Pattern Bargaining, NO ! Enterprise Bargaining, YES!


The Jobs and Skills Summit held in early September 2022 was a pre-arranged event by which big business and industry unions in conjunction with the Albanese federal government moved to legitimize the future introduction of multi-employer agreements (pattern bargaining).  Pattern bargaining is where employment conditions and pay rates negotiated between employers and employees/unions are duplicated in enterprise bargaining agreements across an industry so that there is near uniformity within a particular industry sector.

There is a concern that this duplication of conditions and pay rates via pattern bargaining will create too heavy a burden for small to medium enterprises so that innovation, entrepreneurship and management agility will be fatally undermined.  Additionally, these smaller sectors of the Australian economy may be unable to afford the impost imposed upon them by the pattern bargaining process.   Therefore, the introduction of pattern bargaining could well become a socio-economic disaster for Australia.

The consequent throttling of small to medium business would probably drive-up inflation and unemployment rates.  Big business will probably be able to initially afford the onset of pattern bargaining and could even profit from the rise in inflation by raising prices.  From a trade union perspective there is an expectation that pattern bargaining will lead to a tremendous increase in trade union membership by union preference clauses becoming a de-facto condition of pattern bargaining agreements.

Pattern bargaining will effectively return the Australian industrial relations system to the days (1907 to 1988) when pay rates and conditions were effectively centrally set by binding macro industry awards.  During this era Australian union membership was amongst the highest in the world.  Australian Bureau of Statistics (ABS) figures released in 1976, indicated that 51% of Australian employees belonged to a trade union!

However, this high rate of union membership was not caused by binding centralized awards but rather to the then structure of Australian trade unions which were craft based.  Craft-based unions were smaller and therefore more able to effectively represent their members.   Most importantly, union members had a sense of identification with their particular area of employment so that they felt an institutional sense of commitment to their union.  This analysis is more than just intuitive supposition.  The steep fall in Australian union membership occurred in the 1990s/early 2000s when rank and file members, who had belonged to craft-based unions, declined to join the new industry unions which resulted from the disastrous union amalgamation policy of that period.

The amalgamation policy was a key recommendation of the Australia Reconstructed report which was released by the Australian Counicl of Trade Unions (ACTU) in 1987.  The premise of this report was that if Australian trade unions amalgamated then there would be a concentration of union industrial  power.  The subliminal 'logic' behind Australia Reconstructed was that working class power was more important in achieving union effectiveness than utilzing the arbitral supports which The Conciliation and Arbitration Act 1904 (the 1904 Act) had facilitated.  There was hence a left-wing trade union perspective that the utilization of arbitral institutional supports had stifled working class militancy and consequent union effectiveness - the so-called 'Howard Dependency Thesis'.  It is consequently hpocritically ironical that the current push to engineer union renewal via pattern bargaining is of itself an over-reach of external state power.  

Australian trade unions therefore need to look toward internally strengthening themselves instead of seeking to rely on external institutional supports for the idea was also canvassed at the 2022 Jobs and Skills Summit that increased pay rates achieved under pattern bargaining will only apply to unionised employees.   This two-tier approach to wages is also a flawed concept because too many businesses will still not be able to afford the increased pay rates when wage setting is determined on a macro-basis facilitated by pattern bargaining.  Any increase in union membership which may result from linking wage increases to union membership would be offset by the inflationary impact of pattern bargaining as well as the associated consequence of much higher under-employment/unemployment.

A further consequence of the pattern bargaining approach would be a lack of union delegates at the workplace level which would serve to stifle the development of increased union membership despite the existence of union employment preference clauses and the linkage of pay increases to union membership that would be facilitated by pattern bargaining.  The fundamental cause of the very low rate of Australian union membership (currently at 13%) is the failure of Australian trade unions to utilize the enterprise bargaining triggers in the Fair Work Act 2009 (The 2009 Act) by effectively applying the Union Organisng Model (the organising model).


The Union Organising Model and the Critical Link to Enterprise Bargaining

The organising model is American in its origins and was formulated in the late 1980s/early 1990s.   This model seeks to harness union rank and file support for trade union organising tasks to be undertaken, primarily by workplace delegates with them assuming a substantial degree of responsibility for organising work such as membership recruitment.  It is envisaged within the Australian context of applying the organising model that employees (who are potentially union members) will organise around issues of workplace concern which can be channeled into the enterprise bargaining system.

The failure of most Australian trade unions to effectively apply the organising model and to instead support the introduction of pattern bargaining is therefore all the more galling because the 2009 Act achieves a practically perfect balance between protecting employee rights without placing an undue and unstainable burden upon employers to do so.

The 2009 Act is also employee and union friendly by placing an emphasis upon workplace-based enterprise bargaining which is potentially and inherently a unionising process.  Employees under the 2009 Act have the right to initiate enterprise bargaining at a workplace level and to ensure that the employer negotiates with its employees or the union which represents them and does so in good faith.

Why the ‘Shoppies’ and the Transport Workers’ Union Lead the Way with Regard to Enterprise Bargaining

One Australian trade union in particular which is successfully applying the organising model in an enterprise bargaining context is the Shop Distributive and Allied Employees Association (the SDA).  However, the SDA has been maliciously attacked by the Australian Left for supposedly entering into so-called ‘sweet- heart deals’ with major employers (such as Coles Myer) so that this union / employer relationship can consequently recruit employees into their union.

This left-wing perspective is flawed on a number of levels, but the main point of refutation is that the SDA as a union organisation has traditionally had strong rank and file support.  A brief overview of the SDA’s history illustrates why this has been the case.

The SDA, along with the Federated Clerks Union (FCU), entered into an agreement with Coles Myer in the early 1970s under which this employer undertook to promote union membership.  What the Australian left do not understand is that this agreement would not have the scope to help increase the SDA’s membership unless its rank-and-file membership supported the official union organisation.

A mass meeting of retail employees in 1973 helped to establish a workplace delegate structures so that the SDA was able to build up a large membership base.  Without this delegate structure the SDA could not have effectively represented their members’ industrial interests.  It was also because of this rank-and-file support for the SDA’s official organisation in the late 1970s that an attempt by the Australian Labor Party’s right wing failed to take over this very important trade union which is both moderate and progressive.

The established delegate structures which the SDA has had in place since the early 1970s has enabled this union to effectively apply the organising model since the early 1990s so that its branches were able to successfully adapt to the onset of enterprise bargaining.  The SDA is held up by Social Action Australia (SAA) as a union which has successfully applied the organising model to illustrate the point that if more Australian trade unions are to reap the bonanza of increased union membership, then more delegate structures must be established along with the provision of official union delegate training.

Another trade union which has successfully applied the organising model is the Transport Workers’ Union (TWU).  The TWU has traditionally had a strong delegate structure which predates this union’s official adoption of the organising model due to the practical necessity of keeping track of its often-mobile membership.  Consequently, the TWU’s application of the organising model is in effect a codification of its past organising practices.  Therefore, similar to the SDA, the TWU has been able to master the onset of enterprise bargaining in a workplace context by successfully applying the organising model.

Instead of wholeheartedly applying the organising model as the SDA and TWU are, the Australian union movement in general, is going for the ‘lazy way out’ by opting for pattern bargaining.  The lack of sufficiently extensive workplace union delegate structures will mean that pattern bargaining will not have the ramification of steeply increasing union membership.  Therefore, pattern bargaining will potentially enable the union movement as a whole to reduce the impact of existing delegate structures.

Do Not Give The BOOT the Boot!

To avoid the above scenario, the 2009 Act’s prohibition against pattern bargaining should be retained.  Furthermore, this statute’s provision for a Better Off Overall Test (BOOT), which ensures that Enterprise Bargaining Agreements (EBAs) do not fall below statutory minimums, must also be retained as it is.  Probably, as part of a deal between big business and industry trade unions the Albanese government has flagged diluting the BOOT in return for the former’s acceptance of pattern bargaining.  Consequently, the scope exists for pattern bargaining to be applied in an institutional context in which duplicated agreements could fall below existing award minimums.

Therefore, the federal coalition and the crossbenches of the Australian Senate (which includes the Australian Greens) should oppose the introduction of both pattern bargaining and any dilution of the BOOT.  Opposition on the federal coalition’s part to the introduction of pattern bargaining will not necessarily signify any lingering sentiment on their part in favor of the former Howard government’s notorious 2006 Work Choices legislation.

The federal coalition should instead- in an act of political statesmanship - defend the 2009 Act which Julia Gillard ushered in as being both fair and balanced.

No Free Ride for Enterprise Bargaining

If there are to be legislative changes to help facilitate the desirable outcome of tremendously increased union membership, then options such as a (tax deductible) bargaining fees for non-unionised employees should be considered if a union workplace bargaining EBA is approved by a majority of employees.

The introduction of a bargaining fee for non-unionised employees would align Australian industrial relations law with United States’ practice where trade unions must win so-called ‘representation ballots’.   If an American trade union wins a representation ballot, then that union has the right to negotiate on behalf of all employees at that workplace and to subsequently charge a union bargaining fee which all employees are obliged to pay.

Perhaps there is sufficient scope under the 2009 Act for Australian trade unions to agitate for the introduction of tax-deductible bargaining fees to be inserted into workplace base union EBAs.  Under such a regime union members would not have to pay a bargaining fee because their tax-deductible union membership fee would suffice.

If there is insufficient legislative scope under the 2009 Act to have the Australian equivalent of ‘representation ballots’ inserted in union workplace based EBAs then perhaps Australian industrial relations law should be expanded to accommodate such an important reform.  The scope to introduce such an industrial relations practice is probably viable under Section 51 (xx) of the Constitution which covers the corporations power of the Commonwealth.

Why Enterprise Bargaining Can Lead to Union Effectiveness

It would be a far superior application of the Constitution’s Section 51 (xx) to help introduce non-union bargaining fees then to have pattern bargaining.  For pattern bargaining is essentially a lazy (as well as an ultimately ineffective way) to promote union membership or union effectiveness.  The Albanese government should therefore avoid abusing the corporations power (as the Howard government did with Work Choices) by introducing pattern bargaining.  Future generations of Australians will curse the Albanese government for introducing pattern bargaining due to the structural ill-effects that this industrial malpractice will have on the Australian economy.

A transition to pattern bargaining would be a tragedy because the ALP under Julia Gillard ‘got’ the balance correct when she introduced the 2009 Act with its focus on enterprise bargaining.  For this reason, the slogan, “Pattern Bargaining, No! Enterprise Bargaining, Yes!” is apt.