Opinion article

In search of desirable workplace relations model for Australia

Professor Paul J. Gollan and Dr Ying Xu examine potential use of European workplace relations models in the Australian system.

Given over 11.8 million Australians are currently in the workforce, workplace relations is fundamental to the economy, culture and quality of life of most families.

Australia features a mature and generally resilient economy with a low unemployment rate and a high-wage structure. Facing the new era of globalisation and international competition, better pay, more jobs and higher living standards largely depend on having fair and productive workplaces and an effective workplace relations system to provide sustainable support.

Workplace relations reform has been central to the economic and political debates in Australia, with the most recent policy shift being the enactment of the Fair Work Act in 2009 which was amended in 2013.

In January 2015, the Australian Government delegated the Productivity Commission to undertake a wide-ranged inquiry into Australia's workplace relations framework. Notably the Government has requested the Commission to go beyond evaluating the current system to consider the type of system that might best suit the Australian society over long term.

In search for such a desirable workplace relations model for Australians, workplace relations reform is now considered a big and urgent issue for the future.

Our research on international workplace relations experience finds that the European social partnership model a promising reference for future workplace relations policy and workplace culture change in Australia.

Workplace cooperation and the social partnership model    

It is known that if a trusting and collaborative employer-employee relationship is present in a workplace, employees will be more productive, more creative, have less conflict and be more loyal. Therefore, over the past two to three decades, many western countries, such as the United States, Britain, Ireland and New Zealand, have pursued an employment relations agenda involving labour-management cooperation or a form of partnership.

The social partnership model has a long tradition in northern continental Europe and is a form of labour-management cooperation which is implemented at the national level. Under a social partnership model, social dialogue is essential for both developing and maintaining statutory forms of employee participation, information and consultation.

The flourish of workplace partnership practices in the UK has been largely attributed to institutional support under the social partnership model at the national level. This has been required by important employee and employer social rights and responsibilities which are enshrined in European Union laws, such as the European Works Council Directives and the Directive Establishing a General Framework for Informing and Consulting Employees.

The social partnership approach moves beyond the narrow conception of employment relationships as a function of the labour market towards the consideration of work situated within a broad social context. Under this model, both the economic and social functions of participants are protected by law through provisions of clear definitions and mechanisms with employees and management obliged to work in the spirit of cooperation.

Moving towards a social partnership model in Australia

The current Australian labour law policy explicitly supports both union and non-union employee representation but it lies in the middle ground between a voluntarist and a protectionist approach to labour-management collaboration.

Conflictual industrial relations are a significant part of the Australian system, yet our analysis on the current labour law shows that, while the Fair Work Act (2009) does not refer to the term partnership, the existing system does accommodate, to an extent, labour-management cooperation.

In particular this can be demonstrated through the legislative requirements for information and consultation of employees over major organisational change. Legal requirements also provide support for joint consultation committees, a form of voluntary employee participation, and labour-management cooperation in Australia.

The benefits of a social partnership approach and employee voice are well documented in the literature and are supported by Australian cases involving union or non-union labour management collaboration.

Evidence from Europe also cleared concerns that the process of consultation may cause undue delays in managerial decision-making. The EU information and consultation directives are regarded as a vital and positive response to the economic effects of globalisation. Partnership arrangements seem to offer significant potential for enhancing competitiveness of Australian firms too.

If Australia is to move towards a cooperative workplace relations system and social partnership approach, changes in legislation and workplace relations culture are both imperative.

The Fair Work Act has instituted requirements of early consultation for major organisational change, whereas an ongoing joint problem-solving approach to decision-making would be more akin to the partnership model and its mutual gain principal.

The legislation provides model terms and enhanced guidelines to employee information and consultation, but the mechanisms are yet to be legitimised. We suggest that a more useful definition of labour management and social partnership is developed to clarify identifiable practices (such as employee and especially representative participation) with specific processes.

Importantly, the European social partnership model removes the contentious issue of pay; this could be facilitated by the current labour law and its provisions for information and consultation and collective bargaining.   

Furthermore, public policy and institutional support are only necessary (but not sufficient) conditions for effective labour-management cooperation and partnership. Social partnership and workplace cooperation requires a collaborative cultural paradigm in the terrain of industrial relations in Australia. All parties — government, employers and employees and their representatives (union or non-union) — will need to share a genuine interest in reform, and make concerted efforts through a non-adversarial approach.

From this perspective, the National Reform Summit at the end of August marks a good move towards collaborative approach to workplace relations and reform.    

The implications of a social partnership approach for employee wellbeing is an under-investigated area and deserves greater attention. The annual surveys from 2011 to 2014 on stress and wellbeing in Australia have revealed some alarming trends such as a decrease in levels of workplace wellbeing, job satisfaction and job interest. Nearly half of the working Australians surveyed rated issues in the workplace as a source of stress. Employee wellbeing issues may lead to losses in productivity and discretionary effort and creativity levels, which may lead to significant indirect costs for a knowledge-based economy.

Therefore, the implementation of an enhanced consultation procedure may not only enhance job security, but also employability, flexibility and productivity.  Nonetheless, further research would be required to implement a European-style works council system in the Australian context.

About the authors

Paul J. Gollan

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Professor Paul J. Gollan is a member of CEDA's Queensland State Advisory Council. He holds an MSc (Econ) and PhD from the London School of Economics and is Professor of Management and Director and Head of Australian Institute of Business and Economics (AIBE) in the Faculty of Business, Economics and Law at University of Queensland. Previously he was Professor of Management and Associate Dean (Research) in the Faculty of Business and Economics at Macquarie University. Click here to read more about Professor Gollan.

Ying Xu

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Dr. Ying (Cathy) Xu is currently research fellow at the Australian Institute for Business and Economics, Faculty of Business, Economics and Law, University of Queensland and adjunct lecturer at the department of Marketing and Management, Faculty of Business and Economics at Macquarie University

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