Jeremy Buultjens and

Katrina Luckie

Flexibility in the Hospitality Industry: Is Deregulation Necessary?

Jeremy Buultjens and Katrina Luckie
Abstract: The search for flexibility has assumed great importance in most developed
countries and it has been the catalyst for the decentralisation which has occurred, and
continues to occur, in the Australian labour market. Importantly the question remains
whether decentralisation of the labour market in Australia is necessary for the attainment of
flexibility. It appears the rhetoric of flexibility has been far too readily accepted, in spite of a
lack of empirical support (Bamber et al., 1992: 56).
Industry representatives from the hospitality/tourism sector argue that a high degree of
flexibility is a vital component for this industry to be able to meet market demands and
achieve international competitiveness. This paper, using data from a study of registered
clubs in New South Wales, examines which areas of flexibility hospitality enterprises value
and how awards and trade unions impact on the ability of these enterprises to achieve
flexibility in these areas. This study found that, despite the existence of awards and the
influence of trade unions, many enterprises had a significant degree of flexibility.

Introduction
The decentralisation occurring in the industrial relations system in Australia has been justified, to
a large extent, by the search for increased labour flexibility. It has been assumed that the
centralised system has inhibited flexibility, and therefore has also reduced the international
competitiveness of Australian industry. Despite the acceptance of this assumption by all
governments at the Federal and State level, and policy-makers, there are some commentators
(Callus et al., 1991; Goss, 1988; Shaw, 1990) who argue that the centralised system is not as
inflexible as argued by the proponents of decentralisation.
This paper examines one sector of the hospitality industry, registered clubs in NSW, to determine if
the centralised system does inhibit flexibility. The findings indicate that flexibility is not
significantly inhibited by either awards or trade unions. These results probably provide the
explanation for why no registered club in NSW has entered into a formal enterprise agreement.

Reason for change: the search for flexibility

Despite the success of the centralised system, via the Accord, in restraining wage increases, other
objectives were perceived as being more important to policy-makers (Gittins, 1994). The desire to
'free up' the labour market and promote flexibility emerged as the number one priority of
government industrial relations policy during the late 1980s and early 1990s.
The perceived problem with Australia's industrial relations system is reflected in the conclusion to a
paper delivered at the August 1988 Economic Congress by Professor Max Corden who suggested
that: The biggest constraint on good management of the Australian economy is still the inflexible
(or inadequately flexible) labour market (Corden, in Moore 1989: 29).
To the proponents of a decentralised system, inflexibility has, to a major extent, been caused by the
existence of awards and the intrusion of trade unions. Award regulations, it is argued, cannot take
into account the individual characteristics and needs of enterprises and therefore, inhibit workplace
flexibility (Bray, 1996). The complicated nature of the awards system is also said to make the
administration of awards difficult and costly for business. The awards system is also said to give
trade unions too much. In combination, the unions and the award system create a structure which
ensures a continued wages pressure. In short, the system was almost designed to impair
productivity and to abort growth at regular intervals (Business Council of Australia, 1989: 6). The
proponents of decentralisation have used a mixture of pragmatic and theoretical arguments to
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Katrina Luckie
agitate for a change in the industrial relations system.

The search for flexibility is not peculiar to Australia. It has assumed great importance in most
developed countries and, as Campbell (1993: 2) states, it seems to swirl through the literature on
contemporary changes in the world of production as a slogan in search of a theory . Despite the
importance placed on the search for flexibility, its meaning is rarely defined and when it is, it is
often ambiguous (Burgess and MacDonald, 1989; Hancock, 1987). Pollert (1991) argues that despite
its importance the notion of flexibility has become so confused, diffused and contradictory that there
is a need to find more appropriate instruments of analysis. This view is also supported by Boyer
(1987). Leman (1992) has suggested that there are limits to the extent that flexibility can be put
into practice. He goes on to suggest that there is little evidence of functional flexibility or multiskilling in the UK economy.
In short, flexibility has come to mean all things to all people. However, despite its ambiguous
nature there have been attempts to categorise flexibility, and these attempts range in complexity
from simple dichotomies, such as 'functional' and 'numerical' flexibility to more sophisticated
typologies (Green and MacDonald, 1991).
In 1986, the Dahrendorf Report (OECD, 1986) discussed six factors which they argued affected
labour market flexibility. These were: labour costs; conditions of employment; work practices and
work patterns; rules and regulations; mobility; and education and training.
In 1989, Brunhes (1989) narrowed the focus to labour flexibility at the enterprise level or the
internal forms of labour flexibility and established the importance of five forms of flexibility. These
are shown in Table 1.
Table 1: The classification of flexibility
Brunhe's classification
1. External numerical flexibility the ability
to alter the number of employees to suit the
needs of the enterprise
2. Internal numerical flexibility the ability to
alter the number of working hours of
employees to suit the needs of the enterprise,
while the number of workers remain
unchanged
3. Functional flexibility
the ability to alter
employee job tasks according to the needs of
the enterprise
4. Wage flexibility
the ability to alter the
wages to suit the prevailing economic
conditions
5. Externalisation the ability to contract out
work to be done by persons not employed by
the enterprise.

Rimmer's classification
1. Numerical flexibility the right to hire and
fire staff to suit the prevailing economic
conditions
2. Work time flexibility the ability to adjust
time and quantity of work time with relation to
overtime, shift- work, flexible starting times and
stand down arrangements
3. Functional flexibility the ability to extend
the range of tasks a worker can perform
4. Wage flexibility the ability to alter wages
and conditions to suit the prevailing economic
conditions
5. Procedural flexibility the establishment of
a procedural framework which will allow
consultation and negotiation to occur at an
enterprise level between an employer and their
employees.

In Australia, Rimmer (1991) modified Brunhes' typology and established five similar areas where
enterprises would seek flexibility. This typology was used in this study and is also shown in Table
1.
Importantly, while these definitions may provide adequate measures of flexibility, the question
whether decentralisation of the labour market in Australia is necessary for the attainment of
flexibility remains. As Bamber et al. (1992: 56) state the rhetoric of flexibility has been far too
readily accepted, in spite of a lack of empirical support .
This lack of empirical support for increased flexibility, supposedly fostered through enterprise
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Katrina Luckie
bargaining, has not prevented the acceptance of enterprise bargaining amongst policy-makers.
Enterprise bargaining is consistent with the neo-classical economic approach which is a strong
proponent for increased labour market flexibility through decentralisation. The post-Fordist
paradigm has also been very influential in providing legitimacy for decentralisation.
The pursuit of flexibility, it has been argued by post-Fordists, would result in greater control and
autonomy for employees, more rewarding and skilled jobs and more mutually co-operative
industrial relations (Hall and Fruin, 1994). Two other 'sweeteners' were also proposed, by rightwing advocates of post-Fordism, to result from the pursuit of increased flexibility. First, it was
argued that there would be increased employment opportunities with a more market-oriented
approach to wage fixing. This would clearly be viewed as an advantage in a country experiencing
very high rates of unemployment. Second, it is proposed that there would be a significantly reduced
role for the trade union movement to play. Piore and Sabel (1984) argue that trade unions are too
rigid to allow the attainment of flexibility at the workplace. A reduced role for trade unions has
appeal to many influential Australians who share a strong anti-union sentiment.
This research investigates the role awards and trade unions play in the registered clubs sector. It
also attempts to determine whether the flexibility of these enterprises are, in fact, affected by trade
unions and awards.

The registered clubs sector

The proponents of decentralisation have argued that service industries, such as the tourism and
hospitality industry, are particularly concerned with the attainment of flexibility. Flexible work
arrangements which reflect the 24-hour-a-day service requirements are said to be necessary to
ensure international competitiveness (Commonwealth Department of Tourism and Department of
Industrial Relations, 1992).
This study focuses on one sector of the hospitality and tourism industry, the registered clubs sector
of New South Wales. This sector has had increasing competitive pressures placed upon it by the
changes which have taken place around it. In the early 1990s, clubs in Victoria and Queensland
were, for the first time, allowed to introduce gaming machines onto their premises. Many New
South Wales clubs suffered considerably from this introduction of gaming machines into
Queensland and Victoria. Clubs, in border regions in particular, found it increasingly difficult to
operate under the current structure. A number of NSW clubs which profited from the patronage of
customers from Victoria and Queensland have, since the introduction of machines into those States,
had their income fall substantially.
Another important impact on the clubs sector in NSW has come from the deregulation which has
taken place in the hospitality industry, as a whole. In most States, hotels have been allowed to
operate on Sundays and introduce gaming machines. This has resulted in clubs losing some of their
competitive advantages. In a further loss to competitive advantage, in November 1996, the NSW
government gave notice of its intention to introduce legislation which would allow hotels to
introduce the same type of gaming machines which are on registered clubs' premises.
These changes to the competitive environment in which clubs are operating under and, the
particular needs of the hospitality sector in general, should ensure that flexibility is an important
consideration to registered clubs in NSW.

The nature of clubs

Registered clubs in New South Wales operate under the Registered Clubs Act NSW, and have a
unique ownership structure and business goals. Clubs are non-profit organisations formed by
groups of people who share a common interest and who have got together to pursue or promote that
interest. Individual clubs are governed by a board of directors who are responsible for the
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Katrina Luckie

formulation of policy and for ensuring that these policies are carried out by the management.
The manager/secretary, also known as the chief executive officer, is the person responsible for the
staff employed by a club. Directors are not expected to be involved in the day-to-day running of the
club nor become involved with the staff. Trade unions and industrial tribunals have been keen to
ensure employees only deal with one person to avoid confusion and to maintain clear lines of
communication (Registered Clubs Association of NSW, 1990). The manager/secretary is seen by the
industrial tribunal and trade unions as the employer.
Clubs cover a vast array of interests including sporting, social, community and ethnic interests. In
Australia, clubs are a major social outlet for people and in a number of cases clubs provide
significant funds for community projects. In NSW alone, in 1987, clubs spent $413 million for such
purposes (Registered Clubs Association of NSW, 1990).
The development of the club industry has been very varied in the different Australian States and
Territories. NSW was, and still is, clearly the most important State in regard to registered clubs in
Australia. In NSW, there are over 1,500 clubs (40.5 per cent of all clubs in Australia) generating a
turnover of over $20 billion annually and employing over 63,000 people (67.3 per cent of all
employment in Australian clubs) (ABS, 1994).

The study: flexibility in NSW registered clubs

The results presented in this paper were obtained from survey of registered clubs in NSW and the
ACT. The sample consisted of the 1381 registered clubs, who were members of the NSW Registered
Clubs Association. This Association has, as members, over 90 per cent of all registered clubs
operating in NSW and the ACT. Each club in the sample was sent a copy of the questionnaire, a
free-post reply envelope, and an explanatory letter from the researcher. A reminder letter was sent
to all clubs two weeks after the initial posting.
There were 454 clubs which responded to the survey, and of these, 435 provided useable responses.
This represented a response rate of approximately 33 per cent.
Award coverage
There is a broad range of occupations involved in the clubs sector and this is illustrated by the
number of awards covering employees within the sector. In NSW, for example, the following
awards apply to various employees within the clubs in that State:
1.
2.
3.
4.
5.
6.
7.
8.

The Club Managers and Club Secretaries' (State) Award;

The Club Managers and Club Secretaries' Superannuation (State) Award;
The Club Employees' (State) Award;
The Club Employees' Superannuation (State) Award;
Bowling Club Employees' (Country) and (Cumberland and Newcastle) Awards;
Bowling and Golf Club Employees' Superannuation (State) Award;
Musicians' (Live Performance) (State) Award;
Club Industry (Variety Artists) (State) Award
(Registered Clubs Association of NSW 1990).

The above awards apply in some cases to managers and in other cases to employees. The results
from the survey suggest despite the existence of awards there were significant differences in the
way wages were determined for management and employees. Table 2 indicates that management
wages were determined solely by the award in 24 per cent of clubs, which compares with 61 per
cent of clubs who pay their employees award wages. A number of clubs (41 per cent) use the award
as a basis for negotiation with management staff about wages, while 29 per cent of clubs use the
award to negotiate with employees. More than 76 per cent of clubs negotiate with management in
regard to wages. This figure falls to, but remains a significant, 39 per cent of clubs who negotiate
with employees in regard to wages.
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Table 2: Method of wage determination for management and employees

Determinants

Management
#

Exactly as award
Award & collective neg.
Award & individual neg.
Collective negotiation
Individual negotiation
Pay what they are worth
Voluntary
Combination
Missing
TOTAL

102
39
134
3
55
8
48
29
17
435

Employees
%

24.4
9.4
32.1
0.7
13.3
1.9
11.5
6.7
100.0

263
31
92
3
7
4

61.3
7.2
21.4
0.7
1.6
0.9

29
6
435

6.9
100.0

The figures, in relation to determination of wages, indicate that, despite the existence of awards for
both employees and management, clubs have a significant level of flexibility. While this flexibility
is greater for management than for employees, the findings indicate that clubs are not too restricted
by awards, in regard to the setting of wages.
Given the level of negotiation involved over wage determination it is not surprising to find that
there are a high level of over-award payments made in the club sector. Table 3 indicates that a
majority of clubs, 57 per cent, pay all or some their management staff over-award wages, while 52
per cent of clubs pay all or some of their employees over-award wages.
With a majority of clubs paying over-award wages it could be concluded that wages may not be a
major concern for a number of clubs. If wages were a pressing concern for clubs they could pay
award wages rather than negotiate with management and staff. This lack of concern over wages is
supported by the rating given by clubs to the ability to adjust wages, which is discussed in a later
section on the importance of various flexibility variables.
Table 3: Payment of over-award payments to management and employees
Category

Management
#

Yes all staff

Yes selected individuals
No
Unsure
Not Applicable
Missing
TOTAL

98
138
168
5
2
23
435

Employees
%

23.8
33.5
40.8
1.2
0.7
100.0

#
24
201
203
2
0
5
435

%
5.6
46.7
47.2
0.5
100.0

Trade unions
As stated previously, to a number of critics of Australia s centralised industrial relations system the
intrusiveness of the trade union movement has been a major concern. The evidence on trade union
presence at the workplace is mixed. Approximately 26 per cent of the clubs had no union members
amongst its management and general staff. For the clubs with union members, on average, 34 per
cent of all employees, including management, were members of a union or association. This
generally low level of unionisation is a common characteristic of the hospitality sector as a whole.
Contact with a trade union official also varied considerably for the sector, as Table 4 indicates.
Almost 35 per cent of clubs had never had any contact with a trade union official and a further 11
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per cent of clubs last had contact with a trade union official over two years ago. On the other hand,
42 per cent of clubs had contact with a trade union official within the last six months and a further
eight per cent had contact within the last 12 months. Despite a mixed presence at workplaces,
trade unions are heavily involved in the industrial disputations which occur, with 87 per cent of
disputes involving a trade union. Despite this heavy involvement in disputations, trade union
membership does not seem to present a problem to club mangers in this survey. Nearly 99 per cent
of club managers were either in favour of trade union membership for their employees or were
ambivalent about membership.
Table 4: Last direct communication with trade union
Last Communication
0 6 months
7 12 months
13 18 months
19 24 months
> 24 months
Never
Missing
Total

94

Frequency
153
28
8
6
41
124
75
435

Percentage (%)
42.5
7.8
2.2
1.7
11.4
34.8
100.0

Jeremy Buultjens and

Katrina Luckie
Flexibility
In order to gain an insight into which areas of flexibility clubs thought were to be of particular
importance, managers were asked to rate the importance of five flexibility variables . The results
are shown in Table 5. The five flexibility variables were:
the ability to hire and fire to suit the prevailing economic conditions
the ability to adjust the hours worked by employees
the ability to extend the range of tasks undertaken by employees
the ability to adjust wages to suit the prevailing economic conditions
the ability to consult and negotiate directly with employees.
Rating took place on a scale of 0 to 10. A variable of no importance was rated 0, while a variable of
a very high importance was rated at 10.
Table 5: The rating of flexibility variables
Variable
The ability to adjust the hours worked
The ability to extend the range of tasks
The ability to hire and fire
The ability to consult and negotiate
The ability to adjust wages

Mean Rating
9.1
8.8
8.2
7.7
6.3

SD
2.0
2.2
2.9
3.0
3.6

It is very clear from the responses that the flexibility variables considered to be the most important
were the ability to adjust working hours, the ability to extend the range of tasks performed by
employees and the ability to hire and fire to suit the prevailing economic climate. All these
variables had a mean score of over 8, indicating a high level of importance to clubs. The ability to
adjust working hours was considered the most important with a rating of 9.1, the ability to alter the
range of tasks had a mean rating of 8.8 and the ability to hire and fire had a rating of 8.2.
The ability to consult and negotiate with employees was the next most important variable with a
mean rating of 7.7. Somewhat surprisingly, the least most important variable was considered to be
the ability to alter wages to suit the prevailing economic conditions. Clubs rated this variable at
6.3.
This was a surprising result for two reasons:
clubs are a labour intensive industry and therefore wages would be a relatively high
proportion of total costs when compared with other enterprises; and
the deregulation which has occurred in the hospitality industry should have made clubs more
aware of their cost structure.
This was also a significant result, since a major criticism of awards is that they impose wages which
impinge on the ability of business to maintain viability. But according to the clubs in this sample,
there are more pressing concerns in running their clubs than gaining wage flexibility.
Clubs were also asked to rate the extent to which the existence of awards and trade unions
restricted their ability to achieve flexibility in the five areas mentioned earlier. Rating took place
on a scale of 0 to 10. A variable which was not restricted was rated 0, while a variable which was
very restricted was rated at 10. The results are shown in Tables 6 and 7.
According to the critics of the centralised industrial relations system the existence of awards is very
restricting on the ability of an organisation to achieve flexibility. As discussed earlier, over 61 per
cent of clubs based their employees' wages and conditions on awards and 24 per cent based their
managers' wages and conditions on the award (see Table 2). These figures should indicate that
clubs are restricted by awards, particularly when dealing with employees. However, this did not
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appear to be the case.

The results, shown in Table 6, indicated that the existence of awards impacted most heavily on the
ability of clubs to achieve numerical flexibility. The mean rating provided by clubs was 5.9. While
this was the most restricted variable, it was a relatively low rating and indicates that clubs were
not severely restricted, by awards, in achieving flexibility in this area.
The ability to alter wages to suit the prevailing economic conditions was the next most restricted
variable with a mean rating of 5.7. Again, this was a relatively low rating, indicating that a
number of clubs were not inhibited by awards in this area either. This finding was supported by
the number of clubs who were paying over-award wages to their employees and management (52
per cent and 57 per cent respectively).
Table 6: The perceived impact of awards on the flexibility variables
Variable
The ability to hire and fire
The ability to adjust wages
The ability to adjust hours
The ability to consult and negotiate
The ability to extend the range of tasks

Mean Rating
5.9
5.7
4.7
4.5
3.7

SD
3.6
3.6
3.3
3.4
3.1

The impact of awards on the other three variables were negligible, with mean ratings under five.
Interestingly, the two most highly valued flexibility variables, the ability to adjust the hours worked
and the ability to extend the range of tasks performed by employees, rate low in terms of the impact
of awards. The ability to adjust the hours worked had a mean rating of 4.7 and the ability to extend
the range of tasks performed by employees had the lowest rating of 3.7. The high number of casual
employees is one major reason for clubs having the ability to adjust the working hours of their
employees.
The final variable, procedural flexibility, which determines the employers ability to consult and
negotiate directly with employees on wages and conditions had a mean rating 4.5. Again, this
result seems consistent with other findings, such as the methods of determining wages, the
payment of over-award wages and the determination of rosters, which indicate a high level of
consultation and negotiation taking place between management and workers.
The overall results concerning awards and the ability to alter the five variables seemed to indicate
that clubs do have a large measure of flexibility despite the existence of awards. These results are
similar to the findings of Callus et al. (1991) and Buultjens (1994). Callus et al. (1991) found 57 per
cent of workplace managers reported no restriction being placed upon them by awards in pursuing
efficiency changes. Buultjens (1994) found small business owners had significant levels of flexibility
under the centralised system.
These results would seem to indicate the centralised system does allow enterprises flexibility.
Callus et al. (1991), Goss (1988), Shaw (1990) and others argue that awards do not prevent
flexibility from being achieved in the labour market. It is argued that the award system allows a
substantial amount of informal negotiation to be undertaken at enterprise level. This appears to be
confirmed by the findings from this study.
Another major criticism of the centralised system is the supposedly restrictive nature of trade union
involvement. However, Table 7 indicates that unions do not impact heavily on the operations of
clubs. The mean ratings were slightly lower than the ratings for awards and they also follow
closely the pattern for award ratings. This may suggest that many clubs associate trade unions and
their impact closely with the existence of awards.
Table 7: The perceived impact of trade unions on the flexibility variables
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Variable
The ability to hire and fire
The ability to adjust wages
The ability to consult and negotiate
The ability to adjust hours
The ability to extend the range of tasks

Mean Rating
5.3
5.1
4.3
4.0
3.5

SD
3.8
3.6
3.5
3.3
3.0

The inability of employees to undertake a range of tasks is often a major criticism used against
trade unions. It is argued craft-based unions prevent the adoption of multi-skilling. Interestingly,
this argument does not appear to apply to the club sector. While clubs rated the ability to extend
the range of tasks as the second most important flexibility variable, it was the least restricted
flexibility variable. Managers rated the impact of trade unions on this variable at 3.5 a very low
rating.
The other ratings given by managers were also relatively low. The most valued flexibility variable,
the ability to adjust hours worked, was the second least affected variable by trade unions.
Managers rated the impact of trade unions on this variable at 4. The other ratings were 5.3 for the
ability to hire and fire, 5.1 for the ability to adjust wages and 4.3 on the ability to consult and
negotiate. The figures indicate that, despite the rhetoric, trade unions do not appear to impact on
the operations of awards to any great extent.
The relatively high level of flexibility existing under the centralised system is likely explanation for
the lack of formal enterprise agreements in the sector. At the time the survey was conducted no
registered club in NSW had an enterprise agreement registered with the NSW IRC. Clubs have
had the opportunity under Section 11 of the Industrial Arbitration Act 1940 to enter into a formal
enterprise agreement if they so wished. Since the introduction of the NSW Enterprise Agreement
Amendment Act 1990 there has been an opportunity for clubs to enter into such agreements without
the involvement of a trade union. Given the increasingly competitive environment clubs operate in,
and the perceived importance of the penalty rates issue, it is somewhat surprising not one club had
entered into a formal enterprise agreement.
Despite the lack of formal agreements there are a number of clubs (28 per cent) who have entered
into informal enterprise agreements. While this is a significant figure it would appear that this
may be an underestimate of the actual number of clubs who have an informal agreement. As
discussed previously, a minimum of 39 per cent of clubs stated they negotiated, individually or
collective, with employees while 75 per cent negotiated with management (Table 2). Both these
figures are greater than the number of clubs who stated that they had an enterprise agreement.

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Discussion and conclusion

The results from this study support the conclusion that organisations are able to attain significant
levels of flexibility under the centralised industrial relations system. They also suggest that the
predicted benefits from decentralisation are problematic. It appears, therefore, the pursuit of
decentralisation through enterprise bargaining has been due to the changing balance of political
power and political ideology rather than pragmatic business decisions.
Since the early 1970s there has been a shift in the balance of political forces in Australia. This
shifting balance has occurred internationally as well and resulted in major changes in the United
Kingdom's and New Zealand's industrial relations systems. This shift in the balance, away from
the left toward the right, has been supported by, as well as supporting, the perceived failure of
Keynesian economic policy and the Welfare State, the concern over the increasing levels of
government debt and the breakdown of communism. The 'New Right', espousing rationalist
economic policies, have increasingly been able to dominate the policy agendas in most developed
countries.
This shift in political forces toward the right has also been mirrored by a shift in the balance of
power away from labour toward capital. The recession of the late 1980s and early 1990s served to
reinforce this change in the balance of power. Capital/management saw this as an opportune time
to pursue downward wage flexibility, increased managerial prerogative and reduced interference
from external parties such as trade unions and the industrial tribunals (Campbell, 1993). To justify
such changes capital was able to draw upon the economic imperative for Australia to improve
flexibility. Post-Fordism allowed capital to disguise their pursuit of downward wage flexibility,
increased managerial prerogative and reduced third party influence by extolling the benefits of
increased flexibility.
In reality, as the findings from this study suggest, formal enterprise bargaining may provide fewer
benefits than anticipated and these benefits may be outweighed by the costs imposed on both
employers and employees. Clearly, registered clubs in NSW do not perceive any major benefits
flowing from formalised bargaining since no club has entered into such an agreement.

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