H9100

Dec 530/89 M Print H9100

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Industrial Relations Act 1988

Conciliation and Arbitration Act 1904

NATIONAL WAGE CASE AUGUST 1989

s.59 applications for variation

The Clothing and Allied Trades Union of Australia (C Nos 21376, 21377 and 21378 of 1988)

DRY CLEANING INDUSTRY INTERIM AWARD 1980(1) (ODN C No. 02815 of 1980)

CLOTHING TRADES AWARD 1982(2) (ODN C No. 00696 of 1980)

DRY CLEANING INDUSTRY AWARD, 1966(3) (ODN C No. 01074 of 1962)

The Association of Professional Engineers, Australia (C No. 31751 of 1988)

METAL INDUSTRY AWARD 1971 - PART III - PROFESSIONAL ENGINEERS(4) (ODN C No. 01741 of 1971)

JUSTICE MADDERN, PRESIDENT JUSTICE LUDEKE DEPUTY PRESIDENT KEOGH JUSTICE PETERSON COMMISSIONER JOHNSON COMMISSIONER NOLAN COMMISSIONER LAING MELBOURNE, 7 AUGUST 1989

REASONS FOR DECISION

This National Wage Case decision is the latest in a series in which the Commission has sought to provide a framework to encourage the parties, through a combination of restraint and sustained effort, to improve efficiency and productivity.

The first decision, that of March 1987,(5) laid down wage fixing principles the key to which was the restructuring and efficiency principle. The proper application of that principle required a positive approach by trade unions, their members and by employer organisations, their members and

_______________________________________________________________________________

(1)Print E6068 [DO33]; (1981) 257 CAR 534 (2)Print G0207 [C037] (3)Print C1539 [D008]; (1974) 162 CAR 904 [title change Print E6052 [D008 V052]; (1981) 256 CAR 810] (4)Print C1744 [M042]; (1974) 163 CAR 388 (5)Print G6800

2 NATIONAL WAGE CASE AUGUST 1989

individual employers. In the event, and although the final result was uneven, many made positive efforts and derived benefits which not only produced immediate efficiency and productivity improvements but also laid the basis for future developments.

In its August 1988 decision,(6) the Commission decided not to continue that principle in its then form: some parties had exhausted its usefulness and others were less than successful in applying it. However, in so deciding, the Commission took the view that it was essential that any new wage system should build on the steps already taken to encourage greater productivity and efficiency. It said:

"Attention must now be directed towards the more fundamental, institutionalised elements that operate to reduce the potential for increased productivity and efficiency."

and

"to sustain real improvement in productivity and efficiency, we must take steps to ensure that work classifications and functions and the basic work patterns and arrangements in an industry meet the competitive requirements of that industry."

That decision provided the structural efficiency principle as the central element in a new system of wage fixation. The object was to give incentive and scope to the parties to examine and modernise their awards so as to better meet the competitive requirements of industry.

The Commission sat again in February, March and April 1989 to receive detailed reports on individual award reviews and to consider any matters of general principle that might need to be resolved. The February 1989 Review decision(7) should be read in conjunction with the August 1988 decision and this decision.

In the course of the February 1989 Review the Commission made it clear that structural efficiency exercises should canvass a broad agenda. It also endorsed in principle the proposal of the Australian Council of Trade Unions (ACTU) which it had argued would provide "a national framework or blueprint" which would involve restructuring all awards of the Commission to provide "consistent, coherent award structures, based on training and skills acquired, and which bear clear and appropriate work value relationships one to another". However, the Commission did not endorse the particular award relationships proposed by the ACTU. The Commission decided to sit again on 6 June 1989 "to determine whether any wage adjustment should be made having regard to the progress of award restructuring, the tax changes that have been announced, the state of the economy and the extent to which unions are prepared to make the necessary commitments".

In the current proceedings, therefore, there are two main issues:

. first, the quantum, timing and basis of any wage increase to be made available for effective structural efficiency exercises; and

. second, how the approach endorsed in principle by the Commission for ensuring stable relationships between awards and their relevance to industry is best translated into practice.

_ _

(6)Print H4000 (7)Print H8200

NATIONAL WAGE CASE AUGUST 1989 3

In addition, other issues concerning the effective implementation and future direction of the principles, raised in the February Review, need to be addressed.

STRUCTURAL ADJUSTMENT CLAIMS

The ACTU claimed increases of $10.00 per week for workers at the basic skills/trainee entry level; $12.50 per week at the semi-skilled worker level; and $15.00 per week or 3%, whichever is the higher, at the tradesman level and above. It submitted that such increases should be available on individual award variation, consistent with the structural efficiency principle, in the first half of 1989/90. It sought further increases of the same order to be available in the second half of 1989/90 and paid no less than 6 months and no more than 7 months after the first increases. It also sought the provision of a mechanism whereby higher increases might be achieved on a limited basis to meet special circumstances.

These claims were consistent with an agreement between the ACTU and the Commonwealth, reached on 7 April 1989, and were supported by the Commonwealth in these proceedings. They were also supported by the Governments of Victoria, Western Australia, South Australia, Tasmania, the Australian Capital Territory and by the Metal Trades Industry Association of Australia (MTIA), the Australian Federation of Construction Contractors, the Master Builders' - Construction and Housing Association Australia Inc., the Plumbing Employers Industrial Secretariat and the Fire Sprinkler Contractors' Association of Australia.

The Confederation of Australian Industry (CAI) opposed the ACTU claims and argued that the maximum increase in award rates "should be in the region of two and a half to 3 per cent, but certainly not exceeding 3 per cent". It submitted that such a figure was in line with the trend rate in productivity growth and was the maximum sustainable increase, consistent with moderating inflation, which would not further damage Australia's international competitiveness. CAI argued further that the increase should be in a percentage form; be established as a maximum for each award; be available in at least two instalments; and should not precede implementation of the results of individual structural efficiency exercises.

The Australian Mines and Metals Association (Inc.) (AMMA) and the Governments of New South Wales and the Northern Territory supported the thrust of the CAI submissions in relation to the appropriate amount of wage adjustment. In addition New South Wales argued that if improvements did not turn out to be as effective as originally claimed the second instalment should be deferred, reduced or negated and further, that if unions fail to co-operate, the first instalment should be rescinded.

The Business Council of Australia (BCA) did not oppose wage increases on the completion of structural efficiency exercises. However, it did not propose a specific order of increase or a maximum increase. It argued rather that negotiations should be on an enterprise basis and that the parties "should themselves determine the magnitude of increases, the nature, strength and directness of linkages between wage rises and performance improvement and the timing of increases". It saw the ultimate objective as being the reduction of the gap between Australian and overseas "wage inflation" and the need, consistent with that objective, for "smaller wage rises or wage rises which flow through more slowly or a combination of both".

4 NATIONAL WAGE CASE AUGUST 1989

The Queensland Government submitted that wage adjustments at this time would not be consistent with economic requirements. However, it accepted that an increase could be approved if the Commission was satisfied that significant progress had been made towards restructuring a particular award and that any initial increase should be commensurate with the assessed value of the resultant productivity increase. Any subsequent increase or increases would depend on the completion of negotiations in satisfaction of the structural efficiency principle.

The Australian Chamber of Commerce also opposed the ACTU claim and submitted that the maximum wage increase allowable in view of the economic situation was 2% for the year 1989/90.

The National Farmers' Federation (NFF) submitted that the economic evidence provided no justification for awarding wage increases during the year 1989/90. As to the period beyond June 1990, it proposed that the Commission should further review the state of the national economy in May 1990. The Australian Wool Selling Brokers Employers Federation supported and endorsed the thrust of the NFF's submission.

STRUCTURAL EFFICIENCY ADJUSTMENT

This case was conducted against an economic background that should concern all Australians. As the Commonwealth put it:

"On the economic front Australia's external imbalances remain serious and wages policy must continue to play a key part in addressing them. The current account deficit and associated external debt remain pre-eminent economic problems. Growth in demand has been much stronger than expected, resulting in inflationary pressures, a delay in expected improvements to the current account deficit and increases in Australia's external debt. Controlling demand pressures and getting the medium term adjustment process back onto track are central objectives of government policy.

They will require among other things reducing inflationary pressures, improving our international competitiveness, and raising productivity while avoiding a wages explosion and recession. This in turn calls for continuing nominal wage restraint as part of an integrated package of accord policies including concerted action to improve labour market flexibility and productivity on a sustained basis."(8)

This view of the state of the economy has much in common with the conditions discussed by the Commonwealth during the National Wage Case which led to the decision of 10 March 1987. The Commission then noted:

"In these proceedings the Commonwealth expressed succinctly the economic predicament Australia faces. It said:

'Correction of the imbalances that have developed in Australia's external accounts is necessary. If this is not done, the economy runs the risk of becoming enmeshed in a vicious circle of exchange rate depreciation, mounting inflation and deepening external imbalances.

_ _

(8)transcript, p.161

NATIONAL WAGE CASE AUGUST 1989 5

This would result in an erosion in overseas and domestic confidence in the economy's future, seriously undermining private investment, economic activity and employment. The current account deficit would eventually be reduced, but at a cost of a deep recession in the economy.'"(9)

At that time all parties to the proceedings accepted that Australia's economic performance had to be improved. It was the decision of 10 March 1987 that provided the restructuring and efficiency principle which was designed to accelerate the contribution that parties to awards could make to improve Australia's economic performance.

The period both immediately before and after that decision has seen substantial real wage restraint; an improvement in the relative labour costs and inflation rates as between Australia and its international competitors; reduced industrial disputation; a very substantial rise in employment; high capacity utilisation; a high level of profits; a high level of investment; and rapid growth.

In spite of the improvements in the domestic economy the comments quoted above from the March 1987 National Wage Case decision seem even more appropriate today than they were then. That this is so is of great concern. There is no doubt that labour market reform and, in particular, award wage restraint have over recent years contributed positively to the rapid growth in many sectors of the economy. That contribution has clearly not been matched in other areas because fundamental imbalances have continued and, in terms of external markets, have worsened.

Micro-economic adjustments and wage reform in particular are medium to longer term options which cannot be expected to provide a substitute for alternative macro-economic policy options. Nevertheless it is also apparent that continued efficiencies and improvements in labour flexibility as well as ongoing wage restraint will remain necessary. The structural efficiency principle will maintain the process started in 1987 but it is clearly not the only answer to Australia's international economic difficulties.

Given the excessive level of imports, a fall-off in the level of export growth, the deterioration in the current account, a serious and continual deterioration in the balance of payments, the level of international debt, high interest rates, and renewed concerns about inflation, there are substantial economic grounds for rejecting any notion of wage increases at the present time.

There are however many interrelated elements involved in the work environment and economic considerations cannot be taken in isolation. Indeed to do so could bring about a perverse situation which may compound rather than reduce the economic difficulties.

Ultimately the test is not the pursuit of what is perfect in the abstract, but what is the best outcome which is workable and sustainable immediately and over the medium and longer term. Further, there are both economic and non-economic considerations which point to an alternative conclusion. These include:

. the movement in prices and in particular the erosion of the real value of wages;

_ _

(9)Print G6800, p.32

6 NATIONAL WAGE CASE AUGUST 1989

. the effect on employees of high interest rates;

. the level of capacity utilisation and company profits;

. the tight labour market as reflected in employment and unemployment statistics, labour shortages, and overtime and vacancy data;

. the attitudes of governments and private employers in increasing management and executive salaries, and overaward payments in current economic circumstances;

. the agreement between the ACTU and the Commonwealth;

. support for that agreement by a number of state governments;

. the attitude of some large employer organisations and their membership covering a substantial number of individual employers in a number of industries;

. the expectations created by the agreement of the ACTU and the Commonwealth, and the support of state governments, the ACT and some major employers for that agreement;

. the current level of industrial disputes;

. the fact that commercial considerations, attitudes to comparative wage justice, the structure of trade union and employer organisations and the structure of awards remain fundamentally unchanged from the periods of earlier wage breakouts; and

. the importance of attaining the objectives of the structural efficiency principle.

These are factors that we record as matters that must bear on our decision. In varying degrees they were recognised by the parties but, in their essentials, they were summarised by MTIA in describing the basic reasons for its proposed agreement with the Metal Trades Federation of Unions (MTFU). MTIA said:

"Firstly, the metal and engineering industry has an earnest, indeed it could be said to be, a passionate desire to become internationally competitive. If we do not, the manufacturing industry in this country faces a bleak future.

Secondly, an essential element in the quest for competitiveness is labour market reform. There is unanimity that the operation of our labour market is a substantial hindrance to improved efficiency and productivity.

Thirdly, given the institutional framework we operate in, which includes a powerful and influential trade union movement which has achieved an agreement with the Federal Government on wage outcomes in 1989/90, and given the explosive pressures on wages caused by labour shortages, cuts in real wages over the last six years and current high interest rates, MTIA accepts the reality that we are not going to achieve the reforms that we so desperately need at a neutral cost in the short term.

NATIONAL WAGE CASE AUGUST 1989 7

Fourthly, given what we have been able to achieve in our agreement on award restructuring, MTIA members, those who have to pay the wage increases, have overwhelmingly endorsed the agreement.

And, fifthly, MTIA disagrees with the view expressed by some organisations that there is no risk of a wages explosion. We see it as a very real probability, a probability we have no desire to test. But we do not have to test it. Here, we have an opportunity to manage the wages outcome and at the same time, commence to implement our program of workplace reform."

MTIA represents employers covered by over 350 federal awards, 82 New South Wales State awards, 29 Victorian State awards, 72 Queensland State awards and 41 South Australian State awards.

In light of all the factors we have referred to we have come to the conclusion that we must reject the submissions of those who argued that there are no grounds to justify wages increases during the year 1989/90.

To achieve the goals sought, the structural efficiency principle must increase flexibility by changing employment conditions, work patterns, employee mobility, education and training. These cannot be achieved without some cost to employers and it is unrealistic to suggest otherwise in the current environment.

We also reject the view of the BCA that no ceiling should be imposed: to accept such a proposal would be to risk economically unsustainable wage increases. Furthermore, we do not accept that the 3% ceiling advocated by CAI is practicable in light of the countervailing factors we have mentioned.

The ACTU and the Commonwealth contended that the increases proposed, properly applied, would not exceed the objective of a 6.5% increase in average weekly earnings in 1989/90. On the other hand, CAI, BCA and NFF, on the basis of differing estimates, contended that the effect would be much higher. The main area of difference between the ACTU and these organisations lay in their individual estimates of the effect of wage increases still flowing through the system. On the basis of the material and analysis put to us, we have concluded that the employer organisations have overestimated those effects.

In all these circumstances we are satisfied that the proposal put by the ACTU and the Commonwealth is capable of being limited to the level of increase in average weekly earnings which is contemplated. We have decided to adopt this proposal for the purposes of the structural efficiency adjustment.

Consequently it is our decision that an adjustment in rates of pay will be allowable for completion of successful exercises under the structural efficiency principle. Such an adjustment will comprise:

(i) a first increase of $10.00 per week for workers at the basic skills/trainee level; $12.50 per week at the semi-skilled worker level; and $15.00 per week or 3%, whichever is the higher, at the tradesman or equivalent level and above; and

(ii) a second increase of the same order as the first increase, to be paid not less than 6 months after the first increase.

8 NATIONAL WAGE CASE AUGUST 1989

A number of factors are relevant to the likely labour cost impact of this decision. These include:

. dates of operation of award variations;

. the extent to which translation arrangements from the old to new classification structures and their timing result in actual wage increases;

. the extent to which any increases over and above the structural efficiency adjustment are allowed;

. the extent of wages drift; and

. productivity improvements induced as a consequence of the structural efficiency principle.

Our view on each of these matters is as follows.

We have decided that the first increase should be accessible from the date of this decision. However, the actual date of operation for an award will be the date on which that award is varied following examination by the Commission of the proposals for restructuring and the giving of commitments. The second increase will not be automatic but subject to application.

This is consistent with the submission of the Commonwealth that the taxation and social wage measures being implemented as part of the ACTU/Commonwealth Agreement would "allow a much needed breathing space for the development of genuine award restructuring initiatives, thereby consolidating the new directions in wage fixing laid down by the Commission".(10)

We expect that many structural efficiency exercises will involve new classification structures. In those cases the parties to particular awards will need to apply specific procedures governing the translation of workers from the old to the new structure. This in turn demands that the new classification structure levels be clearly defined. In this connection we note that the MTIA/MTFU Agreement provides for a trial of the new classification structure before award changes are made. This is a sensible procedure and we consider that it should be adopted by other award parties, particularly where an award covers a substantial number of individual employers and establishments.

It is our intention that the translation of workers to new classification structures in the various awards should occur with little cost impact apart from that resulting from the structural efficiency adjustment. In this connection the ACTU stated:

". . . any award wage increases in terms of movement from the old to the new classification would be subject to absorption, subject to receipt of the restructuring adjustment as an actual rate increase".(11)

When the structural efficiency exercise involves reducing the number of award classifications by broadbanding and multi-skilling, it is important that the intent of the broadbanding and multi-skilling be effectively implemented. Hence workers should not be placed in a classification unless they have the training and experience necessary to perform the full range of the functions comprehended by the new classification and are actually required to perform those functions. Consequently the parties should ensure that sufficient time is provided for immediate training needs and, where necessary, on the job experience before finalising the translation of existing employees to the new _ _

(10)transcript, p.163 (11)transcript, p.856

NATIONAL WAGE CASE AUGUST 1989 9

classification structure. In moving to the new classifications the parties should consider stepped wage increases up to the new classification levels.

Furthermore, we believe that the second instalment of the structural efficiency adjustment should only be available if the Commission is satisfied that the principle has been properly implemented and will continue to be implemented effectively. In this regard, our comments concerning the need for a wider agenda in the special case decisions dealing with the Telecom/APTU Award 1986(12) and the Aircraft Industry (Domestic Airlines) Award 1980(13) should be noted.

The conclusions of this Full Bench in relation to the operation of the other wage fixing principles and special cases should mean that increases from these sources are also limited.

We have particular concern about wages drift which has increased in recent months. While annual growth in award rates remains below 5%, average weekly earnings growth is currently running at just under 7%. The reason for this is not readily discernible but compositional changes in the workforce, the growth in managerial and executive salaries and the granting of overaward payments by employers would all have contributed. Too many employers still persist with their own form of market adjustment of wages based on area rates surveys. Such surveys and the actions that invariably follow them are a recipe for wage breakouts. They have been instrumental in encouraging employers to participate in a type of area wages ranking system with an in-built and continuing escalation effect which has aptly been described as a spiral of nonsense. This practice is contrary to both the spirit and purpose of the wage fixation principles and encourages workers to break the commitments to those principles made by their unions on their behalf.

Compositional change in the workforce is unremarkable and desirable in a dynamic and growing community. However, over-fast growth in managerial and executive salaries and overaward payments inconsistent with the wage fixation principles inhibit attempts to maintain wage restraint. Simple commonsense, apart from equity, dictates that employers should not attempt to apply two sets of rules within their workforce. The nature of the structural efficiency principle and its potential to induce productivity improvement, its requirement for positive, co-operative effort by both employer and worker and the workers' unions, and the trade union movement's commitment to the wage fixation system demands that employers also scrupulously comply with the principles.

Providing the implementation of the award changes proceed in accordance with this decision, we consider the decision will not adversely affect the economy in the short term and will in time, assist in achieving improved economic performance. The major success in the economy in the past 5 years has been the creation of over a million new jobs. While this is expected to stabilise as a consequence of current policies, no immediate or significant increases in unemployment are anticipated as a direct result of this decision. We anticipate that the results will also be consistent with a reduction in inflation in the medium to longer term.

A final comment must be made on structural efficiency adjustment. Notwithstanding our affirmation in the February 1989 Review decision that there was no limitation imposed on the agenda available for structural efficiency exercises, we are concerned that conditions of employment have not been included in negotiations as a matter of course. Indeed, it was asserted by some employers that in a number of cases, restrictions had been placed on the restructuring agenda.

_ _

(12)Print H8350 (13)Print H8356

10 NATIONAL WAGE CASE AUGUST 1989

It will be recalled that in the August 1988 decision the Commission said that

"The measures to be considered should include but not be limited to:

. establishing skill-related career paths which provide an incentive for workers to continue to participate in skill formation;

. eliminating impediments to multi-skilling and broadening the range of tasks which a worker may be required to perform;

. creating appropriate relativities between different categories of workers within the award and at enterprise level; and

. ensuring that working patterns and arrangements enhance flexibility and the efficiency of the industry."

In relation to the last measure in particular we are of the view that many awards have scope for a less prescriptive approach and, without limiting the opportunities for innovation, the following are some of the measures which are appropriate for consideration:

. averaging penalty rates and expressing them as flat amounts;

. compensating overtime with time off;

. flexibility in the arrangement of hours of work, for example:

- wider daily span of ordinary hours - shift work, including 12 hour shifts - ordinary hours to be worked on any day of the week - job sharing;

. introducing greater flexibility in the taking of annual leave by agreement between employer and employee;

. rationalising the taking of annual leave to maximise production;

. reviewing the incidence of, and terms and conditions for, part-time employment and casual employment;

. reducing options for payment of wages other than by electronic funds transfer;

. extending options as to the period for which wages must be paid to include fortnightly and monthly payment;

. changes in manning consistent with improved work methods and the application of new technology and changes in award provisions which restrict the right of employers to manage their own business unless they are seeking from the employees something which is unjust or unreasonable;

. reviewing sick leave provisions with the aim of avoiding misuse; and

. developing appropriate consultative procedures to deal with the day to day matters of concern to employers and workers.

NATIONAL WAGE CASE AUGUST 1989 11

In addition, we consider that the following matters should be placed on the agenda for the better administration of awards:

. updating and/or rationalising the list of award respondents; and

. rationalising the number of awards covering any one employing body.

Proposals for changes of this nature should not be approached in a negative cost-cutting manner and should as far as possible be introduced by agreement.

MINIMUM RATES ADJUSTMENTS

In its February 1989 Review decision, the Commission stated:

"The fundamental purpose of the structural efficiency principle is to modernise awards in the interests of both employees and employers and in the interests of the Australian community: such modernisation without steps being taken to ensure stability as between those awards and their relevance to industry would, on past experience, seriously reduce the effectiveness of that modernisation."

The Commission went on to endorse in principle the approach proposed by the ACTU. That meant minimum rates awards would be reviewed:

"to ensure that classification rates and supplementary payments in an award bear a proper relationship to classification rates and supplementary payments in other minimum rates awards".

In these proceedings, the ACTU sought specific endorsement of the following classification rates and supplementary payments:

Minimum classification Supplementary Classification rate rate $ $

Building industry tradesperson 356.30 50.70 Metal industry tradesperson 356.30 50.70 Metal industry worker, grade 4 341.90 48.80 Metal industry worker, grade 3 320.50 45.80 Metal industry worker, grade 2 302.90 43.10 Metal industry worker, grade 1 285.00 40.60 Storeperson 325.50 46.50 Driver, 3-6 tonnes 325.50 46.50 Filing clerk - 1st year 337.00 28.00 - 2nd year 337.00 38.00 - 3rd year 337.00 48.00 General clerk - 1st year 354.40 30.60 - 2nd year 354.40 40.60 - 3rd year 354.40 50.60

The Commission was informed that these rates and the relationships they bear to each other had been endorsed collectively by the trade union movement after long deliberation; they were also supported by the agreement made by the ACTU and the Commonwealth. It was argued that they would provide a firm base for sustainable relationships across federal awards and thus provide a stable base for wage fixation.

12 NATIONAL WAGE CASE AUGUST 1989

The resolution of the issues in this part of the case was not made any easier by the reluctance of the various employer organisations to fully debate the major issues raised by the February 1989 Review decision. Employers generally took the view that no substantial problem existed, but alternatively, if any problem did exist, there were other ways of dealing with it.

The employers argued that the cost of implementing the decision would be substantial and, indeed, prohibitive given the current economic situation. CAI tendered the results of a survey it had conducted to show that a significant proportion of workers either received no overaward payments or were paid relatively small overawards. CAI argued that this survey showed that ACTU estimates based on broad Australian Bureau of Statistics figures understated the incidence of such workers. MTIA also tendered the results of a survey of 200 members to show a similar result.

We do not intend to analyse those surveys in this decision. Suffice to say that, while they might be open to criticism for their methodology, we acknowledge that the results are consistent with a broad view that there are a substantial number of workers who receive very little or no overaward payments. We also accept that this is a significant element in assessing the possible cost impact of these adjustments which were approved in principle in the Commission's decision in the February 1989 Review.

The employers submitted that proper relationships could not be established between awards until new classification structures and definitions were established. They also argued that the Commission should not adopt what were said to be the unilateral, arbitrary assessments put forward by the ACTU as to appropriate relativities between the classifications in key awards.

Finally, the employers submitted that, notwithstanding trade union commitment on absorption of these adjustments where applicable, both the nature and practices of industrial relations in industry and past experience meant that the prospect of actual absorption had to be doubtful.

Without firm guidance on appropriate relativities, individual structural efficiency exercises could create situations which would not only continue but possibly worsen the very position that is required to be rectified. For this reason we reject the proposition that the question of relativities should be left completely until the details of structural efficiency exercises are completed.

Subject to what we say later in this decision, we have decided that the minimum classification rate to be established over time for a metal industry tradesperson and a building industry tradesperson should be $356.30 per week with a $50.70 per week supplementary payment. The minimum classification rate of $356.30 per week would reflect the final effect of the structural efficiency adjustment determined by this decision.

Minimum classification rates and supplementary payments for other classifications throughout awards should be set in individual cases in relation to these rates on the basis of relative skill, responsibility and the conditions under which the particular work is normally performed. The Commission will only approve relativities in a particular award when satisfied that they are consistent with the rates and relativities fixed for comparable classifications in other awards. Before that requirement can be satisfied clear definitions will have to be established.

We are not prepared to approve specific wage relativities proposed by the ACTU on behalf of the trade union movement. Nevertheless, we consider it

NATIONAL WAGE CASE AUGUST 1989 13

appropriate for relativities to be established for both minimum classification rates and supplementary payments for the following key classifications within the ranges set out below:

% of the tradesperson rate

Metal industry worker, grade 4 90-93 Metal industry worker, grade 3 84-88 Metal industry worker, grade 2 78-82 Metal industry worker, grade 1 72-76 Storeman/packer 88-92 Driver, 3-6 tonnes 88-92

In some cases, existing minimum classification rates will already contain an element of overaward payment which should more properly be included as part of the supplementary payment. This will require appropriate adjustment. Similarly, existing minimum classification rates may contain amounts for disabilities and these should be separately expressed.

It will be noted that with the exception of the clerical classifications, we have indicated a range of relativities between the key tradespersons and the other classifications which were the subject of debate. The material available on clerical rates was inadequate to permit the establishment of a similar range of relativities. Furthermore, the ACTU proposed relativities for a number of other classifications in a range of industries, but these too were accompanied by insufficient material to permit any conclusions.

In light of this decision it will no longer be necessary to conduct surveys in relation to overaward payments in individual award areas.

To achieve a proper and lasting reform of awards it is essential that the structural efficiency exercise and the proper fixation of minimum award rates be treated as a package. We are also conscious of the fact that:

(i) the minimum rates adjustment exercise can in itself cause a significant cost impact if the positive co-operation of both workers and employers so necessary to underwrite the exercise is found to be lacking; and

(ii) the minimum rates adjustment exercise could detract from the benefits to be obtained from the structural efficiency principle if priority is not given to that principle.

In making these observations, we are not overlooking the commitments that the ACTU has been authorised to give on behalf of the trade union movement.

However, bearing in mind the statutory injunction of s.90 of the Industrial Relations Act 1988 and the importance to the community of success in this endeavour, we determine that the minimum classification rate and supplementary payment exercise shall be applied in accordance with the following guidelines:

(i) the appropriate adjustments in any award will be applied in not less than four instalments which will become payable at six monthly intervals;

(ii) in appropriate cases longer phasing in arrangements may be approved or awarded and/or parties may agree that part of a supplementary payment should be based on service. In this connection the ACTU stated: "It is recognised by the ACTU that in some industries an amount of between $8.00 to $10.00 supplementary payment might be appropriately paid after three months service";

14 NATIONAL WAGE CASE AUGUST 1989

(iii) the first instalment of these adjustments will not be available in any award prior to 1 January 1990 or three months after the variation of the particular award to implement the first stage structural efficiency adjustment, whichever is the later;

(iv) the second and subsequent instalments of these adjustments will not be automatic and applications to vary the relevant awards will be necessary;

(v) consistent with the commitments given by the ACTU in these proceedings, individual unions will be required to accept absorption of these adjustments to the extent of equivalent overaward payments;

(vi) supplementary payments will not be prescribed in the wages clauses of awards but in separate clauses; and

(vii) where the existing minimum classification rate in an award exceeds the minimum rate for that classification assessed in accordance with this decision, the excess amount is to be prescribed in a separate clause: that amount will not be subject to adjustment.

The Commission will conduct a review of the progress of both structural efficiency and minimum rates adjustment exercises in May 1990.

On the submissions we heard in this case, there must be concern about the concept of absorption. We emphasise that absorption requires discipline on the part of both employers and unions and, in the May 1990 Review, the Commission will make detailed inquiry of both employer and union parties in order to check actual practice.

We cannot overemphasise the importance of successfully applying the structural efficiency principle and the minimum rates adjustment process. These exercises provide an opportunity for the parties to display the maturity required to overcome the wage instabilities with which the community is only too familiar. It also provides the opportunity to take an essential step towards institutional reform which is a prerequisite to a more flexible system of wage fixation. As part of that future we envisage that minimum classification rates will not alter their relative position one to another unless warranted on work value grounds. On the other hand it is our expectation that supplementary payments might vary as between industries, industry sectors, individual employers or on a geographic or some other basis.

Finally, the inclusion of, and increase in, supplementary payments which form part of the exercise is designed, inter alia, to assist those "employees covered by minimum rates awards who have suffered from the inequities of the present system due to the level of their award rates and their lack of substantial overaward payments".(14) However, the unions cannot expect to have supplementary payments included in awards to compensate for the lack of overaward payments for some employees and conduct overaward campaigns for others. To this extent the inclusion of supplementary payments in awards is a concomitant of the no extra claims commitment.

As was stated in the February 1989 Review decision, the alternative to the parties not seizing these opportunities and making them work is:

"the Commission may be left with little choice but to resort to strict prescription of minimum rates only". _ _

(14)Print H8200, p.5

NATIONAL WAGE CASE AUGUST 1989 15

PAID RATES AWARDS

For a considerable period of time, the complex issue of paid rates awards and their interaction with minimum rates awards has been an ongoing problem. The complexity has arisen not merely because paid rates awards have been adjusted from time to time on the basis of market movements while, generally speaking, minimum rates awards have not. Although this has changed somewhat with the granting in recent times of supplementary payments there are other problems. For example, the timing of the review of paid rates awards; the market that is relevant to that review; and the appropriate position in that market. Moreover, changes in paid rates award prescriptions invariably have an immediate impact on the market used as the reference point, a market that may and normally includes both other paid rates and minimum rates awards. Again, problems of relativities have arisen where a particular paid rates award has been adjusted and this has affected workers in other areas, and other groups of workers in the same industry, industry sector or employing body.

The issue was discussed, albeit briefly, in the February 1989 Review and in its decision of 25 May 1989 the Commission, while drawing no final conclusions, commented that "On recent experience there are grounds for doubting the wisdom of attempting to maintain paid rates awards in the private sector".

In the current proceedings only brief submissions were put on this subject and these for the most part could be categorised mainly as expressions of interest by some parties for the retention of paid rates awards rather than a debate as to their efficacy and means of overcoming the problems they create.

In view of this a Full Bench will be constituted in due course for the purpose of hearing further argument about the future of paid rates awards. In those proceedings, parties will be expected to address, inter alia, the following matters:

(i) whether any new paid rates awards should be made;

(ii) whether the parties to existing paid rates awards, both in the private and public sectors, should be required within a given period to apply for cancellation of their existing paid rates awards and their replacement with agreements certified under s.115 of the Act;

(iii) the basis on which rates of pay in paid rates awards or s.115 agreements should be assessed;

(iv) whether paid rates awards or s.115 agreements should only be approved where they cover all workers in an establishment conducted by a single employer; and

(v) whether paid rates awards or s.115 agreements within an industry or industry sector should only be reviewed collectively so as to ensure proper attention is given to internal relativities.

Pending the outcome of the foreshadowed Full Bench proceedings we have determined in relation to paid rates awards that:

. except in special cases, the Commission will not make new paid rates awards;

16 NATIONAL WAGE CASE AUGUST 1989

. it is no longer appropriate to apply the decision in the General Motors-Holden's Limited and Ford Australia Ltd Case, of awarding:

"an increase to restore to the rates under the awards the relationship which they had when established vis-a-vis rates actually paid for similar work in industries located near the establishments of these two companies."(15)

. rates in paid rates awards should not be fixed at a level which would affect the rates for other workers;

. paid rates awards or agreements should contain clear classification definitions;

. statutory declarations will be required from all parties involved to the effect that the integrity of those awards or agreements will be preserved;

. if breached, paid rates awards should be discontinued and appropriate minimum rates should be prescribed;

. no increase at the base rate which is greater than the structural efficiency adjustment will be allowed in a paid rates award; and

. subject to special cases, no special adjustment may be approved which cannot be justified on the basis of the creation of a proper career structure through structural efficiency.

An agreement which adopts paid rates, and in respect of which the parties seek certification under s.115 of the Act, will be subject to the foregoing requirements.

SPECIAL CASES

Both the ACTU and the Commonwealth contended that increases beyond those generally available for structural efficiency may be approved in special cases, provided that the cases are processed through a special case mechanism and provided there is negligible cost or it can be demonstrated that it should be approved on public interest grounds.

It was generally accepted that applications said to fall into the category of special cases must be dealt with at the same time as, and in the context of, the application of the structural efficiency principle.

We have decided that all special cases should be tested against other relevant principles at the same time as the structural efficiency principle is being applied. We consider also that where a special case is claimed, it should be the subject of an application for reference pursuant to s.107 of the Act. It will then be a matter for the President to decide whether it should be dealt with by a Full Bench.

We recognise that there might be some workplaces where the objectives of the structural efficiency principle have already been achieved and there is no scope for further efficiency improvements. We would expect such instances to be rare. However, any such instances may be processed as special cases.

REQUIREMENTS FOR SUCCESS

Having regard to the material before us, in particular the evidence of increases still passing through the system, the amount proposed as a result of _ _

(15)Print E7273; (1981) 260 CAR 3

NATIONAL WAGE CASE AUGUST 1989 17

these proceedings, and the increase in disposable incomes made available by the recent cuts in income tax, there are additional important requirements if the package is to achieve its aims.

First, to achieve the result expected, wage increases must be carefully phased-in in accordance with this decision.

Second, wages drift will need to return to lower levels. This can be achieved if employers actively support the consistent application of the principles. These principles provide that movements in wages and salaries and improvements in conditions - whether they occur in the public or private sector, whether they be award or overaward, whether they result from consent or arbitration - must fall within the limits established by this decision. We have already alluded to the difficulties created by employers applying differing rules to different people.

Further, it is fundamental to success that the unions make and keep the following commitments:

. commitment to new award structures including the reform of awards into base rates and supplementary payments;

. commitment to acceptance of the broad award framework and the relationships established;

. acceptance of classification change and new job specifications;

. preparedness to undertake training associated with a wider range of duties; and

. absorption of increases arising out of the minimum rates adjustment.

A no extra claims commitment from each union will also be required before the benefits of this decision are available.

We note that the ACTU stated that the unions were prepared to absorb increases other than the structural efficiency adjustment. We are satisfied that the ACTU accepts that if these commitments are not met, the wages package cannot be sustained and the drive to reform the system will founder.

Further, if any union, or a group or class of its members, refuses to give the necessary commitments or indicates by its conduct that it is not prepared to work within the framework of the principles, then that union or a group or class of its members should not receive any benefits from this package.

There is also a need for consistency in approach on the part of all tribunals, Commonwealth and State. As noted in the February 1989 Review decision:

"In many instances, employees in the same industry or enterprise may be bound by a mixture of federal and State awards and experience has shown that care must be taken to ensure that appropriate relativities are maintained in decisions of the relevant tribunals."

and further,

"In order to guard against industrial disputation and inappropriate wage outcomes, this Commission will utilise the co-operative powers available to it under Part VII of the Act and will continue to pursue the objective of achieving a consistent approach."

18 NATIONAL WAGE CASE AUGUST 1989

INCENTIVE SCHEMES

In the 1989 Review a number of parties "raised the issue of treatment of profit sharing, performance based systems of pay and payment by results schemes in awards". In that decision the Commission said:

"Our initial reaction is that such schemes can only operate in minimum rates awards without supplementary payments. However, the issue was not extensively debated in these proceedings and we therefore are not prepared to make a final determination without giving the parties the opportunity of addressing it in more detail."(16)

Debate in these proceedings again fell short of the detail which is necessary to make a final determination. Nevertheless, we are of the opinion that current payment by results schemes should continue to be part of the award structure and:

. it is essential that workers covered by such a scheme be subject to the protection of prescribed minimum rates plus supplementary payments for the work involved;

. additional payments derived from payment by results schemes should be absorbed into supplementary payments; and

. supplementary payments should not be used for the calculation of payment by results (although the re-expression of an existing base rate in an award as a minimum classification rate and a supplementary payment should not have the effect of prejudicing employees subject to existing incentive schemes).

THE PRINCIPLES

During the proceedings, the relationship between the structural efficiency principle and the other wage fixing principles was debated. In light of that debate, we have decided that:

(i) structural efficiency exercises should incorporate all past work value considerations;

(ii) any extensions of existing awards to include new classifications should form part of the structural efficiency exercises;

(iii) claims based on anomalies and/or inequities will continue to be treated as special cases;

(iv) there is no separate role for the operation of a supplementary payments principle; and

(v) claims for new allowances will be dealt with in accordance with the relevant portion of the allowances principle but, consistent with this decision, existing work-related allowances may be increased by up to 3% at the time of each instalment of the structural efficiency adjustment.

As a consequence of this decision, the existing principles require amendment. Those amended principles are set out in Appendix A to this decision.

_ _

(16)Print H8200, p.9

NATIONAL WAGE CASE AUGUST 1989 19

NO EXTRA CLAIMS COMMITMENT

As noted earlier, each union will be required to give a no extra claims commitment before the benefits of this decision are available. That commitment shall be inserted into the award concerned in the following terms:

"It is a term of this award (arising from the decision of the Australian Industrial Relations Commission in the National Wage Case of 7 August 1989 the terms of which are set out in Print H9100) that the union(s) undertake(s), for the duration of the principles determined by that decision, not to pursue any extra claims, award or overaward, except when consistent with those principles."

The commitment will continue to operate until the principles as amended in this decision are reviewed. Upon application, that Review will commence in September 1990.

20 NATIONAL WAGE CASE AUGUST 1989

APPENDIX A

THE PRINCIPLES

These principles have been developed with the aim of providing, for their period of operation, a clear framework under which all concerned - employers, workers and their unions, governments and tribunals - can co-operate to ensure that labour costs are monitored; that measures to meet the competitive requirements of industry and to provide workers with access to more varied, fulfilling and better paid jobs are positively examined; and that lower paid workers are protected.

The principles provide that movements in wages and salaries and improvements in conditions - whether they occur in the public or private sector, whether they be award or overaward and whether they result from consent or arbitration - must fall within the level allowable in accordance with the National Wage Case decision of 7 August 1989.

In considering whether wages and salaries or conditions should be awarded or changed for any reason either by consent or arbitration, the Commission will guard against contrived arrangements which would circumvent these principles and their aims.

COMMITMENT

Any claims for improvements in pay and conditions must be processed in accordance with these principles. No adjustments will be approved by the Commission unless a union concerned in an award gives a commitment that it will not pursue any extra claims, award or overaward, except in compliance with these principles.

When this no extra claims commitment is given, it shall be inserted in the award concerned in the following terms:

WAGE ADJUSTMENTS

1. Structural Efficiency Adjustment

There will be allowable under these principles:

(ii) a second increase of the same order as in (i) above to be paid not less than 6 months after the first increase;

(iii) the first increase will be accessible from 7 August 1989 but the actual date of operation for an award will be the date on which that award is varied in accordance with the National Wage Case decision of 7 August 1989; and

(iv) the second increase will not be automatic, but subject to application.

NATIONAL WAGE CASE AUGUST 1989 21

2. Minimum Rates Adjustment

Minimum rates adjustments allowable in the National Wage Case decision of 7 August 1989 shall be in accordance with the following:

(i) the appropriate adjustments in any award will be applied in not less than 4 instalments which will become payable at 6 monthly intervals;

(ii) in appropriate cases longer phasing-in arrangements may be approved or awarded and/or parties may agree that part of a supplementary payment should be based on service;

(iii) the first instalment of these adjustments will not be available in any award prior to 1 January 1990 or 3 months after the variation of the particular award to implement the first stage structural efficiency adjustment, whichever is the later;

(iv) the second and subsequent instalments of these adjustments will not be automatic and applications to vary the relevant awards will be necessary; and

(v) acceptance of absorption of these adjustments to the extent of equivalent overaward payments is a prerequisite to their being applied in any award.

3. Special Cases

Any claim for increases in wages and salaries or improvements in conditions which exceed the maximum increases allowable under the National Wage Case decision of 7 August 1989 will be processed as a special case before a Full Bench of the Commission. Such cases should be considered in accordance with the structural efficiency and other relevant principles.

STRUCTURAL EFFICIENCY

Structural efficiency adjustments allowable under the National Wage Case decision of 7 August 1989 will be justified in accordance with this principle if the Commission is satisfied that the parties to an award have co-operated positively in a fundamental review of that award and are implementing measures to improve the efficiency of industry and provide workers with access to more varied, fulfilling and better paid jobs. The measures to be considered should include but not be limited to:

. establishing skill-related career paths which provide an incentive for workers to continue to participate in skill formation;

. eliminating impediments to multi-skilling and broadening the range of tasks which a worker may be required to perform;

. creating appropriate relativities between different categories of workers within the award and at enterprise level;

. ensuring that working patterns and arrangements enhance flexibility and the efficiency of the industry;

. including properly fixed minimum rates for classifications in awards, related appropriately to one another, with any amounts in excess of these properly fixed minimum rates being expressed as supplementary payments;

22 NATIONAL WAGE CASE AUGUST 1989

. updating and/or rationalising the list of respondents to awards; and

. addressing any cases where award provisions discriminate against sections of the workforce.

Structural efficiency exercises should incorporate all past work value considerations.

WORK VALUE CHANGES

(a) Changes in work value may arise from changes in the nature of the work, skill and responsibility required or the conditions under which work is performed. Changes in work by themselves may not lead to a change in wage rates. The strict test for an alteration in wage rates is that the change in the nature of the work should constitute such a significant net addition to work requirements as to warrant the creation of a new classification.

These are the only circumstances in which rates may be altered on the ground of work value and the altered rates may be applied only to employees whose work has changed in accordance with this principle.

However, rather than create a new classification it may be more appropriate in the circumstances of a particular case to fix a new rate for an existing classification or to provide for an allowance which is payable in addition to the existing rate for the classification. In such cases the same strict test must be applied.

(b) Where new or changed work justifying a higher rate is performed only from time to time by persons covered by a particular classification or where it is performed only by some of the persons covered by the classification, such new or changed work should be compensated by a special allowance which is payable only when the new or changed work is performed by a particular employee and not by increasing the rate for the classification as a whole.

(c) The time from which work value changes should be measured is the last work value adjustment in the award under consideration but in no case earlier than 1 January 1978. Care should be exercised to ensure that changes which were taken into account in any previous work value adjustments or in a structural efficiency exercise are not included in any work evaluation under this principle.

(d) Where a significant net alteration to work value has been established in accordance with this principle, an assessment will have to be made as to how that alteration should be measured in money terms. Such assessment should normally be based on the previous work requirements, the wage previously fixed for the work and the nature and extent of the change in work. However, where appropriate, comparisons may also be made with other wages and work requirements within the award or to wage increases for changed work requirements in the same classification in other awards provided the same changes have occurred.

(e) The expression "the conditions under which the work is performed" relates to the environment in which the work is done.

(f) The Commission should guard against contrived classifications and over-classification of jobs.

NATIONAL WAGE CASE AUGUST 1989 23

(g) Any changes in the nature of the work, skill and responsibility required or the conditions under which the work is performed, taken into account in assessing an increase under any other principle, shall not be taken into account in any claim under this principle.

ALLOWANCES

(a) Existing Allowances

(i) Existing allowances which constitute a reimbursement of expenses incurred may be adjusted from time to time where appropriate to reflect the relevant change in the level of such expenses.

(ii) Existing allowances which relate to work or conditions which have not changed may be adjusted from time to time to reflect national wage increases, except where a flat money amount has been awarded, provided that shift allowances expressed in awards as money amounts may be adjusted for flat money amount national wage increases.

(iii) Existing allowances for which an increase is claimed because of changes in the work or conditions will be determined in accordance with the relevant provisions of the work value changes principle.

(b) New Allowances

(i) New allowances to compensate for the reimbursement of expenses incurred may be awarded where appropriate having regard to such expenses.

(ii) No new allowances shall be created unless changes in work have occurred or new work or conditions have arisen: where changes have occurred or new work and conditions have arisen, the question of a new allowance, if any, shall be determined in accordance with the relevant principle.

The relevant principle in this context may be work value changes or first awards and extensions to existing awards principle.

(i) Existing service increments may be adjusted in the manner prescribed in (a)(ii) of this principle.

(ii) New service increments may only be allowed to compensate for changes in the work and/or conditions and will be determined in accordance with the relevant provisions of the work value changes principle.

SUPERANNUATION

(a) Agreements may be certified or consent awards made providing for employer contributions to approved superannuation schemes for employees covered by such agreements or consent awards provided those agreements or consent awards:

(i) operate from a date determined or approved by the Commission; and

(ii) do not involve the equivalent of a wage increase in excess of 3% of ordinary time earnings of employees.

24 NATIONAL WAGE CASE AUGUST 1989

(b) Where, following a claim for employer contributions to approved superannuation schemes for employees, the parties are unable to negotiate an agreement consistent with this principle, and conciliation proceedings before the Commission have also failed to achieve such an agreement, the Commission shall, subject to the provisions of the Act, arbitrate on that claim.

(d) For the purposes of this principle, approved superannuation scheme means a scheme approved in accordance with the Commonwealth Operational Standards for Occupational Superannuation Funds.

STANDARD HOURS

(a) In dealing with claims for a reduction in standard hours to 38 per week, the cost impact of the shorter week should be minimised. Accordingly, the Commission should satisfy itself that as much as possible of the required cost offset is achieved by changes in work practices.

(b) Claims for reduction in standard weekly hours below 38, even with full cost offsets, will not be allowed.

(c) Changes in work practices designed to minimise the cost of introducing shorter hours will not be a consideration for claims under any other principle.

CONDITIONS OF EMPLOYMENT

Except for the flow-on of test case provisions, applications for changes in conditions other than those provided elsewhere in the principles will be considered in the light of their cost implications both directly and through flow-on and must be processed in national wage case proceedings or before a specially constituted Full Bench.

ANOMALIES AND INEQUITIES

(a) Anomalies

(i) In the resolution of anomalies, the overriding concept is that the Commission must be satisfied that any claim under this principle will not be a vehicle for general improvements in pay and conditions and that the circumstances warranting the improvement are of a special and isolated nature.

(ii) Decisions which are inconsistent with the principles of the Commission applicable at the relevant time should not be followed.

(iii) The doctrines of comparative wage justice and maintenance of relativities should not be relied upon to establish an anomaly because there is nothing rare or special in such situations and because resort to these concepts would destroy the overriding concept of this principle.

(b) Inequities

(i) The resolution of inequities existing where employees performing similar work are paid dissimilar rates of pay without good reason, shall be processed through the Anomalies Conference and not otherwise, and shall be subject to all the following conditions:

NATIONAL WAGE CASE AUGUST 1989 25

(1) The work in issue is similar to the other class or classes of work by reference to the nature of the work, the level of skill and responsibility involved and the conditions under which the work is performed.

(2) The classes of work being compared are truly like with like as to all relevant matters and there is no good reason for dissimilar rates of pay.

(3) In addition to similarity of work, there exists some other significant factor which makes the situation inequitable. An historical or geographical nexus between the similar classes of work may not of itself be such a factor.

(4) The rate of pay fixed for the class or classes of work being compared with the work in issue is a reasonable and proper rate of pay for the work and is not vitiated by any reason such as an increase obtained for reasons inconsistent with the principles of the Commission applicable at the relevant time.

(5) Rates of pay in minimum rates awards are not to be compared with those in paid rates awards.

(ii) In dealing with inequities, the following overriding considerations shall apply:

(1) The pay increase sought must be justified on the merits.

(2) There must be no likelihood of flow-on.

(3) The economic cost must be negligible.

(4) The increase must be a once-only matter.

Any claim made on the grounds of this principle shall be processed as a special case.

PAID RATES AWARDS

(a) Except in special cases, the Commission will not make new paid rates awards.

(b) In the making of a first paid rates award the conditions as provided in the first awards and extensions to existing awards principle must be complied with.

(d) In assessing an adjustment in rates of pay in a paid rates award it is inappropriate to apply the General Motors-Holden's Limited and Ford Australia Ltd Case approach of:

"awarding an increase to restore to the rates under the awards the relationship which they had when established vis-a-vis rates actually paid for similar work in industries located near the establishments of these two companies".(17) _ _

(17)Print E7273; (1981) 260 CAR 3

26 NATIONAL WAGE CASE AUGUST 1989

(e) Subject to special cases, no special adjustment will be approved for paid rates awards which cannot be justified on the basis of the creation of a proper career structure through structural efficiency.

(f) In paid rates awards no increase at the base rate which is greater than the structural efficiency adjustment will be approved.

(g) The rates of pay prescribed by a new paid rates award must be expressed in terms of properly fixed minimum classification rates plus supplementary payments.

(h) Paid rates awards should contain clear classification definitions.

(i) Statutory declarations will be required from all parties to paid rates awards to the effect that the integrity of those awards will be preserved.

(j) If a paid rates award fails to maintain itself as a true paid rates award that award should be discontinued and replaced by a minimum rates award.

FIRST AWARDS AND EXTENSIONS TO EXISTING AWARDS

(a) In the making of a first award, the long established principles shall apply i.e. prima facie the main consideration is the existing rates and conditions.

(b) In the extension of an existing award to new work or to award-free work the rates applicable to such work will be assessed by reference to the value of work already covered by the award.

(c) In awards regulating the employment of workers previously covered by a state award or determination, existing rates and conditions prima facie will be the proper award rates and conditions.

(d) Where a first award is made it shall contain a minimum rate for each classification of employee covered by it. Where the total rate determined for each classification in accordance with (a) and (c) of this principle exceeds the appropriate minimum rate for that classification, the excess amount shall be prescribed as a supplementary payment. For the purposes of this paragraph, the appropriate minimum rate will be assessed by comparison with similar classifications in other minimum rates awards.

ECONOMIC INCAPACITY

Any respondent or group of respondents to an award may apply to reduce and/or postpone the application of any increase in labour costs determined under the principles on the ground of very serious or extreme economic adversity. The merit of such application shall be determined in the light of the particular circumstances of each case and any material relating thereto shall be rigorously tested.

BY THE COMMISSION:

PRESIDENT

NATIONAL WAGE CASE AUGUST 1989 27

Appearances:

I. Watson for The Clothing and Allied Trades Union of Australia with L. Ayres for the Australian Council of Trade Unions and with P. Tighe for the Electrical Trades Union of Australia.

S. Green with L. Stephens for The Association of Professional Engineers, Australia and the Australian Council of Professional Associations.

G. Giudice of counsel with F. Parry and E.H. Callander for the Confederation of Australian Industry, the Textile, Clothing and Footwear Council of Australia, the Confederation of A.C.T. Industry, the Clothing Industries Division of the Queensland Confederation of Industry Limited, The Victorian Employers Federation, respondent members of the Tasmanian Confederation of Industries, the Chamber of Manufactures of New South Wales, the Australian Confederation of Apparel Manufactures - N.S.W. (Division of the Chamber of Manufactures of New South Wales), the Chamber of Commerce and Industry of South Australia Incorporated, the Confederation of Western Australian Industry, the South Australian Employers Federation, the Australian Institute of Dry Cleaning - N.S.W., the Australian Institute of Dry Cleaning - Queensland and with G.R. Sapwell for The Australian Chamber of Manufactures and with R. Whiffin and J. Forbes for the Australian Mines and Metals Association (Inc).

R.P. Boland with M.K. Scott for the Metal Trades Industry Association of Australia and the Engineering Employers Association, South Australia.

B. Yates with L. Tacy for the Minister of State for Industrial Relations on behalf of the Commonwealth (intervening).

E. Porter for Her Majesty the Queen in right of the State of Queensland (intervening).

J. Fernan of counsel with S. Litchfield for Her Majesty the Queen in right of the State of New South Wales (intervening).

I. Silk with J. McCabe for Her Majesty the Queen in right of the State of Victoria (intervening).

G. Bull for Her Majesty the Queen in right of the State of Western Australia (intervening).

J. Woodrow with D.J. McCallum for the Government of the Australian Capital Territory (intervening).

M. Gallant for Her Majesty the Queen in right of the State of South Australia (intervening).

J. McCabe for Her Majesty the Queen in right of the State of Tasmania (intervening).

N. McHattie with M. Jones for the Government of the Northern Territory (intervening).

C. Murphy with B. Davis for the Australian Chamber of Commerce (intervening).

M. Angwin for the Business Council of Australia (intervening).

28 NATIONAL WAGE CASE AUGUST 1989

B.H.B. Dann for Australia and New Zealand Banking Group Limited, National Australia Bank Limited, Westpac Banking Corporation, Bank of New Zealand, Banque Nationale de Paris, Australian Bank Limited, Bank of Queensland Limited, Rural and Industries Bank of Western Australia, S.B.T. Bank (previously Savings Bank of Tasmania), State Bank of South Australia, State Bank of Victoria, Tasmania Bank, Cardlink Services Limited, Deutsche Bank Australia Limited, Mitsubishi Bank Limited, Primary Industry Bank of Australia and Standard Chartered Australia Bank (intervening).

G. Carmody with P. Trenwith and L. Metzner for the National Farmers' Federation (intervening).

G. Gerard for the Australian Coal Association (intervening).

B.D. Purvis for the Australian Wool Selling Brokers Employers Federation (intervening).

S. Clancy and K. Lovell for the Australian Federation of Construction Contractors (intervening).

G. Harrison for The Amalgamated Metal Workers' Union, the Association of Draughting, Supervisory and Technical Employees, the Australasian Society of Engineers, the Electrical Trades Union of Australia, The Federated Ironworkers' Association of Australia, The Federated Miscellaneous Workers Union of Australia, The Federated Engine Drivers' and Firemen's Association of Australasia and The National Union of Storeworkers, Packers, Rubber and Allied Workers (intervening).

D.G. Coleman and R. Hughes for Qantas Airways Limited (intervening).

** end of text **