Trade Union Reform
The Future of Trade Unions: Reform or Replacement?
The bull in the bull ring is his own worst enemy,
for he wastes his energies attacking the cape instead
of the matador. But the same can be said about the
critics and opponents of trade unions. Invariably they
waste their energies attacking the cape---the activities
and behaviour of trade unions, and ignore the matador---the ultimate basis of trade union power: their control
over the hearts and minds of the ordinary wage and
salary earners arising from their perceived role as
worker protection organizations.
And it is precisely on this worker protection role
that attention must be concentrated if the continually
increasing of trade unions is ever to be reduced.
Trade unions as worker protection organizations
The role of trade unions as worker protection organizations
can be regarded as simply the logical outcome of the
way the labour market has operated in capitalist economies
in the last 200 years.
For the most part the labour market is much like any
other market---a conflict situation wherein buyers
and sellers alike are each trying to get as much as
possible and to give as little as possible. Unlike
other markets however the labour market has usually
operated in a state of over-supply; in other words
in conditions of unemployment. And in any condition
of over-supply of course the bargaining advantage is
always with the buyer rather than the seller.
Now naturally enough, no-one is very happy operating
in a situation where they are permanently at a bargaining
disadvantage, so that it is only to be expected that
wage earners would try and look around for some way
of remedying the situation. And having once decided
on the need for positive action to improve their bargaining
power in the labour market there are in fact two different
approaches which might be adopted. The first of these
is to raise the demand for labour by eliminating unemployment
thereby creating a sellers' market for wage earners.
The second is for workers to combine and bargain collectively
with employers by establishing trade unions.
Considered as alternatives, the first method of improving
the bargaining power of the ordinary worker, viz. full
employment, or a sellers' market for labour is by far
the more effective. For by creating a surplus of jobs
over job-seekers it makes the individual worker the
master of his own destiny; he can now pick and choose
in a way he could never hope to do in a buyers' market
Unfortunately for the ordinary wage earner, effective
though the establishment of full employment would be
in improving his bargaining power in the labour market,
there is no immediately obvious way through which he
can bring this most desirable state of affairs about.
This is where the second alternative---collective action
by the sellers of labour---comes into its own. For
though it may present initial difficulties in creating
and maintaining an effective bargaining organization,
once these have been overcome, the benefits of a united
front in negotiating with employers are obvious and
So here then we have the ultimate explanation for
the existence of trade unions. They are essentially
a cooperative response by individual sellers of labour
to the inferior bargaining position in which they usually
find themselves in a capitalist economy operating at
various levels of unemployment. And this desire on
the part of individual workers for more equal bargaining
power is not only understandable, it is also totally
justifiable. After all, everyone believes in equality
before the law: why should there not also be equality
within the market place? And, to take the argument
a step further, it is the fact that trade unions are
presently seen as instruments whereby greater equality
of bargaining power in the labour market is to be achieved
which gives them their present dominating role in the
economy. For they are pursuing not only an economic
objective but a moral objective as well. And, although
we cannot be said to be an overly moral society, the
ability to appeal to morality is one of the most powerful
weapons any pressure group can possess.
The Moral Issues of Industrial Relations
Although the morality of the basic trade union objective
is unarguable, the same may not be said for the method
through which they seek to achieve it. For this essentially
involves the pursuit of equality in one area of the
labour market by the creation of inequality in another
To be an effective force in the labour market, trade
unions must be in a position to interrupt production---in other words they must be allowed the right to
strike. Without this right, often itself expressed
in fervent moral language as 'the sacred right of the
worker to withhold his labour', trade unions would
be unable to exert significant pressure on employers
and would in fact be reduced to the status of a workers'
friendly society. Yet the right to strike immediately
introduces double standards into the labour market.
One group, representing the sellers of labour, has
the right to unilaterally breach contracts while at
the same time the buyers of labour are required to
meticulously honour them.
But if the supporters of trade unions face a moral
dilemma---although in practice it seldom seems to worry
them unduly---so also do their critics. The critics
of trade unions are rightly indignant about the way
trade unions exploit the special privileges which have
been conferred on them. But in seeking to remove or
reduce those privileges the critics seldom face up
to the consequences of such actions. For the reduction
of present double standards will undermine the 'equalizing
role' of trade unions, and, in consequence, lead to
increased inequality in the labour market between buyers
and sellers. In short, in seeking the removal or reduction
of the special privileges granted to trade unions,
their critics usually overlook the necessity to protect
the totally desirable objective which led to the adoption
of those double standards in the first place.
The position may perhaps be summarized in terms of
the classic baby and bath water proposition; the supporters
of trade unions arguing that the bath water---double
standards---is essential for the welfare of the baby---greater equality of bargaining power in the labour
market. The critics of trade unions are arguing that
the bathwater must be thrown out wholly or partly but
in so doing they make no specific provisions to protect
the baby from harm.
Thus the central issue to be faced and resolved in
any serious attempt at trade union reform is really
a moral one: how to reduce the present double standards
enjoyed by organized labour without, at the same time,
increasing the inequality of bargaining power in the
labour market between individual buyers and sellers.
And in so far as the critics of trade unions ignore
this issue they are left in a morally ambivalent position.
They are concentrating on one form of injustice while
overlooking or inadequately accounting for another.
In such circumstances the debate tends to deteriorate
fairly rapidly into a slanging match about which injustice
is the worse---double standards or inferior bargaining
in the labour market. Reduced to these simplistic terms
this is not a debate which the critics of trade unions
can expect to win. They simply haven't got the numbers.
The great majority of the community are wage and salary
earners and their dependents and sympathisers and,
when faced with a choice of injustice, they will obviously
prefer special privileges for trade unions rather than
greater inequality of bargaining power in the labour
Trade Union Responses to Trade Union Reform
Up to this point discussion has in effect assumed
that the trade union response to proposals for trade
union reform will be a neutral or passive one. In point
of fact the precise opposite will be the case. Trade
unions will, quite correctly, regard any proposals
for reform as a direct and immediate threat to their
existing powers and privileges. Once the talking gives
way to action and proposals are converted into specific
legislation trade unions must be expected to respond
with the utmost vigour. Furthermore the resources they
are in a position to mobilize in their defence are
forbidding. To begin with there are presently two and
a half million trade union members in Australia.
At this point it is pertinent to make a few comments
about the relationship between trade unions and their
members. In recent years public opinion polls have
shown not only the increasing unpopularity of trade
unions among the community generally but also a rising
level of dissatisfaction on the part of the rank and
file members. A clear distinction must be made however
between the behaviour and activities of particular
trade unions and trade union officials and the basic
underlying principle for which the trade union movement
stands. Furthermore, allowance must be made for the
love-hate relationship which frequently exists between
the executives and the rank and file---the latter regarding
the former as autocratic and demanding, the former
regarding the latter as ungrateful and apathetic. Both
sides however accept that the fundamental purpose of
trade unionism is worker protection. Once this is seen
to be under threat---and trade unions can be expected
to present any proposals for reform in this light---
ranks will close and individual complaints will be
submerged in a common struggle to preserve existing
rights and privileges.
To start with then, trade unions in their opposition
to reform can recruit from an army of two and a half
million. And they can back this resource up not only
by massive financial reserves but also by easy, and,
for the most part, sympathetic access to the media.
Then again the trade union movement is closely affiliated
with what may be the largest political party in Australia,
some of the members of which would favour an actual
increase in trade union power while few, if any, would
support a significant reduction.
Given then the quite awesome array of force the trade
unions can mobilize in what they would regard as their
defence and given too that they have in their hands
the stronger, or at least more popular moral argument,
it is difficult to see any significant reform of trade
unions in the foreseeable future.
The Alternative to Reform: Replacement
- The basic conceptual problem with the idea of trade
union reform is that it directs attention to the external
symptoms rather than the ultimate source of trade union
power. The argument revolves around the rights and
privileges trade unions enjoy rather than the basic
objectives they seek to achieve. However, were the
focus of the debate to be shifted away from the behaviour
and activities of trade unions and concentrate instead
on ways and means of equalizing bargaining power in
the labour market, then the critics of trade unions
would find they had in their hands a new and potentially
devastating weapon. For if the basic objective of social
and economic policy is seen as greater equality of
bargaining power in the labour market between buyers
and sellers then there is, as pointed out earlier,
an actual alternative to trade unions in the form of
full employment. And once the argument is brought to
this point trade unions suddenly lose their monopoly
in the area of worker protection; they no longer have
a mortgage on morality. A competitor has arrived on
the scene and trade union performance can now be assessed
in terms of what that competitor has to offer the trade
unions' clients---the ordinary wage and salary earners.
Furthermore, once attention is focused on full employment
as an alternative to trade unions the critics of organized
labour have a morally unassailable position. They are
no longer, as in the case of trade union reform, arguing
for a choice between injustices. Nor are they even
attacking trade unions directly. They are simply espousing
the cause of greater equality of bargaining power in
the labour market and asserting that full employment
rather than trade unions is obviously the best approach.
In contrast trade unions will find themselves in the
uncomfortable position of arguing that wage and salary
earners should forgo the manifest benefits of a permanent
sellers' market for labour in order that they, the
trade unions, should be able to continue to bargain
on their behalf.
Furthermore, winning the moral victory against trade
unions opens the way to the next step---winning the
political battle, for the consequences of this change
in the moral balance of power will inevitably be a
drastic realignment of political forces in the community.
In any push for trade union reform the 'pro's' are
heavily outnumbered by the anti's. Those in favour
of a reduction in the privileges of organized labour
are mainly limited to employers, the self employed
and economic rationalists. Opposed to them is the vast
majority of wage and salary earners who make up about
85% of the workforce, plus independent third parties
who almost invariably regard inequality of bargaining
power as a greater injustice than double standards.
When however it comes to the possible replacement
of trade unions---to the proposition that full employment
be used as an alternative way of achieving trade union
objectives---the numbers come out very differently.
Those in favour of full employment without trade unions
as opposed to the maintenance of trade unions plus
a continued high level of unemployment will include
not only employers, self employed and economic rationalists
but also the unemployed, those who live in fear of
unemployment, those concerned about the economic and
social consequences of unemployment, plus a proportion
of securely employed wage and salary earners whose
social conscience overrides their hip pocket nerve.
In such a situation those who, when faced with a choice
between trade unions and full employment, will choose
the latter are likely to be in a significant majority.
In fact the only real problem with the idea of replacing
rather than reforming trade unions is the quantum jump
in community thinking which it involves: the requirement
to suddenly cease taking for granted organizations
which, over the past three generations, have become
an increasingly dominant element in the social infrastructure
and instead to subject the basic assumption which supports
these organizations to critical scrutiny. In short,
to ask the ultimate question, can the objectives sought
through trade unions be attained by some other form
of economic or social organization?
40 Years On
My own association with industrial relations in Australia
now extends over four decades. It began in 1945 when
in the second year of my commerce course at Melbourne
University I chose, as an optional subject, industrial
relations in preference to philosophy---in retrospect
I sometimes wonder if I really made the right decision.
Whether or no, looking back over those forty years,
what stands out most clearly in my mind is the enormous
increase in the power and authority of trade unions
during the period. Over those four decades in fact
the power of trade unions has simply grown and grown
until today they have become a virtual State within
a State with the central trade union body, the ACTU,
not only initiating and therefore largely determining
wage policy but more generally acting as a sort of
national monitoring authority to which our present
Federal Government automatically defers before presenting
its legislative proposals to our elected representatives.
Throughout those four decades employers and their
representatives have been persistently complaining
and protesting against excessive trade union power
in language incidentally which has hardly changed during
the period. Indeed if you care to go back to speeches
made in the 50's and 60's they could be recycled today
with a minimum of revision.
From time to time during the period attempts have
been made to reverse the trend but all such attempts
have failed. Trade union power has remorselessly expanded.
In 1986 trade unions expect, as a right, to negotiate
on a range of issues such as retrenchment payments,
superannuation, work practices, etc, which 30 and 40
years ago were regarded as purely employer prerogatives.
Forty years ago unions were subject to penalties when
they engaged in direct action in defiance of awards
and fines were levied on them. Today awards are little
more than a bargaining platform from which direct action
Forty years ago the idea of claiming payment for time
spent on strike would have been laughed out of court.
Today however it is regarded as the normal stock in
trade of industrial negotiations.
Viewed in the broad perspective of the last 40 years
trade union power might be compared to one of those
mediaeval castles standing upon some rocky outcrop
and dominating the landscape of the surrounding countryside.
Periodically employers launch frontal assaults on the
castle only to be beaten back and to retreat and lick
their wounds while the defenders set about still further
improving their defences from which at some future
date, which they judge to be propitious, they will
sally forth to seize yet another traditional employer
It is true that over the past two years employers
have had some successes---the Queensland Power dispute,
Mudginberri and Dollar Sweets. But these, though heartening
in themselves, are essentially peripheral. They are
no more than a few stones dislodged from the outer
wall of the fortress. Moreover it is important to appreciate
the real reason for these successes. It has been dissension
among the occupants of the castle---the normal division
of interest between the political and industrial wings
of the labour movement which surfaces whenever the
Labor Party forms a government. In each of the foregoing
instances the dispute had reached a point where the
unions could only achieve a favourable result by escalating
it to a national level. Such a nation wide action would
however have demonstrated the essential emptiness of
the Labor Government's consensus policy and consequently
that government exerted (behind the scenes) all its
authority to prevent such escalation occurring.
When however the coalition parties achieve power this
division of interest between the industrial and political
wings of the labor movement automatically closes over.
Trade unions take over the running and the political
party reverts to an auxiliary role. Trade unions in
this situation are free to use their ultimate weapon---the national strike---and when they do the political
party backs them up, not by directly encouraging them
to defy the law of the land but indirectly, by urging
that the dispute be settled through conciliation, meaningful
negotiations, top level conferences, etc, etc. In this
course of action they will be actively supported by
the 'responsible', 'mature' and 'fair minded' sections
of the media and of the general public and passively
supported by a community which soon becomes alarmed
at any interruption to the familiar security of its
normal way of life. In very short order the government
of the day finds itself increasingly isolated and is
forced to seek the best face-saving compromise it can.
The clear lesson of the last 40 years is that the
fortress of trade union power will not be stormed by
direct frontal assault. The defenders are now not only
too firmly entrenched but they still possess the ultimate
weapon which makes them essentially invulnerable to
such a form of attack---their control of hearts and
minds of wage and salary earners arising from their
perceived role as worker protection organizations.
And, to take the analogy a step further, the only
way the fortress of trade union power can be stormed
is through an entrance at the rear---a back door which
can never be effectively barred because the hinge opens
outward---a back door labelled 'equality of bargaining
power in the labour market'.
Asking the right question
It is a commonplace of scientific discussion that
80% of all progress results not from finding the right
answer but from asking the right question.
For the critics and opponents of trade unions and
the community generally the answer to the problem of
excessive trade union power is to be found not by asking
how trade unions can be reformed, how they can be made
more socially aware, or more economically responsible,
or how their activities may be restricted by legislation.
It is to be found by asking the question how best
can we equalise bargaining power in the labour market
between individual buyers and sellers.
Once the community can be brought to ask itself this
question the parameters of the present debate will
change dramatically and the potential impact on trade
unions will be shattering. For they will be immediately
deprived of the moral and social justification for
their existence---their claim to be the only means
in a capitalist economy of protecting the workers from