by Nick Wailes & Russell D. Lansbury

II. The positions of the social partners on flexibility

As noted in Chapter 1, changes introduced in Australia since the late 1980s can be broadly classified into three phases: managed decentralism, coordinated flexibility and fragmented flexibility (see Davis and Lansbury, 1997). Although these have not been "official" policies enunciated by government, these general tendencies can be observed in the approaches to public policy taken by successive Labour and Coalition governments. During the first phase of the Hawke Labour government (1984-86), there was a brief period which saw a return to centralized wage determination in line with the Accord Mark I between the ACTU and the ALP. During this period, there was little discussion of flexibility. Rather, it was argued by the Hawke government that the breakdown of the centralized wage system during the latter years of the Coalition government, led by Malcolm Fraser, had exacerbated economic problems. The Hawke Government also feared the wage/price spiral which had accompanied the more "flexible" bargaining approach of the previous Whitlam government and resulted in a "wages breakout" in 1974. A Committee to Review Australian Industrial Relations Law and Systems, chaired by Professor Keith Hancock, was established by the Hawke government soon after it gained office. After two years of deliberation, the Hancock Report (1985) recommended the retention and consolidation of a centralized system on the grounds that it facilitated the enforcement of incomes policies and thereby helped to contain levels of unemployment and inflation.

Disillusionment with centralized wage policies and the emergence of a new approach which favoured greater flexibility followed the economic crisis of 1986. Balance of payment problems caused by changes in the global economy and structural imbalances in the domestic economy led to alarming declines in the exchange rates for the newly floated Australian dollar and massive increases in foreign debt. The government abandoned full wage indexation at the end of 1986 and agreed on a two-tier wage system with the ACTU, which introduced a more flexible approach. The "managed decentralism", embodied in Accord Mark III, lasted from 1987-88 and was translated into National Wage Case (NWC) decisions during this period. The 1988 NWC decision developed this approach further with a "structural efficiency principle" designed to encourage the parties to introduce multi-skilling and broad-based work classifications, and to reduce demarcation barriers. Rimmer and Zappala (1988) argued that this period ushered in significant increases in labour market flexibility.

The seeds of "coordinated flexibility" were sown in the NWC on February 1990, when the federal government argued that "enterprise bargaining" should become the main process for achieving wage increases. This change of policy by the Hawke government came amid continuing economic uncertainty, criticism by employer groups and pressure from the opposition parties. Although the AIRC initially rejected the new enterprise bargaining policies contained in Accord Mark IV, on the grounds that the parties had different views about what the new system involved, it finally endorsed this more decentralized approach in October 1991. The period from 1991 to 1996 involved an often difficult transition as each of the parties sought to adapt to the more flexible bargaining arrangements. Nevertheless, the AIRC retained a capacity to scrutinize agreements which did not meet "public interest" criteria. Under pressure from employers, however, who complained that it was still too difficult to achieve enterprise agreements, the government introduced amendments which further reduced the authority of the AIRC.

After their election victory in March 1992, the Keating government moved further towards flexibility with the Reform Act 1993. Although the new Act drew upon a number of ILO conventions and recommendations which strengthened worker protection and granted a wider range of minimum entitlements, it also included provisions which facilitated bargaining without unions. Speaking to a meeting of the Australian Institute of Directors, Prime Minister Keating argued that "we need to find a way of extending the coverage of agreements ... to bring full substitutes for awards". Enterprise Flexibility Agreements (EFAs) were introduced under the Reform Act 1993 which did not need an eligible union unless one chose to participate. Unions opposed EFAs on the grounds that they encouraged employers who wished to avoid unions and facilitated a move towards enterprise regimes based on individual contracts of employment.

The most recent phase of "fragmented flexibility" began with the election of the Coalition government, led by John Howard, in March 1996. As noted in Chapter 1, the Workplace Relations Act 1997 signalled a more radical deregulation of industrial relations, although amendments by the Democrats in the Senate softened the Act's provisions. While not going as far as New Zealand's Employment Contracts Act 1991, which dismantled that country's arbitration system, the Howard government nevertheless sought to move the Australian system away from its collectivist origins, in which there was a strong role for unions and tribunals, towards a more fragmented and flexible system of individual bargaining between employees and employers. A key element of the Workplace Relations Act, embodied in the Australian Workplace Agreements (AWAs), seeks to enable (if not encourage) employers to enter into either a nonunion agreement or an individual contract with their employees. While it is generally anticipated that AWAs will play a fairly minor role in regulating wages and conditions, they may be seen as part of a broader trend towards a more individualized and flexible approach to labour market arrangements.