agreement of the ACTU, to reduce wages growth, under the‘Prices and
Incomes Accord’. This was done by the Australian Industrial Relations Com-
mission (AIRC) only partially indexing award wages to the CPI, contrary to its
previous practice of automatically increasing award wages by the full percent-
age rise in the CPI.^2 Lewis and Kirby (1987) modelled the impact of the Accord
and found that real wages fell by 10 per cent below what would otherwise have
been, increasing employment growth by 8 per cent. In the period 1983 to
1990, the unemployment rate fell from 10 per cent to 6 per cent and inflation
fell from 11 per cent to 1 per cent (Lewis and Spiers 1990).
In the period 1983–87, periodic adjustments were made to all award wages
(‘National Wage Decisions’), in that every award wage was increased by the
same percentage or (sometimes) the same dollar amount. But in 1987 the
Commission ruled that the wage increases granted would not automatically
be applied to every award. Instead,firms and employees would have to justify
them through what was termed the‘structural efficiency principle’. Other
wage decisions of a similar nature followed and,finally, in its 1991 decision,
the AIRC encouraged workers and their employers to bargain directly with
each other at the enterprise level. This introduction of‘enterprise bargaining’
was perhaps the most significant change to industrial relations in Australia’s
history.
It has to be noted, however, that only registered unions could bargain. Also,
unlike common law contracts, enterprise agreements bound all employees to
whom they applied, including those not employed at the time of a vote on the
agreement, those who did not vote at all, and those who voted against
approval of the agreement. Awards continued to apply and formed a‘floor’
to wages and conditions which could be agreed on.
But‘enterprise bargaining’, within these boundaries, was given a further
stimulus by the 1993 Industrial Relations Act, and by 2006 one half of all
employees in the federal jurisdiction were covered by an enterprise agreement.
In some states more dramatic changes occurred. In Western Australia and
Victoria legislation permitted workplace agreements which were completely
outside the award system.
The introduction of enterprise bargaining was accompanied by union amal-
gamation sponsored by the ACTU. This was rationalized as increasing‘func-
tionalflexibility’, which had been seriously hampered by strict limits on how
firms could allocate work according to, among other things, the‘trade’, level
of seniority, or to which union a worker belonged. The idea was that this
inflexibility would be reduced by individual craft-based unions being merged.
The result was a frenzy of union amalgamation, so that, between 1987 and
(^2) In a cosmetic change, the Australian Conciliation and Arbitration Commission had been re-
established in 1988 as the Australian Industrial Relations Commission.
Phil Lewis