The future of unions in Australia

| February 10, 2014

Paul Howes, head of the Australian Workers Union, has called for a ‘grand compact’ to reduce conflict between business, unions and government. Ian McAuley says we still need unions, but they and other social and political institutions in our country need reconfiguring.

Paul Howes stirred the political pot when he called for a “grand compact” between business, unions and government.

There are echoes of Bob Hawke’s Accord, the first instalment of economic reforms which were to transform the economy beyond recognition. But that was 30 years ago, when union membership was three million in an employed workforce of six million. In 1983 the interests of unionists could be assumed to align with the interests of all workers. And although it was changing, our economic structure had clearer divisions between “labour” and “capital” and between “workers” and “managers”.  Many people, mainly men, were employed in large establishments, with Bundy clocks, workers’ and managers’ car parks, and informal but clear dress codes signalling a class division.

Now there are only 1.8 million unionists in a workforce of more than ten million. While union membership is still high in the public sector, in the private sector it is only 13 per cent. The distinction between sectors is important, because in the public sector there are weaker hierarchical divisions. On funding issues in schools and hospitals all are on the same side, and while pay, allowances and physical conditions are important, so too are professional issues.

Our economy has changed. People are more mobile, workplaces are smaller, and vertical integration has given way to looser arrangements – not good conditions for unionisation. In many industries the cost of physical plant and equipment has tumbled, particularly where computer technology is involved. Microbusinesses in areas as diverse as printing and brewing, once the domain of big business, are flourishing.

As contemporary Marxists such as Jerry Muller point out, while physical capital has fallen in price, human capital counts more than ever before. The person who has good qualifications, who is ready to learn, and who has confidence and social skills, is the capitalist of this era.

That is not to say all power is now with the workers. Those who lack such human capital are now the underclass, often loosely attached to the labour force and therefore unlikely to be in a union. Those who have human capital believe they don’t need unions, often finding their interests don’t align with traditional union concerns. It is not surprising therefore that half of employed union members are aged 45 or more. Hardly a good sign for unions’ long-term survival.

In short, even if the current political landscape were less polarised, Howes’s grand compact is 30 years past its use-by date.

But his recognition that our combative labour relations system is dysfunctional is spot on.

Our class-based labour relations system is 50 years more out of date than his compact. In 1933 the Australian industrial sociologist Elton Mayo published The Human Problems of an Industrialized Civilization, based on extensive studies at the Hawthorne works of Western Electric in Illinois, a huge telephone and consumer products manufacturing plant. Those studies found, unsurprisingly, that when people showed respect for one another, and when people had some autonomy in their work, productivity rose. There were better arrangements than economic output as a by-product of a class war.

At the same time management theorists such as Adolf Berle, Chester Barnard and Shibusawa Eiichi were writing about new models of enterprise where people come together, some with finance, some with entrepreneurial skills, some with organisational skills, some with engineering skills and so on, to create value and to share the proceeds.

In fact in her recent work Grand Pursuit: A Study of Economic Genius, Sylvia Nasar suggests that while Marx was sequestered away in the British Museum writing Das Kapital, the workplace was already starting to lose clear delineations between labour and capital.

Our institutions – unions as “employee” institutions, and bodies such as ACCI as “employer” institutions – are relics of another era. So too are our two main political parties – the Labor Party with its formal ties with unions, and the Liberal Party which, particularly in its present manifestation, places itself on the “business” side of an imagined fence, as if there is some homogeneous set of interests under the heading “business”, and as if there is some inevitable antagonism between the “employers” and “employees”.  In fact, when Tony Abbott found he was facing a united front at SPC Ardmona, he seemed to be annoyed that the relationship wasn’t antagonistic.

Our social and political institutions need reconfiguring. We still need unions or similar institutions to protect and empower the most vulnerable: The brave new world where the rewards go to those best endowed with human capital is no more benign than the world of the 19th century when the rewards went to those with inherited wealth and social class connections. Above all, however, we need political parties which can stand on competing economic principles rather than on claims to represent class interests.