Part two The parties CHAPTER THREE THE STATE

Part two The parties CHAPTER THREE THE STATE Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 1

Overview § § § Role and function of the state Patterns of state intervention in Australia The state as employer Final observations Summary Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 2

Role and function of the state The pattern of state involvement in the labour market and the economy affects the character of industrial relations. § The ‘state’ as opposed to the ‘government’ encompasses plurality of institutions, which are intended to operate independently of elected political parties or the government of the day. • Public policy determined by complex network of institutional arrangements. § Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 3

Role and function of the state (cont. ) The ‘executive’, ‘judicial’ and ‘legislative’ functions of the state. § Debate concerning wider roles and functions of the state. § Competing perspectives on the role of the state: – pluralist view—state acts as a neutral arbiter – radical (Marxist) view—state acts to promote and protect commercial interests. § Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 4

Role and function of the state (cont. ) § § Claus Offe (1975) identifies two dominant functions for the state: 1. to ensure the continued ‘accumulation’ of profit and 2. to ensures the overall ‘legitimacy’ of the system. Conflict can occur between the accumulation and legitimation aspects of the state. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 5

Role and function of the state (cont. ) Function Role of the state Accumulation of profit based on three principles: 1. Exclusion: decisions about investment, production and resources by private enterprises Does not intervene 2. Maintenance: protections for capitalist production & commercial interests Provides legal and judicial bodies, appropriate financial and tax systems and transport infrastructures 3. Dependency: on private enterprises for taxation and revenue Needs to provide financial and other infrastructures to support the state Legitimacy of the system Formulation of policies on education, welfare, law etc. to reduce class conflict Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 6

Role and function of the state (cont. ) The state has a degree of ‘relative autonomy’ from the interests of private capital. § The state performs a variety of functions in industrial relations: – legislator: labour law and promotion of collective bargaining – labour market regulator: establishes minimum standards of employment conditions – conciliator, arbitrator and mediator: provides services to facilitate resolution of industrial conflict – employer of labour: public sector employment – provider of public goods: provides health care and vocational training. § Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 7

Role and functions of the state (cont. ) The state and IR: Burawoy’s framework § § Burawoy’s (1985) framework establishes links between the state and labour relations. Patterns of workplace IR are directly linked to changes in the character of state intervention in labour regulation. Burawoy argues that state activities can be analysed as ‘factory regimes’ and regulated two ways: 1. imposes limits on managerial prerogative 2. seeks to protect the reproduction of labour power. Burawoy distinguishes between ‘market despotism’ and ‘hegemonic’ factory regimes. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 8

Patterns of state intervention in Australia The state and employment regulation Traditionally, strong state intervention in the economy; however, the pattern proves patchy. § The 1890 s depression cemented state intervention as a prominent feature throughout the twentieth century. § Harvester Judgement (1907): ‘fair and reasonable wages’. § ‘Historic compromise’ coupled with interlocking state policies and institutional arrangements. § Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 9

Patterns of state intervention in Australia (cont. ) The state and employment regulation (cont. ) State intervenes in labour market and other areas of the economy; until 1940 s limited provision of welfare. § Since 1980 s significant changes have occurred. § Reflective of key political and economic developments. § Late 1990 s saw state shift the onus of determination of employment conditions to the workplace. § Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 10

Patterns of state intervention in Australia (cont. ) The corporatist state § § § Corporatism is a highly contested phenomenon—essential preconditions are: – societal consensus and – ‘social partnerships’ between state, employers and unions. Corporatist arrangements are more likely to emerge under Labor governments, facilitated by links with trade unions. Australian complexities: – fragmentation of state policy making as a result of the division of powers between state and federal governments – debate concerning whether arbitration is genuinely tripartite. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 11

Patterns of state intervention in Australia (cont. ) The Accord marked the corporatist shift to policy making: – integration of union movement into national policy through formal and informal consultations. § The Accord featured centralised wage indexation aligned with the cost of living. § 1980 s economic decline necessitated sidelining of previous policy commitments (from 1986). § The focus of the Accord shifted to ‘managed decentralism’ though bipartite consultation, and involvement was sustained. § Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 12

Patterns of state intervention in Australia (cont. ) The Accord (cont. ) § § Corporatism assumed a different character in Australia: 1. conducted between the ALP and ACTU, which enhanced the latter’s power base 2. developed without the formal integration of business groups. Economic concessions (wage reductions) were made by labour, while business benefited from low inflation and low industrial conflict. Did the Accord serve to ultimately weaken unions? Complexity in calculating gains and losses for the ACTU from the Accord. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 13

Patterns of state intervention in Australia (cont. ) The receding state § Corporatist phases ended in 1996 with the election of the Howard Government. § Acceleration of changes in state policies aimed to decrease size and role of public sector in the economy: – tight budgetary constraints on state spending – privatisation of sections of the public sector – marketisation of state services. § Significant erosion in institutions of Australian wage earners’ welfare state: – similar process to UK and Europe – development of ‘contract state’. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 14

The state as the employer Shrinking public employment. § Adoption and expansion of public-sector managerialism from 1983. § ‘Marketisation’ of the public sector has increased. § Devolution of management control in the public sector. § Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 15

The state as the employer (cont. ) • Shrinking public employment. – What is the public sector? § Federal, state and local governments § government funded bodies, such as the ABC and universities § formerly: Telstra, Qantas, Commonwealth Bank etc. – The size and cost of the public-sector workforce has made public-sector management an ongoing political issue. – Traditionally, the public sector has been a large employer: § 1960: 25. 5% of all Australian employees § 2002: 19. 1% of all Australian employees. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 16

The state as the employer (cont. ) • • Why reform the public sector? – A combination of economic and political reasons. This ‘rolling back’ has occurred through: – adoption of private-sector managerialism – marketisation of public activities. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 17

The state as the employer (cont. ) Managerialism in the public sector • Managerialism was the first wave of reform and included: – abandonment of impartial, rule-based bureaucracy responsible for implementing government policy, irrespective of current government, in favour of privatesector management approaches – belief that prior, the system was inefficient and ineffective – rationale (i. e. public-sector efficiency is central to international competitiveness). Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 18

The state as the employer (cont. ) Managerialism in the public sector (cont. ) • Managerialism was the first wave of reform and included (cont. ): – Hawke Government Public Sector Reform Act of 1984, which introduced a new management structure. – the adoption of private-sector management approaches: § decentralisation of decision-making § user-pays/removal of cross-subsidisation § delayering of management decision-making process § increased emphasis on performance management. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 19

The state as the employer (cont. ) Managerialism in the public sector (cont. ) § Marketisation was the second wave of reform. – Sought to achieve two objectives: 1. to maximise public-sector exposure to market competition 2. to minimise political direction and intervention. – Three forms: 1. partial/complete sale of equity in a public enterprise to private investors/companies 2. contracting-out of services 3. approval of privately built and operated public infrastructure projects. – Assumes that private ownership is inherently more efficient. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 20

The state as the employer (cont. ) Managerialism in the public sector (cont. ) Marketisation Previous policy concerns New policy concerns Access Competitiveness Equity Efficiency Need Consumer choice Universalism Value-for-money Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 21

The state as the employer (cont. ) Managerialism in the public sector (cont. ) § Marketisation was the second wave of reform (cont. ). – It has been argued that privatisation has occurred at a very slow pace in Australia. – The arguments regarding the implications of marketisation for the labour market are mixed: § a change of ownership does not necessarily always lead to a change in industrial relations. – Outsourcing is a major instrument of marketisation, and it has been more extensive in the public sector. – There are both efficiency and political rationales for the use of outsourcing arrangements. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 22

The state as the employer (cont. ) Managerialism in the public sector (cont. ) Marketing Efficiency reasons Political reasons Cost reduction Reduce public-sector size Improved service delivery Belief that public sector is inefficient Difficulty in recruiting specialised staff in public-sector pay context Reduce public-sector unionism Introduce contestability principles to service provision Discipline public-sector workers Concentrate upon core business operations Shift difficult decisions (e. g. service provision) with political implications to the private sector Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 23

The state as the employer (cont. ) Managerialism in the public sector (cont. ) § Marketisation was the second wave of reform (cont. ). – There are issues in quantifying the cost savings of outsourcing: § cost savings do not necessarily result in increased efficiencies. – Outsourcing can result in negative consequences (i. e. work intensification, fewer jobs and lower wages. – The move away from the ‘good employer’ role of local governments and the public sector, at large, has implications for industrial democracy and equity-based programmes. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 24

The state as the employer (cont. ) Managerialism in the public sector (cont. ) § • Devolution has accompanied managerialism and marketisation: – abolition of Public Service Board – greater management role at a departmental level, particularly for HR/IR matters. Despite this, federal government attempts to coordinate employment-related matters. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 25

Final observations § § Role of the state in regulating IR is influenced by broader economic and structural factors such as: – accumulation of profits – maintenance of investment. Two state functions particularly important for employment regulation: 1. provision of social insurance 2. labour legislation. Australian state historically much more involved in IR than US or UK: – for example: compulsory arbitration and the wage-earners’ welfare state – except for the period of corporatist decision making (the ‘Accord’ between 1980–early 1990 s). Changing role of state as employer. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 26

Summary § State has a wide range of functions, typically categorised as: – executive – legislation – Judicial. § Australian state has played key role in IR, as: – employer – through the determination of wages and conditions. § Adopted the ‘Accord’, corporatist approach, between 1983– 1995. § Role of state as employer changed from mid 1980 s: – adoption of managerialism – adoption of marketisation. Copyright 2005 Mc. Graw-Hill Australia Pty Ltd Power. Point Slides t/a Industrial Relations 3 e by Bray, Deery, Walsh and Waring 27