Reason, Force or Compromise: Egalitarian Wage Structures under Bargaining and Arbitration

Abstract

It would appear that there is widespread acceptance, at face value, of the view that the Australian arbitration framework produces a more egalitarian wage structure than would exist in its absence. Further, this egalitarian role, which it is said must exist in compulsory arbitration, is to be contrasted with collective bargaining where power struggles are said to be the order of the day and the weak (in terms of bargaining power) fall by the wayside. The aim of this paper is to seek to establish whether this particular view of Australia's industrial relations system is a fact or a myth. Previous studies, the new evidence presented and the explanation of the forces at work in wage determination all combine to suggest that the Australian relative wage structure would not be very different under collective bargaining in times of either full employment or high unemployment. The widely held view of the compulsory arbitration system being more egalitarian than collective bargaining is contradicted. Support for a continuation of the present system in Australia should have to rely on other advantages offered or believed to be offered by Australia's centralised compulsory arbitration system.