1997 Report on Agreement Making
Executive Summary
- This report fulfils the requirements of section 358A of the Workplace Relations Act 1996. This requirement is similar to that specified in the previous Act. However, unlike previous reports which were prepared by the then Department of Industrial Relations, this report was written by researchers at the National Institute of Labour Studies, the Flinders University of South Australia.
- In the first year of operation of the Workplace Relations Act, formal agreement-making continues to be an important means by which the wages and conditions of employees are determined.
- In 1997, there were approximately 5020 Certified Agreements formalised by the Australian Industrial Relations Commission. These agreements represented around 758 698 employees. Ninety-four per cent of these employees were in agreements made between trade unions and employers while the remainder were in agreements made directly between employers and their employees.
- Data on Certified Agreements suggests that around 37 per cent of all employees covered by Certified Agreements formalised in 1997 were female. For employees covered by AWAs, the estimate was 31 per cent. Part-time workers represented only 9.7 per cent of employees covered by AWAs and 11 per cent of the employees covered by Certified Agreements. Only 6.8 per cent of persons covered by an AWA were under 21 years of age, with the comparable estimate for Certified Agreements being 7.6 per cent. Identifying the agreement coverage of persons from non-English speaking backgrounds is somewhat more problematic than for the other designated groups. Indeed, for employees covered by AWAs, it was not possible to determine the extent of coverage for this group. Nevertheless, around 9.7 per cent of employees covered by Certified Agreements were identified as coming from non-English speaking backgrounds.
- Although to some extent the rate of increase in the coverage of agreement-making moderated during 1997, this was largely the result of developments in the first two quarters of the year. Indeed, in the last two quarters, the number of employees covered by new federally Certified Agreements was amongst the highest ever recorded.
- However, during 1997, the number of Certified Agreements which were current (that is, had yet to reach their specified expiry date) actually plateaued (particularly in the first half of the year), while the numbers of employees covered by current agreements actually declined.
- A number of factors appear to have influenced this result:
(i) a number of collective agreements covering relatively large numbers of employees, which had been formalised in previous periods, expired and were not formally renewed during the period. Although the terms and conditions of these agreements continue to apply until another agreement has been formalised, these employees were not counted as being covered by currently operating Certified Agreements;
(ii) the advent of new options in agreement-making — specifically, individual-based Australian Workplace Agreements (AWAs). In some cases, employers who may have formerly been involved in Certified Agreements may have failed either to make or re-negotiate federally formalised collective agreements while they considered the applicability to their own circumstances of these additional choices in agreement-making;
(iii) the year 1997 represented a period of low inflationary pressure, increasing competition and moderately high unemployment. As a result, the opportunity for wage increases through agreement-making may have been perceived as being lower than in previous periods.
- In 1997, the average annualised wage increase (AAWI) from Certified Agreements was estimated to have been 4.5 per cent per employee. The average duration of these agreements was two years. Variation between industries was, however, quite marked, with the Construction industry recording an AAWI per employee covered of 5.5 per cent, compared with only a 2.5 per cent per annum increase for employees covered by Certified Agreements in the Communication industry.
- Consistent with the findings from previous reports on enterprise bargaining, there appears to be an inverse relationship between the concentration of females covered by an agreement and the AAWI per employee associated with that agreement. In 1997, Certified Agreements which had a low concentration of females achieved on average a 5 per cent AAWI per employee. By comparison, agreements which had a high concentration of females achieved on average only a 3.6 per cent AAWI per employee in 1997.
- Nearly 80 per cent of females covered by Certified Agreements are covered by agreements which identify leave provisions of some type. Further, the incidence of leave provisions within an agreement increases with the concentration of females within an agreement. For example, leave provisions were included in 84.4 per cent of female dominated workplace agreements compared to only 65.7 per cent of male dominated agreements. Therefore it is possible that on average, the inclusion of leave provisions in Certified Agreements is of greater importance to females than males.
- For part-time workers, the variation in the AAWI per employee across agreements corresponding to the concentration of part-time workers is less than is the case for females. Nevertheless, Certified Agreements made in 1997 which covered a relatively high proportion of part-time workers had a lower AAWI per employee than Certified Agreements which did not include part-time workers. As with females, there is an inverse relationship between the concentration of part-time workers in a Certified Agreement and the AAWI per employee. In 1997, Certified Agreements which did not cover any part-time workers received on average a 4.7 per cent AAWI per employee. For Certified Agreements which covered a share of part-time workers of 20 per cent or more, the comparable estimate was around 4 per cent.
- Estimates of incidence in the main conditions-related provisions differ substantially between full- and part-time employees. The difference was most noticeable for persons covered by AWAs.
- For persons from non-English speaking backgrounds, irrespective of their share of coverage in a Certified Agreement, the AAWI per employee was broadly in line with or exceeded that of the average for all employees. The AAWI per employee for persons from non-English speaking backgrounds ranged from 4.4 per cent (in agreements with less than 20 per cent of non-English speaking persons) to 4.7 per cent (in those agreements with 20 per cent or more from a non-English speaking background) compared to the average for all persons in 1997 of 4.5 per cent.
- As for females and part-time workers, the AAWI per employee varied inversely with the concentration of young people in a Certified Agreement. Of agreements made in 1997 which did not represent any young people, the AAWI per employee was estimated to be 4.7 per cent. For agreements in which at least 20 per cent of employees covered by these agreements were young, the AAWI was estimated to be 4.2 per cent in 1997.
- In 1997, a total of 4393 AWAs covering 225 employers were approved. The utilisation of AWAs steadily increased throughout the year as both employees and employers became more aware of, and comfortable with, the processes required to formalise AWAs.
- Around 28 per cent of employees covered by AWAs have provisions which were to be drawn from the relevant award. For nearly 20 per cent of employees covered by AWAs, however, the provisions contained in an AWA represent all of the formal entitlements pertaining to the employment arrangement. For the remaining 52 per cent of persons covered by AWAs it was not possible to determine the relationship of their AWA to the relevant award.
- One-quarter of AWAs approved in 1997 contain provisions relating to performance pay. These incentive-based pay structures did not extend to profit-sharing arrangements, with less than 0.5 per cent of employees covered by AWAs having these arrangements.
- In 31 per cent of cases, two or more AWAs were included in the same document. That is, while it is only ever one employee who is signatory/party to an AWA, as with pattern agreements for Certified Agreements which do not vary between firms, many of these AWAs clearly do not vary between individuals. It remains an area of further research to more closely understand the motivations of managers who choose to make individual-based agreements which in practice represent collective arrangements.
- AWA provisions in 1997 are likely to reflect transitional arrangements adopted by employers and employees rather than indicators of secular, long-term developments.
- While adjustments required under the Workplace Relations Act by those groups interested in undertaking collective Certified Agreements between trade unions and employers were relatively minor, for others, the changes introduced in the Act, for example in relation to AWAs, required more time for consideration. Undoubtedly, the evolution of agreement-making which continues with the Workplace Relations Act will require a period much longer than a year to appreciate more fully the developments associated with agreement-making under the Act.
Copies of the Report
To order copies of the report, call (02) 6121 7772.