Stronger union rights can mean more productive, sustainable workplaces

The Australian government has indicated it will soon introduce legislation to strengthen trade unions’ workplace rights. The reported reforms will include increased protections for union workplace delegates and allow paid union officials to enter workplaces to inspect company pay records without notice in cases of suspected wage theft.

Employment and Workplace Relations Minister Tony Burke says the reforms are aimed at ensuring people have support from trained workplace representatives who can help them access their workplace rights. He claims this is important for ensuring all employees can take advantage of new laws to promote collective bargaining and gender equality at work.

Employer groups have voiced opposition to these proposals. Ai Group CEO Innes Willox calls one of the proposals around paid leave and other entitlements for union delegates “a shameless and shockingly inappropriate gift to the unions”.

But this opposition ignores three arguments in favour of strengthening union rights. First, union rights are vital for giving workers “collective voice” or input into company decisions. Various studies have found collective voice is a key factor for improving economic performance.

Research conducted by Professor Alex Bryson of the University College London and colleagues has found that unions can improve worker engagement, which can help companies to innovate and adopt more productive practices. Collective voice provides workers with power to negotiate fair wages and conditions.

Workers who feel they are treated fairly are more likely to be satisfied and less likely to leave their company. According to the OECD, by giving workers collective voice, unions can contribute to “lower turnover and longer tenure [which] can reduce hiring and training costs and increase productivity”.

Second, Australia’s union laws are restrictive by historical standards. This has caused major problems across the labour market. Legislative changes in the 1990s imposed significant limits on union access to workplaces, which drove a sharp fall in the proportion of workers who are union members from 33 per cent in 1995 to 12.5 per cent in 2022.

Legal restrictions on unions’ workplace access have directly contributed to the significant rise in wage theft, where employers pay workers less than what they are legally entitled to.

My research with Associate Professor Stephen Clibborn of the University of Sydney, examining the underlying reasons for this rise, found that these legal restrictions have made it more difficult for unions to assist workers in recovering unpaid wages. Weakened unions have also led to low-wage growth and the prevalence of workers on insecure contracts, which has made it harder for many to secure housing and cover their basic living costs.

Third, Australia’s union laws are more restrictive than in other prosperous and internationally competitive countries. In the Nordic countries, for example, unions have more freedom at the workplace. This gives them powers to negotiate collective agreements regulating virtually all workers’ pay and conditions and ensures employers comply with these agreements.

In many western European countries, workers have strong rights to collective voice via unions and worker representatives on company boards. This encourages companies to consider a wider set of interests and objectives beyond short-term profit maximisation and ensures they operate more democratically and sustainably.

It helps explain why the income gap between the very top earners – such as CEOs – and lower income earners is narrower in these countries than in Australia where collective worker voice is currently muted. According to the 2022 World Inequality Report, the top 1 per cent of income earners in Australia have an average income 40 times higher than those of the bottom 50 per cent, compared with 26 times higher in western European countries.

Collective worker voice has wider social and economic benefits. Studies have found that countries that give workers strong representation, for example through unions, tend to have higher productivity and employment rates, better workplace safety and wellbeing outcomes, and less inequality including gender inequality.

Employer groups have labelled the proposed reforms as “anti-business”. But international research evidence suggests that measures to strengthen collective worker voice are likely to lead to more productive and sustainable workplaces, help to address the scourge of wage theft and insecure work, and bring Australia into line with global standards.

Chris F Wright is an Associate Professor in the discipline of Work and Organisational Studies and co-director of the Sydney Employment Relations Research Group at the University of Sydney Business School.

This article was first published in The Sydney Morning Herald.