10 years ago I presented a paper at an IERA Employment Relations Conference held at Southern Cross University. The theme of that paper, ‘Neither the one nor the other‘, was that neither the (foreshadowed) Workplace Relations Act of 1996, or a return to old-style labourist collective bargaining, would resolve Australia’s adversarial IR culture My plea was that, in spite of real or imagined cultural barriers, attempts should be made to foster workplace democracy and employee share ownership. Ten years later, in the wake of the WorkChoices legislation of 2005, that theme is even more applicable. In 1996, referring to a Business Council of Australia report ‘Working Relations: a Fresh Start for Australian Enterprises’, I concluded:

“Working Relations suggested that there would have to be a ‘fresh start’. Presumably the Coalition proposals are viewed by Messrs Howard and Reith as just that. However, in wishing to reduce the power of the centralised system…the entire approach aims at strengthening management at the expense of employees. The power relationships between owners/managers and individual wage earners in a business enterprise are, in most cases, not those of a level playing field. Far from it. Unless such crucial issues are addressed the decentralisation of employment relations to the enterprise will be resented and fought all the way, not just in the Senate but on the streets and in the workplaces themselves as well. The employment relations’ crisis has been simmering for quite a while now. It was not resolved by the ALP’s piecemeal reforms. The opportunity the ALP had in this area was passed up. Its record as a social democratic party was thereby tainted, to say the least. The Coalition’s alternative, if it were to become law, is likely to fail in different ways….Australia’s IR system is still in need of a complete overhaul. Neither the one nor the other approach comes to terms with the need to effectively reorganise workplace employment relations. For that to happen the concept of workplace democracy needs to be revisited”.

Clearly, it was not. In fact it was a false start. In 2005 the Howard Government attempted to put the IR clock back by more than 100 years. It is not necessary to address WorkChoices’ horrendous provisions here – that has already been done by the ACTU in two major demonstrations, the Rights Campaign and by several expert commentators. In fact some of the Act’s strongest critics have a conservative, pro-business background, arguing that the ‘reforms’ and IR deregulation would not even do the economy any good. Similar conclusions about ‘deregulation’ have been made recently by the OECD (Swan, W. LaboureHerald, 16.06.06). However, what concerns us here is the response by the Australian unions and the ALP. Just “ripping up the legislation” (Beazley, ALP NSW Conference 11.06.06) and turning the clock back some 15 years instead of 100, surely is not enough. It may put the IR humpty dumpty together again but not for long. It may be enough to win the next election but it won’t change the IR culture. That is where the challenge lies for Mr. Beazley and the ALP. Where and when did it go wrong and is it really necessary to go back there to meet this challenge?

Thanks to Sean Leahy.

The view that Australia is an egalitarian society is contradicted by its adversarial IR system. It’s built around “bosses versus workers, and workers versus bosses”. Originating from the British IR culture and reinforced by class ideology, as well as by the associated two-party tradition, the gulf between capital and labour has always been huge, tempered only by the 1904 Arbitration and Conciliation Act and the concept of a fair wage. European social democracies have not suffered as much as Australia from that British IR tradition and the reinforcing two-party system. Pusey (1991) and Beilharz (1994), among others, have argued that the social and bureaucratic limitations for workplace democracy to emerge in Australia, at least still in the 1980s, were apparently insurmountable. Perhaps for that reason many of the sensible recommendations in the ACTU’s Australia Reconstructed (1987) report soon went into the “too hard” basket. Or could it be that the ALP’s political will and insight were simply lacking? I would suggest the latter.

Although there are competing interpretations of that commendable report, as Stilwell (1997) has shown, the opportunities it offered to the Hawke and Keating Governments were missed. As Stilwell put it “Oops, they missed the turning point”, the fork in the road, in many ways. The report was produced following an Overseas Mission to Western Europe in 1986, representing the ACTU and the Trade Development Council. The group visited five countries, Sweden, Norway, West Germany, Austria and the UK. One purpose was to gather relevant information about restructuring, industrial democracy and training policy in those countries with a view to recommending policies for Australia. They could have included several other countries: eg. The Netherlands, Spain, Belgium, Denmark. The Mission recommended a series of far-reaching reforms to the Hawke Government. Some of the training recommendations had an impact but the crucial recommendations on workplace democracy were ignored by the Hawke Government whose employment relations’ agenda was increasingly influenced by the New Right. The entire network of workplace committees, works (enterprise) councils, supervisory boards and employee directors, embedded in the European industrial legislation from the 1950s onwards, fell on deaf ears. Mr. Hawke’s view was that the industrial relations culture in Australia would not allow a legislative program for industrial democracy and he suggested that this could only be achieved on a voluntary basis. There were in fact a number of such “best practice examples” in Australia — sadly these were also ignored.

The Howard Government has also missed opportunities which could have enhanced workplace democracy and phased out the highly counterproductive, dysfunctional, archaic and costly adversarial IR culture. In a surprise move, the Howard Government commissioned the Nelson Inquiry into Employee Share Ownership (ESO), which reported in 2000 (Shared Endeavours), providing 45 modest recommendations to boost Australia’s very low level of employee share ownership. It praised ESO throughout and recommended its promotion as well as a laudable set of targets, from a low (mainly managerial and executive) 5% target in 1999 to a (broad-based) 11% target by 2009.

Apart from all its other flaws, there is nothing in the new legislation to promote ESO. If it was the intention to enact “Stand-alone” legislation, it has happened. Why organise such an Inquiry at all? ESO is not just about the management view that share ownership increases responsibility and risk taking – it is also about the employee’s desire for increased rights, rewards, stability and employment security. It is about building staff loyalty and skills, and about co-ownership rather than easy dismissal and downward pressure on wages. ESO has been quite successful and widespread in the US, and is now gaining ground in Europe as well, following the two PEPPER Reports (Promotion of Participation by Employed Persons in Profits and Enterprise Results ) of 1991 and 1996. The new Employee Ownership Act in Belgium (October, 2002) was negotiated with the union movement there and has the full approval of the unions.

Australia is a full generation behind Europe and the US in both workplace democracy and employee share ownership, a huge gap that should and can be bridged. All the research on these developments abroad is overwhelmingly positive. This is the direction is the ALP should now pursue if it is serious about leadership and Government in 2007.