Outsourcing in Australia and the trade union response: electricity generation in victoria

While 'outsourcing' tends to be thought of as a private sector initiative often taken in conjunction with downsizing, in Australia outsourcing has been most commonly adopted in the public sector, particularly among the utilities: gas, water and electricity. The development of outsourcing has led organisations to question the provision of services once seen as exclusively in-house and is no longer delimited in terms of non-core activities. In the public sector during the 1990s the rise of outsourcing was typically associated with privatisation through contracting out and competitive tendering and was also a catalyst for the spread of non-standard employment in the public sector (Industry Commission, 1996; Teicher & Van Gramberg, 1998). For the trade union movement the development of these patterns of work has proved a serious challenge. In this paper we explore union responses to outsourcing in the context of one major public utility in the state of Victoria, the power industry. Here the outsourcing of what were ostensibly non-core functions was almost inseparable from the process of selling the major generation and distribution assets of the industry. Interestingly, outsourcing sometimes directly involved asset sales with businesses being excised from the former State Electricity Commission of Victoria (SECV) and sold to contracting companies which provided those services to the power generators both before and after their privatisation. Many former SECV employees were hired by the contractors nominally leaving the power industry but performing similar duties for a private employer on different wages and conditions. The central task of this paper is to explain the atypically pacific union response to these major changes. From the 1960s industrial relations in the Victorian power industry were volatile and the generation sector was characterised by shop-floor militancy which had little regard for the views of the official trade union movement. Underlying this militancy were a series of longstanding divisions both within the SECV workforce and between the multiplicity of unions. During the 1990s, as the SECV management implemented a major restructuring, these divisions came to the fore. Instead of a militant confrontation, these divisions were a major contributor to a response which, following Foster & Scott (1998), can only be described as 'pragmatic compliance'. In order to understand the union response two other factors need to be taken into account. Firstly, a process of union restructuring occurring at the same time as the upheavals in the electricity industry and this absorbed resources and diverted the unions into internecine struggles. Secondly, an uncharacteristically proactive management strategy created a groundswell in favour of accepting voluntary redundancy rather than resisting the process of downsizing and outsourcing. In retrospect both the unions and the workforce have had cause to reflect on the wisdom of their responses over the course of the 1990s. The research on which the case study draws is part of a larger project on the industrial relations and labour process implications of Australian privatisations. Interviews with key informants among management (including former managers), union officials and delegates are the primary resource. These interviews were conducted over the period January 1998 to July 2000. The most recent interviews provided an opportunity to focus more narrowly on the issues pertaining to the process of downsizing and outsourcing. This resource was supplemented with various public record documents including government reports and newspaper articles.