
Issue No 57		09 June 2000

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Economics

Millenium Work Ethics - A New Social Partnership?

By Russell Lansbury

The future of work in the twenty-first century will be both provocative and challenging, according to Professor Russell Lansbury.

In this article he focuses on the type of employment relations needed to meet the challenges of the next millenium, and to promote equity and efficiency in the workplace.

Social Equity in the Workplace

Australia is a nation which is increasingly divided at the workplace. The division is not only between the well-paid and the low-paid, but also between a diminishing number of workers who are in secure, career-oriented jobs and the increasing number of casual and part-time workers whose jobs are often precarious. According to the OECD, Australia has one of the highest rates of 'involuntary' part-time employment among its member nations. Almost one third of part-time workers would like to work more hours, according to surveys by the Australian Bureau of Statistics. Yet the number of persons holding more than one job has almost doubled in the past decade. This means that many people are working in multiple part-time jobs in order to make ends meet, while others have no paid work at all. Furthermore, almost half a million workers are classified as 'full-time casual' and have no access to 'community standard' employment conditions such as annual leave, sick leave and long-service leave.

Another division, not unrelated to the emergence of 'secure' versus 'marginal' workers, is between the 'over-worked' and the 'out-of-work'. A growing number of Australians are working excessively long hours, often including unpaid overtime, while others have no work at all. According to the Australian Bureau of Statistics, almost 40 per cent of the workforce worked an average of 49 or more hours per week last year, compared with only 28 per cent a decade ago. This places Australia among countries with the highest average working hours in the advanced industrialised world. The longest hours are being worked by the lowest and highest paid members of the workforce, often for different reasons, but resulting in similar levels of stress which are reflected not only in problems within he workplace but also in the home and community.

Income Inequality

A major source of division at work in Australia remains income inequality. Professor Bob Gregory at the ANU, a former board member of the Reserve Bank, has described the 'hollowing-out' of the labour market which has been occurring since the mid 1970s. According to Gregory's analysis, employment growth over the past 25 years has been strongly concentrated at the top and bottom ends of the earning distribution. During this period, one in three full-time jobs held by males in the middle 60 per cent of the earnings distribution were lost, relative to the growth in the Australian population. Gregory reports that 90 per cent of all new jobs in the past 25 years were to the either end of the earnings spectrum. The phenomenon of the 'vanishing middle', he argues, became even more pronounced in the 1990s. This means that many former middle class workers 'skidded down' into the low wage sector of the labour market, while many of the old working class slipped into unemployment.

Fragmenting Flexibility

Many of the labour market reforms which have been introduced in recent years, not only by the current government but also by previous ones, have contributed to the widening income gap on the grounds that this would improve flexibility and productivity. Certainly it can be argued that the previous industrial relations system was over centralised but have we really achieved a better outcome? During the latter part of the 1980s we moved from a system which has been described as 'managed decentralism' to one which might be described as 'coordinated flexibility'. The Australian Industrial Relations Act was amended to strengthen employment protection and to broaden the range of minimum entitlements to workers. Enterprise bargaining was extended during the early 1990s but a major role was maintained for the Industrial Relations Commission.

Now, at the end of the 1990s, we are moving towards a system of 'fragmented flexibility' with more decentralised, less regulated approach in which the role of labour market institutions has been further eroded. A small number of workers who have strong bargaining power through their unions are likely to do well in such a system but increasing numbers of workers will have to rely on diminishing safety net wage rises through the Industrial Relations Commission. This is likely to exacerbate the wages gap in the labour market. This is essentially taking us down the US path of low minimum wages and less social security which will lead to greater inequality in the workplace. The solution lies not in a return to the past, when high wages were achieved behind high tariff protection, but a better balance between equity and efficiency, achieved by a combination of strong social and economic institutions with high performance workplaces.

Efficiency in the Workplace

We are entering the twenty first century working longer hours under more unequal terms and conditions, but are we working smarter? While there are many ways in which our national performance could be improved, it is important to emphasise our strengths. A recent report by the World Economic Forum in Switzerland ranked Australia twelfth in terms of international competitiveness, ahead of countries such as Japan, Britain and several European economies. The Report emphasised Australia's ability to sustain high rates of growth in GDP per capital over the past decade, the general high quality of education and skills and increasing openness of the economy. However, there is no room for complacency. Investment in both higher education and vocational training has been falling in recent years, at the very time when a 'knowledge-based' economy is most needed. Recent ABS data indicate that there has been a sharp decline in the number of employers providing structured training in key industries - including manufacturing, construction, finance and mining. Traditional trade-based apprenticeships are at a five year low, with new training arrangements insufficient to replace those leaving the workforce. Many private sector and government organisations which previously trained and retained their own skilled tradespeople no longer do so. This raises the spectre of skills shortages for the long-term development of the nation.

The importance of knowledge and skills in a global economy has been emphasised by Robert Reich, former Secretary of State for Labor in the Clinton administration, in his book The Work of nations: Preparing Ourselves for Twenty-First Century Capitalism he argued that the primary assets of a nation are 'the skills and insights of its citizens'. Reich castigated American industry for failing to renew the nation's most valuable resource: its skills and intellectual capital. Yet if the US performance is lacking in this area, Australia's record is abysmal - and the US is soaking up the world's meagre supply of skilled people in new and growing areas such as information technology.

The US experience is instructive because leading thinkers and reformers have highlighted investment in skills and knowledge development combined with employee involvement in work reform as key elements in building greater efficiency and competitiveness. There are issues which were highlighted in the report Make or Break written by the Economist Intelligence Unit for the MTIA in 1997. This Report stressed the need for Australia to develop a strong industry policy which could achieve a balance between social and industry objectives. It criticised our failure to create full-time jobs, our loss of skills in research and development functions and our poorly balanced economy.

Poor Communication

These findings echoed the Australian Manufacturing Councils report on The Global Challenge: Australian manufacturing in the 1990s, which argued that Australian firms had been slow to adopt new systems of work design and production, that managers had not incorporated workers' ideas to improve productivity and quality and that they had not fostered worker commitment. The Karpin Report on Leadership Skills in Australia (1995) highlighted the lack of open-mindedness and rigidity towards learning; deficiencies in team work and empowerment of the workforce; inability to cope with differences; and poor people skills. Finally, the 1997 Australian Workplace Industrial Relations Survey highlighted the failure of managers to consult their employees at a time of momentous change in the workplace, despite the existence of formal mechanisms to do so.

Surveys of enterprise agreements have also shown that although they are required to include provisions dealing with consultative arrangements, these procedures are frequently ignored. Yet unless management is able and willing to engage the full potential of the workforce, and forge ahead with work reform, Australian industry will not achieve sustained world class performance.

Most workers, whether they are engaged in process work or the highest levels of R & D, want not just a job which will provide them with an adequate income but also one which gives a sense of fulfilment. Enlightened employers recognise that the combination of effective organisation of work and worker involvement are key sources of competitive advantage. Progressive unions realise that they need to meet not just their members' basic needs for decent wages and conditions but also engage their broader interests as well. It is noteworthy that the ACTU's recent report Unions@Work, which outlined at strategy for rebuilding unionism in Australia, emphasised not only the need to achieve better wages and safe, secure working life for their members but also sought to encourage active involvement in broader union activities. The Report noted that unions needed 'a flexible approach ... taking into account workplace culture and employee attitudes'. There is a growing understanding among both enlightened employers and unions that effective organisations must pay attention to the way in which workers' interests are engaged, as well as how their work is designed and performed. While there are a growing number of experiments with team work, employee involvement, total quality management and the like, the diffusion of these practices still remains uneven.

Building New Social Partnerships

A century ago, our founding fathers realised that the confrontation between labour and capital during the 1890s had been devastating for both sides and the way forward required a historic compromise. This was achieved through the establishment of what has become the Australian Industrial Relations Commission. Unions at the end of the 1890s were in a parlous condition with only 6 per cent coverage of the workforce, having been undermined by wide-scale unemployment, a disastrous series of strikes and an effective employer offensive. Yet forward thinking representatives of capital realised the need to rebuild working relationships with labour, and unions rebuilt their strength during the first decade of the century.

In their World Labour Report, 1997-98, the International Labor Organisation warned that established systems of regulating employment within individual nations are being threatened by global economic forces, collective bargaining coverage is shrinking and legal protection afforded to workers by the state is shrinking. The ILO has argued that total deregulation of the labour market and the dismantling of institutions designed to harmonise or achieve some balance between the interests of labour and capital is likely to lead to social dislocation and ultimately undermine economic prosperity.

What is required, in the Australian context, is a new social partnership between employers, organised labour and government. This will recognise the need for labour market flexibility but will also preserve collective bargaining as a primary means of achieving agreements between the parties on the broad parameters of the employment relationship. In the context of a liberal democratic society, this is a preferred approach to either party having a monopoly of power or the government regulating all aspects of employment. It is also likely to be a more effective means of achieving high trust relationships between management and employees. It is also a prerequisite for maximising employees' commitment to high performance work-organisation which will achieve high quality and productivity. While greater decentralisation of bargaining may be highly desirable in some circumstances, a more co-ordinated approach at the industry or even national level may be more effective in other contexts.

Government can play an important role in providing mechanisms for co-ordination of bargaining, as well as means for settling disputes, but the decisions about whether to bargain at the enterprise or industry level should be left to the parties. Legislative changes should be the outcome of tripartite recognition and debate rather than the imposition of one parties views on the other. The stark alternative is between a return to the 1890s conflicts which left a legacy of bitterness and division or a more enlightened consensual approach which embraces the contributions and views of all interested parties to achieve both equity and efficiency.

This is an edited version of a paper by Professor Russell Lansbury, Work and Organisational Studies, School of Business, University of Sydney.

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Issue 57 contents

Interview: Cocky Labor
On the eve of State Conference, Country Labor convenor Tony Kelly outlines how Labor is stealing the ground from under the National Party's feet.

Economics: Millenium Work Ethics - A New Social Partnership?
The future of work in the twenty-first century will be both provocative and challenging, according to Professor Russell Lansbury.

Politics: Extracting the Digit
Labor's federal communications spokesman Stehpen Smith outlines the Party's position on the controversial datacasting legislation currently before Parliament.

History: Hot Off the Press
Check out what's in the latest issue of Labour History - A Journal of Labour and Social History,

International: The East Timor of Africa
Nobel laureate Jose Ramos Horta will this week tell a Sydney audience of the parallels between East Timor and the nation described as the last colony in Africa - the Western Sahara.

Environment: MUA Snail Men Honoured
Brisbane wharfies Lehi Munday and Mal Monro look an unlikely Watson and Sherlock double, but their keen detective work has helped win the Southern Queensland MUA Branch two national environment awards.

Satire: Howard Says 'Sorry'
In a startling apology to the Aboriginal community, Prime Minister John Howard said last night he was deeply sorry that he turned up to the Corroboree 2000 celebrations.

Review: Front Stage and Pulp Fiction
The Waterfront War has made the transition from industrial showdown to cultural icon. Now it's inspiring artists.

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