A Collective Catastrophe: Productivity Maximisation and Workplace Bargaining in the Australian Coal Industry

Abstract

Since 1987 Australian trade unions have endorsed productivity-based bargaining at the workplace level. In doing so, their general expectation has been that enhanced productivity would lead to higher wages and more profitable enterprises. In addition, by embracing what were seen as management's legitimate interests, unions sought to establish new collaborative relationships with employers. This article argues that the application of such principles to the Australian coal industry has resulted in a catastrophe for all concerned. While workplace reform in this industry has resulted in dramatic gains being achieved in terms of productivity and total output, this extra product simply added to world oversupply, driving down prices and increasing the pressures for further 'reforms'. This experience demonstrates the problems in evaluating industrial relations outcomes at a workplace level. For, while from an enterprise perspective productivity maximisation seems to be a rational response to increased competition, at an industry level a relentless drive by all producers for productivity improvements may appear as an act of collective madness, in which every competitor acts to fuel further cost and price reductions.