The unions' public relations machine now in full swing against the Howard government's proposed industrial relations legislation masks a key fact about workplace reform. Changing legislation is comparatively easy; the real job is changing workplace relations on the ground in businesses. In this respect, government is largely a neutered observer.
There is much to suggest that Australian managers lack both the desire and skills to make use of the new legislation when it arrives.
Already, the big players in commercial construction are signing deals with the unions well before they need to and locking themselves out of the reform opportunities becoming available next year.
Over the past decade of enterprise agreement-making, the evidence is that most businesses have voluntarily signed agreements that reduce rather than improve their capacity to manage their businesses.
Recent research has shown that this reduction in capacity to manage also applies to businesses under the award system. Reduction of capacity to manage is systemic in the industrial relations system.
A key dynamic that causes workplace reform to stagnate or go backwards, even with helpful legislation, relates to managerial career issues.
In the commercial construction sector, the business of winning and finishing jobs is controlled by a small number of big players. Union agreements serve the purpose of minimising competition. By locking out reform opportunities, the players seek to ensure that no single business or a new entrant achieves a competitive advantage over the group. Competition minimisation serves managerial interest, so desire for reform is non-existent.
In the manufacturing sector, managers can't see how they can achieve reform without causing significant business disruption. The smallest disruption to production will damage a manager's career. A smarter career move is to take advantage of cheaper production opportunities offshore.
In any sector, this managerial career issue overrides any economic or performance logic favouring workplace reform. This applies as much to the public service, including education and health, as it does to the private sector.
What will cause reform to happen is competition.
If someone in the Australian construction sector learns to build skyscrapers using domestic housing construction cost structures free of industrial relations constraints, they stand to achieve a cost advantage of about 20 per cent. Such a player would reap super profits and its managers would be massively rewarded. If this happened, managers in non-reforming construction companies would quickly be sacked and replaced with reformers. A rapid cycle of reform would then unfold.
This is what happened under reforms in the mining industry in the 1980s and 1990s in a sector then groaning under the weight of profit-sapping work practices. This is the situation that today confronts manufacturing.
In mining, major reform in one mine, Robe River, resulted in dramatic business turnaround. Mine managers across the industry suddenly had the potential of the industry demonstrated to them. Over the next eight years just about every mine in Australia was transformed.
The hugely productive workplace practices that resulted now underpin the success of Australia's mining sector. Many other industry sectors have similar latent potential.
The car-component sector is said to be confronting a rapid wind-back in local production that may cost about 2000 to 3000 jobs. The industry has a potential future but not with the destructive workplace arrangements it confronts, which bear similarities to those that once existed in mining. But what will determine success or demise in all sectors is managerial capacity.
However, Australian managers have a 100-year culture of management inertia on workplace issues as a result of an industrial relations system that systemically reduces capacity to manage. The creation of managerial reform know-how, as happened in the mining sector, is a slow process. There are no courses or training. Managers feel isolated.
This isolation and management training has to be addressed something the mining industry has institutionalised in very practical ways.
Passing legislation is a first step to workplace reform. The necessary further steps are far more difficult to achieve and are uncertain.
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