE TRAINING REFORM AGENDA, SKILL FORMATION AND INDUSTRIAL RELATIONS • The genesis of the Training Reform Agenda: The culture of Australian industry has been one offragmentation built around occupational skills and managerial control: Historically, Australian technolcultures emerged from nineteenth century British concepts of technology, hierarchical organisations, ‘trade’ unions and conflictual relations. Overlayed on this were twentieth century American concepts of mass production, fragmentation of work, authoritarian control and narrow semi-skilling of workers. (Ford 1990/3: 6).

6. The genesis of the Training Reform Agenda • Manual skills typically obtained in external labour markets with the following characteristics • persistent skill shortages • tendency for training to be crisis driven • heavy reliance on immigrant labour • large proportion of employers provided no training • major role of public institutions in skill formation • points of entry restricted to youth based apprenticeship system • high levels of inter-firm mobility • flat age-earnings profiles

7. The genesis of the Training Reform Agenda • The Changed Environment: • The dismantling of the protectionist system beginning in the 1970s saw skill formation emerge as an issue of national concern • Central to this was the need for Australia to improve its productivity and international competitiveness: • a well-trained, multi skilled work force was seen as essential to economic survival • increasing importance placed on the existing concerns about skill shortages

8. The genesis of the Training Reform Agenda 2. By the 1980s increasing global competition created theimperative for changed policies on skill formation as part of a broader process of workplace reform • 1987: Second Tier changes included: • Flexible labour utilisation • Working time arrangements • Management practices and quality control • 1988/89: Award Restructuring measures to include: • Establishing skill related career paths • Eliminating impediments to multiskiling • Creating appropriate relativities • Working patterns and arrangements to enhance flexibility

9. Skill formation and the Training Reform Agenda • How do we characterise the contemporary Australian labour market? • Contraction of internal labour markets in both public and private sectors • increased reliance on contracting firms and self-employed contractors • Growth of open or ‘competitive’ labour markets as a result of increasing domestic and overseas competition • growth of low-wage firms including outworking

10. Skill formation and the Training Reform Agenda • Associated rise of non-standard and precarious employment with limitation on training and employment opportunities for some groups • Upper segments: elite workers in high-tech industries with high inter-firm and vertical mobility based on scarce skills and knowledge • Lower segments: groups of vulnerable workers with high mobility but not associated with income or career progression

11. The TRA and the Demand Driven approach to skill formation 1. The Training Reform Agenda • Since 1985 skill formation has achieved sustained attention in the context of the Training Reform Agenda • The election of the Howard government changed the terminology but the policy settings shifted more gradually • Major problem was the inability of the training system to provide the type, depth and quality of skills required to make industry competitive or offer real incentives for individuals to undertake and employers to provide training • Reflected a move to a demand driven system of training and development which focuses on workplace skill development • Aimed to improved competitiveness through greater competition between TAFE and commercial training providers

12. The TRA and the Demand Driven approach to skill formation 2. New Apprenticeships: • Recognising the limitations of traditional apprenticeships, the government created theAustralian Vocational Certificate (later recast as New Apprenticeships): • Designed to provide a consistent national standard based around the concept of competencies. • Many pathways [work experience, education, and training and variations] to competence, thereby overcoming the problem of non-recognition of prior learning. • Extended beyond the limited range of occupations associated with apprenticeship traditionally. • Embraces shorter training previously termed Traineeships

13. The TRA and the Demand Driven approach to skill formation • What has been achieved under New Apprenticeships? • Expenditure: • 25% increase in VET 1998-2003 • Firms using NA spend on average x 5.5 • Qualification level: • Most growth at AQF3 (65%) • Occupational spread: • Shift from Trades and related to Intermediate clerical, sales and service and rapid growth in Associate professional • Traditional trades down from 25% of commencements to 13%. • Proportion of workforce engaged in NA is up from 1.9% to 4% (Skills at Work, 2004)

14. The link between workplace reform and training reform • 1991: adoption of the Enterprise Bargaining Principle: • Federal government viewed a strategic approach to skill formation at the enterprise as the key to national competitiveness (NBEET 1991) • Climate of deepening recession militated against training and cost cutting and downsizing impeded workplace reform • Attempt to ‘put the onus on the direct parties to negotiate genuine arrangements tailored to their particular circumstances [EPAC 1993: 24].

15. The link between workplace reform and training reform • Early assessments of enterprise agreements indicated: • Training commonly addressed as an implication of work organisation issues • 54% of the First 1000 agreements included an employer commitment to training and 16% of these contained comprehensive provisions. • Training provisions slowly increased over time • 1998-2000: provisions in 82% of federal agreements • Two forms dominate: General Training Arrangements and Entry Level Training Arrangements • Limitations of such an approach

16. THE WORKCHOICES AMENDMENTS • WorkChoices: The Basics #1 • Creation of a national system based on the Corporations power • Even government acknowledges that coverage will never be complete. • Aimed to restrict circumvention of national policy by State governments • Establishment of the Australian Fair Pay Commission • No procedural transparency • Limited role in standard setting

17. WorkChoices: the basics #2 • Introduction of Australian Fair Pay and Conditions Standard as safety net • Replaces the NDT • Base for evaluating agreements, enabling loss in pay and conditions to be negotiated • Apart from minimum wages, adjustment by legislation • Awards restricted to 13 allowable matters: • Agreements displace awards • Awards are a residual • Previously the base for the NDT

18. WorkChoices: The basics #3 • Further reduction in the role of the AIRC: • Essentially voluntary dispute resolution • Termination of industrial action • Restriction of the unfair dismissals jurisdiction* • Firms with less than 100 employees • Operational considerations excluded

19. Agreements under WorkChoices #1 Six types of workplace agreements: • Individual (Australian Workplace Agreements; s326) • Collective agreements • union (s328) • employee (s327) • Greenfields Agreements* • union (s329) • Without union (s330) • Multiple business agreements (s331) • Relates to one or more single businesses or parts of a single business • A form of collective agreement under the Act • Requires OEA authorisation

20. Agreements under WorkChoices #2 • Distinctive features of agreements include: • ‘Protected award conditions’ and AFPCS replaces the no disadvantage test • ‘simplified’ lodgment-only process • legislation prescribes both “required content “ and “prohibited content” • No previous limitation on incorporation or referencing other industrial instruments or other terms • Dispute resolution processes

21. Secret Ballots • Industrial action by employees is not protected action unless it has been authorised in advance by a secret ballot • Employees or employee organisations wishing engage in protected action must under s449(2): • (a) obtain an order from the Commission that will authorise a protected action ballot to be held ; and • (b) hold a protected action ballot that may authorise the industrial action • For employer action to be protected s441(4) provides the following: • Written notice of the intended industrial action must be provided if it is in response to action by an organisation that is a negotiating party to a proposed collective agreement, or • In any other case, at least 3 days working days written notice of the intended industrial action

22. Interaction of industrial instruments • Effect of Overlap • One workplace agreement at one time per employee • A collective agreement is of no effect on employee to whom AWA applies - regardless of timing • A second EBA only binds an EBA employee following nominal expiry • Award of no effect on an employee while workplace agreement operates • When an agreement is terminated (before another comes into place) employee reverts to AFPCS and any “protected award conditions”

23. Unions under WorkChoices #1 • Anti-union features include: • Objects of the Act (s.3) varied to delete encouragement of representative associations • Encouragement to AWAs which prevail over other instruments and restrictions on the making of new awards • Access to protected industrial action restricted and asymmetric • Secret ballot must occur before industrial action is taken • Industrial action in pursuit of multi-employer or pattern bargaining agreements cannot be protected, thus increasing costs on unions

24. Unions under WorkChoices #2 • Concept of employer greenfield agreement allows for unilateral determination of pay and conditions* • Could include new activities of an existing employer • Prohibited content effectively targeted against union participation in determination of workplace outcomes and processes • Restricting the unfair dismissals jurisdiction effectively marginalises unions • Additional restrictions on union right of entry • eg to be a ‘fit and proper person’ must have completed ‘appropriate training’ about the rights and responsibilities of a permit holder

25. WORKCHOICES PROVISIONS RELEVANT TO SKILL FORMATION • The Australian Fair Pay Commission • Responsible for setting and adjusting the • Federal Minimum Wage, minimum classification rates of pay, casual loadings and piece rates which previously formed part of federal and state awards. • These revised wage instruments are established as Preserved Australian Pay and Classification Scales (APCS) and form one of the five minimum employment standards in the Australian Fair Pay and Conditions standards

26. The Award system • Traditionally a complex specification of the legally enforceable entitlements of workers • In 1996 ‘simplified’ to 20 allowable matters (S.513) • (a) classifications of employees and skill-based career paths • Not included in the WorkChoices 13 allowable matters • Awards are not just overridden as previously, but excluded

27. Award Review Task Force • Role was to examine and report to the Government, with recommended strategies for: • rationalising wages and classification structures • rationalising federal awards • The Award Review Taskforce provided their final report to Government on 4 September 2006. Key findings: • There is a substantial diversity in approaches to wage and classification structures between federal and state industrial commissions (Ch 15, 369) • A specific classification rationalisation strategy has not been recommended (Ch 15, 371), which reflects the extent to which the diverse and complex classification structure identified by the Taskforce, is interwoven with the minimum wage adjustment approach to be adopted by the Fair Pay Commission (Ch 15, 374)

28. Mandatory content of Workplace Agreements • Nominal expiry date • Dispute settlement procedures • Protected award conditions* • certain provisions are automatically preserved unless expressly excluded or modified by the agreement • Australian Fair Pay and Conditions Standard** • Limitations on incorporation of terms

29. Why WorkChoices might not help with skill formation #1 • The ‘skills’ problem is often related to job quality not shortage: • Growth of individual agreements likely to be associated with reduced job quality • Job quality issues may require an industry wide response which is now unavailable • Skill shortages can now be offset with the importation of cheap temporary labour rather than increased training • Shift to individual agreements reduces scope for negotiation around skills: • Responsibility for skill formation shifts to employees in jobs at all skill levels • Problems exacerbated by the growth of labour hire; see also the impact of the Independent Contractors Act

30. Why WorkChoices may not help with skill formation #2 • WorkChoices makes it difficult to have multi-employer agreements: • Industry agreements more likely to provide training regimes, eg industry standards, levy schemes • Creates cheaper unskilled labour • Operation of the competitive process in some sectors • Suggests that skill formation is not a priority • Removing the incentive to provide training opportunities • Skill not included in awards as an allowable matter • Traditionally awards a vehicle for skill formation and workplace reform

31. Some unsettled issues • Jurisidictional debate over how the federal industrial relations laws apply to apprenticeships • Are state laws covering training agreements now overridden by awards and agreements in the federal jurisdiction under WorkChoices? • WorkChoices provides no specific requirement that trainees and apprentices be paid for off-the-job training • Unclear how the AFPC will provide for new types of apprenticeships and attracting more apprentices to areas of skills shortage