The Guardian • Issue #1951

A New Accord?

“Governments create the environment that enables business to prosper and create new jobs,” said Anthony Albanese in a speech to Queensland TAFE earlier this month.

“This requires a partnership between government, business and unions. […] Working together. That’s the way to achieve growth and prosperity.”

“The best governments in our history have understood the need for a compact between business and their workers to advance their mutual interests.”

This tripartite partnership or compact is a key feature of Labor’s Job Plan. The historical compact that Albanese is referring to is the Prices and Incomes Accord between the Hawke/Keating Labor governments and the Australian Council of Trade Unions (ACTU), which ran in various incarnations from 1983-96. Employers were never party to the Accord.

In general, the aim of prices and incomes policies is to restrain wages, enforce industrial peace, and replace trade union militancy and struggle with compliance. In particular, their purpose is to keep wages at a level below that which could be attained through free collective bargaining between the trade unions and the employers.

The Accord was adopted during a period of economic crisis, high unemployment and high inflation. Curbing inflation and job creation were the justifications used at the time. Today, the Reserve Bank of Australia is pursuing a policy of higher inflation.

The reference to prices is suggestive of price controls, but in fact, the Hawke government legislated for price surveillance, setting up the Prices Surveillance Authority, which monitored prices in certain key areas of the economy. It lacked the teeth to enforce price controls.


Under the Accord, trade unions initially agreed to limit wage rises to national wage indexation decisions from the Industrial Relations Commission and make no extra claims for improved working conditions or shorter hours.

In return, the government would deliver a “social wage” – entitlements and benefits that would improve living standards such as Medicare, superannuation, increased spending on education, and tax cuts, all of which were at no cost to employers. In the main, these were already Labor Party (ALP) policy.

Labor also promised to bring unions into the policy-making processes. Union leaders were appointed to various government authorities including the Reserve Bank of Australia Board.

Historically, prices and incomes policies are not new. They have appeared from time to time in a number of countries, taking various forms, mostly with the stated aim of curbing inflation.

Wage restraint

At a National Economic Summit organised by the Hawke government following its election in 1983, ACTU Secretary Bill Kelty said that “enterprises need to make a profit and, in the current environment, may require profit increases to establish increased employment.”

The theory is that wage restraint and no extra claims result in higher profits. These profits are invested, creating additional jobs. The assumption is that higher profits are ploughed back into new investments, expanding job opportunities. In reality, they tend to be distributed to shareholders, invested in labour-saving new technology (reducing jobs) or offshore in pursuit of cheaper labour.

The promise of higher profits holds true, but job creation does not necessarily follow.

The anti-inflationary side of the equation is based on the capitalist myth that price rises are caused by wage rises. But wages are neither the sole nor main determinant of price levels, and a certain wage rise does not mean an equal rise in consumer prices.

For example, when global oil prices rose, this impacted the cost of transportation of goods and hence their price. Or take the price of masks at the beginning of the pandemic. The lack of supply saw prices skyrocket. This had nothing to do with wages. Now that there is a glut on the market, the price has dropped back – again, no link to wage rates.

Co-operation with employers

To succeed, in the eyes of capitalists, a prices and incomes policy relies on the co-operation of the workers and their unions in restraining wages and abandoning the class struggle in favour of class collaboration (co-operation) and industrial peace. The Accord actually referred to “co-operation with employers.” Never before in the history of the ACTU had unions agreed to co-operate with employers.

In return for collaboration, the working class are sold such illusions as “worker power,” “intervention,” “participation in economic planning,” and the promise of employer co-operation. The social gains offered in return for class collaboration were, in the main, already ALP policy.

Later versions of the Accord – there were seven in all – saw the focus shift from a highly centralised system of determining wages and working conditions to one focused on the workplace. This focus on the workplace seriously weakened the bargaining power of trade unions, and disadvantaged workers who were in industrially weaker situations. It also incentivises union busting behaviour by employers, as different levels of workers’ organisation and unionisation between enterprises can lead to significant differences in labour costs, which impacts competitiveness. The same is not true in an industry-wide bargaining system.

In later versions of the Accord, workers had to buy part of their wage rises by trading off hard-won concrete conditions for a few dollars. These monetary gains were gradually eroded by inflation, but employers retained the benefits (profits) of the lost conditions.

Consequences of co-operation

Albanese pointed to the examples of the Labor Hawke/Keating governments saying, “Collaboration between workers, employers and the government of the day delivered genuine enterprise bargaining and the conditions that created 30 years of continuous economic growth.”

If economic growth is measured by movements in the Gross Domestic Product (GDP), then that is true. The GDP kept rising over those years, but this was mostly due to profit growth and inflation. Wages stagnated and fell in real terms and workers did not receive increases in line with productivity growth. Today, real wages as a share of GDP (a measure of the wealth workers produce) is at its lowest level for decades. Conversely, profits are at their highest level.

The number of days lost to industrial disputes declined rapidly, and today a large percentage of those days are due to employer lockouts rather than working class action.

Decline in trade union membership

When unions suppressed workers’ demands, and in the process, undermined their internal democratic processes, many members became disillusioned. “Why bother being a union member?,” many asked. It was not surprising that as unions stood by and watched wages decline and traded off working conditions, trade union membership took a nosedive.

Since then, the decline has continued now standing at a record low of just over fourteen per cent. The Accord started this process, and successive rounds of union-bashing legislation have seen it continue. There have also been other contributing factors such as the demise of manufacturing, growing casualisation of the workforce, new industries, etc.

Employer response

So, did the employers co-operate in return? Hardly!

They never let up in the class struggle. Instead, they took advantage of a cooperative and compliant trade union movement, to wage an all-out offensive. This is starkly reflected in the experience of the Australian Metal Workers Union (AMWU) as outlined in one of its newsletters distributed to members in 1987 under the heading “DO THE EMPLOYERS WANT CO-OPERATION?”

It said that over the previous four years workers and their unions had:

Reduced strikes and other industrial action

Restrained wage claims to national wage increases

Not pursued other claims on conditions.

In return, it said Metal Industry employers:

Sacked tens of thousands of workers

Closed workplaces

Irresponsibly neglected to train enough workers

Continually attacked established award conditions, etc.

The more the unions gave, the more blood employers sought to suck from their workers.


Important working conditions were wound back, and trade unions lost some of their workplace rights.

Real wages have continued to slide ever since the Accord, and at the same time, the number of days lost due to industrial action has plummeted to record lows. Successive governments introduced legislation attacking trade union rights, wages and working conditions making struggle more difficult.

The Howard government’s anti-worker, anti-union armoury included individual contracts and the notorious Australian Building and Construction Commission (ABCC) with its draconian powers to hound unions and workers in that industry.

It was followed by the Rudd/Gillard government that brought in the concept of “protected industrial action,” effectively outlawing all industrial action except during the negotiation of a new enterprise agreement, and then only in relation to the terms of that agreement.

The Abbott/Turnbull/Morrison government continued where Howard left off. The Coalition’s latest weapon is the industrial relations omnibus bill, which passed the House of Representatives last week and is now before the Senate.

Class collaboration

It is utopian to think that workers and capitalists can be one happy family co-operating with each other for the common good under capitalism.

If trade unions co-operate with employers, then it amounts to surrendering workers’ interests, as workers discovered. Employers never let up in the class struggle, although they might tell trade unions not to be ideological or call for an end to conflict or class war while they continue to wage it.

The class interests of the worker and the capitalist were described by Karl Marx: “[…] if we remain within the relation of capital and wage labour, the interests of capital and the interests of wage labour are diametrically opposed.” (Wage Labour and Capital )

Workers seek higher wages, improved working conditions, shorter working hours, job security, and safe working conditions.

Employers seek larger profits by cutting wages and working conditions, longer working hours, casualising their workforce, and taking shortcuts to safety.

Every extra dollar in profits is one dollar less in wages. Every extra dollar in wages is one dollar less in profits.

While the level of class consciousness of workers may be suppressed from time to time as it was under the Accord, class interests cannot be changed; the class struggle cannot be eliminated without changing the economic system and its production relations.

Lenin emphasised the importance of the political struggle. He said: “[…] economic struggle can bring about a lasting improvement in the conditions of the masses of the workers, and a strengthening of their truly class organisation, only if this struggle is properly combined with the political struggle of the proletariat.” (Lenin, Collected Works, Vo1 10, p 160.)

Note, not all agreements with employers are class collaboration. Agreements won through negotiation and struggle, that improve wages and working conditions or obtain social gains are a vital part of the class struggle. They serve the interests of workers and are won as a result of economic, political and ideological forms of class struggle.

They are in sharp contrast to agreements reached through collaboration which replaces struggle and subordinates the interests of workers to those of capital and the capitalist economy.

The Communist Party of Australia supports workers and trade unions in the struggle to retain their full capacity to wage economic and political struggles for democratic rights and demands. Any surrender of rights or any voluntary restrictions on the capacity to struggle amount to an abandonment of class struggle in favour of class collaboration and the capitalist class.

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