Discussion Paper

The Transformation of Australian Industrial Relations

*** This series is now complete ***

The Impact of Enterprise Agreements: Evidence from the AWIRS - Discussion Paper Series No 4

Arguably, formalised enterprise bargaining has altered the industrial relations landscape in Australia more in the last decade than any other development in the last century. As summarised in earlier papers in this series (Hawke & Wooden 1998, Hawke & Drago 1998), these changes to the processes which determine the wages and conditions of employment have occurred in both State and federal jurisdictions. Despite changes in both governments and government policy on industrial relations, the trend towards decentralised processes in the determination of wages and conditions has continued (Hawke & Wooden 1998). While the formal systems for determining wages and employment conditions were still highly centralised in 1989, by 1995 formal structures for enterprise- and workplace-level bargaining were widespread. In 1990, according to AWIRS90, around 20 per cent of employees had their terms of employment determined by some form of formal (and hence legally enforceable) enterprise agreement. These were largely employees covered by State legislation. In 1995, the situation was very different with over 40 per cent of employees covered by written agreements. Around two-thirds of these were covered by some form of federally registered agreement.

One of the main aims of enterprise agreements was to enable productivity improvements at workplaces. In this paper, we examine the impact of enterprise agreements on workplace productivity and other performance-related measures. First, we use the responses from managers on the perceived effect of workplace agreements on workplace profitability, labour productivity, the quality of the service or product, absenteeism and the skill level of employees. As identified by Rimmer and Watts (1994), it is likely that the responses of managers reflect inherent biases rather than an accurate perception of reality. As a result, therefore, we also undertake an analysis of the effect of enterprise agreements upon more objective measures of performance for all workplaces.

This research utilises data collected as part of the Australian Workplace Industrial Relations Surveys (AWIRS) which were conducted in 1989/90 and 1995. The 1995 survey contains both cross-sectional and panel elements (for a discussion of the structure of this survey, see Hawke & Wooden, 1997b). The AWIRS data represent the most comprehensive snap-shot of Australian industrial relations between 1989/90 and 1995 - a period of great change in industrial relations processes and practices. Although the coverage of the survey was extremely broad, its focus was clearly on industrial relations structures and processes. Hence, using these data enables a close examination of the role of agreement-making on both quantitative and qualitative performance outcomes of Australian workplaces. In future papers in this series, an examination of developments in industrial relations in Australia beyond 1995 are examined.

The paper is broken into five main chapters. Following this introduction, there is a brief discussion of the stated goals of agreement-making from the main parties involved. The paper then provides some background to the AWIRS data used in the analysis. Specifically, this section identifies and explains the performance outcomes examined in the paper, along with the measures of agreement-making. In Chapter 3, a simple analysis of the data is provided to illustrate the nature and incidence of the performance measures used in this analysis as they relate to enterprise agreements. Chapter 4 uses multivariate techniques to extend the analysis of the previous chapter to include a large range of other controls which may also influence workplace performance. A concluding chapter draws together the general findings of the paper.

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