The gap between work and choices

ON THE GRASS outside an abattoir on the Western Plains of New South Wales, in the dark, cool air, a few workers are forming the late-night shift of a picket. Some journalists are hanging around, talking to them.

It is less than a week after the federal government's new industrial relations legislation, known as "WorkChoices", has taken effect. The men are outside the Cowra abattoir, not inside, because they have received termination notices. Twenty-nine have been sacked from their jobs – for "operational reasons". And they have been offered re-employment. To be precise, an unidentified twenty of them will be offered re-employment – if they go back to work for substantially less than what they had been earning before the new law came into force. The drop in pay is typically around $180 a week, nearly a quarter of their wage. For some shift workers, it is as much as $300 a week. The men are angry. Some do not know how they will meet their mortgage repayments on the lower rate of pay.

What is happening at Cowra on this April night in Cowra tells us much about the WorkChoices legislation. For one thing, it shows us how much easier it is for employers to dismiss employees.


I MET BRAD at a local meeting that had been organised by a Brisbane community group to talk about WorkChoices. He was an EFTPOS technician – well-dressed, tall and quietly spoken. He told how his workplace life had been getting harder. He had been harassed, mainly by his supervisor. Eventually he lodged a complaint. A top manager came to Brisbane, met with Brad, his supervisor and others, sorted it out and went away. Mission accomplished. Except it wasn't. The harassment started again. And it got worse. So Brad lodged another complaint, to someone else at the top. On his first day of holidays, Brad got an SMS from his general manager, asking for his home address; he was told they had some important "confidential documents" to send him. When he got back, there was a registered letter waiting for him. It said that he had been made redundant with the offer of a few weeks' redundancy pay.

His firm had more than a hundred employees. But Brad had been dismissed for "operational reasons" – just like the Cowra workers. And under this provision, even if you have been unfairly and capriciously targeted for dismissal – whether you have been singled out because you ask too many questions or do not share the corporate culture – the reason you were selected for redundancy is "irrelevant". An operational reason – that is, something of a technical, economic or structural nature – does not have to be the main reason why you lost your job. It just has to be part of the reason.


COWRA ALSO ILLUSTRATES how workchoices can be used to cut pay and conditions. I do not wish to overstate the problems with WorkChoices. Whatever the negatives WorkChoices holds for Australian workers, exaggerating them only serves to disempower the already weakened, making it harder to move forward. That said, there are many examples of cuts in pay and conditions – particularly through the use of AWAs – that have become widely known.

In Sydney, within days of WorkChoices taking effect, Amber Oswald, a sixteen-year-old casual working in a juice bar, was put on to an AWA that cut her weekly pay from $97 to $65. Her boss told the media: "If they don't want to sign, they can leave ... It's not about what's fair, it's [about] what's right – right for the company." Amber was able to challenge it through her union because the AWA had not been offered properly – she had not actually seen it before she was put on it. But after winning her case for back pay, she was taken off her Sunday shift which had attracted double-time rates. One day, a few months later, she was told not to come in the next day because the store was closed – for "rebranding".

Therein lies the problem for many casual workers. In theory, workers are still protected from "unlawful termination" if they are sacked for refusing to sign an AWA. It is expensive – a case will cost upwards of $30,000 to run through the federal court – so if you are not wealthy or in a union, it is at best a threat. But for casuals, if you do not sign you can just find that your rosters are changed, your hours are cut back until it is barely worth coming in to work any more.

At retailer Spotlight, new employees were offered AWAs that abolished penalty rates, overtime rates, rest breaks, incentive-based payments and bonuses, annual leave loading and public holidays. For those who worked Thursday nights and Saturdays, this would cost $90 a week. In return, they received an increase in their base hourly rate of pay of two cents an hour. That was OK, said Spotlight management, because that is just "the starting point ... Our store managers negotiate the rates with the staff depending on the skill of the person and market forces." But if the starting point for "negotiations" is $90 a week less, then most workers are going to be hard pressed to get near what they would have been automatically entitled to under the old system.

Workers at a Melbourne call centre operated for Lufthansa were told to sign AWAs which cut their base pay by between 3 and 10 per cent, and reduced penalty rates and loadings. To allegedly offset this, the agreement provided a complex bonus scheme in which, to get the full bonus (at management's discretion), workers had to achieve 110 percent of the performance targets and not take more than one day of sick or carer's leave. The Equal Opportunity Commission of Victoria said that there was "considerable potential for the proposed performance bonus scheme ... to discriminate against employees who need to utilise their leave entitlements because they experience personal illness and/or have parental or carer responsibilities."

The examples mount. Yet the advocates of WorkChoices tell us that it is bringing higher wages: real wages (that is, the purchasing power of your wage after allowing for price rises) have risen by 16 per cent since 1996. But that is barely the long-term growth rate in real wages anyway. Most of the increase has been obtained by managers and professionals with the top 10 per cent of incomes. For the median worker or the low paid, real wages have increased at barely 0.4 per cent a year in recent years.

Most recently, in the first six months of WorkChoices, average real wages (measured by the wage price index) fell by 0.6 per cent. At the same time, in Queensland and Western Australia, there are major labour shortages. Employers are offering huge wages to get people to work in the resources sector. Yet, on average, real wages fell. It would be surprising if this situation continued, but nonetheless it is remarkable that this should have been the case in an economy with the tightest labour market in three decades. Something strange is going on, especially in the part of the labour market where workers do not have strong bargaining power. In part, this is because the protections that used to exist for those signing AWAs are no longer there. Under the old system, agreements were meant to leave employees no worse off than they would be under the award. If you lost your penalty rates or another entitlement, you were meant to be compensated – most probably through an increase in the base hourly rate of pay. Now you can lose any or all award conditions and not receive a cent in compensation.

The trouble is that it is hard to know what is happening in that less prosperous part of the labour market, because the government does not publish data letting us see into it properly. We know that average real wages fell most markedly in retailing and hospitality – where penalty rates are most at risk – in the first six months of WorkChoices. But that does not tell us the specifics of AWAs in those industries. We know that, before WorkChoices, wage increases under AWAs nationally were typically only 2 to 2.5 per cent – barely half the 4 to 4.5 per cent that workers obtained under union collective agreements. But nothing has been, or will be, published about wage increases under WorkChoices AWAs – except that 22 per cent of WorkChoices AWAs provide for no wage increase during the whole period of the AWA, which may last up to five years.

This glimpse came when the Employment Advocate, Peter McIlwain, answered questions asked by the Senate Estimates committee last year. His office had examined a sample of 250 AWAs registered in the first month after WorkChoices took effect. It also showed that just over half had abolished overtime pay. This was interesting because it meant that overtime was being abolished much faster than previously. A further one-third of AWAs reduced overtime pay. This meant that, in total, 82 per cent of AWAs either reduced or abolished overtime pay. The story was no better for other conditions of employment. Most AWAs abolished penalty rates, shift loadings and annual leave loading – all representing notable acceleration of the pre-WorkChoices patterns. Large proportions also abolished rest breaks, public holiday pay and allowances.

All these disappearing conditions, government commercials told us in 2005, were "protected by law".

These numbers only tell a small part of the story. They do not tell us about the differences between industries where workers are strong and where they are not. After all, AWAs are also used extensively in mining, where there is a severe labour shortage, and those AWAs – like the collective agreements they try to outbid – are very generous.

Yet, instead of publishing more detailed information, the government is now publishing no information at all. The Employment Advocate developed concerns that he had not expressed before about technique and interpretation. This decision to stop publication was one he came to entirely of his own accord, without input from the minister – nothing to do with the bad publicity generated by these statistics or how embarrassing they might have been to the cause of promoting AWAs or the government.

The Office of the Employment Advocate knows that it faces abolition if there is a change of government.


WHEN THE COWRA abattoir workers were sacked, they had few options. The most effective industrial weapon – going on strike – is impossible to implement if you have already been sacked. They could not seek reinstatement from the industrial tribunal because they had been sacked for "operational" reasons, and under WorkChoices that disqualified any claim for reinstatement, no matter how unjust, harsh or unreasonable the dismissal. But they, and their union, had one major weapon at their disposal: the media. Within hours, press and TV camera operators were outside the abattoir. The workers' plight was beamed into homes across the country.

The minister realised he faced a problem. This was just one of several cases in the national media of workers being sacked or abused under the new laws. He went on television to say that some employers, like the Cowra abattoir, had "jumped the gun". It seemed "quite possible" that the employer there had acted "contrary to the provisions of the law itself". The Office of Workplace Services (OWS) was told to investigate and speak to the company. The unions negotiated with management. Under media and political pressure, the company reinstated the workers. The Minister was triumphant: "This shows that the law works."

Except that the company had not broken the law at all in sacking the workers as it did. An OWS report to the minister eight weeks later cleared it of wrongdoing. Fortunately, through judicious use of the media, the workers had got their jobs back for the time being.

As with Cowra, much of the battle over WorkChoices is fought out in this symbolic domain. For the unions, the ability to mobilise media and create images of workers being disadvantaged has become a key tool in preventing employers from exploiting opportunities the law now gives them. No doubt many employers have decided that the cost to their reputation of adopting an aggressive approach would not, at the moment, be worth it. At least, that is the case for unionised workers who have the resources of a political savvy union movement behind them. Those who do not belong to a union, lacking media access, remain largely invisible and more easily exploitable.


FOR THE GOVERNMENT, image control is essential. It started badly. One of the early prosecutions, launched in March 2006 by the OWS, was against a group of workers. In early 2005 they had been placed by their employer in demountable accommodation that was infested with fleas and feral animals. It reeked of raw sewage. Not surprisingly, the workers struck for a few days for decent conditions, which they successfully obtained. Over a year later, the OWS, without the support of the employer, began proceedings against the workers, who faced fines of $20,000 each.

The symbolism was disastrously revealing. The minister ordered that the prosecutions be halted. Whenever a problem arises under WorkChoices, the standard response from the government has become: "Any examples of employees feeling they have been treated unfairly can take their claim to the Office of Workplace Services." Of course, the OWS can do nothing about many of the cuts in pay and conditions and dismissals under the Work-Choices spotlight because the law has made them legal. But the government wants workers to turn to its OWS, not to unions, for assistance, and it hardly helps the imagery if the OWS is so obviously enforcing the spirit as well as the letter of the law.

There are two other ways the government responds to evidence of mistreatment under WorkChoices. One is to confuse the issues. For example, after the OWS reported to the minister that the Cowra abattoir's actions were legal, the minister claimed (without any evidence) that what the corporation did would also have been legal under the old law. He contradicted himself again five months later when he argued to an industrial tribunal that the "operational reasons" provision must be a weaker protection ("lower threshold") than applied under the old law.

The other response is to seek to discredit the person making the complaint. Academics are a common target. When several workers who had been dismissed or disadvantaged under WorkChoices agreed to appear in union advertisements, the government pilloried the ads as "misrepresenting the position", justifying this by handing to journalists a series of short reports that had been prepared by the OWS without giving the workers concerned the opportunity to respond. The OWS investigations appeared very flimsy. One of the cases that appeared in the OWS material given to journalists concerned Optus technicians. With twenty-eight colleagues, Arthur Ledwidge was sacked for operational reasons a month after WorkChoices took effect, and given the "opportunity" to work as an independent contractor for Optus – provided he had the money to buy his own Optus van and cover his own worker's compensation, superannuation and leave. As the OWS found, there was "no evidence of breach of WR laws". Unable to meet his mortgage repayments, Arthur lost his house.

When the government launched a $55 million advertising campaign, "WorkChoices" was created as a single symbol. Yet the gap between work and choices, embedded subtly in the legislation's title (the "Work Choices"Amendment Act) is experienced starkly by many employees. Government spin has not been enough to turn around public opinion. The polls show that WorkChoices remains deeply unpopular with voters. The policy is opposed by a margin of two or three to one. Amongst voters who believe industrial relations is the most important election issue, the margin is four to one against the government. The government fell seriously behind Labor when WorkChoices was debated in Parliament, and was – in trend terms – behind in all three major polls through most of 2006, from the time Work-Choices took effect. WorkChoices represents a clear and present danger to the re-election of the government.

The man who owned the Cowra abattoir drives a Mercedes sports car. His private company was estimated in 2005 by BRW to be worth $120 million, placing him in BRW's top 500. He lives in the ironically named Bushranger's Hill, with what the Daily Telegraph calls "sweeping views" over Sydney's Newport and Pittwater. Around July 2006, after the workers were reinstated, he transferred $1 million through a "loan" from the abattoir to his private company. This came on top of another $800,000 he had transferred to his private company over the previous year. Then, in August 2006, he closed the abattoir permanently. Within weeks it was in liquidation.

The workers were left not only without jobs, but also owed an estimated $2.8 million in unpaid entitlements, about half of which were redundancy payments. The owner's private company then discharged the priority debt of the abattoir, making his private company the priority creditor – ahead of the workers, who had yet to receive any of their entitlements.

The image of the boss enjoying the high life and reinforcing his wealth while the workers face pay cuts, dismissal and disempowerment is an uncomfortable one for the government. But it is one that is becoming increasingly real. By the end of 2005, the wages share was at its lowest level in thirty-five years. The profit share, on the other hand, was at the highest level ever recorded. Between 1998 and 2004, the gap between the top one-tenth of wage and salary recipients (mainly managers and senior professionals) and the bottom one-tenth grew by 10.4 per cent. In the year to May 2006, average weekly full-time earnings rose by 2.8 per cent, well below the rise in prices, but among the chief executives salaries rose four times as fast.

The government said WorkChoices was about a new wave of prosperity. Higher productivity. More jobs. Abolishing the unfair dismissal laws, it said, would create 70,000 jobs, and now it claims credit for creating 100,000 – no, 200,000 – jobs. If this were the cause, of course, jobs must have contracted when the unfair dismissal laws were introduced. But when you go back and look at the figures, you discover that job growth after the unfair dismissal laws were introduced – 2.4 per cent in six months – was higher than the 1.6 per cent growth in the same period after the protections were abolished for four million workers.

And higher productivity? Seasonally adjusted labour productivity actually fell by 0.7 per cent in the first quarter after WorkChoices began. In reality, analysts do not pay much attention to one quarter's productivity figures, as they are highly volatile. They look at it over a complete growth cycle in the economy. But the only growth cycle completed under the government's Workplace Relations Act, the law that introduced AWAs in the first place, hardly gives cause for optimism. Labour productivity grew at only 2.2 per cent a year – below the 2.6 per cent that was achieved in the '60s and '70s under the traditional award system, now pilloried for its inefficiencies.


IT IS CLEAR that workchoices is not about increasing productivity or prosperity; rather, it is about increasing the power of those who already have the most power and resources, and in doing so taking power away from those who have the least, and from those who would challenge the power of the mighty.

The greatest power rests with those who own and control the most resources. They use those resources to generate profit and more resources and power. In order to do so, they typically organise themselves into a collective of capital known as a corporation. This collective form has all sorts of benefits, including the granting of the status of an "artificial person", and the granting of limited liability, so valuable to people such as the owner of the Cowra abattoir. Workers respond to the power of capital by organising collectively into unions, since the power of an individual employee bargaining with a corporation is minimal, but the power of employees bargaining together is potentially quite substantial.

WorkChoices seeks to undercut this challenge to the power of corporations, by removing many of the protections that workers previously had as a result of the pressure exerted collectively by workers for over a century, lowering the starting point for negotiations (if negotiations occur), and making it very difficult – and sometimes illegal – for workers to bargain collectively. It seeks, in effect, to re-establish the great divide between the strong and the weak.

One mechanism for this is the targeting of trade unions. In no other Western democracy can a union be fined for seeking similar outcomes in different agreements ("pattern bargaining") or for including, in a collective agreement, provisions that protect against unfair dismissal. In no other Western country can a worker be jailed for six months for refusing to answer questions asked by government inquisitors about what happened at a union meeting where such seditious matters as pattern bargaining or union security provisions were discussed. As of 30 June 2006, twenty-nine people had secretly been questioned under threat of jail if they refused to submit or told anyone about what happened in the interrogation room. Some were denied the right to be represented by the lawyer of their choice.

The secondary target of WorkChoices is the independent industrial tribunals. Their powers have mostly been enfeebled or given to partisan government agencies or private contractors. The federal tribunal is left mainly with responsibility for administering the anti-strike laws targeted at unions.

And then there is another, unexpected target: the companies who refuse to play ball with the government, who wish instead to maintain constructive, cooperative relations with a unionised workforce. For many companies, maintaining good relations is the most sensible way to make a profit.

In no other Western democracy does the government micro-manage consenting relations between employees and employers to such a degree, fining employers for making agreements that allow union officials on to their own workplace or permit union-provided training. While decrying the "paternalistic influence of ... third parties", the minister, at the stroke of a pen, declares provisions in collective agreements "prohibited content" and makes the users of such provisions potentially liable to large fines. A company like Smorgon Steel – lauded in the management literature as a company that has used a "partnership approach" to achieve "substantial improvements in organisation performance" – finds itself barred from government contracts because of retrospective rules that forbid such partnerships. It is, as the president of the conservative H.R. Nicholls Society says, the "old Soviet system of command and control, where every economic decision has to go back to some central authority and get ticked off".

Smorgon is immersed in government micro-regulation because it supplies steel to the building industry. The government has targeted unions in the construction industry with special legislation that goes even further than WorkChoices presently does. The construction industry is dangerous, so construction workers like to form themselves into unions. Each year, around fifty people who go to work in the industry one morning never come home. Like twenty-three-year-old father Nathan Park, killed on a Victorian construction site in September 2004 in an accident that was "easily avoided". The construction company, Melbourne Transit, failed to implement procedures that a Victorian county court judge said were "blindingly obvious". She fined Melbourne Transit $100,000. But the owner had already put that company into liquidation and so avoided any penalty. Shortly afterwards, the owner was operating again as a different company (such a valuable thing, the corporate form). Some $300,000 was collected by the union to pay into a trust fund for the education of Nathan's infant son. Rather than focus on such issues, the government established a royal commission, then a building industry task force, then an Australian Building and Construction Commission, all with severe punitive powers, all more concerned with prosecuting unions for closed shops and removing union banners from building sites than with prosecuting unsafe employers.

To get a small sense of the partisan nature of WorkChoices, consider the origins of the provision concerning "operational reasons" for dismissal. The Prime Minister stated that this provision arose from a dispute at the Blair Athol coal mine in central Queensland, owned by a subsidiary of Rio Tinto. Blair Athol management, according to the Australian Industrial Relations Commission, had created a "blacklist" of union members who were "singled out for termination" through a redundancy process. Mine management went about "demeaning" those targeted for termination, a practice "designed to force (unionists) to accept the redundancy package".

This case was pursued by the blacklisted workers under the unfair dismissal provisions of the old law. Following numerous cases, appeals and delays, most of the workers were reinstated and the case was settled after seven years. Reports suggest that Rio Tinto spent $20 million in legal fees, trying unsuccessfully to keep these sixteen unionists out of its mine sites.

Then along came the chance to rewrite the rules. Lawyers from Freehills, who represented the employer in the Blair Athol case, helped draft the Work-Choices legislation. No more Blair Athols.


COWRA IS A small regional town, with a population of nine thousand. In regional areas, away from the resource boom districts, alternative opportunities may be hard to come by. There is a national shortage of nurses yet in Parkes, a hunded kilometres from Cowra, a nursing home gave five nurses a work choice: take a 22 per cent pay cut to become "care service employees", or be made redundant. That was legal, said the OWS. In a small town, if you take on your employer, you may also be hurting your chances of getting a job elsewhere. So there are stories from places like Coffs Harbour, Merimbula and Albury of people forced to sign AWAs that cut their pay, in ways that are mostly illegal but for which redress is quite impractical.

For women, the problems of WorkChoices are not restricted to regional areas. Women are more reliant on awards, and people reliant on awards have most to lose from WorkChoices. Workers on collective agreements will generally have the collective bargaining power to resist reductions in pay and conditions. But those who are entirely award-reliant, who until now have been subject to the collective protection of awards, are people who are without individual market bargaining power. They have suddenly had that collective protection taken away.

Women have more to lose from the attacks on institutions and from the shift to individual contracts. Unionism and collective bargaining have a bigger positive effect on women's pay than on men's. Conversely, individual contracting has a bigger negative effect on women's pay than men's. Women on individual contract agreements have an hourly wage one-fifth lower than men, whereas for women on collective agreements the difference is only one-tenth.

Throw this in with the welfare-to-work laws, which target sole mothers and the disabled, and we have an unpalatable mix. Because if a sole mother is offered a job on an AWA that has no penalty rates, no overtime pay, no meal breaks, no shift allowances, no leave loading, no redundancy pay and only pays minimum wage, and she knocks it back, she is breached and without income for eight weeks. Then where does she go?

WorkChoices killed off the ability of women and unions to pursue equal pay, parental leave and other important conditions through industrial tribunals. Indeed, some types of equal pay claims are now illegal. At the same time, actions that are illegal may become increasingly tolerated. Western Australia's Equal Opportunity Commissioner warned that one consequence of WorkChoices is a fear among workers about lodging complaints concerning discrimination. Stripped of the collective protections provided by the law – or at least, of confidence in these protections – it is women who are most vulnerable in the dysfunctional workplace.

But it is both easy and dangerous to fall into a sort of resigned torpor, to accept that all our rights have been taken away and we might as well just get used to it. In reality, workers still have many rights at work. There are a lot fewer than existed in the past, but they still exist. The problem for many workers is to know what rights they still have, and possess the confidence to exercise them. This is a special problem for non-unionists, who make up the majority of employees, as they are less likely to be informed about their rights or to have the ability to enforce them.


IN ONE WAY, workers are lucky that workchoices came in when it did – during a resource-driven boom. For many occupations, there simply are not enough workers to meet employers' needs. But try explaining to the half a million workers presently unemployed that they are the ones with the upper hand in bargaining with a potential employer, and see what sort of look you get. Explain it to the sole parents or the disabled people on "welfare-to-work". The "boom" is uneven, many people are missing out (real wages are falling for about half the workforce), and economic growth is slow in several states. No boom lasts forever, and this one will come to an end as surely as every other one has. Then, even the workers who are momentarily protected from the effects of these laws, because their skills are in short supply, will find them biting hard.

In the long run, it is that fundamental shift in power – which eventually tears away the entitlements that workers fought so long to get – that represents the biggest threat posed by these laws. It is not what it does in 2007 or 2008 that comprises the worst aspects of WorkChoices; it is what it could do to the prospects of our children and our grandchildren.

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