Nov 2, 2011

Delegitimising unions in the great game of labour v capital

As voters become more estranged from corporations and economic reform, neither labour nor capital is responding effectively to the sentiment.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

It may not look it, but there are strong links between the Occupy protests here and overseas, and more formal political debate and public discourse, which naturally has been dominated by the Qantas dispute. And not just in the vague sense that both deal with the economy, or capitalism, or markets. Let's be clear about the long-term business agenda in Australia regarding industrial relations. It's an agenda aimed not at improving productivity -- as I and others have incessantly showed, the last round of IR reform led to a drop in labour productivity -- but a more self-interested one aimed at reducing labour costs and neutering unions. Business is quite tolerant of trade unions, as long as they do nothing that inconveniences business or increases labour costs. They can even be a useful form of alternative pressure on governments when industries set about rent-seeking. Neutered unions are quite acceptable. Real ones, that aggressively represent the interests of their members, aren't. And ones that actually take industrial action, in particular, are regarded as outright enemies of business. This is the ultimate thrust of IR reform -- to pathologise industrial action, however legal, however justified. The point is to frame the right to withhold labour as an illegitimate form of economic vandalism, no matter what the circumstances. Thus the incessant business complaint that the Fair Work Australia framework is too "pro-union" because it allows unions to take industrial action once a number of legal hurdles have been cleared. And the logic of Qantas's actions on the weekend was to break free of the normal industrial dispute provisions under which it was operating, in which unions could continue to take wholly legal industrial action which (as Fair Work Australia found on Sunday night) did not pose a significant threat to Qantas. This is business's particular self-interested contribution to the liberal economic reform project. The IR component of that project, starting in 1993 with the Keating government's provisions for enterprise bargaining and accelerating in 1996-97 with Peter Reith's reforms to deliver individual contracts, was to remove the impediments of a centralised bargaining system from a modern, open economy, allowing enterprises to respond to competition more flexibly. Coupled with globalisation, deregulation and corporate tax cuts, the reform project has delivered a huge increase in the corporate sector's share of national income -- at the expense of labour, as this graph from the Australian Council of Trade Unions shows:

The wage share of national income in Australia has only recently come off historic lows. But on this we're no different from the United States or the United Kingdom, where wage share has also dropped over the last three decades to historic lows of around 50%. Australian business clearly doesn't believe the wage share has fallen low enough. That's what drives its agenda to go further and undermine collective bargaining, a key part of which is the right to withhold labour, something businesses have been trying to do since the time of the Combination Acts in the early nineteenth century. Australia remains, for its corporate leaders, a "high wage" economy that struggles to compete internationally. For globally-mobile capital, there's always a lower-wage country somewhere else to move to. That same global market, however, has been the justification for a massive increase in executive remuneration, which as Prof David Peetz has shown, accelerated in the 1980s but then really took in the late 1990s.

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135 thoughts on “Delegitimising unions in the great game of labour v capital

  1. GeeWizz


    [“The Australian Federal Police are looking into an act of alleged sabotage involving a Qantas plane.

    The plane was undergoing maintenance in Brisbane when the alleged incident occurred last week, before Qantas grounded its entire fleet on Saturday during an industrial dispute.

    It is understood that after engineers returned from a lunch break, they noticed several wires had been cut on an in-flight entertainment system, The West Australian reported this morning.

    Read more:

    Looks like Qantas are vindicated as grounding all aircraft as a safety measure after announcing the lock-out.

    The unions are a safety and security risk.

  2. Mel Campbell

    Wow, a single alleged incident that’s still under investigation is enough to brand unions, generally, “a safety and security risk”?

    Probably better to view ‘safety’ as a canard that both sides of the dispute are attempting to harness, as clearly nobody wants planes dropping out of the sky.

    What I liked about Bernard’s story was that it pulls back to examine the bigger picture.

  3. fredex

    Excellent article Bernard.

  4. Jimmy

    Geewizz – “Looks like Qantas are vindicated as grounding all aircraft as a safety measure after announcing the lock-out.” Do you know who cut the wires? And the cut wires were to in flight entertainment, hardly a safety risk. Also remember that it was the engineers who reported the damaged wires to Qantas.

    The one point I will make is that Australia, unlike the US still has had real wage growth over the past 30 years, in no small part due to union representation.

  5. SonofMogh

    Is it just me or does Geewiz sound just like Truthie.

  6. CTar1

    The problems with the 767’s entertainment wiring could have been done by anyone – just like the Alan Joyce ‘death threats’.

    What are ‘the Combination Acts’ ? (A spell check ‘problem’ on the Harvester case?)

  7. ace ventura

    if julia gillard didn’t cut the wires herself i bet she knows who did or even ordered it. even if thats not the case she should have done something to stop it happening in the first place just another labor stuff up!

  8. R T

    I am new to Crikey but I am guessing that Geewizz is a troll so – enough said.

    This is an excellent piece Bernard. Thank you and I agree that the unions are not engaging well enough the ‘collective’ view and voice and thus allowing corporations to do what they do well, lobby the individual. Divided we fall and they know it!

    Ruth Townsend

  9. Jimmy

    RT – If we look at Australia’ recent history (last 30 years or so) in IR we will see that in the late 70’s early 80’s unions probably had too much power and during the Hawke and Keating years the balance was moved more towards the middle. More recently Howard and big business tried to move the power too much towards the corporations and the unions were able to get this over turned and the power is now back towards the middle. Over this time we have had a sustained period of continuos economic growth, a sustained period of low unemployment, a sustained period of low inflation, real wages growth and an improvemtn in the GINI coefficient (that measures wealth distribution) to a point where we a among the best in the world.

    If you compare this with the US where Reagan smashed the Unions in the early 80’s and the now have about 8% representation you will see that we appear to have a good balance of union and corporate power benefitting everyone.

    Plus we need those corporations to make money to fund our super.

  10. Michael


    Man you’re unbelievable. 2011 and still fighting the revolution. Guess that’s what gives dryed up baby boomers like you some meaning to the last years of your miserable, hash riddled lives. So uncool. So passė. So predictable.
    By the way, is Crikey a union workshop? But you it’s not, Beecher is way too competent for that. So how do you negotiate your coin or are you paid by barter?

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