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Issue #1557      25 July 2012

Corporatising workers

There is nothing that strengthens the hand of employers more than a divided workforce, with workers pitted against each other competing for jobs. De-unionisation, individual employment contracts, exportation of jobs, importation of cheaper labour – they use whatever means they can to divide and rule. The one barrier that stands in their way is the unity of workers in their trade unions. Now the chair of the Productivity Commission (PC), Gary Banks, has come up with another approach to drive wages and working conditions down in a race to the bottom.


Workers preventing a supplier entering the premises face heavy penalties.

In a recent speech to the Economics Society in Melbourne, Banks called for workplace regulation to be included in a review of laws that “restrict competition”. His aim is for competition law to apply to industrial relations. He said labour should be treated in a similar way to other markets which are closely scrutinised to promote competition.

Banks was reported as criticising the government for still supporting “collective action” as a proper basis of workplace relations.

The Howard government’s use of corporations law to impose individual employment contracts (AWAs) on workers was just a taste of what lies ahead if the present exemptions of trade unions and workers from competition law are lifted. If applied to labour-employer relations, the provisions of the Competition and Consumer Act (formerly the Trades Practices Act) would effectively outlaw all trade union rights.

It would require special provisions for trade unions to continue to negotiate agreements on behalf of members or for minimum standards and awards to apply.

Competitive labour markets

The aim is to create competitive labour markets. That is, the unfettered competition between workers for jobs. Just as there might be competition between supermarkets over the price of bread of milk, workers would compete, with jobs going to those who accept the lowest wages, longest hours, shortest annual leave (if any), etc. It would be worker versus worker in a race to the bottom.

“Price fixing” and collusion

Workers would compete on a labour market for jobs as never before. Joining together (in a trade union) in an attempt to fix the price (wages, conditions) of the services they provide would be illegal. It would be construed as collusion (Sections 44ZZ - RF, RG, RJ & RK) and “price fixing”.

“Anti-competitive agreements”

Section 45 of the Act prohibits contracts, arrangements or understandings that would be likely to substantially lessen competition in a market. A set price for workers (wages and other entitlements) as negotiated in an enterprise agreement (or found in an award) would not only lessen competition between workers but also the ability of companies to compete on a market. (They could not undercut each other on wages.)

If the provisions of the Act were extended to workers and trade unions, then individual contracts would be the only legal instrument for determining wages and conditions. That is, unless the government amended the Act to allow for the retention of legislated minimum standards or awards.

Otherwise a trade union would need to seek authorisation from the Australian Competition and Consumer Commission (ACCC) to negotiate on behalf of their members for common wages and conditions (the cost of the service they provide – labour). If not they would be in serious breach of the Act.

If this sounds far-fetched, it already applies to certain groups of workers. For example, the Queensland Branch of the Transport Workers Union is in the process of trying to gain authorisation from the ACCC to represent owner drivers contracted to CEVA Logistics, a car carrier. Without that authorisation the union cannot legally engage in collective bargaining with CEVA.

The ACCC has granted interim authorisation to the TWU and will make its final determination after receiving public submissions. To grant what amounts to an exemption under the Act, the ACCC must be satisfied that there is public benefit from doing so.

Without that authorisation, the only legal option for truck owners is to individually negotiate with CEVA – i.e. compete against each other.

Breaches of the Act can result in criminal and civil penalties amounting to millions of dollars.

Union versus union

Without the inclusion of further exemptions from the Act, the allocation of coverage could also be subjected to competition policy. Any union could recruit any worker, regardless of occupation or industry – opening the door to company unions to divide the workforce.

“Misuse of market power”

If Section 46, “Misuse of market power”, were applied to trade unions, then all industrial action would be outlawed. The only source of power that workers have is their unity in action, their ability to withdraw their labour – what is referred to as a primary boycott in the Act.

With penalties of up to $10 million, it would make it extremely difficult to enforce a union-negotiated enterprise agreement (if there was one) and prevent individual workers accepting individual contracts for inferior (“more competitive”) conditions.

The trade union would be construed as having taken advantage of its power in the labour market for the purpose of “preventing a person from engaging in competitive conduct in that or any other market”.

Trades Practices Act 45D & E

It should not be forgotten that the Fraser Coalition government’s amendments to the Trades Practices Act in 1978 removed trade union and employee exemptions to Sections 45 D & E which outlaw secondary boycotts.

A secondary boycott is defined as action by two or more people acting in concert, which prevents a third party, such as a potential customer or supplier, from dealing with or doing business with the target of the action. The third party, who has nothing to do with the dispute which is the subject of the direct boycott, suffers loss or damage as a result of the boycott.

For example, under the Act, workers on a picket line outside a factory who stop trucks from another company entering or leaving the site are carrying out a secondary boycott against the company which owns the trucks.

If the two or more people taking the action are members or officials of the same trade union then the trade union is deemed to be taking the action and can be subjected to damages actions of up to $10 million as well as other penalties.

The Act resulted in many unions abandoning secondary boycott actions, a powerful weapon in an industrial dispute, particularly when supplies can be blocked to an employer attempting to use scab labour. Notwithstanding various tactics to get around the Act, it seriously weakened the capacity of trade unions to fight.

The lifting of the exemption to the remainder of the Act, as appears to be the aim of not just Banks but the Abbott Opposition, could see the outlawing of basic trade union rights including collective bargaining, joint claims by trade unions and the taking of any industrial action.

The extent to which it completely deregulated the labour market and outlawed any means of defence would depend on special provisions inserted by the government removing the existing exemptions.

PC’s agenda

The neo-liberal PC gave some insights into its intentions for workers in its recent review of the retail industry. It was highly critical of the Fair Work Act and the modern (gutted) award system which provides bare minimum wages and conditions across an industry or trade. It found the minimum wages and penalty rates too high and the system inflexible for individual employers. It is referring here to some of the lowest paid workers in the country!

It found that the current provisions for individual flexibility agreements, which state that under such individual agreements workers must be “better off overall”, might be “inhibiting the adoption of flexibility enhancing provisions.”

The PC proposed “linking remuneration, and therefore unit labour costs, to product demand/output rather than hours worked – approaches include sales commissions or incentives and bonus or profit sharing schemes”.

In other words, it wants a deregulated labour market, lower wages, with maximum flexibility for employers, with employers dealing directly with workers.

PC ideological push

In trying to defend his drive to deregulate the labour market, Banks attempted to deny the existence of the class struggle in the workplace.

“The industrial landscape today is considerably evolved from what it was a few decades ago and far removed from the dark satanic mills that nevertheless still seem to condition much thinking about workplace regulation”, he told the Economics Society.

In other words, the system is based on an outdated concept of a fundamental conflict between labour and capital – class struggle – that requires workers to unite to match the power of the employer. Having denied the existence of the class struggle, the argument is that the protection afforded to trade unions is no longer required. They are a relic of the past, we are supposed to believe.

The media and representatives of big business have been pushing this line for some time. It has been reinforced by Labor’s workplace relations minister Bill Shorten. Claiming that individual workers can freely speak up in workplaces he told delegates at the recent ACTU Congress that, “we mustn’t let ourselves get fitted up – that somehow we are the class warriors.”

“I do not subscribe to the view that the union movement would seek conflict in the workplace, instead we would seek harmony, I believe. That is the Labor way” (See Guardian No 1549, 30-05-2012) was Shorten’s response to the question of applying competition policy to labour relations. He said that a Labor government “will never support leaving the wages and conditions of Australian workers to the market alone”.

“The bottom line is that people are not products,” he said, acknowledging that there is a human dimension to the labour market. “This does not mean that labour markets are not competitive, but that the labour market is not unfettered.”

But he also said that “you should have competition with labour markets.”

Shorten failed to rule out some form of application of competition policy.

Opposition leader Tony Abbott ducked direct comment: “Business and community groups have been saying for months that we’ve got a flexibility problem, we’ve got a militancy problem.” This suggests he is sympathetic to Banks’ position, to say the least.

Gary Banks is a pro-big business, conservative economist with impeccable neo-liberal grooming at the World Bank, OECD and GATT (now the WTO). It is time the government sent him and his fellow neo-lib commissioners running back into the private sector where they belong. The PC should be disbanded and Sections 45 D & E repealed as originally promised by Labor when it came to office in the mid-1980s.  

Next article – Editorial – Skills: rebuild the public sector

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