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Back to the Future with Arbitration?

24 Nov 2011

Emeritus Professor, Russell Lansbury

Russell Lansbury

An irony of the Qantas dispute is that it demonstrates that the industrial relations system works rather well, if the parties use it effectively.

Rather than complaining about the short comings of 'the system', critics should focus on the inability or unwillingness of some of the parties to use the available processes of good faith bargaining, conciliation and arbitration.

What seems to have been forgotten is that the system of compulsory arbitration, which served Australia well for almost a century, was abandoned twenty years ago to make way for enterprise collective bargaining which, subject to certain requirements, gives workers a circumscribed right the strike &endash; 'protected action' and employers the right to lockout a workforce.

The vast majority of recent enterprise agreements have been concluded without industrial conflict. In the Qantas case, arbitration processes provided by the federal tribunal have been used to break the deadlock between the parties.

Employers, unions and the federal government were all in favour of the shift to collective bargaining when it was introduced in the early 1990s.The 'new' system  has operated with a reasonable degree of success, as measured by declining levels of strike activity.

A high level of consensus prevailed when the current government introduced the Fair Work Act. The then Minister for Workplace Relations, Julia Gillard, consulted widely with the parties and drafted the legislation after seeking the views of both the business advisory group and the workers' advisory group.

While there has been some use of protected action by unions and lockouts by employers under the Fair Work Act, these forms of industrial have been accepted as part of the new collective bargaining system. There has been no recourse to arbitration in the normal processes of agreement-making until the Qantas dispute.

It is notable that two industries which were strike prone in the past have recently demonstrated their ability to negotiate enterprise agreements without recourse to arbitration.

In the automotive sector, General Motors Holden was able to achieve the introduction of the new Cruze model with strong cooperation from its workforce and union during the difficult period of the Global Financial Crisis.

The parties were able to agree to flexible working hours in order to cope with the decline in sales and utilise the 'down time' by providing additional training, with federal government support, without workers being made redundant.

As the volume of sales improved and the new model was introduced, workers were gradually brought back to full time employment and the company managed its way through the crisis very effectively.

The union did not demand its full rights under the enterprise agreement because it realised that the long term interests of the workers and the company required a cooperative and flexible approach.

Recently Patricks and the MUA reached an in principle agreement that delivered productivity at the company's container terminals in return for pay raises for 1200 stevedores, to be  phased in over a four to five year period.

The agreement was achieved after a year of negotiations and some industrial action. One interesting aspect of the agreement was the decision by the parties to establish committees to address productivity and safety issues so that they did not become the source of future disputation.

The managing director of Asciano, which owns Patrick, stated that the agreement would 'ensure productivity on Australian wharves lifts towards global rates' while the union's leader said that he was 'more than confident' that the targets for crane movements and ship turnaround times would be achieved.

For Qantas, there are some parallels with a lengthy dispute in 1981 which was finally settled by the federal tribunal. Sir John Moore, who was President of the tribunal, recommended that Qantas establish a formal consultation council with the unions to foster more effective employment relations and dispute resolution mechanisms, which they did.

In general, the current system of enterprise bargaining is working well but there is a place for arbitration when the parties are not able to resolve their differences through collective bargaining. But there also needs to be the willingness on both sides to seek a settlement and then to rebuild relationships after a long dispute.

This will be a major challenge for Qantas and its unions after arbitration has occurred. The review of the Fair Work Act, foreshadowed by the federal government, will provide an opportunity to establish where and why certain parts of the Act are deficient and need to be changed.

Russell Lansbury is Emeritus Professor in Industrial Relations at the University of Sydney Business School