Tackling Labour Market Exploitation: Are industry and regulatory codes of conduct sufficient?

Of course not! It would be naive as to suggest that they are. Nevertheless, they are vital to the success of a comprehensive strategy in tackling labour market exploitation. Three characteristics of labour market exploitation suggest reasons why that is so.

  1. Labour market exploitation manifests across a “spectrum of infringement” from the deliberately (and sometimes organised) criminal to the merely inadvertent and aspiring compliant.
  2. Labour market exploitation is a poly-centric problem that properly engages competition & consumer, equal opportunity, privacy, workplace relations, work health & safety, revenue, and immigration regulators; as well as their industry, union, and consumer stakeholders.
  3. Labour market exploitation is not localised to any state or territory. It is widely recognised as a global problem that requires coordinated responses.

These characteristics of labour market exploitation combine in such a way that no single, localised solution – be it tougher penalties, a licencing scheme, or an industry code – can ever be a wholly effective measure against exploitation by itself.

There is a place for criminal penalties and sanctions and there is a place for industry codes. They operate in different domains and according to different principles.  Industry codes are part of a market driven response to exploitation. If they have the additional force of operating as prescribed codes (as they may under Australia’s Competition and Consumer Act), they might also operate as “light touch” regulation, because they will be backed up by statutory enforcement and remedial provisions.

It has become fashionable to criticize industry codes because it is said they will not stop criminals and that they have no teeth. What rubbish!  They are not designed to “stop criminals” – there are criminal laws and sanctions backed up by policing and prosecution resources for that!

Tiger 04As for teeth – it is not a matter of whether they have teeth; but whether the bodies that are armed with those teeth have the will to bite!  Ask one major supermarket chain, which was recently subjected to fines of $10 million and ordered to refund a further $12 million to suppliers for unconscionable conduct, whether these codes and the laws that they illuminate  might have teeth.

Even so, industry codes are not primarily about imposing penalties or extracting remedies. They are about laying down the standards according to which an industry is prepared to engage with its market and its participants.  They are about establishing a basis for shared and reciprocal responsibility as between suppliers and users of an industry’s goods and services.  They are about how an entire industry frames, negotiates and sustains goodwill and role acceptance in its market. This is where they find their proper place.

They do often contain broad statements of principle, which the uninitiated might criticize as being “vague” or “uncertain“. But what could be vague or uncertain about a code principle that says:

You treat work seekers fairly and honestly.

Would it be out of order for me to imagine that the people who complain loudest about that sort of principle are likely to be the very same people, who are prepared to express pretty strong opinions and judgements if they feel that they, themselves, have been treated unfairly or dishonestly? At that point everything appears to be perfectly  and sufficiently clear. Clarity, it seems, for some people exists in inverse proportion to the capacity for self reflection. An industry code, with its guiding and supporting materials provides a “mirror” to aid the capacity for that self-reflection.

But, even in the absence of a well-developed capacity for self-reflection, broad statements of principle, like the one that requires fair and honest treatment, work because they are paired with dispute resolution schemes that are more concerned with ensuring that participants moderate their conduct to comply with the code, than with catching them out when they don’t.

Think about it. How does the unfair dismissal regime get by with a principle as broad as “a-fair-go-all-round“? It works because there is Commission procedure to support it. How does New Zealand get by with an employment relations system that is based on a general duty of “good faith“? It works because there is a grievance resolution system commencing in the workplace and extending to the Employment Relations Authority and up through the court system when needed that supports it.

How does RCSA get by with a general principle that requires integrity in all dealings? It works because there is a disciplinary and dispute resolution system to support it that allows for counselling and the making of conduct recommendations to guide and amend conduct before a grievance ever crystallizes into a formal complaint.

An industry code fills in gaps in the level of professional and consumer knowledge about acceptable standards of service and conduct in the market by establishing principles and stating positive outcomes that should be achieved if the principles are being observed by users and suppliers.

In the case of the presently proposed Employment Services Industry Code (#ESICode) the Code helps to ensure that the employment services market is –

  • more engaged in social dialogue about the risks and harm of exploitation and the promotion of acceptable business and social standards;
  • more alert and better able to identify signs of exploitation and risks of potential exploitation;
  • better able to educate and protect customers and work seekers against the risk of exploitation;
  • more confident to resist and report conduct that may result in labour market distortion and exploitation; and
  • more able to make a valuable contribution to the proper functioning of the labour market with which it interacts.

That is not the domain of criminal law enforcement or of restrictive licensing schemes or professional education programs that rarely reach much past their already compliant participants.  What is needed is something that is more connected to the market and its participants. That is why an Employment Services Industry Code can never provide an entire solution  … but it is also why it is vital to the success of a comprehensive strategy in tackling labour market exploitation.

Tiger Smelling Flower

Andrew C. Wood


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