Advantages and disadvantages of union involvement in enterprise bargaining
... higher wage increases than non unionised agreements. In March 2002 union agreements had an average annual salary increase of 4.1%, whereas non unionised agreements had an average annual salary increase of only 3.3% (www.acirrt.com, accessed 25th April 2003). Other research indicates that this gap is larger than the figures quoted above. According to the 1995 Australian Workplace Industrial Relations Survey (AWIRS), collective agreements with strong union presence saw wage advantages of between 15% – 17%. This research also indicated that wage increases in enterprise bargaining are more possible when there is a strong union presence. However, research also shows that the pay differential between unionised and non unionised workforces is decreasing. Unions can also use their market power and negotiating ability to provide additional fringe benefits for the employee in enterprise bargaining. Research by Miller and Mulvey (1992, as cited in Ivanhoe, 1993) suggests that unions may have a positive impact of increasing the value of fringe benefits for employees in enterprise bargaining by up to 13%. However, more research on this issue is required before a firm judgement can be made. Unions may also use their market power to negotiate better hours of work for employees. Employees are becoming increasingly concerned with achieving an equitable work life balance while employers are concerned with increasing the flexibility of the workforce in order to increase productivity and efficiency. As a result, hours of work issues are second only to remuneration issues (www.acci.asn.au, accessed 25th April 2003). Unions can negotiate a variety of hours of work outcomes and are very pro-active in restricting the number of working hours in enterprise bargaining. Therefore, a union may provide a better opportunity to achieve work-life balance for employees in the bargaining process by negotiating positive hours of work outcomes. An additional benefit of a union’s market power is that a union may represent whole industries. Unions should be able to draw on previous experience to ensure the best possible outcomes in a bargaining process. They may have ideas from other workplaces that can be negotiated into new agreements in order to receive greater benefits for both employers and employees. As illustrated, the market power of unions provides many benefits for employees (and to a degree employers) when negotiating a collective agreement. The question then arises, will unions see a resurgence in membership with the introduction of enterprise bargaining? Union membership has been decreasing since the introduction of the Accord. In the early 1980’s union membership was running at 50%, today it has fallen to approximately 23% (www.abc.net.au, accessed 27th April 2003). However, the introduction of enterprise bargaining has given unions the opportunity to become important tools in today’s workplaces because “collective bargaining is the mechanism by which unions achieve most gains for their membership” (Peetz, 2002, p 41). It may be suggested that with the benefits unions can provide during enterprise bargaining, union memberships should start to increase as more employers turn towards negotiating certified agreements. This argument is mirrored by research into unions perceptions of enterprise bargaining. Most unions see enterprise bargaining as an opportunity not a threat. (Evatt Foundation 1995, Pyman et al 2000). One disadvantage of the market power that unions hold during enterprise bargaining is the issue of negotiating effectiveness. When the Accord was introduced in 1983 unions were involved in setting labour market policy and were given a strong voice through the Accord. When the move to enterprise bargaining began in early 1990’s, unions did not have the skills to negotiate the agreements as they “had been lulled into a false sense of security by the Accord” (www.abc.net.au, accessed 27th April 2003). In order to be effective, unions have had to learn new negotiation skills for the decentralised system. Therefore, the issue of market power has a duel approach. On the one hand, a union may secure additional benefits for employees during negotiations of a collective agreement. However, unions must be proactive in developing skills to ensure they negotiate effectively. 3.3 Collective Voice Unions provide a collective voice for employees that is often illustrated through the “exit/voice model”. The “exit/voice model” argues that individuals acting alone are more likely to leave the workplace rather than speaking up about a concern in fear of victimization by the employer (Ivanhoe, 1999). This suggests that by providing a collective voice, employees are more likely to be satisfied with enterprise bargaining as the union will reflect the voice of its members. This in turn may lead to decreases in turnover as employee concerns are raised and resolved through the collective voice of the union. An additional benefit of the collective voice of unions is that it opens up effective channels of communication. Data, from the Federal Department of Industrial Relations (1995), shows “that a critical factor in bargaining at a workplace was union presence” (Campling and Gollan, 1999 p54). Unionised workplaces are more likely to have formalised communication processes (Campling and Gollan, 1999) which is essential for an effective enterprise bargaining process because the employer is more informed about employee preferences and requirements. 3.4 Productivity Evidence suggests that unions appear to have a negative effect on productivity as “union power is generally used in a manner detrimental to productivity while… employee participation has a positive effect on performance” (Ivanhoe, 1999 p333). This is supported by data collected by the AWIRS that concludes that unions have a negative effect on productivity and the rate of return for firms in a competitive product market. In summary, there are several advantages and disadvantages to union involvement in enterprise bargaining. However, no matter how strong the benefits of union involvement are, there is still be move away from collectivism in today’s workplaces towards individualism. This is evident also in Australian culture in general. As workplaces become more individualised in nature the role of unions will diminish unless they can adapt to the new workplace environment. 4.0 Collective agreements – no union involvement The previous section touched on the issues of flexibility and productivity and the gains non union enterprise bargaining may create in these areas. However, there are also several other advantages, and disadvantages associated with collective agreements made without union involvement which are summarised as: 1) Flexibility 2) Marginalise union influence 3) Bargaining Power 4.1 Flexibility As previously discussed, Campling and Gollan (1999) found that functional flexibility and numerical flexibility in certified agreements increased when unions were not involved in the negotiation process. In addition, Campling and Gollan found that work redesign is an outcome more common in non union enterprise bargaining. Work redesign, numerical flexibility and functional flexibility are all important aspects of the enterprise bargaining process for both employees and employers as they can positively affect work-life balance and business performance. However, these tools must be negotiated fairly as some research indicates that enterprise bargaining (with and without union involvement) leads to work intensification. It is argued that while the employer aims for increased flexibility, which is usually offset by increases in employee wages, this can lead to employee providing increased efforts (Willis, 2002). Without the bargaining power of unions, employees may enter into certified agreements that result in work intensification. Employees and unions have to learn to play the “enterprise bargaining game” to ensure this does not occur. 4.2 Marginalising Union Influence Research by Campling and Gollan (1999) shows that enterprise bargaining without union involvement is a proactive measure designed to reduce and marginalise union presence. In addition, non unionised workplaces are more likely to have unregistered agreements. 4.3 Bargaining Power Employers traditionally have stronger bargaining powers than individuals or even a group of individuals without union presence. Research by Campling and Gollan shows that collective agreements were often offered without “any genuine bargaining with employees” (Campling and Gollan, 1999 p 44). This creates a culture of non participation by employees. However, one of the important potential benefits of non union enterprise bargaining is that employees can participate in the process of enterprise bargaining. This in turn leads to higher workplace commitment and thus gains in productivity. By promoting proactive participation in the bargaining process, the employer can initiate positive cultural change as employees feel empowered by the negotiation process. So although a perceived benefit of non union enterprise bargaining is the ability for employees to participate and feel empowered through the negotiation process, research indicates that this rarely happens. In fact, Campling and Gollans’ findings show that the opposite occurs and employees have less input into the bargaining process when there is no union involvement. Research by Campling and Gollan (1999) also suggests that enterprise bargaining, without the involvement of unions, rarely has good consultation processes. Whereas unionised workplaces are more likely to have formalised communication structures such as staff meetings and newsletters, non unionised workplaces are more likely to have informal communication processes such as after hours get togethers. During the ratification of enterprise bargaining the “employer must prove it has taken “reasonable steps” to consult the employees covered by the agreement” (Campling and Gollan. 1999 p 22). However, without a third party or union involvement it becomes difficult to judge what constitutes reasonable steps. Non unionised workplaces are less likely to have formalised agreements. In 1996 63% of certified agreements involved unions, whereas 18% were negotiated without the presence of unions (Campling and Gollan. 1999). This suggests that there is less incentive for a non union workplace to enter into enterprise bargaining. Therefore, the perceived advantages of non union involvement in the enterprise bargaining process is that employees become empowered and committed to the employer by participating in negotiations. However, evidence suggests that this advantage is rarely seen in the negotiating process as most agreements are offered to employees by employers without any negotiation or formalised communication and consultation processes. 5.0 Australian Workplace Agreements (AWAs) The increasing level of individualism found in Australian culture is reflected in the labour market. “Employers are increasingly treating employees as individuals not as simply part of collective arrangements negotiated with trade unions” (www.acci.asn.au, accessed 25th April 2003). The advantages and disadvantages of AWAs are similar to those of enterprise bargaining without union involvement and may be summarised as: 1) Improved employer – employee relationship 2) Pay for performance 3) Bargaining power 4) Transaction c...