The Impact of Changes to Financial Management and Organizational Culture - Research Paper Example

The labor market of Australia has been synchronized through role of the state in Australian Industrial Relations, since the early 1980s. Role of the state in Australian Industrial Relations generally has led to powerful pressure for greater labor market flexibility in the country. In Australia, conciliation and arbitration remained protected by the constitution; however, industrial relations reforms aimed at severely weakening the system were implemented in the 1990s. According to Wooden (1999) the collective bargaining coverage has dropped. Australian Industrial Relations of collective bargaining outcomes have seen declines in reimbursements, and noteworthy changes in working time measures. Union density has dropped, as also has public sector employment. Systems of conciliation and arbitration have operated nationally within the states of Australia. Multi-employer bargaining systems resulted. Market deregulation generally has led to pressures for labor market deregulation, as Australia struggled to remain internationally competitive. This paper reviews the role of the state in Australian Industrial Relations. Australian Industrial Relations of collective bargaining coverage too is falling, albeit under a quite different set of circumstances. Let us start with the obvious: Australia is a federation of states and territories. Nolan (1998) has provided a useful perspective of the Australian labor law reforms in the later half of the last decade of previous century. His concept was to undertake Australia as a federation and then state by state analyzing the status, of collective bargaining. Multi-employer awards, procured through conciliation and arbitration, at both federal and state level, were historically the primary forms of wage fixing. In 1990 such awards were estimated to cover some 5,652,200 employees – about 80 per cent of the labor force (McCarry, 1998). At federal level in Australia, enterprise bargaining has been promoted through the Reform Act 1993, amending the Industrial Relations Act 1988 and the Workplace Relations Act 1996. (Patterson, 2001) The 1993 amendment allowed for certified agreements and enterprise flexibility agreements; the Workplace Relations Act restricted the nature of awards and provided for Australian Workplace Agreements. Both certified agreements and Australian Workplace Agreements can be union-free and individual employment contracts. According to ACIRRT (1999) at this situation level, only New South Wales and Queensland (both underneath industry governments) have promoted legislation painstaking to protect reconciliation and arbitration and multi-employer awards. Victoria has ceded its industrial relations powers to the Federation; Western Australia has adopted a voluntarism system that has spread rapidly (Wallace-Bruce, 1998); Tasmania’s move to enterprise level bargaining, with or without unions, began in 1992 (Garnham, 1998); and South Australia is heading down the same path. The Australian employers were the intended beneficiaries of Australia’s Workplace Relations Act. Rimmer (1997, p. 56) predicted that the new legislation would open the possibility for increased individualization of employment regulation, and at the same time would bring intensive legal harassment of unions pursuing their normal activities. As events would show, he was correct on both scores. Management strategy had already been a key factor in falling union density rates in Australia. Peetz (1998), using data from a period immediately prior to the introduction of the Workplace Relations Act, demonstrates that employer strategy to enhance productive efficiency was the most significant influence on union collapse. Where employers saw the award system as failing, they pursued more aggressive anti-union strategies. Where employers sought advice from lawyers, union density fell markedly; a major change with the appointment of new senior management too saw density fall; as did the use of over-award payments to employees. Management strategy was having a clear de-unionizing effect prior to the Workplace Relations Act. This trend continued in the period post-1997. Government and major employer hostility was evidenced through a series of major disputes arising from challenges to “strategically placed unions” (Ellem, 1999, p. 141), with employers moving to cut out the right to collective representation in a range of industries (Ellem, 2001). Employers in the late 1990s pushed for a world of workplace harmony free from the legal shackles of the “3 Ls” – legislation to establish the desired framework, with litigation and lock-outs becoming the favored strategic employer options (Sheldon and Thornthwaite, 2001, p. 220). Employer control and dominance for Australian employers took an additional form during the 1990s – changes related to the structure of the workplace. The “employment revolution”, which involved: … the progressive abandonment of the customary legal relationship between an employer and an employee … together with the translation of the full-time, permanent workforce into a workforce which was at best casual, part-time or independent and, at worst, unemployed (Macken, 1997, p. 39), proved to be lethal for unions. Union decline was significantly greater in workplaces with a high proportion on “non-core” employees (Peetz, 1998, p. 119). The combined result of employer strategy, the Workplace Relations Act and the structural changes in the workplace, is that multi-employer award coverage has shrunk rapidly over the past decade; that enterprise bargaining has flourished in large workplaces; and that individual employment contracts have become common. Official data on industrial relations coverage are not available. It has been estimated, however, that currently the split is: about 34.95 per cent of employees remain covered by multi-employer awards; about 29.5 per cent are covered by awards and enterprise level agreements; about 4.95 per cent are covered by enterprise agreements only; and about 30.5 per cent are covered by individual employment contracts (ACIRRT, 1999, p. 77). In Australia, individual contracting has grown from some 20 per cent of the workforce in 1990 to some 34.78 per cent in 1996, a growth of 76.01 per cent, in a changing environment, and with data that take no account of the deregulatory effects of the Workplace Relations Act 1996 in the period 1996-2000. Changes to cooperative bargaining exposure and unions concentration levels have led to an inevitable outcome in the overall decrease in working conditions in both countries. Bargaining arrangements in the Australian public service have remained static though individual employment contracting is growing. Bargaining is focused at the level of the enterprise or the department. The enterprise flexibility agreements system introduced in 1993 was widely applied in the public service – possibly as a result of Government directives. The public sector share in employment has declined significantly over the past decade – from 31 per cent in 1987 to 20 per cent in 1999. This has had an important impact on the level of public sector union membership, which has declined by 18 per cent in the last seven years (Peetz, 1998, p. 6). In Australia, the most important change has been the shift from complete uniformity to relative or emerging diversity in bargaining structure and outcomes. A key factor in this has been the move from a bargaining system based almost completely on industrial relations to one that combines individual and collective employment contracts and mixes standard permanent employment with fixed term contracts and other non-standard arrangements, including the use of external contractors and consultants. (Danin, 1995) Nor should the impact of changes to financial management and organizational culture be overlooked. The extent of this diversity should not be overstated, however; most public sector employees still enjoy broadly similar conditions of employment, as is to be expected, given similar labor market factors, and union-based collective bargaining remains vitally important. Bibliography Australian Centre for Industrial Relations Research and Training (ACIRRT) (1999), Australia at Work: Just Managing?, Prentice-Hall, Sydney.. Danin, E. (1995), "We can’t overcome? A case study of freedom of contract and labor law reform", Berkeley Journal of Employment and Labor Law, Vol. 16 No.1, pp.1-167. Ellem, B. (2001), "Trade unionism in 2001", The Journal of Industrial Relations, Vol. 43 No.2, pp.196-218. Garnham, J. (1998), "Tasmania’s move to flexibility and choice", in Nolan, D.R. (Eds), The Australasian Labor Law Reforms: Australia and New Zealand at the End of the Twentieth Century, Freedom Press, Sydney. McCarry, G. 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