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Were unions the victims of their own success?

May 15, 2018 - 16:51 -- Admin

When Australian Council of Trade Unions secretary Sally McManus outlined the peak union body’s Change the Rules campaign at the National Press Club in March, the Australian Chamber of Commerce and Industry had a quick comeback. “Ironically,” said the Chamber’s acting chief, Jenny Lambert, “the rules they are seeking to change… are the very Fair Work laws the unions themselves campaigned for and secured.” Given the unions got what they wanted then, went her logic, their demands for more must be unreasonable.

As it happens, Lambert’s history is correct. Back in 2005, after it had gained control of the Senate, the Howard government passed its controversial WorkChoices legislation. In response, the union movement launched the Your Rights at Work campaign, which ultimately played a decisive role in the government’s demise in 2007. In government, Labor overturned WorkChoices. Its Fair Work Act passed through parliament in 2009, creating a new set of rules for workers and bosses.

So successful was the anti-WorkChoices campaign that it was revived for the 2010 election. Opposition leader Tony Abbott was forced to declare that not only had WorkChoices died but it had been buried and cremated. Subsequent attempts to resurrect it have so far failed.

On the facts, then, the Chamber of Commerce is correct. If the rules today are unfair, it is Labor’s Fair Work Act — itself the result of the unions’ Your Rights at Work campaign — that is to blame. If industrial relations laws are stacked against workers, then that’s the case not despite the labour movement but largely because of it.

Take a claim central to the critique advanced by McManus at the Press Club. According to her account, the right to strike is so restricted and heavily regulated that it is nearly dead. And once you take away workers’ power to withdraw their labour, you take away their bargaining power. It’s no wonder, as McManus points out, that wage growth is at record lows, Australians’ real take-home pay is declining and the wages share of national income hasn’t been this low in half a century.

Even figures on the other side of politics are showing signs of unease. As Tim Colebatch wrote last year, “when a Liberal treasurer tells us he is worried that the low rate of wage growth is slowing the economy, then something is seriously wrong.” Colebatch pointed out that in the previous two years just 28 per cent of the increase in national income had gone to wage and salary earners while 49 per cent had gone to increased corporate profits. In the previous year, profits in the mining sector had grown by a massive 504 per cent but wages had increased by just 0.6 per cent.

Meanwhile, strike activity in Australia has declined so precipitously that the Australia Institute’s Jim Stanford can plausibly claim that “strikes have become almost non-existent in Australia’s economy.”

As the ABC’s Stephen Long has outlined at length, restrictions on industrial action under Labor’s Fair Work Act are elaborate and onerous (and, as we’ll see, in breach of international law). They proscribe strikes in four main ways.

First, the Fair Work Act limits when workers can walk off the job to the period after an agreement has expired, even if there is a legitimate dispute about whether the wages or conditions in a pre-existing agreement are being honoured.

Second, the legislation then dictates a convoluted process that, in practice, suffocates industrial activity. Before taking action, a union must conduct a referendum of all members. But it must first have made an application to the Fair Work Commission and demonstrated that it has been unable to achieve agreement with the employer through good-faith bargaining. If this approval is given, the member plebiscite — usually a postal ballot conducted through the Australian Electoral Commission — must specify each and every kind of action the union is considering, whether it’s a full-day strike, a lunchtime stop-work meeting, a ban on excessive overtime or a work-to-rule initiative. A majority of members must return their ballot paper in the post, and a majority of those need to have voted in favour of the specified form of industrial action. Although the ballot process inevitably takes weeks, industrial action must occur within thirty days of approval having been granted. After that time, the strike action becomes illegal again and subject to hefty penalties — unless a new ballot has been conducted.

In other words, even the decision to ballot members about taking industrial action is heavily constrained. Union officials have to demonstrate to the Fair Work Commission that they have exhausted the possibilities of good-faith bargaining, but they can’t leave escalation so late that, by the time a lengthy ballot process is concluded, the will of members has begun to fade. And, of course, the people on the other side of the bargaining table know this.

Third, in addition to dictating when and how strikes can be called, the Fair Work Act constrains actions by limiting the legal justifications for a strike to a narrow range of “permitted matters.” Workers can’t legally strike in support of industry-wide claims, multi-employer agreements, or a common claim across an industry. Nor can they strike to strengthen job security by seeking limits on an employer’s use of casual and contract labour. Similarly, workers have no industrial recourse on matters like executive pay, company environmental practices or corporate social responsibility. Sympathy strikes and secondary boycotts are forbidden, as are strikes in support of an increase in the minimum wage.

And fourth, even once all these conditions have been met, strike action isn’t necessarily lawful. As Long explained, having exhausted good-faith bargaining in relation to permitted matters and having balloted members on industrial action, unions have to “give the employer three days’ notice before pursuing any action, during which time the employer is free to apply to a tribunal or court to have the strike quashed.” The Fair Work Commission must uphold the employer’s application if it judges that strike action could “cause significant damage to the Australian economy or an important part of it” or that the action is going to cause “significant economic harm to the employer or employees who will be covered by the agreement.” As Sydney train drivers learnt the hard way in January, this can mean that the very fact a strike is likely to be effective will count against its legality.

If a union decides to proceed with industrial action without having met these extensive conditions, it is immediately exposed to hefty financial penalties and the opprobrium of having broken the law. These risks are not mitigated, as they once were, by access to an independent umpire that played a role in conciliating disputes.

“The basic right to strike in Australia is very nearly dead,” Sally McManus observed in response to the Fair Work decision against the Sydney train drivers. What she didn’t say is that the cause of its demise is Labor’s Fair Work Act. While she has made clear that the quest to recalibrate enterprise bargaining involves a departure from the industrial relations policy of the Keating government, she has been much more coy about the fact that the Change the Rules campaign constitutes an emphatic rejection of Labor legislation passed less than a decade ago.

The obvious defence is that the Australian labour movement was preoccupied with defeating an electorally successful conservative government and overturning the draconian industrial relations legislation it had introduced. A new industrial relations order had to be forged in the face of hostile opposition and predictions of industrial chaos. Today, though, the union movement is blaming the Fair Work Act for causing the near-death of the strike and record-low wage. No matter how sanguine you might be, if you’re a unionist that is a sub-optimal outcome.

Understanding what went wrong is of more than historical interest. From mass rallies in capital cities to an ad campaign featuring harsh industrial realities intruding into the kitchens of working families, the Change the Rules campaign looks for all the world like Your Rights at Work redux. The chief difference is that the original was launched in opposition to Howard-era laws but the revival is aiming to overturn the very Labor laws that replaced them. Nobody who rallied to Change the Rules in recent days did so in the hope that the end result will be something they are disowning in less than a decade — or that the Chamber of Commerce might, in time, start defending.

How did it come to this? Many in the union movement believe the Rudd government betrayed them. According to this view, the union movement played a key role in delivering government to Labor in 2007. After the election, the ACTU released research showing that industrial relations was a key issue for eight out of ten voters, with 13 per cent saying the issue caused them to change their vote. Later, using data from the Australian Election Study, political scientists Murray Goot and Ian Watson reported that the number of electors who saw industrial relations as “extremely important” to their voting decision more than doubled between the 2004 and 2007 elections, from 30 per cent to 67 per cent. “In the electoral battle over WorkChoices,” Goot and Watson conclude, “the ACTU set the terms of the debate.” In government, though, Labor failed to return the favour.

For this story, I spoke to union officials and rank-and-file activists who answered the ACTU’s call in 2005 when WorkChoices became law. They proudly displayed maps of the NSW towns of Queanbeyan and Cooma on which they had marked each street they had doorknocked. For them, the moment of what one called “total betrayal” was in April 2007, when Labor announced its industrial relations policy. While they were doing the hard yards talking to their neighbours about the evils of WorkChoices, Labor had devised a policy that could only be described as WorkChoices Lite.

But that response highlights how the truth is a little more complicated than a simple tale of the labour movement’s parliamentary wing betraying its industrial wing. The policies that the union movement are attacking today were pretty clearly set out in Labor’s pre-election policy document, Forward with Fairness (page 16 deals with strike action). And it is hard to blame a political party for going on to deliver its announced policy when elected to government.

Even after the election, as Labor’s legislation was being negotiated behind closed doors and its precise shape came into public view, the union movement was hardly a vocal critic. This general rule is illustrated by the one notable exception.

In February 2009, the Victorian Branch of the Electrical Trades Union, or ETU, submitted a complaint to the International Labour Organisation, or ILO, alleging that the Fair Work Act contained “numerous contraventions of freedom of association principles, including restrictions on the right to organise, the right to bargain collectively and the right to strike.” Pointedly, in light of the recent cases in which industrial action has been prohibited on the basis it will cause harm to a part of the economy, the union contended that “section 423, as drafted, appears likely to render all successful industrial action unlawful — in contravention of freedom of association principles.” The complaint was upheld, with an ILO request that the Australian government review six sections of the act, “with a view to their revision.”

This March, the inconsistencies between Australian law and international labour law were a recurring motif in the ACTU secretary’s speech. But the ACTU and the Australian union movement were much more reticent when the offending laws were being introduced into parliament, debated and passed.

Dean Mighell was the leader of the Victorian Branch of the ETU that was behind the complaint to the International Labour Organization. When I spoke to him recently he emphasised that he was out on his own in publicly criticising the Labor government. “Very few unions — I can only think of ours — actually said, ‘Hang on a minute, this is a shit deal for workers. This fails ALP policy. This fails ILO conventions.’ And when we took the issue up, no one wanted to know us because Labor was in government.”

In 2010, Mighell wrote in the Age about the ACTU’s acquiescence in the genesis of the laws it is now campaigning to overturn. “During the recent Senate inquiry into the Fair Work Bill,” he wrote, “the ACTU refused to buy into the debate that the bill contained many breaches of human rights as defined by Australia’s international obligations under International Labour Organization conventions. If the ACTU is so severely compromised by the ALP relationship that it can’t stand up and fight for basic workers rights, then something is seriously wrong.”

In a chapter for the book The Fair Work Act: Revision or Restitution, researcher Keith Abbott commented on the surprising failure of the broader union movement to make the kinds of criticisms voiced by Mighell. “It is as though the lesser standards applied since the Workplace Relations Act 1996 have become ‘normalised’ in the thinking of trade unions, such that aspiring to standards more in line with their international counterparts is simply held beyond any realistic possibility of being realised,” he wrote.

By 2010, cracks finally started to emerge in the labour movement. In the lead-up to the federal election of that year, union leaders called for a new wave of industrial relations reform as part of a second-term Labor agenda. The right to strike, the right of union officials to meet with employees in their workplaces, and an easing of limitations on the “permitted matters” for bargaining emerged as flashpoints of union discontent. By 2011, the ACTU was in public disagreement with the Gillard government over whether employees should be entitled to negotiate job-security clauses into collective agreements. In 2012, the ACTU’s submission to the post-implementation review of the Fair Work Act argued that “limitations on the right to strike in support of legitimate bargaining claims cannot be justified. They contravene international law and ILO rules and violate the fundamental human rights of workers to strike.”

But the unions found themselves without leverage. Prime Minister Gillard, who had seen the Fair Work Act through parliament as workplace relations minister, showed little inclination for more fundamental change. And she had plenty of other fights on her hands. Having packed up the public campaign when Labor had been elected in November 2007, the union movement had lost any capacity to pressure the Labor government publicly. As Peter Malone, coordinator of the Your Rights at Work campaign in the marginal seat of Eden-Monaro, puts it today, “To have not planned for and implemented an ongoing community-based campaign lessened the credibility of the ACTU and caused many grassroot activists to feel abandoned.”

By 2015, it had become something of an orthodoxy within the union movement that Your Rights at Work had been the most successful union campaign in decades but that the decision to declare victory and go home as soon as Labor got into government had been a historic blunder. “Now we’ve also learnt our lesson from the Your Rights at Work campaign,” ACTU secretary Dave Oliver told union delegates assembled from around the country that year. “We learnt that we made a significant mistake. We made a significant mistake that after the 2007 election we dismantled all the campaigning infrastructure that we had built up over the years…

“And I’ll make you this promise,” Oliver added for emphasis, “as long as I’m here; we will not make that mistake again.”

The lesson of Your Rights at Work is simply summarised. As much as the interests of Australian unions and the Australian Labor Party overlap, they are distinct, and sometimes they conflict — especially when Labor becomes the party of government. The challenge for the union movement is to recognise when divergences exist and to pursue its own interests vigorously in these cases. That manifestly failed to happen in the Your Rights at Work campaign. Will Change the Rules be any different?

One reason to believe it will be is the McManus factor. Appearing on ABC TV’s 7.30 on your first day in the job and declaring that sometimes it’s right and just to break the law is a pretty clear indication that you’re not planning on taking a backwards step in representing the interests of your members. And it works in McManus’s considerable favour that social democratic politics has taken a decisive step to the left. Times are such that, as improbable as it sounds, Bill Shorten has become the most left-wing leader of a Labor opposition since Gough Whitlam. Given the mood of the age, maybe this time the parliamentary wing won’t let the industrial wing down.

Maybe. But a fundamental imbalance in the Labor–union relationship — one that is much larger than individual personalities — remains. Labor long ago became a mass party, one that seeks to balance the interests of “working families” and the “business community.” In government, its constituency is substantially broader than the industrial wing of the labour movement, and its responsibilities much larger. It is more responsive to Newspoll than to the ACTU, more attentive to reports in News Corp papers than input from affiliated unions.

Yet the union movement still believes, by and large, that Labor is the only show in town when it comes to electoral politics. This is evident in the formal affiliation of many unions (though by no means all) to Labor and, for some individuals, in the holding of memberships and (often high) offices in both wings of the labour movement. But, more pervasively, the union commitment to Labor derives from the belief that there is no alternative and that publicly criticising Labor is therefore an act of self-harm. On this account, Labor’s Fair Work Act may have breached international law, suffocated strike action and depressed wages but it was a whole lot better than WorkChoices (and, under Labor, union officials didn’t have to spend time in front of a royal commission).

So, while the Labor Party long ago declared it’s in an open relationship, the union movement can’t forget its wedding vows. It’s a dysfunctional recipe if ever there was one, and the dysfunction manifests in at least three different ways.

First, union leaders are vulnerable to confusing or conflating the interests of their union with the interests of the Labor Party. This happened when the union movement mistook Labor’s election victory in November 2007 for the successful accomplishment of the goals of the Your Rights at Work campaign.

The second kind of dysfunction occurs when union leaders put Labor’s interests ahead of their members’. “You know, for a lot within the union movement the ALP is the most important thing,” Dean Mighell said to me. “And for some it’s more important than their members. There’s safe seats and all sorts of games to play.”

In other instances, union leaders actively pursue their members’ interests but, relying exclusively on the inside game of preselection battles and party conferences, are unable to exert much influence. This was the experience when unions unsuccessfully lobbied the Rudd and Gillard governments for amendments that would ameliorate the Fair Work Act.

But there is an alternative. When Sally McManus controversially defended the right of the CFMEU and other unions to take unprotected industrial action, she had few friends in parliament. Bill Shorten — who as a union leader could never have been accused of militancy in defence of his members’ interests — was emphatic in disowning the ACTU secretary. “I just don’t agree,” he said. In sharp contrast, Greens leader Richard Di Natale, came out in support. “No one knows more than the Greens that it does take brave people to stand up against laws that are wrong if we’re going to change them,” Di Natale said. Adam Bandt, the Greens’ industrial relations spokesperson, pointed out that the laws in question contravened international law: “You can’t condemn people who get punished under them.”

During the 2016 election, Bill Shorten chided the Greens for promising to introduce laws to protect penalty rates. Only months later, after a ruling by the Fair Work Commission in favour of reducing Sunday penalty rates for retail and hospitality workers, Labor backflipped and adopted the Greens policy. In a similar vein, the Greens have been out in front championing worker-friendly laws that would prohibit deals that leave workers on less than award pay (as much as $5000 a year less in some cases), increase secure employment, and guarantee paid domestic violence leave.

For the union movement, there is clearly potential to exploit electoral competition on the left to put pressure on Labor. And while unions have mostly stuck with their historical loyalty to the party, there have been exceptions. Under Mighell’s leadership, the Victorian Branch of the ETU not only disaffiliated from Labor but put significant money into Adam Bandt’s successful campaigns for the seat of Melbourne. And in January 2016 the Australian revealed that the Greens had received donations from the National Tertiary Education Union, the CFMEU and the Maritime Union of Australia, as well as the ETU.

Theoretically, it would be possible — smart even — for the union movement to adopt this approach nationally, for the Change the Rules campaign to mobilise behind Labor in marginal seats while supporting the Greens in inner-city, red–green contests. In practice, of course, there’s no chance of this happening. Even if McManus wanted to make such a move, right-leaning unions affiliated to the Labor Party (think the Shoppies) would block it.

But it’s also clear that McManus herself has no desire to adopt this kind of strategy. Along with Victorian Trades Hall, she campaigned for Labor and against the Greens in the recent Batman by-election (even though neither Trades Hall nor the ACTU is affiliated with Labor). That Labor’s candidate, Ged Kearney, was an old comrade provided an obvious rationalisation, but it also illustrated how difficult it is for the union movement to isolate personal loyalties from a hard-headed assessment of members’ interests.

When unionists criticised McManus on Twitter for siding with Labor, her response was revealing. She didn’t take issue with claims that Labor policies were inconsistent with union positions. Instead she insisted that the best way to change Labor policy was from the inside. “You see,” she tweeted, “the Greens won’t change Labor policy. Labor & MPs change Labor policy.” These are clearly not the sentiments of a union leader who would be willing to use the Greens to pressure Labor — or to keep it honest.

However McManus’s position is viewed, it leaves the ACTU and the union movement with a serious problem. Currently, the ACTU is seeking to persuade the opposition to take its agenda to the next election, negotiations that will no doubt intensify in the lead-up to Labor’s national conference in July. But if Labor doesn’t make the commitments the ACTU regards as critical, it’s unclear what options, if any, are available to it.

So McManus is in an odd position. She’s one of the most skilled negotiators in the country. She leads a movement of 1.8 million people. She has already ploughed millions into a campaign that aids Labor’s effort to win government. And yet she’s bargaining without any alternative to a negotiated agreement. It sounds uncannily like the position of workers who effectively lack the right to strike.

And for whatever deal is worked out between Labor and the ACTU, it’s unclear what the consequence would be if a Shorten government didn’t deliver. As ACTU chief of staff Ben Davison told me, “Regardless of which party forms government after the next election we will continue to fight.” But what a “fight” might entail, given the assumption that there is no electoral alternative to Labor, is not easy to envisage.

In this way, the Change the Rules campaign, like Your Rights at Work before it, embodies a kind of ambivalence among unionists. In significant part, the campaigns are simply attempts to mobilise support to boot out the conservatives and put Labor in government. But, as Davison’s comment exemplifies, they are also aimed at building independent union power and leverage over Labor governments. To that extent, they are an implicit recognition that influencing preselections and party conferences and getting former union officials elected is not enough. An inside game can only go so far, yet unions lack the will to pursue an independent campaign to its logical conclusion. •

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