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Globalisation and the Erosion of Class Compromise in Contemporary Australia

Rob Lambert

1. Bargained Liberalisation

Contemporary Australia is a prime example of the way in which a state’s far-reaching commitment to neoliberal globalisation swiftly erodes the politics of class compromise. This commitment has changed Australia’s status in two significant ways. Firstly, the nation has changed from being one of the world’s most protected economies to its present position as arguably the most open. Secondly, Australia can no longer be considered the model social democracy of the world, a ‘social lighthouse’ where the interests of working men and women are protected by a state that identified with their interests, ‘watching over their welfare and prosperity’ and extending to them ‘sympathy and protection’. The Australian industrial relations system, which was one of the foundation stones of Australian social democracy and the mechanism for the realisation of class compromise, has been radically altered. A state previously the guardian of trade union rights and the politics of class compromise has now marginalised those rights through labour market deregulation founded on a system of individual contracts. 

These historical changes in Australia’s social and political landscape have a significance beyond the boundaries of this island continent for they reflect the consequences of constructive engagement with neo-liberal globalisation in a context where social and political systems vary markedly across nations. These systems have come to exert a global influence because economic deregulation in the form of tariff reductions and free capital movement has meant that the denial of basic labour rights by authoritarian regimes has undermined the politics of class compromise in social democratic regimes. 

This paper focuses on the erosion of class compromise in Australia that is propelled in no small measure by the labour market pressures of authoritarian regimes in Asia. In uncovering these changes, the paper challenges the contentions contained in the paper by Webster and Adler, ‘Towards Class Compromise in South Africa’s ‘Double Transition’: Bargained Liberalisation and the Consolidation of Democracy’. They argue for ‘a bargained liberalisation’ that will enable groups to ‘renegotiate the terms on which a country engages with the global economy’ (2). Their optimism is grounded on a sense of the capacity of unions and other forces in civil society ‘to bargain over the terms and pace’ of global economic engagement (7). South Africa’s relatively powerful union movement has the means to ameliorate the social adjustment costs of globalisation. This bargained compromise has been facilitated by new institutional arrangements that have emerged in post-apartheid South Africa. These include the form of co-determination embodied in the new Labour Relations Act; a tripartate structure to reach consensus on economic and social policy and industry wide forums to bargain over the terms of liberalisation. They argue that these institutions are being tested by the ANC government’s adoption of liberal economic policies that accelerate global economic integration.

Australia provides a sound point of comparison to question this optimistic scenario. Both countries are locked into a similar position in the global economy. The economies of both have relied heavily on commodity exports. Both are struggling to transform their manufacturing system and expand exports. A relatively powerful, well organised labour movement that has bargained positive wage and conditions outcomes has bound the manufacturing systems of both. Given these similarities, comparison of the relative impact of neo-liberal globalisation is pertinent because Australia attempted constructive engagement a decade earlier than South Africa. Certain outcomes are therefore already evident, thus providing the basis for an assessment of the bargained liberalisation thesis. 

In the 1980s, the Australian Labor government adopted a bargained liberalisation strategy, confident in their capacity to achieve a new level of economic efficiency as a dynamic material base for retaining Labor’s social democratic programs. This optimism in a high road engagement with globalisation was evident in a 1993 speech by Paul Keating, who was then Prime Minister. He asserted that these changes would foster ‘a creative, innovative, manufacturing nation in the front rank of trading nations and the front rank of social democracies’. Ten years later, research into the impact of this engagement paints a less sanguine picture, one that corresponds more closely with a conclusions contained in the Wright paper, ‘Working Class Power, Capitalist Class Interests, and Class Compromise’. Here Wright (1997,30) acknowledges that his analysis leads to ‘a fairly bleak picture of progressive class compromise’. He concludes that globalisation undermines bargained compromises, which depend on highly organised workforces where unions are strong and solidarity high (6). This is so because globalisation deepens labour market dualism, increases heterogeneity and decreases job security (28). These factors corrode workers’ struggle for enhanced associational power (30). This undermines ‘high road’ technologically innovative production systems that are enhanced by union power and productivist compromise, which provide the security necessary for workers to accept new technology and flexible work organisation. These contrasting assessments point to the importance of cross-country comparisons for the advancement of our understandings of these historic transformations.

To widen debate over the implications of globalisation on the politics of class compromise, this paper analyses of the erosion of this compromise in Australia. The argument is structured as follows. Firstly, the paper will show that through much of the 20th Century, Australia represented a classic example of the politics of class compromise, founded on a relatively strong labour movement and a high degree of economic regulation. Secondly, Australia’s strategy of bargained liberalisation will be presented. A notable feature of this experiment was the social accord between the Labor government and the union movement, which aimed at promoting the high road development path. Unions sought to partner business in securing world competitive industry based on technology and work organisation innovation. Thirdly, new survey data, which reveals the ways in which bargained liberalisation has eroded class compromise will be summarised. Fourthly, it will be argued that this period of bargained liberalisation has severely weakened organised labour through undermining its membership base and commitment to resist the restructuring that accompanied this process. This weakening of organised labour paved the way for a more far-reaching intervention by the state. The coming to power of a Conservative Coalition government in 1996 ushered in a new, intense attack on institutions underpinning class compromise. The nature of this intervention will be explored. Fifthly, these state actions have generated a response that demonstrated that the century old class compromise has roots deep into civil society. The 1998 maritime dispute crystalised this contradiction by revealing the degree to which citizens were prepared to defend Australia’s historic compromise.

2. Constructing Class Compromise

At the turn of the Century the Australian state was founded on a belief in egalitarianism secured through a method of judicial determination in centralised wage fixing and the conscious protection of industry and jobs. Social reformism was a response to the great wave of strikes of the 1890s. Recognition of the role and the rights of trade unionism and protection of their power to bargain collectively were a central feature of the reforms and the interventions came to reflect the social identity of the new federal state formed in 1901. This was a state that defined itself in terms of a particular relationship to the working class. In 1890, Alfred Deakin, a founding father of the Australian federal state, commented,

Instead of the state being regarded any longer as an object of hostility to the labourer, it should now become identified with an interest in his works, and in all workers, extending to them its sympathy and protection, and watching over their welfare and prosperity. Recognition of worker rights was to usher in ‘the age of the common man’, and ‘the beginning of a new phase of civilization’. The industrial relations system that was to play a central role in making Australia ‘the social lighthouse of the world’ was founded on the Conciliation and Arbitration Act of 1904. The Act required employers to recognize unions registered under this law and empowered these unions to represent the interests of all workers within an industry. Under the Act, unions could force employers into an industrial court even if they were unwilling to negotiate. Courts were empowered to make an award, that is, a legally binding ruling on wages and conditions. Employers eventually came to support the arbitration and award system because the government promised tariff protection, provided they could prove that they had met their responsibility to pay fair and reasonable wages.

Some 70 years after the introduction of the first moderate levels of tariff protection in 1902, the highest tariff levels of any industrialized nation, baring New Zealand, shielded Australian manufacturing. This interventionism was seen to assert the positive social value of egalitarianism. Wage justice through Arbitration became the means, which marked ‘the beginning of a new phase of civilisation’. A regulated minimum wage structure grounded in the principle of human need and welfare, not profit and productivity was enshrined through the famous Harvester judgement. In this, the state set minimum wages by judicial decree rather than abandoning workers to the turbulent waters of market forces. The notion of the cost of living became the basis for wage movements. The then President of the Arbitration Commission, Justice Higgins was ruthless in his enforcement of these principles. In a 1909 case involving one of the large mining companies, BHP, he argued that if the company could not pay the minimum rate it was preferable that it shut down. He commented, ‘If it is a calamity that this historic mine should close down, it would still be a greater calamity that men should be underfed or degraded’. Hence the industrial relations system came to be viewed as ‘the greatest institutional monument to Australian egalitarianism’. Trade unions were a recognised, integral component of this system and came to play a key role in securing a steady, uninterrupted improvement in wages and conditions. Between 1939 and 1974, workers’ real wages rose by an annual average of 2% and the 40 hour working week was common by the late 1930s.

These material gains, which were the product of trade union recognition, arbitrated wages and industry protection, represented a century long, stable, durable class compromise that was the foundation of Australian social democracy. The compromise has had some degree of cultural impact on class relations in Australia. In certain literature, notions of egalitarianism were presented as a defining feature of Australian society. So for example, Ward in his book, The Australian Legend, advanced the mythical notion of ‘the typical Australian’.

The typical Australian is a practical man, rough and ready in his manners…He believes that Jack is not only as good as his master but at least in principle probably a great deal better. He is a fiercely independent person who hates officiousness and authority…yet he is very hospitable and, above all, will stick by his mates through thick and thin. The notion that ordinary Australians resent class distinctions was also advanced. Historian Sir Keith Hancock noted that deference was not a feature of communication between classes in Australia and visible signs of class distinction in language, dress and perhaps education were not visible to the extent that they were in the United Kingdom. The power conceded to trade unions doubtlessly contributed to this lack of deference. The legal protections of the arbitration system contributed to a culture of democratic and social rights that gave a degree of independence to workers and in some measure, undermined elitism. 

3. Bargaining through the Social Accord

In conducting this social experiment, Australia was advanced as a nation that had become ‘the model social democracy of the world’. The nation had ‘set great store both on the capacity of a state to steer the private economy and, equally, on its capacity to shape and shelter Australia’s own distinctive social democratic ‘labourism’ in the face of external pressures’. This commitment changed during the 1980s. When Labor came to power in 1983, constructive engagement with the global economy was fully embraced. This carried with it the liberal economic assumptions regarding the role of market forces and the state that had shaped global change. Hence Labor was forced to rethink the notion of ‘steering’ the private economy. The new government accepted the arguments advanced by key agencies of the state that it was in the nation’s interests to embrace economic deregulation. The deregulation of financial markets, the dollar float and sweeping reductions in tariff protection were advanced as an answer to Australia’s declining competitiveness, growing external debt and a reliance on commodity exports that were falling in value. There was consensus that there should be no half measures in the degree of the nation’s openness to the competitive pressures of global markets. Openness would challenge the past complacency of Australian manufacturers thereby reconstructing a manufacturing base that Labor Prime Minister Paul Keating referred to ‘a completely uncompetitive lump of industrial archeaology’. This ‘uncompetitive lump’ was to be transformed into a sleek, competitive, globally integrated manufacturing system that could contribute to Australia’s trading position through a strong export focus.

Labor’s strategists were of the view that this efficiency drive was the most effective defense of the social democratic project in the new circumstances. The creation of a dynamic, globally orientated economy would generate the wealth necessary to sustain these social commitments. Labor aimed at achieving the best in both spheres. The establishment of a social accord between the Labor government and the union movement was to be the principal mechanism for the realisation of this balance. The Accord established a process within which the terms and conditions of economic liberalisation could be bargained over. In seeking the best possible advantage from liberalisation, the Accord also sought to shift strategic thinking towards a ‘high road’ development path. The corporate sector and unions would join forces to implement advanced manufacturing technologies, skill formation and the transformation of work organisation. 

Mathews argued that whilst unions had previously ‘stood back from work organisation’ issues, adopting a ‘hostile and defensive attitude to technological change’, economic liberalisation necessitated a new strategic response: unions would have to move from ‘antagonism to protagonism’. Unions would become engaged in the process of workplace change rather than being automatically opposed. These changes were founded upon ‘new production concepts’ that transcended past principles of work organisation such as the fragmentation of tasks, the divorce of conception from execution and the imposition of authoritarian forms of supervision. The adoption of this new approach in Australian workplaces would realise Labor’s twin goals of achieving international competitiveness whilst retaining a progressive social agenda. This is possible because ‘worker involvement in the design of technology, of jobs, of work organisation…amounts to the democratisation of work’. In addition to promoting this deep transformation of work, the Accord process also sought to shape macro-economic management in a manner which would secure the twin goals. In this vein, the early Accords tried to regulate wages to underpin high growth without inflation, whilst at the same time focusing on the broader question of the social wage.

Australian Council of Trade Unions (ACTU) strategists promoted what they regarded as a new form of unionism appropriate to this phase of economic liberalisation. The emergence of best practice unionism was regarded as ‘an historic watershed’, not just for the future direction of the Australian movement, but for trade unionism more generally. In 1987, the Australian unions adopted this new role when the leadership accepted the proposals in the document, ‘Australia Reconstructed’. This role dovetailed with unending waves of economic liberalisation and competition policy of the past decade. 

Unions could contribute constructively to this efficiency drive through the adoption of best practice unionism, which forged a new strategic relationship with management. Unions were to move beyond a traditional defensive wages and conditions strategy to a new and innovative role – ‘that of making enterprises more efficient’. A cardinal feature of the change is a transformation of the traditional relationship between management and unions. ‘The ingrained distrust of employers by unions must give way to a recognition that some points of agreement are critical to all of us – for example the efficiency of enterprises’ (59). Workplaces where such a strategic unionism is present ‘tend to be more productive’ (x). Furthermore, such an orientation produces ‘a cooperative industrial relations climate’ in which ‘unions and management can agree on strategic objectives and negotiate through their implementation. By minimising traditional conflict but remaining independent, the union can concentrate on wealth creation as well as distribution (x).

This orientation is viewed as a creative response to the breakdown of Taylorised, high volume mass production systems and their displacement by flexible Post-Fordist systems based on lower volumes, greater product variety and new technologies requiring high skill and new work organisation. (2). The introduction of self-managing work teams were viewed as central to realising the new production system. Their introduction results in less management control. Work teams have ‘devolved responsibility and created a learning hierarchy that is about informing, training, and generally assisting the workers – in contrast with the coercive, control orientated hierarchy of traditional Taylorism’ (3). Under the new conditions of globalisation, those who lack strategic vision and who fail to understand the possibilities will ‘pay a high price’ (4). Team orientated, best practice unionism, with its clear, long-term strategy, enables enterprises to respond to the market more effectively. Companies become more profitable and the workplace becomes more democratic as unions take on managerial functions through work teams (5). 

A further contention is that this broader, sophisticated approach creates the possibility of an effective response to the competitive pressures of globalisation. Best practice unionism can assist international solidarity through pursuing similar changes in work design and skill world –wide. This strategic orientation would pursue ‘approximately comparable minimum levels of skills, wage levels for skills, principles of best practice design (6). Such an approach could avoid ‘the destructive competition between countries that will lower living standards’ (7). An enterprise focused, sectoral approach along these lines would replace ‘the empty rhetoric that has characterised the sloganising of internationalism (7). Ogden argues, ‘ We must move beyond generalised conferences and exchanges to establishing links with specific companies and plants to discuss matters such as skills, work design, and management techniques’ (72).

Best practice unionism has been implemented in Australia over the past decade through the Accord and through an intense focus on workplace restructuring aimed at achieving international benchmarks. The industrial relations system was geared to advancing this goal. Wage increases were to be constrained and could not be secured without offsetting productivity gains emanating from the restructuring process. 
4. Bargained Liberalisation’s Impact on Class Compromise.

Wright considers conditions under which class compromise might be realised. This is viewed as a non-zero-sum game between workers and capitalists in which ‘both parties can improve their position through various forms of positive mutual cooperation rather than through simply refraining from hurting one another’. Non-zero-sum contexts of struggle open up possibilities for genuine compromises between antagonistic classes where ‘the realisation of the interests of the members of one class is to some extent facilitated, rather than hindered, by the realisation of the interests of the other’. Wright goes onto argue that the relationship between the power of workers and the interests of capitalists lies at the core of the problem of class compromise (8). He states, ‘to the extent that increases in working class power can contribute not merely to the realisation of working class material interests, but also to the realisation of capitalist interests, then class compromises are likely to be more stable and beneficial for workers’. The positive impact of an well-organised labour movement on the character of the compromise is illustrated (11). Organised strength could increase job security. Such security may well generate loyalty to the company and a willingness to cooperate in various ways. For example, workers might accept technological upgrading because they are confident of retaining job security. Hence compromise may operate in the interests of both contending classes. 

The Australian experience of the past two decades raises certain vital questions regarding these issues Wright raises. The case is pertinent because, as demonstrated above, high road, ‘technologically innovative system of production and skill’ was promoted nationally, rather than a low wage development path. According to the Wright model, favourable conditions existed for realising a high road, productivist compromise. Whilst organised labour was relatively powerful, the movement never contested capitalists right to control the allocation of capital. Under the Accord, as shown earlier, best practice unionism reflected a commitment to positive mutual cooperation with capitalists, thereby hoping to generate technological innovation in a job secure context.

The Australian case reveals the inherent risks in this process. Rather than strengthening class compromise, the positive cooperation of Australian unions played a significant role in its erosion. A decade after unions adopted this strategy, research reveals the impact of the change on the material interests of workers. During this period capitalists advanced their material interests, whilst those of the working class were eroded. 

During the Accord (1984-1993), real wages fell, whilst profits rose. The wages share of non-farm output fell from 69 per cent to 65.6 per cent during the life of the Accord, whilst profits increased from 31 per cent to 34.4 per cent. Taking account of both social and real wages, average living standards declined by 5.4 per cent. The pattern of wage restraint was unevenly distributed. Those in relatively unskilled work suffered a massive cut of 15.6 per cent. The restructuring has been accompanied by a rise in the level of part time employment, which has increased at three and a half times the rate of full time employment. There has also been a notable shift to precarious employment through the increased casualisation of work, increases in the proportion of temporary jobs, outsourcing and the utilisation of labour hire companies as enterprises introduced ‘numerical flexibility’ into the workforce.

As a result of downsizing and outsourcing work, in a mere 12 years between 1986 and 1997, 3.3 million full time workers were retrenched. Of these 2 million were blue-collar male jobs. By the mid 1990s, more than half of all Australian organisations had been downsized, with the public sector leading the way. Amongst large corporations, downsizing became almost a standard practice. Between 1990 and 1995 about 55 000 jobs were lost in just 20 large corporations. Most of these firms cut between 20 per cent and 80 per cent of their workforce. As can be seen from the following table, the cuts involved substantial numbers of workers.

Table One: Corporate Downsizing, 1990-95.
Company Jobs lost: Numbers As a percentage of employees
Ford  7 160  50 
Westpac  5 810  17 
Nth Broken Hill  4 729  68 
Coca Cola Amatil  3 787  55 
Metro Meat  3 017  60 
Aust. National Industries  2 855  38 
Pasminco  2 687  43 
Fosseys  2 408  38 
BHP (slab and plate products)  2 355  24 
TNT  2 334  20 
CRA  2 256  15 
BHP (rod and bar products)  2 189  38 
Amcor Trading  2 175  95 
Angliss Group  2 104  82 
Shell  1 987  40 
BP  1 761  44 
BHP (Utah0  1 648  83 
BHP (Log Products division)  1 562  40 
Hawker De Havilland  1 443  56 
David Syme  1 289  46 

By 1994 it was estimated that about 25 per cent of the Australian workforce had been casualised. Over the decade of global engagement, nearly all industries realised a significant growth in the proportion of casuals (Figure One). This change has impacted on both men and women. Amongst men, the proportion of casuals has doubled, rising from 10 per cent to 21 per cent between 1984 and 1997. For women there was also an increase but of a lessor magnitude – from 26 per cent to 32 per cent.
Australia’s growth in temporary employment, or short-term jobs, has outstripped all OECD countries except Spain. This form of employment rose from 16 per cent to 24 per cent between 1983 and 1994. (Figure Two). The growth in casual and temporary work is a form of precarious employment that has a serious impact on workers.
A significant historical gain of the Australian trade union movement was the advancement of the eight-hour working day. Unions fought against the 19th Century norm of a twelve-hour working day. Eventually, eight hours became the norm. Standard working time arrangements were then defined as an eight-hour day worked over a five- day week during eleven months of the year over a 45 year working life. Global engagement of the past decade has resulted in the withering away of these gains. By the late 1990s only about one third of the workforce has retained standard hours each week That is to say, the majority of Australian workers are now working extended working hours. The proportion of full time workers working very long working hours – more than 48 hours a week – nearly doubled between 1978 and 1996, jumping from 19 per cent of all full timers to 32 per cent. The system of wage bargaining introduced in 1987 forced workers to trade hours for modest wage increases. Chairperson of the Future Work Foundation, Charles Brass, stated that his research reveals that 750 000 Australians work at least one month longer each year than they did a decade ago. Restructuring and job shedding had so infused workplaces with fear that workers were willing to make concessions in this area in the hope of keep their job. Bass commented, ‘job insecurity is forcing people to work longer and harder, causing failing health and family breakdown’.
Apart from working longer, the Australian Workplace Industrial Relations Survey (AWIRS) shows that work has intensified. 58 per cent of the respondents to the survey reported that their work effort was higher than it had been 12 months earlier and 49 per cent said that stress on the job had increased. Between 1990 and 1994, stress claims under workers compensation doubled. A 1997 survey of 4 500 union and non-union workers by the Australian Council of Trade Unions (ACTU) found that 36 per cent were stressed by company restructuring and 29 per cent worked long and unpredictable hours. Responding to the survey results, the Chamber of Commerce and Industry’s occupational health and safety manager commented, ‘employees needed stress to work well’. Other surveys have found much higher levels of workplace stress. A 1998 survey of 3 500 workers in Victoria found that 91 per cent were stressed. 85 per cent of the business surveyed acknowledged that their workplaces were stressed. Commenting on the findings, Vichealth’s chief executive officer stated, ‘the drive for competitiveness was resulting in unhappy, unproductive and sick workers’.

These changes, which have impacted so adversely on the material conditions, life style and daily experience of the Australian working class, highlight the negative impact of global engagement and the Accord strategy on class compromise. For, as Wright has argued, working class interests center on financial remuneration for work and quality of life. The data reveals that both have been undermined. 

In advocating enterprise efficiency, best practice unionism unintentionally became an active partner in eroding working class interests. A strategy of positive mutual cooperation provided the rationale for standing the union role on its head. Rather than engendering a consciousness of the way in which these changes undercut working class interests, best practice unionism contended that these changes were essential to the nation’s survival under the new conditions of globalisation. Rather than becoming conscious of the class character of neo-liberal globalisation, the union movement, through its commitment to this new cooperative venture, promoted these changes as inevitable and essential. 

The data outlined above calls into question positive mutual cooperation as a strategy for creating durable class compromise. The data also raises doubts about the efficacy of bargained liberalisation advocated by Webster and Adler. The Australian experience reveals that bargained liberalisation, underpinned by union promotion of high road global engagement seriously erodes the class compromise it sought to secure. The real danger is that the union movement has legitimated these changes. As workers experience their interests being undermined, unions risk workers questioning their legitimacy and indeed blaming unions for the erosion of their material conditions and job security. Since the shift to bargained liberalisation and best practice unionism, union membership decline has become a serious problem. 
The movement’s membership decline is one of the largest in the world.This is the reality for a movement that had once enjoyed the highest density in the world. In the space of two decades (1976 to 1996), union density dropped by two-fifths, declining from 51 per cent in 1976 to 30.3 per cent in 1997. Thus a nation that moved swiftly to become one of the world’s most liberal economies is also the nation with the largest decline in union membership. Since union power is a critical ingredient in sustaining class compromise, the declining power of Australian unions is significant. 
Differential Labour Regulation and Class Compromise
    There is a further dimension to these changes that requires analysis of a new kind. Implicit in Webster’s and Adler’s account is a national centered methodology. National change and new national institutions are presented as having the potential to ‘stalemate liberalisation’ by ensuring that ‘change is subjected to institutionally structured interplay of societal interests’. In this account, globalisation is an external force that impacts on these domestic arrangements. Consequently, the way in which the interaction of different national systems of labour regulation has shaped the class compromise dynamic has not been properly explored. Here it is contended that the global needs to be analysed not only as a set of external pressures but also as an internal force through the processes whereby corporations organically connect divergent systems within their own corporate structures, thereby transmitting the logic of geographically distant, politically diverse systems.

    This approach is central to understanding the most recent state initiatives in Australia to further undermine trade union power and accelerate the class compromise eroding trends identified in the previous section. The 1996 Workplace Relations Act that introduced an individual contract system sought the realisation of this objective.

    This institutional change aimed at resolving the contradictory interplay between democratic and authoritarian national industrial relations systems. Democratic systems emphasize liberty, independence, representation and collective bargaining. Authoritarian systems are marked by the unilateral regulation of the employment relationship, which organises and consolidates employer power whilst simultaneously disorganising workers. Australian case studies reveal how companies that globalise benchmark these differential systems. For example, companies investing in China, often through joint venture arrangements, become embedded within and come to rely upon the contract labour system that has emerged in the 1980s. This system is characterised by three key features: the replacement of lifetime employment by a system of individual, fixed term, renewable contracts; the institutionalisation of labour migration not dissimilar in form to apartheid South Africa’s; and the denial of independent union rights. Companies gain competitive advantage through this system, securing wage rates at 2.15 per cent of the Australian rate, with workers labouring double the working hours per week. These conditions are then transmitted back into Australian companies through the joint venture linkage. Unionised Australian workers are presented with the dilemma - either match China’s unit costs of production, or face the prospect of the remaining production facilities being relocated to China. This pressure has produced downsizing and work intensification as unionised Australian workers compete directly with Chinese contract workers through transnational corporate structures. 

    In 1997, A Western Australian Labour Relations Minister commented on returning from a trade mission to China, ‘Asian nations are not dominated by militant union officials as is the case in Australia. The ugly face of unionism is responsible for exporting the jobs for our people’. The 1996 Workplace Relations Act accommodated these pressures through an authoritarian remodeling of Australia’s industrial relations system. New industrial laws centered on individual employment contracts aimed at marginalising union based, collective agreements. A system of individual contracts reinforces relations of dominance and dependency; a consolidation of power and hierarchy; unilateral decision making and the promotion of a culture of obedience that is only ever transformed through labour market institutions that promote checks and balances in employment relations. In a sense, Labor in power had paved the way for undercutting the industrial relations system in this way. Critics argued bargained liberalisation was schizophrenic. Economic liberalisation had little chance of success if labour markets remained out of bounds in the reform process. Unleashing one without the other was a recipe for failure. Leaving intact this pillar of class compromise acted as a dead weight on modernising the economy. Extending reform to this sphere was essential because integration into the world economy achieved through economic liberalisation introduced intense pressures to lower wages. 

    The weakening of organised labour described earlier facilitated this demise of the institutional foundation of class compromise in Australia in that the government felt it could move against the unions with only the minimum of resistance. The transition has opened the way for a deepening of the trends outlined in the previous section, which have been so inimical to the class compromise project. Thus far, South Africa’s development path contradicts this final phase of liberalisation in Australia. The 1994 Labour Relations Act contrasts markedly with Australia’s 1996 Workplace Relations Act. The South African Act consolidates the collective bargaining and associational power of organised labour, whilst the Australian Act undercuts these rights. The Labour Relations Act is a reflection of the present power status of organised labour in South Africa. The alliance between the ANC government and COSATU means that Australia’s radical form of labour market deregulation is not on the agenda. Furthermore, given the fact that South Africa is liberalising a decade later than Australia, the labour movement may well be more critical and less prone to the constructive engagement model of Australia’s best practice unionism, although these influences appear to be strongly present in certain significant unions

    This only serves to highlight the contradictions. Australia’s model of engagement seeks to respond to the competitive pressures emanating from authoritarian regimes. If the ANC is constrained in this regard, how can they expand or even merely retain levels of investment under conditions of democratic labour regulation? A weakness of Webster and Adler’s assessment of the prospects of ‘stalemating’ liberalisation takes little account of the future impact of differential industrial relations systems on the class compromise project. The business strategies of South African companies that globalise, or global companies considering South Africa as a possible investment site will doubtlessly be shaped, at least in part, by the competitive advantage of cheap, ununionised labour, often sustained through authoritarian industrial relations systems. This has to be factored into any assessment of the prospects of building and sustaining class compromise. 

    The Future of Class Compromise in Australia

    Declining union densities, workplace change in the form of a shrinking core and the expansion of precarious forms of employment, concerted pressure to impose individual contracts and finally government campaigns against trade unionism would appear to reveal a bleak future for class compromise in Australia. The fact that popular resistance to these changes has emerged indicates that the egalitarian culture engendered by the historic compromise still has relatively deep roots in certain sectors of Australian society. Lengthy, bitterly fought disputes at Rio Tinto’s Hunter Valley mine and at the US ARCO corporation’s site in Central Queensland are indicative both of the corporate strategy of the mining multi-nationals and of union determination to resist the change. An extraordinary, fouteen month long strike was triggered at the Rio Tinto coal mine when the company tried to impose individual contracts on the 430 strong work force with the intent of realising more flexible work practices to ‘get into the 20th Century’. These included freedom to use contractors, part-time, temporary or casual labour on any work as required; individual performance assessment; the right to allocate overtime at management’s discretion, rather than through a union seniority list; and finally, the right to hire and fire on ‘merit’ as decided by the company in place of recruitment from a union list of retrenched miners and retrenchment on a ‘last on, first off’ basis. The company offered a substantial $10 000 a year pay inducement as well as improvements in superannuation and medical benefits to any who volunteered for individual contracts. All but seven workers refused the contracts, insisting instead on a collective agreement. The stand off continues. At the Central Queensland mine, 250 workers have been on strike for fourteen months after ARCO issued an ultimatum: sign individual contracts that would introduce the same set of conditions as sought by Rio Tinto or face the prospect of dismissal. The union has predicted that no one will take up the contracts because ‘the union and the local communities were committed to the strike’. The Australian mining union has now built an international campaign against Rio Tinto that has incorporated organisations such as Greenpeace.

    During 1998, the Conservative government colluded with one of Australia’s two major stevedoring companies to cleanse the Australian waterfront of unionised labour. The plan included utilising military personnel as strike breakers. On the night of the 7 April, a 2 000 strong workforce at Patrick Stevedores was locked out and replaced by non-union labour. The mass sackings were facilitated by a corporate restructure that transferred the workforce to a labour hire company, which in turn contracted the workers to Patricks under a Labour Service Agreement (LSA). These agreements could be terminated if the services are ‘interfered with’ or ‘delayed’ (Clause 2.3 (h) the movement of cargo. Financial analysts calculated that Patrick could reduce its wage bill be 62 per cent from A$112 million a year to a mere 32 million using contract workers. However, what was at stake was more than profitability. The strategically placed Maritime Union of Australia (MUA) had lent power to the entire movement through its practical commitment to the struggles of other Australian unions. The government aimed at breaking the MUA thereby seriously weakening organised labour more generally.

    This attack failed because of legal miscalculations on the part of the government and the strong community and international support the MUA received. In its eagerness to break the MUA, the government contravened Section 298K(1), which protects the right of workers to belong to a trade union. The International Transport Federation was effective in organising an internationally coordinated campaign against the government and the company that included shipping boycotts. Most importantly, the unions backed by widespread community support on the picket lines prevented the free movement of containers in and out of the terminals, placing enormous pressure on the protagonists. The high level of community support indicates that the culture of egalitarianism and fair play that accompanied class compromise still resonates in sections of the Australian population. The continuing attack on class compromise is likely to remain a defining feature of Australian politics. Despite globalisation empowering an anti compromise agenda, further resistance is likely. Whether or not such resistance reclaims lost ground depends on the capacity of particular interest organisations working together around a broad agenda of social reconstruction that can capture the imagination of working and middle class citizens.


Drawing on the Australian experience, this paper has tried to sound a cautionary note on the prospects of bargained liberalisation articulated by Webster and Adler. There are differences between Australia and South Africa. The most notable is the relative strengths of organised labour at this point in time and the fact that South Africa has a government not overtly hostile to the unions. Notwithstanding these differences, much can be learnt from the experience of the Accord in Australia. Best practice unionism signaled weakness to employers, who soon began an offensive in the form of lean production managerialism. The paper outlined how material conditions declined significantly for workers during this implementation of a high road strategy. Lean production is not the only force challenging the standards built during the period of class compromise. Economic deregulation in the context of diverse industrial relations systems reinforced this trend.

These are issues South African society will have to confront. If bargained liberalisation, a social accord and strategic unionism is a flawed strategy in the struggle to achieve some form of compromise, what is the alternative? Whilst Australia’s bargained liberalisation points to the urgency of a new vision and new politics, the detail has yet to be worked through. This would include revaluation across a wide range of policy arenas. All that this paper has sought is a critical appraisal of bargained liberalisation as a means of securing compromise.

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