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McCormick Foods workers want a pay increase – their dispute shows Australia’s enterprise bargaining system is broken

12th March, 2021

Picture: Opposition Leader, Anthony Albanese, addressing workers at the McCormick Foods picket line, 10 March 2021 (source: @UnitedWorkersOz)

United Workers Union members at a McCormick Foods manufacturing site in Clayton, south-east Melbourne, have just started their third week out on strike.

They are locked in a dispute with the company over a new enterprise agreement, to replace the one that expired in 2016. That’s the last time these workers had a pay rise.

McCormick, a US-based multinational, makes herbs and spices as well as the dipping sauces used by fast-food chains including KFC, Red Rooster McDonald’s, Hungry Jack’s. It also supplies products like Aeroplane Jelly and Keens Mustard to the major supermarkets .

Management not only rejects the UWU’s 3% per annum pay claim. It wants to move away from the 10-hour, four-day per week roster at the Clayton plant (to bring these workers into line with the five-day working week at its nearby Mentone warehouse).

The effect of this would be to disrupt the working time arrangements that workers on the Clayton production line have built their lives and family commitments around.

The dispute is in many ways a microcosm of the COVID-19 pandemic’s impact on workers. Many have laboured hard, continuing to front up despite the risk of infection, in order to keep our society and economy functioning.

Meanwhile, businesses like McCormick have done extremely well: its US parent entity, McCormick and Company, Incorporated, reported a 7.2% increase in gross profits in 2020. This was based partly on a 5% increase in net sales arising from so many more people cooking and eating at home (source: McCormick and Co, Inc, 2020 Annual Report).

But McCormick Foods here in Australia does not want to share the spoils with their low-paid manufacturing workforce.

The current strike also illustrates the problems at the core of Australia’s system of enterprise bargaining.

It forces workers into a zero-sum game, in which they have to take on huge risks by striking (or imposing work bans, or other forms of protected industrial action) until their employer agrees to negotiate a fair deal.

That’s once they have followed the Fair Work Act’s restrictive procedural rules on who workers and their union can bargain with; what claims can be included in bargaining; and when, how and why industrial action can be taken in support of those claims.

Trip up on any of this, and the workers could face Fair Work Commission or court orders deeming their actions illegal. Where industrial action affects public health or welfare, or an important sector of the economy, it can be stopped by the FWC on ‘public interest’ grounds.

The net result: wages have stagnated since 2013, because there is no effective mechanism for workers to obtain decent improvements in pay and conditions.

Research from the Centre for Future Work has shown that the share of total economic output going to workers through wages and superannuation has been falling for decades now, contributing to growing income inequality).

According to the Reserve Bank and respected economic commentator Alan Kohler, Australia needs an injection of wages growth to help lift the economic recovery as we emerge from COVID-19.

The Coalition Government’s IR Reform Bill, likely to be up for debate in the Senate next week, will take us in the opposite direction. It will make it even harder for workers to use enterprise bargaining to obtain pay increases.

What the workers at McCormick Foods – and across Australia – need, are new laws that:

  • require businesses to properly engage in agreement negotiations, rather than hiding behind the neutral obligation to ‘bargain in good faith’ without ever making an offer
  • enable unions to bargain across the supply chain – so if the direct employer won’t ‘play ball’, workers can get a result out of others with a responsibility to ensure staff within their supply chain are fairly treated (e.g. the fast-food companies in the McCormick dispute)
  • prohibit employers from using tactics that make the ‘right to strike’ meaningless, such as bringing in outside workers to replace those taking protected industrial action
  • ensure that once an agreement is reached, the employer can’t get around it by engaging labour hire staff (who would not be covered by the agreement) on lower wages.

Opposition Leader, Anthony Albanese, visited the McCormick workers’ picket line on Wednesday. It’s now up to Labor to develop a true collective bargaining policy to take to the next federal election, and consign enterprise bargaining to the history books.

Anthony Forsyth is Professor of Workplace Law at RMIT University’s Graduate School of Business and Law. His forthcoming book is: ‘The Future of Unions and Worker Representation – The Digital Picket Line’.

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