Work councils could be the future of Australian industrial democracy in an ABCC world

Work councils are one model of industrial relations that could potentially fill the enormous gap in Australian industrial democracy left by precarious employment and the decline of the union movement.

Canberra was once again the scene of further blows against construction workers and their union when the federal government this week passed legislation to hasten the onset of laws linked to the Australian Building and Construction Commission (ABCC).

In something of a one-two combination for the Australian union movement, the ABCC’s return accompanies reports that national union coverage has dwindled to its lowest ebb. Union membership now stands at around 15%.

In Australia, the growth of casual jobs outstrips the creation of permanent jobs by nearly two to one. Such precarious employment prevents workers putting down roots in their workplace, joining a union or engaging in enterprise bargaining.

The wane of the union movement need not sound its death knell, nor the end of collective bargaining. So long as there is work, there is a future for the rights of workers and unions. But such a future in Australia may look very different to the current industrial relations landscape.

What is a work council?

A work council is basically a “shop-floor” panel of employers and employees that convenes to negotiate and co-determine labour and business relations within a company.

Co-determination has flourished in Germany since the late 19th century. More recently, the European Union has embraced work councils.

Since their implementation across Europe, work councils have overseen increases in production and decreasing industrial disputation while affording workers a seat at the bargaining table, alongside unions.

In practice, work councils rely upon civic participation by workers within their workplaces to collectively negotiate their rights with employers, with or without union presence. In most cases, union representatives are present at negotiations. And yet personal participation in work council meetings has increased union membership.

Could it work in Australia?

At the heart of this model is a shift from an adversarial system of industrial relations to one based upon co-operation and social partnership between labour, capital and government.

Over the course of the 20th century, German manufacturing firms such as Mercedes-Benz, BMW and BASF yielded impressive profit margins by adopting the work council model.

Mercedes-Benz has taken a long-term view of the benefits of co-operation between management and workers. As part of this compromise between workers and the company’s bottom line, trade unions and workers have increased productivity, exercised wage restraint and reined in union militancy. In exchange they have received enhanced workplace safety, small pay increases and protection of jobs from mechanisation.

A work council model for Australia was originally proposed by the Evatt Foundation and then discussed by industrial relations scholars and labour lawyers some 15 years ago.

Work councils are not without their faults, however. It is precisely the system’s “co-operative” nature that may not transplant easily from Europe to Australia. If the past 20 years of industrial relations in Australia demonstrate anything, it is that employers and the federal government have consistently and radically tipped the balance in the industrial framework toward employers.

Nevertheless, there are a range of examples from the 1990s in which similar arrangements to work councils were tried and tested on Australian construction sites. Results were equally successful to those in Germany.

The framework of the impending ABCC legislation would not legally impede implementation of work councils in Australia. But the ABCC will do nothing to promote the kind of mutual trust, respect and agreement between workers and management that a co-determinist system requires.

The 2006 WorkChoices case led to a major shift in the constitutional underpinnings of the Australian industrial relations system. Previously, it relied on arbitration and conciliation, or the labour power, which was a federalist model in which the states retained separate industrial jurisdictions. It shifted to a system underwritten by the corporations power – a centralised system in which the Commonwealth unified labour law.

While WorkChoices was abolished in 2009, the centralised constitutional framework remained.

Well before 2006, however, advocates of industrial democracy such as Professor Ron McCallum suggested that in a climate of diminishing unionisation, the work council model might do well – if it were centralised and built into the workings of Australian companies through the corporations power.

Accordingly, the existing Australian constitutional legal framework is now ripe for the introduction of a work council system.

As unions and workers are increasingly stripped of their power in Australian workplaces, the spirit of a fair go will not simply disappear through harsh industrial legislation. It must be channelled somewhere. Whether that happens through an increasingly under-represented system of enterprise bargaining, or something like the German model of work councils, remains to be seen.

But a major shift to a model that benefits all parties, such as the work council system, will only happen with the utmost co-operation of Australian workers, unions and – most crucially – employers.