Reforming awards and work and management practices 1987–1991

Updated time

Last updated

20 December 2016

The National Wage Case March 1987[1] introduced new principles which did not provide for wage indexation.  The principles provided for ‘two tier’ increases, with the first tier a $10 per week increase to award rates.  A second tier adjustment not exceeding 4 per cent was available in return for ‘measures implemented to improve efficiency’ under the ‘restructuring and efficiency principle’, including changes to ‘work practices and management practices’.  It provided for arbitration of superannuation claims.  

The decision provided for work and management practices to be reformed because of the universal agreement amongst trade unions, employers and Governments that Australia’s severe economic problems had to be addressed.  These problems included CPI increases of 10% per annum compared to an OECD average of one quarter of this, increases in the national debt and the costs of servicing it, pressure on interest rates, no growth in Non-farm Gross Domestic Product, negative growth in terms of trade, and a rise in unemployment from 7.6% in June 1986 to 8.2%:

‘It is against this background that all parties to these proceedings accepted that Australia’s current economic performance has to be improved quickly.  It is also against this background that a strong case can be argued that the economy should not be asked at this time to absorb increased labour costs.  We do not think that such an outcome is feasible, given the immediate needs and expectations of wage and salary earners.  Many may already be feeling at least some of the effects of the problems that confront the country.  Not to grant an increase, notwithstanding experience of what would follow from an uncontrolled situation, would inevitably in our view, destroy the immediate possibility of a co-operative community effort to play in that effort.

Our task is to provide a framework in which a combination of restraint and sustained effort to improve efficiency and productivity can be achieved.  The principles we have determined provide that framework.  For it to be successful, however, we must also make a judgement as to a workable combination of restraint and inducement for sustained effort.’[2]

As a result of this package of principles:

  • the National Wage Case December 1987[3] was adjourned.
  • in the National Wage Case February 1988[4] a flat increase of $6.00 was operative from 5 February 1988.

The National Wage Case August 1988[5], two increases at least six months apart were made available, the first one of 3% (after 1 September 1988) and the second a flat rate of $10 (at least six months later). The ‘restructuring and efficiency principle’ was replaced with the ‘structural efficiency principle’.  Under this principle increases were available if the parties to the award formally agreed to cooperate positively in a fundamental review of the award with a view to implementing measures to improve the efficiency of industry and provide workers with access to more varied, fulfilling and better paid jobs. 

All aspects of award provisions were mentioned as being appropriate for review, including classification structures, and provisions regulating working hours.

  • the February 1989 Review[6] was adjourned.

The National Wage Case August 1989[7], provided that adjustment of pay would be allowable for completion of successful exercises under the structural efficiency principle.  It provided for all award rates to be ‘broadbanded’ into generic classification levels, to replace the hundreds of award rates set by reference to a narrow function.  Award rates were to be set by reference to the metals and building tradesperson rate of $356.30 and $50.70 per week supplementary payment.  They were to be set on the basis of relative skill, responsibility and the conditions under which the particular work is normally performed. 

The decision provided a first increase of $10 per week for workers at the basic skill/trainee level;  $12.50 per week at the semi-skilled worker level; and $15.00 per week or 3%, whichever is the higher, at the tradesman or equivalent level and above;  and a second increase of the same order as the first increase, to be paid not less than 6 months after the first increase.  The second instalment of the structural efficiency adjustment should only be available if the Commission was satisfied that the principle has been properly implemented and would continue to be implemented effectively. 

In the National Wage Case April 1991[8], the structural efficiency principle was continued with some changes.  It provided for a 2.5 per cent general increase in award rates, subject to the requirements of the structural efficiency principle. 

It decided not to move to a system of enterprise bargaining supported by the ACTU and Commonwealth, and opposed by employers, because the parties lacked the ‘maturity’ to undertake such bargaining, and because the Commission had ‘major concerns about:

  • the incompleteness of the award reform process and its application at the enterprise level;
  • the inadequate development of the ‘receptive environment’ necessary for the success of enterprise bargaining beyond the scope of the present system;
  • the fundamental disagreements between the parties and interveners about the nature of the proposed form of enterprise bargaining and their failure to deal with various significant issues; and
  • the potential for excessive wage outcomes.’

It said that the unresolved issues required further attention and debate, if ‘industrial disputation and excessive wage outcomes’ were to be avoided. 

Footnotes

[1] Print G6800 10 March 1987

[2] Ibid, p.32

[3] Print H0100 17 December 1987

[4] Print H0900 5 February 1988

[5] Print H4000 12 August 1988

[6] Print H8200 25 May 1989

[7] Print H9100 7 august 1989

[8] Print J7400 16 April 1991