Arbitration System in Australia - Literature review Example

The of arbitration in Australia encompasses economic and social equality. This equality continues further than most political theorists realize. Its evolution broadens throughout the state, including historic triumphs, and economic growth. An assessment of state intervention in the context of changing forms of state regulation of work, wages and conditions in Australia in the 19th century and the debates over the institutionalization of arbitration in Australia will be considered in this paper. In addition, there will be an exploration of social relations and its effects of arbitration, with attention to problems involving inequality, economic growth, wages policy, women’s wages and labour market participation studied. To conclude, an examination of the contemporary attack on arbitration and the move toward more laissez-faire industrial relations will be assessed. Economic and social equality in the Australian arbitration is regulated by federal regulation which is exemplified in its arbitration act. According to the Australian Centre for International Commercial: “In general international arbitrations in Australia are governed by federal legislation, the International Arbitration Act 1974 (Cth). The Act incorporates an internationally accepted law on arbitration known as the UNCITRAL Model Law on International Commercial Arbitration. However, parties are permitted to exclude this law. Where they do so the arbitration will be governed by the Commercial Arbitration Act of the State or Territory where the arbitration is held.” ACICA (2006). “As a response to the inadequacies and disparities of national laws, the Model Law presents a special legal regime geared to international commercial arbitration, without affecting any relevant treaty in force in the State adopting the Model Law. While the need for uniformity exists only in respect of international cases, the desire of updating and improving the arbitration law may be felt by a State also in respect of non-international cases and could be met by enacting modern legislation based on the Model Law for both categories of cases.” SICE (2007) Although there was periodic change, state intervention was instrumental in structuring the state regulation of work, wages, and conditions in Australia in the 19th century “Australia’s strategy of using the tariff to sustain wage levels divorced from labour productivity (at least in secondary industry) reached its zenith in the 1950s under the powerful influence of John Blackjack McEwen. He also stated, that in reality, the standard of fairness and reasonableness was set by the higher wages paid (and afforded) by higher productivity primary industry. It was considered unfair and unreasonable to pay lower wages to those whose employers, through no fault of the workers, could not afford to pay wages at the same levels. Faced with the choice between greater wage dispersion and lack of international cost competitiveness, Australia chose the latter.” Harper (2001). Opperman and Lincoln (2006) said it best when they stated that Australia has been increasingly promoted and recognised as an attractive venue for arbitration in the Asian region. The political environment is stable and the laws applicable to arbitration are well understood and effective in supporting arbitral processes. Australian arbitration became occupied with work classifications which led to the realization that conflict resolution was required. “The Employment Relations Act abolished the system of boards and the Industrial Relations Commission, and replaced them with a newly established Employee Relations Commission (ERC). The new ERC had limited capacities to resolve disputes and determine matters….Minimum hourly rates of pay were set for work classifications in the industry sectors previously defined under the Employee Relations Act 1992, and confined to the first 38 hours worked per week. This situation still prevails.” Gahan (2005) Industrial relations forced conflict regarding economic markets in Australia. Cockfield (2006) stated, where workplace bargaining and militancy has occurred it has been in competition with arbitral regulation....The relationship between arbitration and the workplace was not this straight forward. “The problem of accommodating pure economic considerations based on an ideal economic system to industrial relations pressures of the real world is a persistent feature of any system of wage fixation. Economic policy framed without sufficient regard to these pressures in the labour market can have perverse economic effects through prolonged unemployment and/or industrial unrest. The industrial structure of the labour market and the norms applied in wage determination provide the basis for conflict centred on the distribution of income between wages and profits and between the wages of one group of workers and others, resulting in cost inflation and/or unemployment. Current proposals for the resolution of this conflict are based on two opposite courses: decentralisation and centralisation of wage deter mination. The difficulties attendant on each course are discussed in the light of experience with wage indexation and the development of more decentralised wage fixing since the abandonment of indexation. It is suggested that there is no perfect solution to what is in substance an institutionalised conflict about the distribution of income. A compromise approach is called for in which economic and industrial relations requirements must find mutual accommodation.” Isaac (1982). It should also be noted that John Howard gave an early lead in establishing mechanisms which brought some oppressive trade union conduct within the purview of the Courts when he introduced section 45D of the Trade Practices Act in 1977. Although it took some time for employers to see the potential for this clause, it is now well established as an effective counter to some secondary boycotts. Chaney (1987). Australia Now (1968) printed that over the last decade significant legislative reform of the workplace relations system by the Australian Government has contributed to a strong economic performance and higher standards of living for Australians. The workplace relations reforms that began in 1996 with the Workplace Relations Act 1996 (WR Act) have helped to achieve high productivity and wages growth. “Australian Conciliation and Arbitration Commission adopted the principle of equal pay for work of equal value. However it was estimated that only 18 per cent of adult female employees obtained equal pay under this ruling because in most cases females and males worked under different awards. The Commission continued to state that the male wage takes account of family considerations and it will not apply to females.…Generally, studies with a gender focus incorporate two of the distinguishing features of women’s working lives, fewer years of workforce participation and lower earnings, and analyse the way in which they interact to restrict superannuation accumulations. However, different models of projected superannuation accumulations vary considerably in the number and pattern of individual working life profiles and the assumptions used in the estimation of future savings.” ACAC, (n.d.) According to O’Donnell (2004), many of the proponents of the inclusion of the conciliation and arbitration power in the Constitution assumed it would rarely be relied on in practice and expected that the normal means of determining the terms and conditions of employment would be through collective bargaining. “A number of criteria will be addressed, including inflation, unemployment, allocation of labour, productivity growth and responsiveness to economic shocks. The evidence is inconclusive in terms of a direct relationship between the wage setting decisions of the arbitration system and macroeconomic performance. Nevertheless, there are important institutional features of the arbitration system that are important in shaping the growth path of the Australian economy over the past century.” Burgess (2004). Mitchell and Watts (1997) stated that persistent unemployment arises because free market ideology has overridden collective responsibilities. To restore full employment the government must provide permanent employment for all the unemployed in environmentally sustainable and useful jobs. “The current reform objective of developing more competitive workplaces has been incorrectly identified with an alleged need to deregulate the labour market. An examination of current reform proposals reveals that there is an attempt to increase the importance of internal modes of regulation controlled by managers at the expense of external regulation such as awards. Such a development is likely to increase inefficiency and inequality in the labour market, as formal, external modes of regulation can promote both international competitiveness and fairness. Greater attention should be devoted to identifying better ways of linking external and internal modes of regulation to improve both efficiency and equity at work.” Buchanan and Callas (1993). Macintyre (2005) stated, in place of older patterns of unilateral action, where the buyers or sometimes the sellers of labour used their market power to impose their will, or collective bargaining, where the parties negotiated with the ever-present threat of recourse to lockout or strike, the Court now determined pay and conditions according to what the legislation described as an equitable award. “Australia and some European countries experienced economic "miracles" in the 1990s that reversed prior poor export, employment, and fiscal performance. The miracles might provide transferable lessons about economic governance if it were true that economic governance institutions are malleable, and that actors deliberately changed those institutions in ways that contributed to the miracles. This paper analyzes Australian policy responses to see whether remediation should be attributed to pluck (intentional, strategic remediation of dysfunctional institutions to make them conform with the external environment), luck (environmental change that makes formerly dysfunctional institutions suddenly functional), or just being stuck (endogenous or path-dependent change that brings institutions into conformity with the environment). These distinctions help establish whether actors can consciously engineer institutional change that is "off-path." While pluck appears to explain more than either stuck or luck in the Australian case, the analysis suggests that both off-path behavior and policy transfer are probably rare.” Herman (2006). According to Vassilopoulos (1997), in Australia since the late 1970s, there has been a large increase in the rate of unemployment. In 1977, it was 5.6%; today it is 8.5%. Yet since 1983 real rates of pay have fallen in the order of 17-28%, depending on the award.” James Vassilopoulos In addition, some would even argue that Arbitration limits you to a single persons decision-making, without the opportunity to submit your case to a jury through the court process. Many feel juries are more likely to be sympathetic to you as an individual employee. Bennett (2007). However, Steketee (2007) stated that the substance of Labors policy - and the main reason the unions like this is that it restores the role of the umpire in the industrial relations system. It does so by adopting the national system established by the government under the Constitutions corporation’s power and which Labor state governments fought tooth and nail in the High Court. To review the institution of arbitration in Australia the following passage summarizes the conflict: “The Constitution of the Commonwealth of Australia enacted by the British Parliament in 1900 made provision for the parliament of the new Commonwealth to make laws with respect to conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State. By the Conciliation and Arbitration Act of 1904 the parliament established the Commonwealth Court of Conciliation and Arbitration. The high purpose of the new court was to protect the public from the effects of industrial disputation by requiring that industrial disputes be subject to compulsory conciliation and arbitration as a substitute for strikes and lockouts. While the concept of compulsory arbitration had already been adopted in some of the States and the need for a federal industrial arbitration system was generally acknowledged by the members of the Commonwealth Parliament, the form the system should take and the powers the new Court should exercise gave rise to controversy.” Macintyre and Isaac (2004). In conclusion, John Howard’s leadership of the Coalition to its second term of government was classic leadership underpinned by belief and core values. Reith (1999). The Howard Government has increased regulation in the industrial relations sphere. Far from its rhetoric about the need to cut legislation dealing with labour and industrial relations, it has gone about increasing regulation and intervention in the processes of agreement making. Patmore, G. and Kelly, P. (1991 and 1992). REFERENCES ACICA (2006) Australian Centre for International Commercial Arbitration. 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(2004)mployment Studies Centre, Newcastle Business School, University of Newcastle, Callaghan The Federal Arbitration System and Australian Economic Performance Employment [online], Studies Centre, Newcastle Business School, University of Newcastle, Callaghan, Australia. Blackwell Publishing. Available from: [Accessed 25 April 2007]. Business Victoria (2007) Business Victoria: The Place To Be. Paving the Way For Older Women in the Workforce 2025: Australian Women’s Labour Market Participation and Their Retirement Incomes: A Literature Review. Chapter 3. [Accessed 29 April 2007]. Chaney, F. (1987) Light On the Hill: Industrial Relations in Australia. The Opposition’s Industrial Relations in Australia. [online], [Accessed 1 May 2007]. Cockfield, S. (2006) Labour History. Arbitration and the Workplace: A Case Study of Metters Stovemakers, [online], [Accessed 1 May 2007]. Federal Minister for Employment (1999) Workplace Relations and Small Business. 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The Path to full Employment Policy Forum: Unemployment in Australia [online], 30 (4), 436–443, Available from: [Accessed 25 April 2007]. O’Donnell, A. (2004) The Age. The Road From Harvester. [online], [Accessed 1 May 2007]. Opperman, D. and Lincoln, B. (2006) The International Comparative Legal Guide To: International Arbitration 2006. A practical insight to cross-border International Arbitration in 2006. [online], 36. Available from: [Accessed 30 April 2007. Patmore, G. and Kelly, P. (1991 and 1992) Labour History and The End of Certainty: A Short History of Industrial Relations. [online], Available from: [Accessed 1 May 2007]. Schwartz, H. (2006) Governance Explaining Australian Economic Success: Good Policy or Good Luck? [online], 19 (2), 173–205. Available from: [Accessed on 29 April 2007]. SICE (2007) Commercial Arbitration and Other Alternative Dispute Resolution Methods: B. Salient Features of the Model Law. [online], Available from: [Accessed 1 May 2007] Simon, G. (2004) ZNet. Labor in Australia: Troubles Ahead. [online], Available from: [Accessed 1 May 2007] Steketee, M. (2007) The Australian. Commission a sacred cow thats easy to kill. [online], Available from: [Accessed 1 May 2007]. Socialist Equality Party (2005) World Socialist Website. Australia: some plain truths about the fight against Howard’s IR laws. [online], Available from: [Accessed 1 May 2007]. Vassilopoulos, J. (1997) Green Left Weekly. Low pay, no way: Solving the jobs crisis. The economic history of the Commonwealth of Australia. [online], Available from: [Accessed 29 April 2007]. Read More