Executive Monograph

The Transformation of Australian Industrial Relations

*** This series is now complete ***

Enterprise Bargaining Under Labor - Executive Monograph Series No 2 (October 1998)

Executive Summary

This paper explores the nature and impact of enterprise agreements during the period 1989 to 1995. It examines the features of these agree-ments, differences across workplaces in the use of agreements and the impacts such agreements are having on both trade unions and firms.

It is clear that the coverage of workers by formal enterprise agreements (i.e., registered agreements) has grown rapidly over the course of the 1990s, and especially during the years the federal Labor government was in office. From a low base in the late 1980s, formal enterprise agreements have been estimated to have covered over 2.5 million workers by late 1996, which represents somewhere around 36 per cent of all Australian employees.

Data from the Australian Workplace Industrial Relations Survey (AWIRS) suggest that while there has been a burgeoning in the number of workplaces with formalised agreements, unregistered agreements remain extremely common. That said, it is true that unregistered agreements are relatively more common in small workplaces.

Most agreements in place by 1995, however, could not be described as very comprehensive, with only 16 per cent of workplaces (with 20 or more employees) indicating that agreements replaced `all' aspects of the award. Interestingly, the likelihood of an agreement replacing all or most aspects of the award was found to be greater for registered agreements, and especially those registered in State jurisdictions. The scope of agree-ments was also found to vary with workplace size, union density and industry.

The principal factor motivating management interest in enterprise agree-ments is the desire to increase productivity and efficiency. There were, however, a multitude of other reasons cited as motivating factors.

Use of enterprise agreements was found to be closely linked to union presence, and especially where formal structures facilitating union-management cooperation exist. Enterprise agreements were also found to be more likely to occur in large, foreign-owned firms, possibly reflecting the greater availability of financial resources in such firms. Very little evidence was uncovered to suggest that either market characteristics or workforce characteristics were associated with the presence of enterprise agreements.

Determining whether and how enterprise agreement-making has impacted on trade unions was complicated by the fact that unions have been so central to the formal agreement-making processes over the period under review. Overall, however, there appears to be little evidence to suggest that formalised enterprise bargaining processes enhanced or weakened trade unions. Indeed, the principal impact of enterprise bargaining as far as trade unions are concerned may have been to place added demands on the time of union delegates and officials. Very differently, evidence was also uncovered which suggests that informal agreements may have been associated with a decline in union membership.

Attitudinal data collected from managers suggests that a significant fraction believe that, by 1995, enterprise agreements were having the expected positive impact on labour productivity and other performance-related outcomes, though very few respondents indicated that the magnitude of these effects was large.

Despite the positive attitudes of managers, data correlating the presence and coverage of enterprise agreements with data on a range of perfor-mance indicators (such as profitability, relative labour productivity, absence rates, quit rates and the incidence of industrial action) is not supportive of claims that enterprise agreements have resulted in a marked improvement in workplace productivity. Indeed, after subjecting the data to a range of statistical analyses, we are drawn to the conclusion that there is little evidence in the AWIRS to suggest that enterprise agree-ments have led to any marked improvement in workplace performance. This does not mean that enterprise agreements cannot have performance enhancing effects, only that any such effects were not apparent by 1995.

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