ACTU pushes for “Qantas clause” in Fair Work Act

As the ACTU prepares for battle and business groups ramp up the rhetoric, the cooperative culture that allows Australian workplaces to innovate is at risk, according to a productivity expert.

In a policy document tabled at ACTU conference yesterday, the union body pushed for the introduction of a “Qantas clause” in the Fair Work Act, which would allow Fair Work Australia to end employer lockouts without terminating all industrial action.

“Fair Work Australia should not be compelled to cancel a union’s industrial campaign as a reward to a significant employer threatening to hold the nation’s economy to ransom,” the policy states.

The unions also want a reintroduction of pattern bargaining, where a policy made in one workplace can apply in another. Pattern bargaining was banned under the Howard Government’s WorkChoices legislation, a ban upheld in the Fair Work Act.

In addition, the body seeks greater ability for unions to organise to strike without seeking an employee ballot, and a greater ability to enter workplaces.

Businesses are also getting increasing testy. Recent months have seen a notable increase in business rhetoric and action over the difficulties posed by the industrial relations regime. Qantas chief Alan Joyce has vigorously defended his decision to ground the airline as a response to the rolling union campaign. Last September, former BHP chairman Don Argus blamed the industrial relations regime for declining productivity. And small businesses, particularly in retailing and hospitality, have become increasingly vocal about the prohibitive effect of penalty rates.

Paul Gollan, a professor of marketing and management at Macquarie University, has a different take on the whole debate: he tells LeadingCompany the psychological impact of such conflict is likely to be part of Australia’s declining productivity.

“The biggest change in the Act is that it created an ‘us and them’ adversarial environment,” he says. “That environment and culture in many workplaces, that’s where the real challenges are.”

Australian labour productivity declined to 84% that of the US in 2010, the lowest level since the 1970s, as reported by the Grattan Institute in early 2011. This most certainly isn’t just due to industrial relations, research shows.

While it’s far too early to conduct an analysis of the effect of the Fair Work Act on productivity in Australia, economic research overseas has found no clear link between the level of union involvement in industrial relations and productivity.

But productivity studies are typically conducted at a national level using data from decades at a time, leading critics to argue that such research neglects to look at how productivity and industrial relations play out on a more micro level.

Gollan says there is clear evidence companies are most innovative, and therefore most likely to come upon ways to boost productivity, when employees and managers are able to try out new work practices in a creative, supportive environment.

It’s this that is most threatened by the adversarial nature of the current industrial relations regime.”

“For good workplace relations, there needs to be a positive culture,” he says. “Productivity can only be really enhanced by people coming together in positive workplaces, with a degree of predictability, low risk and added value,” Gollan says.

“The simple fact that people are operating in an adversarial environment has created an atmosphere of risk and unpredictability.”

“Employers take risks when investing… so if risk increases, then that will quite obviously impact the future value of the business. Employers aren’t going to invest in training, skills, infrastructure, machinery, IT and so forth. There’s a knock-on effect that’s quite broad.”

Many were hopeful the Fair Work Act would provide more balance to the workplace, Gollan says.

“Before the Fair Work Act, the pendulum was obviously too far to the right, and that was universally agreed by the electorate.”

But Gollan says the union movement has used the change in government, and the Fair Work Act, as an opportunity to flex their muscle, leading many to discuss what the limitations on the movement should be. For example, he says there is a worrying trend of unions challenging “managerial prerogative”, leading to issues previously decided by management about business strategy going to industrial relations tribunals. He cites the Qantas dispute as a clear example of this.

“In the immediate to long-term, that will have an impact on productivity.”

The Government has appointed former RBA board member John Edwards, as well as former judge Michael Moore and workplace academic Ron McCallum to conduct a review of the Fair Work Act. But when asked what reforms he would like to see come out of this, Gollan says he believes the whole act needs a rethink, as when it comes to productivity, its focus is counterproductive.

“The current act doesn’t do enough to highlight the cultural aspect of workplaces. There’s plenty in it for lawyers, but far less for those trying to create positive cultures.”

Dr Gollan will be presenting on this topic at the Centre for Economic Development of Australia ‘Movers and Shakers – Change for a productive workplace’ seminar. It will be held from 11am-2pm on May 22, 2012 at the Shangri-La Hotel Sydney.