Politically, I think it is pretty smart of Abetz and the others to be fingering piss-weak employers for entering into costly and dodgy enterprise agreements.
And, of course, there is an element of truth to what is being said. But most economists would argue that management quality is endogenous – in other words, we get the managers we deserve in the context of the environments in which they work (legislative and regulatory rules, product market conditions, government assistance, etc.)
There is no doubt that there would have to be considerable changing of the guards in management ranks if we are to diverge from IR club-like behaviour – most managers are neither willing or inclined to fight for the best outcomes for the company and shareholders.
The case of CRA/Rio is an interesting example. Historically, this company was a fully paid up member of the club, although BHP was even more embedded than CRA. But a change of leadership at the top and some new ideas meant that something of a managerial revolution took place in the 1990s. This took a lot of time, many managers were sacked and a great deal of patience (and some legal battles).
And bear in mind that commodity prices were at very low levels when this was taking place. The high level objective of the company was to run only mines and operations that were in the bottom quartile of the relevant cost curve.
There were two basic premises as far as employee relations were concerned, according to the new thinking. Individual employees should feel loyalty to the company, rather than the union, and this loyalty should be reciprocated by the company. And individual contracting, rather than collective deals, was the preferred arrangement.
It would be fair to say that CRA/Rio had the most success in non-coal mining. There were some gains in coal mining and aluminium smelting, but they were much more modest.
But with surging commodity prices, it is fair to say that management at the company became complacent and a very large number of concessions were waved through in the past ten years which would not have been allowed in the late 1990s/early 2000s. And, of course, the Fair Work Act has been very facilitative to the unions getting a foot back in the door.
The point I want to make here is about the importance of individual contracting. People will tell you that statutory individual agreements under the Workplace Reform Act and then WorkChoices never reached much beyond 2 – 3 per cent of employees. But the real issue is that the mere presence of the individual agreement option significantly conditioned collective bargaining.
The unions always knew that if they pushed things too far, an exasperated manager would threaten to shift to individual bargaining, potentially picking off the better employees for superior deals. In this way (as well as constraints on the content of agreements through the prohibited content clauses under the law), some sort of reason prevailed in respect of at least some collective enterprise agreements. Without individual agreements and virtually no constraint on the content of agreements, unions have had a seriously upper hand since the FWA became operation (2010).
And if you think it is easy for a company to simply stick with the award and refuse to bargain, just take a look at the fate of Cochlear. The unions simply refuse to give up the fight and are prepared to damage the company in any way they can, with picketing, etc. I’m just surprised the company hasn’t simply upped stakes and shifted the plant to Singapore.