Structural Factors Shaping Four Phases of Institutional Change to Wage and Condition-setting in Australia

Abstract

Since the 1980s, the ways that Australian employees’ wages and working conditions are determined have changed dramatically. Awards issued by the industrial relations tribunal declined in significance while new forms of registered agreements negotiated between employers, employees and unions were introduced and encouraged. While the roles of trade unions, employer associations, and political parties in driving these changes are well understood, the complex mix of legislative and non-legislative processes of institutional change requires further explanation. The central objective of this thesis is to explore how structural factors shaped the processes of institutional change that altered pay and condition-setting practices in Australia between 1983 and 2013. In 1983 the Labor Government negotiated a Prices and Incomes Accord with the union movement; three decades of change later, another Labor Government passed its last refining amendments to their Fair Work legislation before losing office in mid-2013. The thesis examines the processes of change affecting pay and condition-setting institutions through a detailed chronological analysis of these changes and their contexts that combines analytical techniques from labour law and political studies. To understand the role of structural factors in shaping the processes of change, the thesis applies a theory proposed by James Mahoney and Kathleen Thelen (2010) that conceives of multiple types or ‘modes’ of institutional change and uses structural factors to explain why one mode of institutional change occurs rather than another. The thesis argues that four distinct phases of institutional change affected wage and condition-setting practices in Australia between 1983 and 2013. Each chronological phase was characterised by the predominance of a different mode of institutional change. These four phases of institutional change can be effectively explained within Mahoney and Thelen’s theoretical framework using three key structural factors that shape and constrain actors’ capacity to implement different types of institutional change. In this case, these structural factors are the discretion afforded to the industrial relations tribunal by legislative rules (‘rule discretion’), the opportunities to block legislative change (‘formal veto possibilities’), and the capacity of interest groups to block changes to practices on the ground (‘informal veto possibilities’). The thesis argues that processes of change are constrained by nationally specific structural factors and that the framework based on rule discretion and formal and informal veto possibilities will be highly useful for explaining processes of institutional change affecting industrial relations at other times and in other countries. The thesis makes important contributions to three bodies of knowledge. First, this is the only study that sustains a detailed institutional analysis of changes affecting wage and condition-setting practices in Australia from the initiation of the Prices and Incomes Accord in 1983 through to the legislative framework, which, in amended form, remains in effect today. By explaining how structural factors shaped four distinct chronological phases of institutional change, the thesis balances and complements the abundant explanations for Australia’s changing wage and condition-setting practices that focus on the agency of trade unions, employer associations, the industrial relations tribunal and political parties. Second, testing Mahoney and Thelen’s theory makes an important contribution to Historical Institutionalism because the theory has been widely cited but received limited empirical application. It reveals further avenues for theoretical development regarding strategic agency and choice within structural constraints. The thesis also demonstrates the analytical usefulness of one specific mode of institutional change that has been largely overlooked by the Historical Institutionalist literature – institutional resettlement. Third, the thesis makes a major contribution to debates about whether industrial relations systems are converging or will continue to follow nationally specific trajectories of change.