Business Studies
HSC Course
Topic 4:
Employment Relations
Section 4.5:
Industrial Conflict
Section Overview:
4.5.1
Definition and causes — wage demands, working conditions, management policy,
political goals and social issues
4.5.2
Perspectives on conflict — unitary, pluralist, radical
4.5.3
Types of industrial action
– overt — lockouts, pickets, strikes, bans, work-to-rule
– covert — absenteeism, sabotage, turnover, exclusion from decision-making in
business
4.5.4
Roles of stakeholders in resolving disputes
4.5.5
Dispute resolution processes — conciliation, arbitration, grievance procedures,
negotiation, mediation, common law action, business/division closure
4.5.6
Costs and benefits of industrial conflict
– financial, personal, social, political, international
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Section 4.5
Industrial Conflict
4.5.1 Definition and Causes — Wage Demands, Working Conditions,
Management Policy, Political Goals and Social Issues
INDUSTRIAL CONFLICT is caused by a clash between employers and employees. The
Australian Bureau of Statistics (ABS) defines an industrial dispute as a withdrawal from
work by a group of employees, or a refusal by an employer to allow workers to work.
Generally, the causes of industrial conflict fall into categories such as wage demands,
working conditions, management policies, political disputes and social concerns.
A)
Wage Demands
Wage rates are a cost to employers but are income for employees. For this reason
they are an obvious source of conflict. There are a number of main reasons why
unions and employees may fight for wage increases.
i)
ii)
If a business is achieving a high profit (i.e. Qantas) at the expense of
employees, then unions could agitate for a pay rise.
Also, employees may argue that a wage increase is fair if executive salaries
have increased faster than employee wage levels.
At a minimum, employees and unions are keen to see wages keeping pace with
inflation so that their real living standards are maintained.
B)
Working Conditions
Disputes under this category include those concerning issues such as protective
clothing, first-aid services, uncomfortable working conditions, shortage or condition
of equipment, lack of amenities, new production methods and equipment, and
arduous physical tasks. Depending on the industry, it is the responsibility of
management to ensure that workers are provided with safe and reasonably
comfortable working conditions.
An industrial dispute may arise if workers feel that management is neglecting the
safety of employees, or if they feel that their working conditions are generally substandard and uncomfortable.
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Section 4.5
C)
Industrial Conflict
Management Policies
Managerial policy decisions have become the major cause of industrial disputes in
recent years. Management decisions can create industrial conflict, especially when
major changes to the business’s structure or operations are announced without
consultation with employees. For Example: as firms restructure to increase
productivity or efficiency, conflict often occurs when managers handle
retrenchments poorly and leave the remaining staff with increased workloads.
Management can reduce the potential for industrial conflict by ensuring that staff are
notified of any changes in policy that will affect their working conditions. An even
better solution is to consult staff before making changes to policy.
D)
Political Disputes & Social Concerns
Unions have become directly involved in non-industrial issues, that is, political and
social issues. This involvement has been controversial both within the union
movement and in the general community. Issues range from conscription, apartheid,
rainforest conservation and support of indigenous people. These disputes are
targeted towards people or situations other than the employer/employee
relationship.
4.5.2 Perspectives on Conflict – Unitary, Pluralist, Radical
People involved in employment relations may differ in their beliefs about conflict: how it is
caused, who is involved, and how it should be resolved. This has resulted in the following
views or perspectives on conflict: Unitary, Pluralist or Radical.
A)
Unitary
The unitary view of conflict likens a business to a team or unit. It assumes that all
employees within the business share the goals of the business as defined by senior
management. Conflict within the team or unit is seen as disloyalty – the work of
stirrers or agitators. Human Resource Management, with its focus on improving the
management of employment relations, has close ties with this unitary perspective on
conflict.
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Section 4.5
B)
Industrial Conflict
Pluralist
Pluralists take the view that organisations are complex, are made of many parts and
have a number of different stakeholders. As a result, everyone will not share
identical interests. From this perspective, conflict is to be expected. It is even
viewed as positive by the pluralists. The challenge for managers is to develop an
effective system of communications that allows employees to express their views and
to resolve them without damaging the organisation and its performance.
C)
Radical
The radical left view of conflict was influenced by the writings of Karl Marx. It
focuses on the imbalance of power between employers and employees. This
imbalance is believed to be so great that employees feel they have to overthrow their
employers, whom they see as their masters. Those with a radical perspective on
conflict see the employment relationship as part of a social structure of classes.
Conflict is caused by the class war in capitalist economies between workers and
business owners. Government is seen to be on the side of business and thus unable
to resolve conflict. A total change in the economic system and social structure is
required.
4.5.3 Types of Industrial Action
- Overt — Lockouts, Pickets, Strikes, Bans, Work-to-rule
- Covert — Absenteeism, Sabotage, Turnover, Exclusion from
Decisions
Many disputes that arise in the workplace can be resolved through negotiation between the
employees and employers. Sometimes, however, communications between workers and
management break down and either party may resort to industrial action, such as strikes,
lockouts or absenteeism. Employees may protest against the actions of an employer if they
feel they are being treated unfairly. Employers may take action if they believe employees are
not acting in the interests of the business. Either way, industrial action is a sign of poor
employment relations.
Generally, industrial action can be divided into two groups: OVERT and COVERT.
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Section 4.5
A)
Industrial Conflict
Overt Forms of Industrial Action
Overt Industrial Action refers to open, obvious industrial action taken by workers
or management including strikes, work bans, pickets, lockouts and work-to-rule.
i)
Strikes
The most publicised type of industrial action is the strike. A strike involves
the withdrawal from work of a group of employees to disrupt business
operations as a means of expressing dissatisfaction with some aspect of
employment relations. Strikes are also used to draw community attention to
the employees grievances and thereby place greater pressure on management
(although sometimes strikes can annoy the public and reduce sympathy for
workers).
ii)
Pickets
Pickets are protests that occur outside or at the gates of a workplace, and are
generally associated with strike action. Union members and other workers
form a picket line to prevent other workers or supplies from entering the
building in an attempt to disrupt business. Pickets are therefore another
dramatic way for workers to express their dissatisfaction with management
and can cause significant production losses for a business if prolonged.
iii)
Work bans
A work ban is a situation where workers refuse to perform some task that is
usually not specified in their legal contracts. The most common form of
work ban is the refusal to do overtime. Other types of ban include the black
ban, which prevents workers from using equipment or performing a task that
has been banned. This may be due to safety concerns or because there is a
dispute over pay quotas or the introduction of new technology that displaces
workers.
iv)
Lockouts
A lockout is an extreme measure where employers physically prevent their
employees from working by locking the gates to the work premises. By
denying access to the building, managers effectively cut off the workers’
source of income and thereby force them to accept a management decision,
negotiate or face a drawn-out dispute and financial difficulties.
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Section 4.5
v)
Industrial Conflict
Work-to-rule
Working to rule is quite similar to a work ban and involves workers following
the strict terms of their employment contract. During a period of work-torule, employees will not perform any task that is not specified within the
terms of their employment, which tends to decrease productivity. Again, this
aims to put pressure on management to listen to workers’ grievances.
B)
Covert Forms of Industrial Action
Covert Industrial Action refers to actions by workers or management which are
not immediately obvious such absenteeism, sabotage, turnover or exclusion from
business decision-making.
i)
Absenteeism
Absenteeism can be defined as the percentage of employees, on an average
day, who are away from work or on sick leave without leave being approved
in advance. The level of absenteeism in a workplace can act as a guide to
how satisfied workers feel in their jobs. If employees are unhappy with their
work conditions or their employers, they are more likely to take days off
work. Businesses with effective employment relations usually experience
lower levels of absenteeism among their employees.
ii)
Sabotage
Sabotage is the deliberate damaging of physical items such as machinery and
deliberate interference with products, systems and procedures. An employee
with a grievance may be tempted to carry out an act of sabotage. Sabotage
can cost businesses millions of dollars in lost revenue, production and
reputation.
iii)
Turnover
Like high levels of absenteeism, high voluntary labour turnover (resignations)
often indicate poor staff morale or conflict in the workplace. Unskilled
workers whose jobs offer little variety or interest are far more likely to resign;
management might want to take steps to increase job satisfaction.
iv)
Exclusion from Decisions
Making decisions about what will happen in a business is an important issue
for both employers and employees in that business. Decisions have to be
made on a wide range of issues. Conflict can certainly result when employees
believe that they have not been given the opportunity to have their say.
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Section 4.5
Industrial Conflict
4.5.4 Roles of Stakeholders in Resolving Disputes
The main stakeholders involved in a dispute are workers and management. In Australia, a
strong emphasis has been given to the role of representative bodies such as trade unions
and employer associations. However, over recent years, declining union membership and
a decline in industrial conflict has increased the role of individual employees and employers
in resolving disputes quickly at the workplace.
Many disputes can be resolved at the workplace without the need for intervention by unions
or industrial tribunals. This is becoming more common as employers and employees gain
experience at resolving disputes. Efficient dispute resolution has the benefit of being less
costly to both employee and employer. Many businesses are recognising this and have
formal grievance procedures.
When a dispute becomes more serious, employees often use unions to represent their
interests in meetings with employers or in industrial tribunals. The union’s role is to
represent employees in conciliation or arbitration in the industrial tribunal.
Employer associations are rarely as involved as unions in industrial disputes. Only once
conciliation and arbitration procedures are initiated do employer associations become
involved. It is their role to represent employers in the industrial tribunal. Otherwise,
employer associations tend to provide general assistance to employers in handling workplace
conflict.
Several government organisations can play a role in resolving industrial disputes.
Traditionally, the Australian Industrial Relations Commission (AIRC) – a body set up
by the Federal Government – has played a very important role. However, it’s role has been
reduced in recent years. Most of the recent laws passed by the government have been aimed
at decreasing the role of ‘third parties’ in industrial disputes.
A number of other bodies have also been established by the government to resolve disputes:

The Employment Advocate provides information to employees and employers
about their rights and responsibilities under employment contracts.

The Human Rights and Equal Opportunities Commission (at the federal level)
and The Anti-Discrimination Board (at the state level) are involved in resolving
disputes that involve discrimination.

Courts are also playing an increasingly important role in industrial disputes as they
enforce some aspects of the Workplace Relations Act.
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Section 4.5
Industrial Conflict
4.5.5 Dispute Resolution Processes — Conciliation, Arbitration,
Grievance Procedures, Negotiation, Mediation, Common Law
Action, Business/Division Closure
Having examined the role of each of the stakeholders in the resolution of disputes, we now
must look at the procedures that are usually followed to resolve disputes. In Section 4.3.2,
grievance procedures were discussed as they were the first formal level of dispute resolution.
In Australia, a comprehensive system has been developed to deal with disputes that cannot
be solved by workplace grievance procedures.
A)
Negotiation
Many of the issues that cause conflict in the workplace are part of the employment
contract – the Award, a Certified Agreement or Australian Workplace Agreement.
Disputes usually arise when such contracts are being renegotiated. Once a dispute
arises, a number of steps may be taken to resolve a dispute.
B)
Mediation
If the parties in a dispute are unable to reach an agreement through negotiation on
their own, mediation may be the next step. MEDIATION is the intervention into a
dispute by a neutral third party such as an employment relations specialist or a
lawyer. The mediator’s role is simply to encourage the parties to come together to
reach common ground, and neither party is bound by the mediator’s suggestions.
C)
Conciliation
CONCILIATION is the same as mediation except that it is the AIRC (an
INDUSTRIAL TRIBUNAL) who acts as the mediator. If the conciliation
meetings fail to bring about an agreement, then the parties will enter the final stage
of arbitration.
D)
Arbitration
ARBITRATION is the process that occurs when an industrial commissioner
evaluates the arguments of both parties and comes to a decision which is legally
binding. The decision made can be appealed.
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Section 4.5
E)
Industrial Conflict
Common Law Action
Where there is no federal or state legislation about a particular employment matter,
the common law will apply. This means that certain disputes may be settled by court
action.
F)
Business/Division Closure
If a dispute is impossible to resolve it may result in the business or the division
closing altogether. Disputes cost businesses money in lost working time and legal
expenses. Obviously, if a business is not producing its goods and services, eventually
it cannot afford to pay its bills. Prolonged disputes can force business closure for
financial reasons.
4.5.6 Costs and Benefits of Industrial Conflict
– Financial, Personal, Social, Political, International
Industrial conflict has the potential to be very costly for both employees and employers.
Effective employment relations is crucial to avoiding conflict in the first place, and ensuring
that any disputes are resolved quickly and inexpensively. It is important however, to
consider the financial, personal, social, political and international costs and benefits of
industrial conflict.
A)
Financial
The primary cost of conflict is the financial damage to both employees and
employers. Conflict can result in lost production, increased costs of production, lost
revenue and reduced profits. The employees will forego pay and reduce their job
security if they go on strike.
B)
Personal
Personal costs are more difficult to identify and almost impossible to measure. Any
level of industrial conflict must increase the level of tension within the workplace.
This tension is experienced by workers and management alike, and could lead to
further breakdowns in communication. Low morale is a very real problem and a
major result (and cause) of conflict.
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Section 4.5
C)
Industrial Conflict
Social
Personal costs could lead to social problems that, at first, seem totally unrelated.
Tension and dissatisfaction at the workplace could be expressed in the home through
increased family breakdown, and even domestic violence. These problems could be
heightened if workers are not being paid for long periods of time.
D)
Political
Political costs of disputes can range from the matter of challenged or damaged
political reputations to internal political party disagreement. Public opinion of
political parties could be damaged by the mishandling of a dispute.
E)
International
The international costs of industrial conflict largely relate to the lost markets and lost
market share because the business and the country gains a reputation as an unreliable
supplier. In the past, disputes on the waterfront, for example, have held up
shipments of exports, causing foreign buyers to question their future dependence on
Australian supplies.
Furthermore, when employees and employers are caught up in industrial conflict,
their productivity falls and financial costs are increased. Australian businesses then
become less competitive internationally, compared to efficient businesses overseas.
Benefits
It must be remembered that industrial conflict can bring a variety of benefits. These include:

It provides an opportunity for workers to express their dissatisfaction. Workers can
bring issues to the attention of management before any long-term damage is done.

New methods of doing things, whether this involves the decision-making process or
changes in production techniques, can be introduced during negotiations.

Productivity can be increased through changes in work and management practices.

New communication lines can be opened between workers and management.

Health and safety issues can be addressed.
The overall effect of improving communication and discussing grievances leads to improved
employee morale, and reduced labour turnover and absenteeism. By using industrial conflict
positively, an organisation can increase productivity, efficiency and competitiveness.
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Section 4.5
Industrial Conflict
DEFINITIONS:
Arbitration
The process that occurs when an industrial commissioner
evaluates the arguments of both parties and comes to a
decision which is legally binding.
Conciliation
A form of mediation ordered by an industrial tribunal.
Covert Industrial Action
Actions by workers or management which are not
immediately obvious such as go slows, sabotage, absenteeism
or exclusion from business decision-making.
Industrial Conflict
A clash between employers and employees.
Industrial Tribunal
A body established to settle certain types of dispute, in this
case industrial disputes.
Mediation
A voluntary negotiation process where a neutral third party
assists the parties to try and find a way to resolve their
dispute.
Overt Industrial Action
Open, obvious industrial action taken by workers or
management including strikes, bans, pickets and lockouts.
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Section 4.5
Industrial Conflict
HOMEWORK ACTIVITIES:
Activity 1:
Complete the Activities Questions 1 – 3 on the bottom of P.356 of the text.
Activity 2:
“There’s no way we’re ever going to make a deal with these thugs.
The only way to get a fair deal for our workers is to show the bosses
the power of a united workforce – and to fight, fight, fight!” Explain
whether this reflects a unitary, pluralist or radical view of industrial conflict.
Activity 3:
Complete the Activities Questions 1 – 3 on P.364 of the text.
Activity 4:
What is the difference between overt and covert industrial action? Illustrate
your answer with examples of each type of action.
Activity 5:
Complete the Activities Questions 1 & 2 on P.370/371 of the text.
Activity 6:
What is the difference between the conciliation and arbitration of a dispute?
Activity 7:
Which method is more likely to achieve a result that is acceptable to both
parties – negotiation, conciliation or arbitration? Justify your answer.
Activity 8:
‘It may be costly, but sometimes a strike is a good thing.’ Describe
what benefits may come about from industrial disputes.
Activity 9:
Read the Case Study: “The 1999 – 2000 BHP Pilbara Dispute” on P.374
– 376 of the text and complete Questions 1 – 4, & 6.
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