The Future of Trade Unionism in Australia

In the early years of Australia’s history, legislation was inevitably weighted in the favour of business and to the detriment of employees. Initially trade unions were suppressed on the basis of being a “restraint on trade”. In general, the law required absolute obedience of employees to the whims of employers. Any act of disobedience could be subject to criminal penalties and if found guilty the relatively powerless employee could be subjected to a jail sentence of hard labour.

The overarching legislation was a hand-me-down from the British legislature, called The Master and Servant Act. This legislation contained laws that provided the employer with draconian rights over the employee. In the 1800’s employees typically worked up to 14 hours a day and six days per week. There were no leave provisions and employers could sack employees at will.

In the second half of the nineteenth century labour organisations began to learn how to manage their collective activism to gain benefits for workers. It took many decades to come to fruition, but perhaps the crowning achievement of the fledgling union movement was the attainment of the 8 hour working day. The eight hour day marches proclaimed the desire of eight hours of work, eight hours of leisure and eight hours of rest. The eight hour day ideal was achieved for skilled workers in Australia in the 1840’s and 1850’s. Most of the rest of the workforce were unable to achieve this result until early in the twentieth century. (The celebration of the eight hour day for workers is the rationale for the Labour Day holiday in Australia.)

The initial trade unions formed around shearers, stevedores and mineworkers but very quickly spread to cover almost all the blue-collar workforce. The rapid expansion of the Australian economy in the late nineteenth century resulted in labour shortages and, as a result, higher wages for workers, and particularly for skilled workers.

Employers, seeking to avoid high wages, were motivated to import Chinese workers and later, to meet the specific demands of the burgeoning sugar industry, Pacific Islanders. The Labour Movement’s response to this threat to their high wages caused them to influence Australian politics and resulted in legislation to prevent the immigration initially of Chinese workers to Australia. Eventually that restriction was enhanced to include all non-white races. The Immigration Restriction Act of 1901 cemented in place what came to be known as the White Australia policy that prevailed until it was dismantled by the Menzies and Holt Governments between 1949 and 1966. This has been a continuing theme of the trade union movement and even today trade unions attempt to curtail the importation of workers on temporary visas to meet skill deficits in the Australian workforce.

But although the Labour Movement was successful enough in its attempts to prevent the import of foreign labour, it rankled at its failure to have a broader influence on politics in the late nineteenth century. As a result, after Federation in 1901, trade unionists sought to be elected in the various parliaments of Australia. This established a new political movement out of which the Labor Party was formed. Subsequently politics became largely a struggle between the socialists of the Labor party and the conservatives.

The success of this movement culminated in the 1910 Federal election when Labour under the leadership of Andrew Fisher delivered the first national Labour majority government in the world. The Fisher government was successful in delivering to Australians such social reforms as old-age and disability pensions, a maternity allowance and workers compensation. The working class of Australia through their political arm had begun to provide protections for the poor and the disadvantaged.

The Australian Labour movement asserted itself during the First World War. Aided by the influential voice of the Catholic Archbishop of Melbourne, Daniel Mannix, they were able to defeat two referendums which sought to introduce compulsory conscription. As a consequence it was only South Africa and Australia of all the Commonwealth countries that eschewed conscription in order to support the efforts to resist the German assault.

But by the end of World War I, a resurgent union movement had initiated a number of major industrial and political actions which alarmed governments and resulted in a swathe of legislation seeking to curtail the power of unions.

In the early 1920’s, influenced by the international organisation, Industrial Workers of the World, the Communist party of Australia was formed by radical unionists. It had particular support from the Miners Federation and the Waterside Workers Federation of Australia.

In the face of repeated disruptive industrial action, the Commonwealth Government passed legislation to curtail union activity. In response to this threat to their industrial power the unions formed a permanent, national trade union organisation, the Australian Council of Trade Unions.

But finally the bubble burst. Unemployment became rife, culminating in the Great Depression in 1929 when formal unemployment rates rose above 30%.Union power is always enhanced when the economy is growing and the demand for labour is strong. (This is a fact that many in the union movement have yet come to understand. They often persist in pursuing unwarranted benefits for their members when the economy is weak which puts a brake on growth and reduces employment.) Consequently the seemingly inevitable march towards higher wages and better conditions was suddenly halted and even, on occasion, reversed.

In 1929 timber workers participated in a major strike. As a result Justice Ludkin authorised a new award for the timber industry which increased the working week from 44 to 48 hours and at the same time reduced wages.

Despite all this the union movement continued to grow and by 1931 union membership reportedly covered 47% of the workforce.

But as World War II approached trade unions were becoming to be more generally active on the political front. In Port Kembla in 1938 the trade union movement sought to prevent pig iron being loaded at the wharf on to a ship bound for Japan. The Japanese had invaded China and the unions resolved to take strike action to prevent such exports because they might result in the manufacture of weapons to aid the Japanese invasion. The strike lasted more than 10 weeks. And it was of course the incident that caused then Attorney General, later to be Prime Minister, Bob Menzies the nickname of “Pig Iron Bob”!

After World War II there was increased sympathy for the Soviet Union from the labour movement. As a consequence there was a resurgence in the Communist party of Australia (CPA). The CPA  as a result began to infiltrate more substantively the trade union movement. There were a number of significant strikes after the war provoked by the CPA.

But the influence of the CPA was relatively short-lived. The rejection of the communist ethos was led by the Catholic Church and pursued by such Catholic aligned organisations as the National Civic Council led by Bob Santamaria.

The 1960’s and 1970’s was a period of growing militancy. It was a time of high union membership with manufacturing still prevalent and mining employing large numbers. With growing numbers of strikes and unions competing for membership productivity declined. Much of the loss of productivity resulted not only as a result of strikes and “work to rule” campaigns but also as a result of inter-union conflict as unions competed for members. This resulted in debilitating demarcations which tightly prescribed what work individuals were allowed to do on the work site, thus reducing productivity.

Concerned that falling productivity was likely to reduce our standard of living, in 1984 the Hawke Labor Government negotiated the Prices and Incomes Accord with the ACTU. This initiative resulted in the deregulation of a number of markets including the labour market. It also led to many union amalgamations which simplified industrial negotiations.

[As a manager in the electricity industry, I was used to negotiating with 8 or 9 unions on the sites I managed. After the union amalgamations facilitated by the ACTU I had only to deal with 3.]

Under the Keating Labor government in 1991 a new negotiating framework was put in place. As a consequence enterprise bargaining was introduced. This ended a century of centralised wage-fixing in Australian industrial relations. Enterprise bargaining was designed to have the management of an enterprise negotiate an agreement for a specific enterprise such that productivity gains made might be passed back to the workforce in terms of higher wages.

In latter years, enterprise bargaining has become discredited. To begin with productivity gains of any consequence are hardly ever pursued and many unions boast of negotiating a wage increase with no productivity concessions at all. As well most enterprise agreements have a duration of around three years. Negotiations are often protracted and cause ill-will between employers and employees. As a result, after an agreement is reached, an employer’s relationship with employees has barely time to settle down before the next set of negotiations has to begin creating more rancour and divisiveness.

The next chapter in the development of industrial relations in Australia occurred following the John Howard led Coalition Government of 1996. With the encouragement of the Government, the stevedoring company Patrick Corporation set out to improve the productivity of the nation’s wharves which performed very poorly against international benchmarks. Patrick’s CEO, Chris Corrigan attempted under the guise of company restructuring to dismiss a sizeable part of his workforce. Finally a settlement was negotiated between the employer and the Maritime Union of Australia which provided some productivity gains.

In 2004 the Howard Government was re-elected but this time with an absolute majority in the Senate. In order to take advantage of these fortuitous circumstances the Government moved to curtail the power of unions. The Work Choices legislation was passed which aided the employers to strike non-union agreements and to deal more easily directly with the workforce. Unfortunately some employers abused their new powers to the detriment of workers. This resulted in a public reaction which resulted in the Howard Government’s defeat in the 2004 election.

The incoming Labor Government under Kevin Rudd dismantled a great deal of Howard’s legislation swinging the pendulum back in the favour of unions.

Since the election of the Abbott and Turnbull governments apart from the re-establishment of the Australian Building and Construction Commission, and setting up the Registered Organisations Commission the government has shown little interest in further industrial reform.

But the difficulty confronting unions continues to be declining membership. In the latter half of last century union membership was consistently around 40%. But by 1997 it was 30%, and by 2006 20%. Today membership in the private sector is a paltry 11%. Alarmingly for the union movement membership for workers aged under 25 is a mere 7%. This trend is not confined to Australia but appears to one degree or another across the industrialised world. (Decline in union membership in New Zealand for example has been even more dramatic than in Australia.)

Some of the aspects of this general decline are easy to understand. If I asked you to imagine a typical union member you would probably picture a blue collar worker – a factory hand, a tradesman or some such worker.

But as I have pointed out in previous essays the blue collar workforce has considerably diminished over what it was in the peak days of unionism. Manufacturing has vastly declined. Automation has put paid to many unskilled or semiskilled jobs.  Many tradesmen are now aspirational and run their own businesses rather than work for an employer. Employment has grown most in service industries so that a unionist is more likely to be a clerk, a teacher or a nurse. But unfortunately for the union movement the members the unions have won from such sources have not offset the loss of their traditional membership. And while it has been argued by some that the decline in union membership can be attributed to enterprise bargaining, and other factors that resulted in the decline of the influence of the Australian Industrial Relations Commission, it is hard to dispute that the reduction in union members followed closely the decline of the blue-collar workforce in Australia. It seems as though the unions have been unable to develop a value proposition with such an appeal to other sectors of the workforce.

Another problem confronting unions is that since their heydays in the 1960’s and 1970’s many more workers now are part-time or casual or even work from home. Whilst these arrangements improve the flexibility of the workforce and are even preferred by some employees, such employees are much more difficult to organise. So when you hear unions advocating for “secure” employment (ie fulltime, permanent employment) don’t be fooled into believing they have only the welfare of such people at heart. They are more concerned to force them back into “traditional” employment where they can be more easily coerced into taking up union membership.

But I could suggest that there are two other factors resulting in the decline of union membership.

Now I might be pilloried for suggesting this, but employment conditions in Australia are, with some minor exceptions quite good. Over the years the unions have by and large succeeded in the achievement of good wages outcomes, generous leave arrangements, reasonable working hours, safe workplaces, equal pay for women and so on. It would seem to me that industrial campaigns now are moving into areas of less concern of the average worker. For example one of the current provisions that unions are trying to insert into industrial agreements is domestic violence leave. Now I am not trying to downplay the importance of combatting the insidious impacts of domestic violence but I would suspect the average unionist has little interest in domestic violence leave (beyond their capacity to make sure they get some of it irrespective of their domestic circumstances).

In my latter years as a manager it was my practice to allow the workforce to meet some time prior to enterprise bargaining, to come to some consensus on what they would like to achieve (other than higher wages outcomes) in the negotiated agreement. As the years went by the claims became more and more outrageous because by and large their dominant needs had already been met. Quite often they would end up being led to make claims by the union because a workplace somewhere else had negotiated a particular outcome or because the union was pursuing some national agenda or other. So it would seem to me that employee indifference to union membership reflects an overall relative satisfaction with wages and conditions.

But a compounding problem for the union movement is its inability to sign up younger people as members. Many demographic studies have shown that young people today are more independent and less comfortable with authority and paternalism which most unions (and unfortunately many managers as well) thrive on. What’s more with a long history of economic growth in Australia they have not had to confront difficult times. So if the unions’ value proposition is failing for older workers it is even less effective for young workers.

Industrial Relations commentator, Grace Collier, writing in The Australian recently, made an interesting point about union membership.

In the private sector people don’t join unions without some sort of prompt from their boss. Mostly workers will classify they work for as a “union company” or a “non-union company” and join or not join a union taking their cue from this. If the employer provides a pack on union membership at the point of hire, the worker is likely to join because they will feel it is what their boss wants them to do. I estimate that at least half of union members in the private sector are members only because their boss has pushed them into it.

There is little doubt that most union members are only members because of such coercion. In the private sector as Collier points out this comes as a result of collusion between the employer and the unions who manufacture “closed shop” arrangements. In the public sector it is aided by Labor governments who under the strong influence of unions make much of government employ a pseudo domain of compulsory unionism.

(As I write this essay, he Queensland Treasurer, Jackie Trad has just handed down the Queensland Government’s 2018/19 budget. In the budget Trad announced that in the next twelve months the Queensland Government will increase its workforce by 3,800. Her stated rationale for so doing is to improve “front line” government services. But by far the more compelling reason is that most of these people will be coerced into joining a union thus swelling union numbers, bolstering union coffers and recruiting more, likely Labor voters to entrench the Government whilst in the process swelling the state debt and putting its credit rating in further likely jeopardy.)

It is an unfortunate fact that left to their own devices most employees are unlikely to join a union and the unions don’t seem to have clue how to deal with this. Their only strategies seem to be to use Labor Governments to change the rules in favour of more union coercion. This can hardly be a long term strategy because as the political pendulum swings between Labor and Conservative dominance the rules will inevitably be changed back again.

[This dilemma for unions was amply demonstrated in New Zealand. When Labor lost power in 2008, the incoming conservative government removed many of the benefits Labor had bestowed on unions in legislation. This resulted in a reduction of union membership of more than 20%.]

Without a strong traditional industrial platform, the union movement has increasingly turned to a broader political agenda getting involved in such things as free trade agreements, the treatment of refugees, immigration and so on. Mostly their political stance has been hard left which isn’t destined to win over employees of more moderate views.

Additionally the movement has been tarnished by lawlessness and often abandoning the welfare of members in order to pursue other ends.

The leader of the opposition, Bill Shorten, whilst leading the AWU has been found to have entered into agreements with employers that, whilst providing benefits for the union and the employer, sold out the employees’ interests. There have been documented many other cosy, collusive agreements between employers and unions, entered into without the knowledge of union members, that were detrimental to employees.

ACTU Secretary, Sally McManus has stated that she believes it is OK for the union movement to break any laws they disagree with. The CFMMEU demonstrates this ethos practically daily resulting in the union appearing regularly before the courts and being fined millions of dollars. Being a wealthy union, the CFMMEU is undeterred by this and accept this as merely the cost of doing business! (A recent press report suggests this union has accrued more than $15M in fines in a little over a decade!)

So in the face of all this it is likely that the union movement has little likelihood of stemming its continuing decline in membership. To do so would require the radical revision of its business model and there is little indication this is happening. Without the sponsorship of Labor governments and complicit big business its position would be even more parlous.

Whilst more and more employees are confident and independent and see little value in unions, the greatest losers from the demise of unions would be the most vulnerable of our lesser skilled workers. We saw how some unscrupulous businesses exploited the over-reach of the Howard government’s Work Choices. If unions continue their decline we must find other ways to protect such people.

Because of their symbiotic relationship, this decline is not only a problem for unions but also a problem for the Labor Party. Unions provide a massive funding input into Labor. As a result Labor continues to look for opportunities to promote unionism. But as the relevance of unions decline Labor’s ties to the union movement becomes a political problem for the party. With most Labor MP’s now emanating from the ranks of the unions, and the Labor Party so beholden to the union movement, it is hard to see how the Labor Party can effectively pursue the national interest when the national interest is at odds with the sectional interest of unions. As the electorate becomes awake to this fact the Party’s electoral outcomes will suffer. Calls from within the Labor Party to distance the Party from unions seem doomed to failure because in the short term losing union support would severely diminish its resources, putting at risk the chances of re-election. Individual self-interest makes this an unlikely path and would probably only occur if Labor’s association with the union movement began to have more serious outcomes at the ballot box.

In conclusion then the union movement is being assailed on numerous fronts largely because of:

  • Deregulation of the labour market in response to international competition,
  • Structural changes in the nature of work resulting from technological progress,
  • Social changes that have increased employees’ sense of individual autonomy, and paradoxically,
  • The historic success of unionism has resulted in most employees being now comparatively happy with their working conditions.

As I have indicated above, the long term success of the union movement really requires a radical revision of their business model. I see no sign of this. In fact most union strategies seek to return workplaces to the strictures of the 1960’s and 1970’s. Without such a revision of their thinking it is hard to envisage anything but further decline.

5 Replies to “The Future of Trade Unionism in Australia”

  1. Ted, an interesting history of unions working themselves into irrelevance. What has been omitted is their treasonous action during the war, holding up the loading of materiel for the war at the docks, destroying and stealing essential food and equipment for soldiers on the front line in support of the CPA. See Hal Coalbatch’s “Australia’s Secret War. Even returning soldiers, incensed at the wharfie’s actions, had to be held over on board the ship when returning, as they threatened to deal with the scurrilous wharfies. Unions have always had, and still hold today, a strong element of bullying and illegality that diminishes achievements.

    1. Well of course i was aware of all that Paula.But in a short essay I was more inclined to concentrate on the longer term pervasive themes of declining membership and lack of relevance in the movement. But I share your other concerns in my essay that much of the influence of unions has built on the bullying, coercive nature of their involvement in industry which is an affront to personal freedom.

      Thank you for your comment and I hope my readership takes the time to read it to remind them that the union movement has in the past displayed attitudes that were far from patriotic.

  2. Today the growth area in employment is young women, often in part time menial jobs which are areas where exploitation can and does happen. This should be a productive area for the ACTU, but the Union movement is obviously struggling when Sally McManus is its face. From her personal appearance she has some gender confusion and she presents as a bitter old style Marxist. From my observation of young people these attributes are an anathema to them. They certainly do not see themselves as victims and part of the downtrodden masses as Ms McManus would have them believe and her personal appearance and lack of charisma would be real “turnoff”. No doubt these people can be wooed by the siren songs of Bernie Sanders and Jeremy Corbyn, of free universities and a Universal Basic Wage but this is seen as what they deserve and what their idealism regards as fair. These people are aspirational and full of confidence because they are digital natives and believe these skills will enable them to rise to the top. They may be socialists and idealists but traditional unionists they are not, so traditional union appeals will not resonant with this demographic and will not provide a stream of new members for the future.
    The revelations of the Banking Royal Commission (BRC) are appalling. As you have written, because of previous successful Union campaigns, I could, when I was a manager, tell our employees that there was no longer a class war, we all had the same needs, management could be trusted and wanted similar outcomes to them, and we had a better chance of achieving good outcomes for everybody, by working together. The BRC revelations are a personal betrayal. While I was was telling workers senior managers could trusted, it appears that banking managers were performing or tacitly accepting, dishonest and illegal activities. This will certainly support the bitter narrative of people like Ms McManus.

    1. Thank you for your insightful response Larry.

      You were one of the managers I had in mind when I talked of those who tried to get close to their workforce.

      Certainly the Banking Royal Commission has highlighted flaws in management. But the Royal Commission into Trades Unions has unearthed even more worrisome practice. There has been ample evidence to show that unions have entered into collusive arrangements with big business to the detriment of their members,

      You and I can remember union officials that whilst giving us a hard time were plainly trying (sometimes misguidedly) to advance the welfare of their members. Today’s union officials seem more inclined to try and advance agendas that have little relevance to their shop floor members in their desire to promote more grandiose causes. Most union officials seem to be more motivated to promote for themselves a career as a Labor member of parliament than to focus themselves on the concerns of the workforce. An examination of Bill Shorten’s history would attest to that.

      You have always been a champion of women and so it does not surprise me to see you highlight the particular circumstances of young women. And indeed it is obvious that young women are making their mark on the employment scene. No doubt they exhibit characteristics that are more conducive to employment than many young men, But this also highlights the fact that education is favoring females to the detriment of males. (A subject no doubt for another blog essay!)

      But if I return to the main thesis of my essay, unions have prospered because management have abrogated their responsibilities towards the workforce. You were never guilty of that.

      In fact you demonstrated to me how to get closer to the workforce. I always had that desire but it was you and later others like you that helped me do better in that regard.

  3. You are too kind Ted.
    During the Royal Commission into Unions Bill Shorten claimed it was a case of just few “rotten apples”. I guess it depends how you define what is a rotten apple and my definition in this context is a person who uses their position as a Union Official to advance a personal agenda not directly related to the benefit of the members, who pay their wages. Bill’s definition I suspect is somewhat narrower, but using mine, I concluded from my experience that the opposite is true; viz that the majority of Union Officials are rotten apples and it is just few genuine, dedicated people that gives the Union movement the credibility it needs to continue to exist.

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