Australian Unions Need to Stop Pinning Their Hopes on the Labor Party

Since the 1980s, Australian unions have subordinated everything to getting Labor elected. It’s a failed strategy that has diminished union power, leading to declining wages and conditions for workers.

Secretary of the ACTU Sally McManus visits Parliament House in Canberra, Australia, on March 18, 2021. (Sam Mooy / Getty Images)

In the lead-up to the Labor government’s Jobs and Skills Summit next month, the union movement faces a dilemma.

The first option is to continue relying on Labor to end neoliberalism, a strategy that has seen the union movement decline precipitously. The second option is for the unions to rebuild ground-up industrial power and fight for the change they want to see.

Rebuilding industrial strength will necessitate confronting a hostile Labor government. Employers and the media will also seize on a resurgence of militancy to attack Anthony Albanese’s Australian Labor Party (ALP). Consequently, the unions must choose between defending the ALP’s interests or their members’ interests — they cannot do both.

A Small Target

“A vote for the Australian Labor Party is a vote for the unions.” Since the unions first entered politics in the 1890s, this has been the rallying cry of the Australian labor movement.

The May 2022 federal election called this slogan into question once again. Armed with a small-target strategy, Labor went to the election intent on recasting itself as immune to union influence.

Going into the election, the unions’ top-tier concerns were stagnating real wages, rising insecure work, the aged-care crisis, and the cost-of-living crisis. Labor only offered a solid commitment on wages, and even then, this was only given on May 10, eight days before the election, when Albanese pledged Labor’s support for wage increases in step with inflation. “When the Fair Work Commission considers any minimum pay increase,” he said, “people should not go backwards.”

Despite years of soaring profits and stagnant wages, Labor’s election commitment was to advocate for the status quo. It wasn’t exactly the stirring policy platform that workers and unions may have hoped for.

Industrial Peace

Albanese’s small-target strategy is in keeping with the scathing internal review of Labor’s shock defeat at the 2019 federal election. “Labor’s policy formulation process,” recommended the review in November 2019,

should be guided by its strategy and the national interest, avoiding any perception of capture by sectional interests. Labor should adopt the language of inclusion, abandoning divisive rhetoric, including references to “the big end of town.”

From then on, the Albanese-led opposition busied itself rewriting Labor’s policy agenda so as not to appear captured by “sectional interests.” The implication was clear: the ALP would refuse to put union interests first and instead pursue a policy of industrial peace.

Labor abandoned the wide-ranging platform of industrial reform that it took to the 2019 election, including the reintroduction of industry-wide bargaining, demanded by unions. “Business, workers, and unions have to work together,” declared Albanese in September 2019, “each in the recognition that both the ingredients and fruits of success are shared.”

In reality, however, this success has not been shared. Between 2016 and 2021, in real terms, corporate profits increased by a staggering 256 percent while wages grew by only 7.5 percent. Today the share of national income going to business has never been higher. Clearly, the unions must challenge Labor’s industrial peace strategy if they are going to reverse this trend. Despite a few notable exceptions, this is not what the union movement has done.

In fact, the peak union body, the Australian Council of Trade Unions (ACTU), supports Labor’s industrial peace strategy. Following Albanese’s lead, in 2019, the ACTU scaled back its calls for overhaul of the industrial relations system. The following year, during the height of the pandemic, the peak body struck a deal with the Business Council of Australia to fast-track union-approved enterprise agreements, even if it meant some workers would be worse off. More recently, ACTU secretary Sally McManus hailed Albanese’s wage commitment as the “key moment” of the election campaign.

In short, the ACTU made its thinking clear: to help Labor get elected, it would support industrial peace. This choice, however, comes at a cost.

Wagging the Dog

Every time a reforming Labor Party has formed government, it has been on the back of the union movement.

Consider the barnstorming election victories of the reformist Labor leaders John Curtin, Ben Chifley, and Gough Whitlam in 1943, 1946, and 1972, respectively. These historic Labor victories coincided with the decades of the Australian union movement’s greatest strength. Union density hit a peak of 64 percent in the 1940s, before dipping to just over 50 percent in the mid-1970s.

Without the industrial strength of the unions, it would not have been possible for these Labor governments to introduce the redistributive reforms for which they are remembered. Curtin laid the foundations of the welfare state, Chifley built a full-employment economy, and Whitlam introduced Medibank and increased all social security payments to the poverty line.

The bipartisan abandonment of full employment in the mid-1970s proved a turning point. Naturally, employers used workers’ growing fear of unemployment to undermine union power and drive down wages and conditions, leading to a sharp increase in the share of the national income going to business. The ACTU responded by pursuing an industrial peace agenda, leading to the ACTU-ALP Prices and Incomes Accord and, ultimately, thirteen years of federal Labor governments between 1983 and 1996.

As the majority of unions accepted the accord, Bob Hawke’s Labor government attacked the militant minority that refused to accept industrial peace, including the Builders Labourers Federation and the nurses’ and pilots’ unions. The result was a significant shift of power away from the rank and file and toward union officials. As unions prioritized negotiation, union membership declined due to restrictions on industrial action and a diminished emphasis on workplace organization. The result was the steady degradation of workers’ industrial power. Between 1983 and 1993, union density declined to 37 percent while workers’ share of the national income decreased by 10 percent.

Consequently, the movement that had either pushed Labor governments to introduce reforms or that had defended them lost much of its historic power. Over time, this contributed to a rightward shift that harmed workers. Without a strong independent union movement to represent workers’ interests, Labor found it easier to dismiss genuine working-class reforms as electorally unviable.

Pulling Teeth

In the early 1990s, Labor escalated its assault on the unions’ industrial power. This reached its zenith in 1993, when Paul Keating’s Labor government expanded its system of enterprise bargaining agreements (EBAs).

Prior to Keating’s reforms, workers’ terms and conditions were largely set by industrial awards, while the Industrial Relations Commission determined most people’s wage improvements via National Wages Case decisions. EBAs, by contrast, are struck between unions and individual businesses. Referred to at the time as “managed decentralism,” the shift toward EBAs made it impossible to generalize wins, requiring unions to duplicate their efforts at many different workplaces. It also opened avenues for employers to sidestep or undermine workplaces with particularly militant traditions.

As a result, workers’ power in the labor market nose-dived. Union density declined from 44.3 percent in 1992 to just over 20 percent in 2010. Incredibly, the union movement not only supported Keating’s EBA system but extended this support to Kevin Rudd and Julia Gillard, both of whom placed EBAs at the heart of their governments’ industrial relations agendas.

In 2007, Keating proudly reflected on his government’s legacy of union busting.

I was the guy that had to get the ACTU in a headlock and pull its teeth out. . . . I was one of those who ushered Australia into the post-industrial age, where the collective is less and the natural role of unions is less. They also got incompetent as well. [The union movement] is dying on the vine. . . . [Today] you have Labor with unions attached, but they’re not the ones calling the shots.

Successive neoliberal governments, along with employers, ruthlessly took advantage of the disorganization of Australian workers. Casual and insecure work became the norm. Labor sold state-owned assets wholesale, junking its postwar legacy of redistributive reformism.

By 2016, union density had declined to 15 percent. Ged Kearney, then president of the ACTU, concisely summarized the challenges confronting the union movement. The unions, Kearney warned, were at risk of becoming a “quaint anachronism barracking from the sidelines.” As she explained:

The politicians, on all sides of the political spectrum, already scoff at our views and point out that we represent less than one in seven workers. . . . Unless we act decisively, we risk moving in a very short time from national standard bearer . . . to national nonentity.

A Political Solution

In 2015, the unions doubled down on their political gamble by endorsing the ACTU’s plan to invest greater union resources into Labor’s election campaign. In the lead-up to the 2016 election, then ACTU secretary Dave Oliver announced that, as part of its “mobile and nimble” approach, twenty-one full-time political organizers would be embedded into marginal electorates.

The unions did not consult most members about this use of their membership fees. It was not always this way. Traditionally, if unions wanted to raise funds for the ALP they would ask their members — not officials — to endorse a “political levy.” This was generally a small sum that all members would pay on top of their normal membership fees. Unsurprisingly, this brand of direct democracy did not survive the accord.

Over the next five years, the ACTU spent at least $38 million on two political campaigns. The first was the “Build a Better Future: Fight for our Living Standards” campaign of 2015, which cost $13 million. The second was 2017’s “Change the Rules” campaign, worth $25 million. Both assumed that electing a Labor government would challenge Australia’s decades-long commitment to neoliberal policymaking. They never got around to explaining how or why Labor would abandon its long-term commitment to neoliberalism.

Once again, it was a dead end for workers. Following Labor’s 2016 and 2019 federal election defeats, a few left-wing union leaders began to publicly criticize the ACTU’s top-down electoral focus. Instead, they suggested going “back to basics” by building power at the workplace level. For example, in 2019, United Workers Union secretary Tim Kennedy argued that

the movement lives and dies on whether people have hope to join and act in concert — you do that first and the rest follows. . . . Organizing needs to be first, second and third priority. A media political campaigning strategy is alluring because it is exciting, but nothing beats the fundamental relationship of organizing.

A False Dawn

In response to these criticisms, in 2019, the ACTU commissioned former Queensland state Labor MP Evan Moorhead to review its Change the Rules campaign. Finalized in 2019, the review found that the campaign had promoted the right policy agenda, including greater bargaining rights, raising the minimum wage, and reversing casualization.

However, the report criticized the campaign for its poor communication and argued that there was no clear link between the campaign’s policy objectives and a Labor victory:

The combination of an assumption of a Labor win and a dependency on Labor policies poses a risk of putting faith in political solutions in circumstances where voters are not easily convinced. Even for simpler messages like “Australian Needs A Pay Rise,” it was hard to explain the direct and immediate link between election outcome, policy reform and changed wage levels.

At long last, it appeared that the union movement might begin rebuilding its industrial power. However, the reform agenda promoted by left-wing union leaders lost momentum, while the pro-business strategy pushed by Labor’s newly chosen leader, Anthony Albanese, gained ground.

In line with the recommendations of the Moorhead review, the ACTU publicly pledged not to complicate Labor’s election narrative with a detailed policy agenda. The ACTU did concede that it should spend less of its funds — derived from union members’ dues — on Labor campaigning. It did not, however, come out with a plan to rebuild industrial power at the workplace level.

At the same time, many unions simply transferred their own campaign resources away from the ACTU-led effort and toward Labor itself by directing their officials to “volunteer” for a factional Labor ally in a marginal seat. Once again, unions kept their members in the dark about this use of union resources. Thus, the union movement continued to subordinate itself to Labor, effectively abandoning whatever small leverage its flawed 2015 campaign model had given it. Rank-and-file union members continued to lose power to power brokers, technocrats, and aspiring Labor politicians.

Next month’s Jobs and Skills Summit presents an invaluable opportunity for the unions to stand up to Labor. Indeed, the ACTU appears to be calling in old debts, having recently taken the unusual step of publicly demanding that Labor use the summit to announce an overhaul of the “broken bargaining system.”

Whether it’s the beginning of the unions’ rejection of Labor’s commitment to industrial peace or another flash in the pan remains to be seen.