Declining Formal Strikes in Australia

The Fair Work Commission has introduced regulations to prevent industrial action, leading to a significant decline in formal strikes in Australia. This analysis explores the reasons for this decline and the impact of these regulations on workers and the labor market.

Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
DECLINING FORMAL STRIKES IN AUSTRALIA
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
Introduction
Industrial strikes and conflicts possess considerable challenges to loss in productivity in
working days (Cooper & Ellem, 2008). Conflicts and strike resolution is regulated by the
Commonwealth Fair Work Act. Such conflicts can be related to harsh, unfair and unreasonable
employer action in relation to recruitment, dismissal or treatment of employees, where their
rights are not protected. Such strikes and challenges were at its peak during 1917 but have
decreased considerably since the 1970s and from 1991 with the introduction of enterprise
bargaining. With inclusion of more and more issues which employees face at workplaces number
of applications has reduced significantly (Nankervis, Baird, Coffey & Shields, 2016). While the
role of the Fair Work Commission is to pre-emptively block any industrial dispute with renewed
attention being given to administrative and legal barriers that limits Australian workers collective
action. Work stoppage in industrial lock-out and other strikes possess significant losses in
number of working days though they have become extremely rare in Australia currently
(Stewart, 2011). The scope of the current analysis includes identifying reasons that have led to
the reduction in number of formal strikes across the country. It identifies past trends and reasons
for lock-outs with current trends and reasons for decline in lock-outs.
Analysis
The Fair Work Commission has provided various regulations in order to block any
industrial action that might hinder industrial productivity. The current regulations that the
Commission have developed is completely one-sided as it supports the industrialists and
businessmen ignoring labor force completely. In the past Australia, similar to other developed
industrial nations, experienced significant number of days lost to formal strikes and lock-out
procedures (McKenzie, 2015). Currently the population of Australia is only at 20% as compared
to the past but such strike rates is near to zero. In the past more than 4.2 million days was lost in
strikes which have also dramatically improved. The following figure from Australian Bureau of
Statistics Labour Force revealed the significant drop in rates of formal industrial strikes. There
was prohibited action that was taken by the Bus Union and the Rail Tram for economic damages,
possibility of safety hazards and public inconvenience. Unions in Australia have high
membership, yet they have lower collective bargaining power. Australia is believed to have the
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
most stringent restrictive industrial actions amongst industrialized country. Industrial conflicts
had been at record high in the 1970s with average 500 days lost in 1000 workers in the past
decade. As per the Accords process disputes fell from 1983, back from 200 days every per 1000
workers from estimates. Work Choices in 2005 post 1991 began steeper decline by bottoming
out. The dramatically extent of declining industrial disputes have represented 0.005 % of total
work time. Collective industrial actions have become large invisible across Australian economy.
Regulators have prohibited work stoppages due to economic damage or public convenience.
Figure 1: Declining Trend in Industrial Disputes per 1000 Employees
Source: ABC, 2014
Australia’s rates of industrial strikes are the lowest amongst all countries in the world,
some experts provides that Australia’s restrictions on industrial action is the primary reason
(Forsyth, 2012). The introduction of enterprise actions along with other regulations includes
prohibiting industrial action, while being within current enterprise agreement. Restricting
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
timing, notice and disclosure, authorization that leads to work stoppage have further reduced
formal strike procedures. Strict limits in regards to bargaining demands which are in turn legally
tied to industrial action are another procedure that has limited formal strikes. Restrictions on
peaceful activities such as boycotts, picketing and other limits on speech during the time of
industrial disputes. Blanketing and discretionary authority in order to prohibit an industrial
action which might hinder or affect public service have further reduced industrial disputes
(Spencer & Hardy, 2014). Arbitrary powers of the Commission in suspend industrial action
whenever the regulator deems cooling period has hindered capability of employees to
collectively call for industrial strike. The Commission further provides prohibitive protected
action in case unions or their representatives have contravened any other regulatory orders, even
in cases it is not directly linked to the strike have further demotivated the ability to call for a
formal strike (Hardy & Howe, 2010). According to the framed regulations, the Federal
Government has powers to directly intervene in terminating any disputes by any Ministerial
declaration. These legal and regulatory measures along with certain structural factors introduced
by the Commission have significantly reduced any effect or incidence arising from formal
strikes. The union members currently in Australia faces immense legal, economic and
administrative barriers in order to undertake collective industrial actions towards their bargaining
goals (Baccaro & Howell, 2011). The below mentioned data reflects historic trends of days lost
in industrial disputes.
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
Figure 2: Historical Trends in Industrial Disputes
Source: Australian Economic Statistics 1949-1950 to 1996-1997
The International Labour Organization states that, the right to strike comprises of an
essential for workers and organisations need to promote and protect economic and social
interests for the same. However, Australia the situation can somewhat be contrasted with slowing
of share of workers being covered by enterprise agreement with that of wage increase. The
Department of Jobs and Small Business data on entries bargaining reflected an annual wage
increase of 2.2% in 2017, which is one of the slowest in the history of enterprise bargaining (Toh
& Quinlan, 2009). In relation to the above discussion for the regulations that was introduced in
Australia with respect to enterprise agreement almost all rights of the Unions have been curbed
and to exclude their rights further there have been legal steps included. In the post-war phase of
industrial expansion, industrial disputes were very common with over 1700 strikes every year
from a period of 1950 to the 1990. With number of strikes peaking to all time high in 1970s ,
with over 2000 strikes (Gerber, 2013). The introduction of protected industrial action was done
when strikes was allowed. At this juncture, the number of disputes almost reduced to about two-
thirds. However, in the year 2017, there could be seen a large number of strikes with cases of
106 industrial disputes being reported. The ABS reports that working days that are lost directly
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
or indirectly in a working year have significantly declined when compared to past trends. In the
time period 1950s to 1960s, it was estimated that an average of 1 million work days per year was
lost due to industrial disputes, which was almost 3 million per year in 1970s and then 2 million
in 1980s (ABS., 2018). Introducing enterprise agreement have led to work day lost per year to
decline to an average of 145,000 days in a year currently (Hamberger, 2012). The figure below
depicts relation of Australia’s postwar economic history of pace of wage growth with that of
frequency of industrial disputes.
Figure 3: Work Stoppages and Wage Growth, 1950-2017
Source: Australian Economic Statistics 1949-1950 to 1996-1997
The Australian economy post war has a relationship between pace of wage growth and
frequency of industrial disputes. The data released by ABS reflects that the credible threat from
work stoppage is integral in the collective bargaining powers of workers. Thus, it can be stated
that industrial action can be related to faster growth in rate of wages. In the current scenario rates
of wage increase has dramatically slowed which can be seen associated with reducing number of
formal strikes in Australian industries (Sandford & TanKiang, 2011). With industrialists and
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
businessmen having full support from the Commission and the Federal Government, rates of
industrial strikes can be seen to be going down significantly. Complaints registered are now
dismissed or treated under stringent legal scenarios. Internationally industrial strikes have
reduced significantly since the 1980s but did not disappear. Disappearance of industrial action in
Australia can be seen as a complete action as compared to other developed industrialized
countries. Comparison of Australia’s industrial formal strikes with that of other OECD countries
reflects that Australia leads significantly (Kippist & Fitzgerald, 2009). Australia has lowest strike
frequency rates when compared to its population-normalized frequency. France on the contrary
has seen higher rates of industrial disputes as compared to any other OECD country. There are
some countries where there is lower frequency of industrial disputes such as the U.S.; however
such low rates can be attributed to lower union membership and incapability of unions to
conduct any type of activities such as industrial actions. In some other countries such as
Netherlands, Sweden and Austria unions participate in regular industry-wide negotiations hence
they have lower rates of strikes. They have present collaborative centralized bargaining
structures to achieving wage increase with lower number of strikes (Pyman, Holland, Teicher &
Cooper, 2010).
In Australia, there is fair number of union participation and issues prevailing for which
workers can call for formal strikes. However, the restrictive practices debar unions into entering
any sort of formal procedure for negotiations and bargaining. In short, all powers of the union
and employees rest with the Commission and they enjoy relatively fewer rights under the new
enterprise agreement. In order to end industrial strikes, a cumulative decision was entered into by
the regulators for prohibiting industrial disputes. Examples of past industrial disputes in
Australia in Sydney can be seen to have impact on its economy. With the new regime in place,
work stoppages have reduced by almost 97% ever since 1970s. It can be said that the procedure
of collective bargaining allows labors to interact with employers, however in absence of the
same unilateral powers of employers to hire and fire prevails (Jericho, 2015). While no one
appreciates work-stoppages due to cost associated with it and disruptions, the new state of art
regulations prohibits any sort of free will to do so. Strikes are common in most nations of the
world, the resultant costs of disputes has to be considered for understanding the impact that they
generate on society and economically. In Australia, the Commission along with the government
has necessitated a course of action leaving potential industrial disputes to be one-sided. The
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
Commission totally ignores the broader aspect of economic and social costs that might arise from
wage stagnation and from rising inequality of labour incomes, which form basic characteristics
of today’s labour market. The current prevalent scenario in Australia needs some corrections
from the lopsided trajectory of its labour market. The current policies prevalent in Australia are
more likely to affect the larger variables stagnant wages, strained household finances and falling
labour share in national output. The variables are more likely to impact the broader macro-
economic variables of consumption pattern, reducing in number of industrial workers, declining
industrial output and so on. All policies and regulations need to provide an appropriate balance
such that a healthy collective bargaining can be introduced and cost of disagreement can be
reduced. The Commission needs to take into consideration such that basic rights of the basic
rights of the labors can be meaningfully restored and a positive labour market trend can be
established.
Conclusion
The scope of the current discussion reveals that the Fair Work Commission have pre-
emptively analysed all data related to number of days of lock-out and reasons for such lock-outs.
The primary reason that can be attributed to reduction in industrial disputes across Australia is
attributed to restrictive practices undertaken by the Commission along with the Federal
Government. The Commission in an active manner has been able to prohibit any collective
actions that workers might take. It prohibits industrial action at the term of current enterprise
arrangements, strict timing, notice, authorization, disclosure for any sort of work closure.
Restrictions on peaceful activities in industrial disputes and ability to prohibit protected unions.
Moreover, the Federal government’s power to directly intervene for termination of disputes has
given industries an edge over workers. With various restrictive efforts and policies, there have
been record low rates of formal strikes in Australia with significant drop in complaints as well.
Though there are such actions, until the basic rights of workers in regards to stagnant wages,
falling share of national output and strained household expenses continue, there is bound to be
negative trends in the labour market.
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Running Head: DECLINING FORMAL STRIKES IN AUSTRALIA
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