
Issue No 72		06 October 2000

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Politics

Industrial Democracy for Australia

By Glenn Patmore

Glenn Patmore argues we need new forms of employee representation in the workplace to broaden employee participation.

Workplace democracy and public debate

As Australian citizens we have long accepted that we have a right to participate in decisions by government at the national, State or local levels. We take it for granted that we have a right to vote or stand for parliament, to speak freely, to form political organisations and, if necessary, to protest and to contact our representatives.

While we understand that we have rights to participate in government decision- making, we have heard very few claims that we should have a similar right to participate in workplace decision-making. Very little public debate has taken place in our newspapers or other media regarding the extension of democratic principles to the workplace.

Benefits of employee participation

In contrast to this absence of public comment, voluminous industrial relations literature has argued that schemes of industrial democracy have significant benefits for employers and employees. Participation at work gives employees the opportunity to promote their interests and enhance their personal development. Schemes of employee representation have also been shown to promote both productivity and efficiency.

Employee Representation in the Australian Industrial Relations Context

Generally, Australian employees and employers do not currently enjoy the very considerable benefits of representative participation at work. This is largely because, until recently, employee representation has been seen as the domain of unions in Australia. But, with the decline in union membership, union representation of employees' interests has correspondingly declined. It is significant to note that trade union membership Australia-wide was 51.1 per cent in 1976 and 25.7 per cent in 1999. Consequently, nearly 75 per cent of employees are not represented by unions. To those of us who support unions, this is a very disturbing figure.

Furthermore, and similarly alarming, is the data that indicates that workplace decisions are increasingly being left to employers and managers. In fact, empirical studies of workplace relations indicate that the level of joint decision-making in Australia is poor. It is therefore evident that a serious gap in employee representation in workplace negotiations and corporate decision-making exists in Australia. This lacuna is most apparent as a significant problem when considered in contrast to other countries which have more highly developed forms of employee consultation and participation, an issue which I will address shortly.

In this paper, my central argument is that new forms of employee participation need to be developed to complement and operate independently of union collective bargaining and that this policy should be enthusiastically embraced and rigorously promoted by the Labor Party. In proposing a new form of representative consultation in the Australian workplace, I draw on European Industrial experience because it has a long history of diverse forms of employee participation mechanisms, from which we can learn important lessons.

Employee Representation in Europe: The European Works Council Model

A particularly significant development in Europe has been the introduction by the European Union of its European Works Councils Directives (1994 & 1997), requiring the establishment of a European Works Council (which I will refer to as the EWC) in larger, multinational, enterprises.

Briefly, a EWC is a compulsory and elected committee of employees which has the right to meet with central management to discuss the structure and economic and financial situation of the company. The EWC scheme is not a union-based scheme, nor does it preclude union members running for election to EWCs. EWCs provide an additional and new form of employee participation in workplace decision-making designed to complement, not replace, union schemes of collective bargaining already in existence.

Furthermore, the EWCDs are binding on member and associate member States. All 18 States, comprising a range of industrial cultures and legal systems, were required to implement its provisions by 15 December 1999.

Assessment of the European Works Council

Padraig Flynn, who is the European Commissioner for Employment and Social Affairs, and who has responsibility for overseeing the implementation of the directives recently commented on the viability and efficacy of EWCs throughout Europe. He noted the adverse economic consequences of the absence of employee consultation and representation in European workplaces. Flynn stressed the importance of the workforce being engaged as an integral and formal part of the process of constant change and restructuring necessitated by globalization. Flynn has maintained that if the workforce is not consulted in a formal way, it will create:

'[A]t worst, a culture of conflict, at best a culture of cynicism. To nurture globally productive companies and workforces, we must aspire to quite the opposite effect. We need to create a culture of anticipation, to actively engage the workforce in the process of change.' (Flynn 1999)

The EWCDs seek to create a new and positive balance between flexibility and security. Again according to Flynn, the message is clear: 'Mechanisms for proper worker involvement can increase the flexibility of the business environment in which firms operate. And they can offer workers a sense of confidence that they will not emerge as the losers in the restructuring process and that they have a stake in the future of that business.' (Flynn 1999) Flynn has also stated that by April 1999 almost 600 corporations had established EWCs by means of company agreements. I believe that this development represents a very considerable transformation of workplace relations in Europe. Formal mechanisms of employee consultation and representation are thus seen as a focal point for the future development of labour relations law in Europe.

Towards a scheme of industrial democracy for Australia

The EWCDs and works councils legislation in EU countries (such as the Works Councils Act in Germany) provide realistic, workable and functional legislative models of representative consultation for Australia. Nevertheless, as with any overseas model, it will be necessary to adapt them to fit in with Australia's industrial system. This task will require careful consideration and widespread consultation. For present purposes, I will focus on the views of the union movement and the proposed policy of the Australian Labor Party.

Unions

The union movement is likely to provide a variety of responses to a proposal for works council legislation in Australia.

Some unions may apprehend only dangers and oppose such a scheme. Such Unionists may perceive a legislative scheme as dangerous if it poses a threat to their existence. Under such a scheme employers might try to exclude union-based collective bargaining by introducing new mechanisms of workplace participation that they are able to control. This might or might not be a valid concern, depending on the details of the actual proposal adopted. However, I do not believe that an EWC style scheme, which aims to complement union-based employee organisation, would pose such a threat.

Moreover, representative consultation may be seen by unions as a positive measure in an otherwise hostile industrial relations environment. For the union movement, the status quo is no longer an option. Union membership is continuing to decline and has already dropped to its 1912 level. New and innovative measures such as works councils hold out the prospect of increasing union membership and rejuvenating the union movement. For instance in Germany, works councils have strengthened the union movement because unions have actively participated in these structures, training employees to be works councils representatives.

Works councils would have the effect of providing unions with a legally guaranteed basis for workplace organisation that is highly visible at the enterprise level.4 Having union members participate in works councils would aid the establishment and maintenance of an articulated union movement. Unions could still maintain a central coordinating role at the sectoral level, and works councils and collective bargaining could meet the needs of members in individual enterprises. Accordingly, the Evatt Foundation in its Union 2001 publication recently proposed a system of works councils for Australia.

Obviously, the support of unions for any such proposal will be of vital importance. Equally important will be the policy adopted by the ALP.

The Policy of Australian Labor Party

The Labor Party's industrial democracy policy is found in paragraph 97 of chapter 8 of the 2000 Party Platform. This States:

The following principles should be pursued:

the right of workers to meaningful participation in decision-making in the workplace about industrial matters;
the right of workers and their representatives to be consulted before decisions that will have significant effect on employment or work generally are implemented;
the extension of industrial democracy and other modern forms of work organisation in major enterprises and workplaces;
encouragement of employee share ownership programs; and
assistance for the development of cooperatives.

This policy gives us a reason to be cheerful. Certainly, a proposal to consider the adoption of works councils would fall within the scope of the policy as outlined in points 1 to 3 of paragraph 97. Although, the mention of the word "industrial" in point 1 may be unduly narrow. Workplace democracy is asking for something more than employees having a say about industrial matters; it aspires to giving workers a say over the commercial ends - market investment and future development of the company.

Furthermore, this policy also provides reasons for pessimism. To put the point boldly and bluntly, there is no express commitment by the Labour Party to consider the introduction of schemes of industrial democracy, in the event of it winning government.

The 2000 platform contains no specific proposals or programs to review current arrangements or to establish a programme to introduce new forms of industrial democracy. Nor does it mention the need to enact legislation. In other words, the 2000 industrial democracy policy, couched in principles and other generalities, contains no standards against which to measure progress. No standards means no commitment.

By way of comparison, the industrial democracy policy (para 97) is in stark contrast to the fair industrial relations system policy (paras 70-81) that also appears in chapter 8. Unlike the industrial democracy policy, the fair industrial relations policy contains a detailed proposal to introduce new industrial relations legislation.

It follows that, had the industrial democracy policy mentioned specific programs, standards and positive commitments, it would have heralded a far brighter future for the establishment of democracy in Australian Workplaces.

In closing, it is necessary to comment more generally on the 2000 industrial policy. The platform can be described as a move back to the adversarial form of industrial relations. One commentator has favorably characterised this shift as the "Pendulum swings back with ALP IR Policy". For instance, the platform proposes the abolition of the Australian Workplace Agreements, which may not be a bad thing.

Nonetheless, and most importantly, I strongly believe that the party must look forward to new forms of employee participation. That co- operative forms of representation must play a role to develop more democratic, more productive and more secure workplaces in the 21st century.

Glenn Patmore is a Lecturer in law, University of Melbourne, a Member of the Centre for Employment and Labour Relations Law, Convenor, Australian Fabian Society Research Committee and Co-editor of, and contributor to, New Voices for Social Democracy, Labor Essays 1999-2000. He is a member of the Australian Labor Party.

This paper was delivered at the 'Unchain My Mind' Forum Organised by Pluto Press Australia and the Australian Fabian Society at Trades Hall, Melbourne , 27 July 2000

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Issue 72 contents

Interview: Taking It To The Union Busters
ACTU Assistant Secretary Richard Marles talks to Workers Online about turning back the anti-union sentiment growing in the business community, responsible unionism and the sense of fun to be found at the ACTU.

International: The White Knights
The International Labour Organisation has become the great hope for those fighting to give globalisation a human face. Australian Bob Kyloh is one of those working with trade unions within the ILO to make it happen.

Politics: Industrial Democracy for Australia
Glenn Patmore argues we need new forms of employee representation in the workplace to broaden employee participation.

Unions: Behind The Scenes
In a small office at Homebush Bay, as the world focused on all that was positive about our games, Unions 2000 and SOCOG officials worked tirelessly to ensure that no worker was ripped off. Chris Christoudoulou reports.

Satire: Parade of Icons �Could Have Included Even More Ex-Aussies� Say Critics
The selection of Greg Norman, Paul Hogan and Elle Macpherson to represent Australia in the �Parade of Icons� during the Closing Ceremony of the Sydney Games last night has prompted a storm of complaints from other famous former Australians.

Review: Elliott Smiths Figure 8
Smith is basically the secret love child of the fab four and it�s so blatantly obvious. That�s not a bad thing because one thing Lennon and McCartney were reknown for was there ability to pen catchy tunes.

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