Decline in Strikes Contributes to Wage Stagnation

As the Fair Work Commission ordered NSW rail workers on January 25 to abandon their planned work stoppage, union representatives warned that the ability to strike in this country is “very nearly dead.”

Fair Work Commission senior deputy president Jonathan Hamberger ruled that an indefinite ban on overtime, as well as a 24 hour strike planned for January 29, could not take place as they posed a threat to the economy.

The commission heard applications from NSW industrial relations minister Dominic Perrottet and Sydney Trains, which were both seeking suspension orders under the provisions of the Fair Work Act 2009.

Section 424 of the Act provides that industrial action must be suspended or terminated if it threatens to “endanger the life, the personal safety or health, or the welfare, of the population or of part of it” or it threatens “to cause significant damage to the Australian economy or an important part of it.”

The commission’s order placed a block on the Rail, Tram and Bus Union taking any protected action for six weeks. And while this had unions up in arms over the erosion of workers’ bargaining power, a report released last week links slow wage growth to an overall decline in industrial action.

Declining influence, declining wages

Produced by the left-leaning Australia Institute, the Historical Data on the Decline in Australian Industrial Disputes report reveals that the frequency of industrial action in this country has decreased by a staggering 97 percent since the 1970s.

And if the data from the first nine months of last year is anything to go by, the number of stoppages in 2017 was the lowest on record during the post war era. There were 106 workplace disputes in Australia recorded up to September last year. The final figure will be released next March.

The author of the report, economist Jim Stanford, outlines that there is a “close statistical relationship between the near-disappearance of strike activity and the deceleration of wage growth.”

Indeed, the current decade has witnessed the slowest wage growth over the post war era. Since 2010, average weekly earnings have grown by just 2.5 percent a year. And in comparison, during the 1970s, when industrial action was at its height, annual wage increase hit a high of 13 percent.

Ever-increasing employer powers

According to Stanford, the gradual decline in work stoppages is due to the powers and restrictions afforded to Australian industrial authorities.

These include prohibiting actions being carried out during a current enterprise agreement, full disclosure of the nature and timing of actions, prohibitions on multi-employer and sympathy strikes, limits on strikers’ speech, and the authority to prohibit actions affecting public services.

And in addition to the effect these regulations have had on decreasing industrial action, a number of structural factors have had a chilling effect on strikes, such as declining union numbers, the aggressive negotiating strategies of employers, and the expansion of labour hire and contractors.

Breaching international labour rights

Adelaide University professor Andrew Stewart told the ABC in March last year that Australian industrial action laws are some of the most restrictive in the developed world. And many of these laws are also in breach of international labour standards.

The NSW Public Service Association, the ACTU and the Community and Public Sector Union lodged a complaint with the International Labour Organisation (ILO) in 2015 claiming the NSW government was breaching international standards by denying them the right to collectively bargain.

Over the last twenty years, the ILO has consistently warned both Coalition and Labor governments that local laws are out of step with international law.

And although the right to strike is not explicitly contained in any of the ILO conventions, it is said to arise by necessary implication in the 1948 Freedom of Association Convention and the 1949 Right to Organise Convention. And Australia ratified both these agreements on February 28 1973.

The death rattle of Australian strikes

The Australia Institute analysis tracks the legislative changes that have led to the near death of industrial disputes in this country. During the post war expansion of the 1950s and into the 1980s, there were on average around 1,700 work stoppages a year.

And this peaked at around 2,000 in the 1970s.

However, with the introduction of enterprise bargaining, under the Industrial Relations Reform Act 1993, the number of disputes dropped by two-thirds. The changes also introduced protected industrial action, which spelt out when strikes are allowable, but also when they aren’t.

Over the period 1990 until the mid-2000s, there were around 700 disputes a year.

Then the Howard government introduced the Work Choices Act 2005, which was followed by Rudd’s Fair Work Act 2009. And both these pieces of legislation are associated with a sharp drop in industrial action. Since 2006, this has averaged out at less than 200 a year.

Declining dissent

There’s an irony over suspending the recent rail worker strike because it would be disruptive to the economy or to people’s daily routines, as this is exactly what strikes are meant to be about in the first place.

Work stoppages should cause at least a modicum of chaos, as this is the advantage that workers gain over their employers in order to force their demands to secure better working conditions and benefits.

Last year marked the 100th anniversary of the Great Strike of 1917, which saw work stoppages taking place around Australia. The strike, which was led by Sydney rail and tram workers, was over the increased monitoring of worker productivity by employers using time cards.

Despite the dispute controversially arising during wartime, 100,000 workers walked off the job nationwide for a month. And although it didn’t achieve its objective, the strike demonstrated the importance of workers being able to collectively cause the powers that be a massive inconvenience.

As Mr Stanford pointed out in his briefing note, the Fair Work Commission is missing the point.

While it’s focusing on avoiding the economic costs and disruptions of particular industrial disputes, it’s failing to take into account the broader economic and social benefits a steady rise in wages has for the Australian community as a whole.