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The Future of the Union Movement

I come from a working class family. And it would be appropriate to emphasise the “class” part of that description.

My father, who was a good man, had a social conscience and was always on the side of those he felt were unjustly wronged or oppressed. He was a staunch unionist and participated in local politics being elected as a Labor candidate to our local council in Charters Towers.

He talked disparagingly about “bosses” and knew instinctively they were untrustworthy. He felt the same about the “upper class” and abhorred their airs and graces. His sister, who was a very accomplished lady becoming one of the first women elected to local government in Rockhampton, in his eyes had the misfortune to marry a lawyer and thus defect to the upper class. He talked scornfully about going to dinner with her in her home and his having to contend with serviettes and pressed linen tablecloths.

Looking back now, in retrospect they were both admirable people, except that, as he saw it, she had been mired by deserting her “class”.

But there was no doubt that the brotherhood (and it certainly was a brotherhood in those days with women playing little or no substantial roles) of the union movement provided consolation to my father. And I can remember him in his union role soliciting donations from his poorly paid peers (he, himself was a very generous man) to help a widow of a recently deceased workmate and others in similar difficulties.

And mirroring some of the themes of today’s union movement, he despised banks, was suspicious of foreign workers and was a champion of protectionism. What’s more he criticised Paul Keating for promoting superannuation, because in his eyes that was just the government’s way of depriving people of their pensions to which they were justly entitled. He also echoed some of the union’s slogans of those days, for example “one man, one job”, which if followed to its logical conclusion meant unchallenging work and a myriad of demarcations.

It took me a long time to understand that many workers had been indoctrinated to believe that work could not possibly be fulfilling. As a consequence, if you came to work with that attitude your ambitions were largely about securing as high a wage as you could, doing as little work as you could, and placing impediments in front of employers to ensure they employed as many people as possible without any thought of the profitability of the enterprise.

My first brush with unions occurred when I worked in a remote regional location. Having to provide all the services to support a remote site, I employed a cook. An AWU organiser arrived on site one day and demanded to see the union tickets of those staff his union covered. As a then government entity, under a Labor government, union membership was effectively compulsory. The organiser was incensed that the cook didn’t have a union ticket, despite the fact that when he applied for employment he had given an undertaking to join the union. He demanded I sack the cook because he hadn’t honoured his undertaking to join the union. “You wouldn’t want to employ a blatant liar!” he asserted. Knowing what duress such people were put under to join the union, I countered, “But you would feel comfortable coercing a liar to be member?” He snarled a few obscenities and left.

My next confrontation with a union occurred a little later. I had heard rumours that one of the trade’s assistants I employed, a big stocky fellow, was aggressively bullying his workmates out of hours. Being a remote community we provided accommodation and meals for all of our workforce and maintaining order outside working hours was perhaps the most difficult aspect of the job. Once I had gathered enough evidence to be assured this was the case, I sacked him. However he was the ETU union delegate. I soon enough got a phone call from union head office pointing out the error of my ways, suggesting he had been sacked because of his union role, and demanding his reinstatement. I refused to do so. Shortly after I also received a phone call from my boss who seemed rather agitated that I had run afoul of the union who suggested I should reinstate the offender just to “maintain peace” with the union. I told him that I could not in all conscience do that, and if he insisted on that outcome I would resign. I had considerable leverage here because the organisation had found it hard to fill the position I occupied and it was acknowledged that under my management the site was performing much better than previously. There was some gnashing of teeth but after a time he agreed that I should stick to my guns. He then informed me that the union had insisted on a meeting on site where their most senior regional official would attend to contest my decision. Now I was pretty naïve in the ways of industrial relations and knew that my peers in management roles at other sites feared the unions. As a result I became a little anxious about what might transpire at the scheduled site meeting, and I lost a little sleep on the night before as I considered what the outcomes might be.

When I got to work that morning a representative of the men who were domiciled in the company accommodation asked to see me. I invited him into my office. He said, “I have here something that might help you”. He then presented me with a petition, signed by all the men that we provided accommodation for, supporting my decision to sack the union delegate. When in due course the regional official showed up for our meeting, much to the surprise of my superior, I showed them the petition and the union official immediately packed up and went home. My boss was elated. It seemed as though this was the first union confrontation he had been associated with that produced a positive result!

In retrospect it taught me a great lesson. Many of my peers tried their best to have a good relationship with the unions. I, on the other hand, knew that the most important relationship I could have was with my employees.

As you might imagine I, coward that I am, avoided having discussions about these issues with my father!

In terms of industrial relations, my next assignment proved much more difficult. I decided to try my hand at improving a very industrially aggressive site. It had been languishing for many years, with poor productivity, high turnover, frequent strikes and industrial militancy.

When I arrived at this site, it seemed to me that the workforce was in a perpetual struggle with management. They wanted to show management who was really in control. It didn’t take long to find out that there was no doubt who was in control and it wasn’t management! The strange thing was, that here was a workplace where the employees virtually ran the place, yet it was the unhappiest workplace I have ever been associated with. The unions and their site representatives were dominant.

I had some really capable managers working with me and we eventually made a difference. To my mind the biggest change came when I began to talk directly to the workforce. The unions tried to oppose this but I insisted it was my right as the employer. We assembled the workforce in the lunchroom and laid out to them in the simplest terms how their actions were compromising their long-term employment prospects. We made many gains but in the end it was necessary to downsize. It was instructive that even though we halved the workforce I could not ascertain any difference in the productivity of the workforce.

My next appointment really focussed my attention on industrial issues. I had to start off a new greenfield site and consequently decided to negotiate an agreement to cover the site. This occurred at the beginning of the Hawke Government’s microeconomic reform agenda. For the first time in my memory this translated to the ACTU actually promoting productivity improvements, although this still seemed to be an anathema to individual unions. After negotiating for eighteen month we were able to put in place an agreement that provided substantial productivity gains compared with like enterprises elsewhere. Mind you, it still required the signature of seven participating unions!

With the relative success of that venture behind me I was appointed the manager of another greenfield site. By now the microeconomic reform agenda had progressed even further with the ACTU actively trying to rationalise union coverage. Consequently the next industrial agreement only had two union signatories and the productivity gains were such that I was able to run my business with only half the number of staff as comparable enterprises elsewhere.

Mind you the advances we made were not widely taken up. In retrospect I would have to say that there were two principle reasons for this.

Firstly most of my peers feared unions and bent over backwards to appease them in order to avoid conflict.

Secondly, and perhaps most importantly, they sought out and acted on the advice of industry IR people who were very much part of the “IR Club”, and were unimaginative and reactionary in their approach. I, on the other hand, sought out more independent IR advice and valued those who could craft new solutions for IR problems rather than passively accept the status quo.

I relate this history just to demonstrate I have considerable experience in IR. Indeed for much of the late eighties and early nineties it consumed a considerable part of my time as a manager. This indicates how dysfunctional IR can prove for management, drawing needed attention away from the basics of the business to fight the bushfires IR creates.

As one of my colleagues once put to me, “The problem with IR is that the unions encourage workers to believe that managers have at their disposal a huge bucket of money and it is management’s job to keep them from it and the union’s job to get at it.” Little thought is given to enterprise profitability. Time and again we see highly industrialised workplaces mired by inefficient practices and exorbitant wages and allowances become uneconomical and being forced to close. It is only when such places are in imminent danger of collapse that any industrial concessions are made. Whereas unions, who seem to put such high stock in permanent secure jobs would be well-advised to always have an eye on the profitability of the enterprises that employ their members.

No longer involved in industrial relations (to my great joy) but being still an interested observer, I thought I might make some observations on the changing role of unions.

To begin with Trades Unions directly represent far fewer workers now than they ever have. In my father’s day workers took pride in belonging to a union, and a huge majority did. Even at the time I was negotiating significant industrial agreements almost 40% of the workforce belonged to a union. Today only 14% of workers are unionists. Most employees who belong to unions are coerced into doing so. They are either the employees of large organisations whose EBAs virtually compel them to be in unions or are government employees in Labor governments where compulsory unionism is enforced. It is indicative that almost 40% of public servants belong to a union but just over 10% of private sector employees do so.

The union dilemma is highlighted by the fact that its membership (like the population at large) is aging but young people have little interest in belonging to a union. Of employees in the 15-19 age group, only 6% are unionists. Maintaining membership, let alone increasing membership, in the face of this demographic will be challenging to say the least. Unfortunately from what I can see the union business model seems to have changed very little in response to this challenge. They have made little effort to change their product offering and rely more and more on finding ways to coerce people into membership.

Despite their declining membership unions have two key defining characteristics.

  1. Considerable wealth, and somewhat related,
  2. Undue influence over the Labor Party.

Having to rely on its continued existence on coercion, and with little notion how to create a value proposition that might be attractive to more workers, it is inevitable that the Union movement, putting all its eggs in one basket, is now over-reliant on its political influence for continued survival. They require the intervention of the Labor party in the workplaces of Australia to compel union membership.

Yet, because of that, the unions have become very adept at waging political campaigns, being able to marshal large numbers of volunteers, utilising social media well, and managing effective TV and radio advertisements. Their campaigning efforts could be credited with the removal of the Howard Government, and the competitive showing of the Bill Shorten opposition at the last election.

As a consequence we have an organisation who effectively represents a very modest portion of Australian voters being able to significantly influence the policy of the Labor opposition and who will no doubt want their pound of flesh when Labor is returned to government. Effectively, Labor in pandering to its union sponsors ensures those representing barely 10% of working Australians will determine the policies that impact on all Australians.

This change in union focus from one of workplace activism to political influence was nicely captured in a quote from Tim Lyons, former Assistant ACTU Secretary, who wrote in Meanjin Quarterly, “The union becomes not something about your work and your life, but an organisation that periodically tells you how to vote.”

To make matters worse, many union officials seem more interested in securing Labor endorsement for election to Parliament than they are about the welfare of their members.

This union influence is directly correlated to union wealth. Now one might wonder how these organisations with declining membership might be awash with money. The Trades Union Royal Commission has thrown considerable light on how that has occurred. Essentially it results from collusion between big business and unions where business effectively pays unions to gain benefits from EBA negotiations at the expense of their members. Opposition Leader, Bill Shorten, was exposed as having done this to the detriment of low paid workers.

The recent decision by the Fair Work Commission to reduce the penalty rates of some workers for working on Sundays exposes the hypocrisy of the union movement. Many EBAs have traded off penalty rates. Sometimes even without any compensation to base rates of pay. If colluding employers are prepared to inject enough into union coffers, I guess any industrial outcome is possible.

The Federal Government is about to enact legislation preventing Unions and Employers from colluding to produce such secret deals without the knowledge of their membership. This should reduce the volume of the revenue flow to unions. In the past, Unions have also received funding from employers for the provision of dubious services like training. This will also be harder to hide.

And let me be candid here. This sorry state of affairs has been aided and abetted by big business which has compromised their principles to do tawdry deals with unions. In the long term both employees and shareholders have been taken for a ride.

The wealth of particular unions has also allowed them to blatantly flout the law. The CFMEU and MUA in particular, are prepared to break the law and view paying the fines imposed by the courts as a legitimate business expense. It is likely that courts will increase the penalties for serial union offenders. In a current case where the CFMEU was initially fined $23,500 for its role in blockading the Perth Airport Extension project, on appeal by the Australian Building and Construction Commission the fine was upgraded to $250,000, which is probably nothing like the cost to the contractor and subsequently the public.

Cutting off some of their dubious revenue streams will reduce the wealth of unions. This would have two positive effects.

  1. It would reduce their influence on the Labor Party which would be then compelled to seek a broader mandate.
  2. It would increase their reliance on membership which would necessitate the development of a better value proposition for their members.

As the current situation stands both the Labor Party and the Unions are unduly dependent on each other.

For the Union movement, it depends on ongoing sponsorship by the Labor Party. It needs Labor Governments to put in place laws and regulations that coerce or compel people to join unions. Without such support union membership would quickly wane away.

The Union movement looks to a return of the industrial conditions of the 1960s where manufacturing industry prospered and along with it, blue collar unions. They seek a return to protectionism and restrictive work practices in a misguided attempt to reverse the course of history.

Today the industry sectors that have greatest union membership are, education and training, healthcare and social assistance, transport, postal, warehousing, public administration and safety.

The traditional powerhouses of blue collar membership, manufacturing and construction have little more than 10% union membership. Whilst the other union mainstay, retailing, has just 10% membership.

If you add to this picture the increasing reluctance of young people to join a union, then you would have to say the long term prospects of the union movement are not good.

As I referred to above, I have a considerable history of battling with unions. And yet enough of my father’s blood courses through my veins to understand that there is still a place for unions, largely to guard against employer excesses. You only have to look at the Howard Government’s Work Choices to understand this. Work Choices would have been a perfectly reasonable set of industrial prescriptions for principled employers. But unfortunately exploitative employers abused them. Because there will always be abuses of power on both sides of the employment equation, the welfare of employees need to be safeguarded. A principled, compassionate union, more interested in the welfare of its workforce and less interested in advancing political agendas could provide such a safeguard and maybe stem the declining membership. But I guess I was always an idealist!

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  1. 1 Comment(s)

  2.   By R.Ross on Apr 1, 2017 | Reply

    All systems become corrupted and Unions are no different.

    However, if anyone wants to see what sort of a world there is for workers where Unions are minimally present, if at all functional, then look to the United States which crushed its union movements long ago and where workers have the least rights, the lowest wages and the worst worker conditions in the developed world.

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