by Nick Wailes & Russell D. Lansbury

IV. The process of collective bargaining over flexibility

B. Managed decentralism

The movement to managed decentralism reflected the view that wage restraint was not enough and that changes in the overall pattern of industrial regulation were needed to facilitate improved economic competitiveness. The managed decentralism approach attempted to use the existing mechanisms of bargaining and determination of wages and conditions to effect changes which would facilitate increases in labour market flexibility. Figure 4.2 below indicates the process through which wages and conditions were adjusted during the period of managed decentralism and the extent to which this altered the traditional bargaining system.

Starting with Accord Mark III, the ACTU and the ALP accepted the need to make changes to the patterns of industrial regulation. This agreement was translated into a set of wage determination principles developed and administered by the AIRC (see 1.3 above for more details, and also Dabsheck, 1989 and 1994). These principles attempted to facilitate the growth of productivity bargaining. It attempted to do so by tying increases in wages beyond the minimal increases contained in the first tier to union and employer agreements to alter award regulations which could be shown to increase productivity. This approach not only retained the wage restraint benefits of the initial Accords, but also provided a mechanism through which changes in the pattern of industrial regulations in one industry or occupation did not automatically flow through to other industries and occupations.

Sheldon and Thornthwaite (1996) suggest that the managed decentralism agenda had its origins in an agreement reached between unions and employers in the metal trades industry and was subsequently generalized to the entire federal award system by its incorporation in the Accords after 1987. The high degree of organization of both employers and workers in the metal trades industry, and a long tradition of coordination and bargaining between the parties, meant that this model worked effectively in this industry. However, the absence of these factors in other industries and sectors meant that productivity bargaining was not adopted to the same extent in other industries and sectors of the economy.