Traditionally Australian wage determination has involved specialiscd state agencies providing the setting in which employers, unions and workers settle agreements, written and unwritten, individual and collective. Until recent times the formal elements of the system have been built around the equal standing of unions and employer representatives in setting basic standards under the authority of industrial tribunals. As a matter of practice, however, employers at workplace and enterprise level have, in many industries, enjoyed considerable autonomy in the setting of wages and conditions above minimum standards.' Developments in 1996 confirmed the steady reduction of union influence in the formal process of wage determination and a consequent increase in the relative power enjoyed by employers in setting pay. The changing role of industrial tribunals in these trends was also clarified during the year. At both state and federal level they played an active role in facilitating the development of new, non-union and, in some cases, individual contracts of employment.As the year unfolded a number of key events occurred at national, state and industry levels and important new information on how wages are set within the firm was released. At the national level the last days of the Accord coincided with the tacit acceptance of individual, staff-based systems of employment within the award system. Ironically, the early days of the Liberal-National Coalition coincided with the commencement of a living wage case conducted to maintain the relevance the award rates of pay for the late 1990s. Both developments signified the high level of policy continuity between the outgoing Labor and incoming Liberal-National Coalition governments. The consolidation of employer influence in the system of wage determination received further support in the reforms promoted by most state governments, two of which (Victoria and Queensland) moved to directly align their systems with that prevailing federally. Newly released data on enterprise and workplace level wage determination revealed growing fragmentation in the wages system, with growing numbers of workers being excluded from coflective agreements at workplace level, and a large proportion either achieving wage increases outside of collective bargaining or working longer hours for no increase in pay at all. Developments at industry level revealed that the balance between individual and collective bargaining varied dramatically from industry to industry. They also revealed that the nature and outcomes of collective 1. An excellent account of employer autonomy is provided in Chris Wright (1996), The

Fundamental tensions embedded in the Australian system of wage determination became apparent in 1995. Awards remained an important, indeed the only source of improvement in wages and working conditions for around one-third of the workforce. Registered enterprise agreements involving management and unions also consolidated their position as an important source of wage increases and employment regulation for a similar proportion of workers.' Despite fears among finance sector and media commentators that these would result in a union-driven 'wages blowout', such inflationary pressures did not eventuate. Arguably, the major developments during the year were a number of major disruptions to the industrial relations systems caused by non-union agreements. While such agreements did not increase in labour market significance (continuing to cover only a minority of workers), their institutional significance increased greatly, in part because of the recent changes in industrial law at both federal and state level. Some of the most controversial developments occurred as a result of some employers pursuing aggressive non-union industrial relations policies based on individual contracts of employment.Economic and political context Throughout the year the economy continued to grow, although at a slower pace than in 1994. The September National Accounts revealed an annual rate of growth of 3.3 per cent .2 While representing a slow-down, these figures were stronger than expected and represented the seventeenth consecutive quarter of economic growth. As the year progressed inflation became an issue of concern. This fuelled speculation that the much feared 'wages blowout' was finally under way. By the September quarter, the Consumer Price Index had reached 5.1 per cent, the highest annual rate in nearly five years. Moreover, the underlying rate of inflation (which effectively factors out increases generated by government policy) had reached 3.1 per cent, slightly above the 2 to 3 per cent target of the Reserve Bank and Accord Mark Vlll. ' Average weekly earnings had also crept upwards during the year. By September, average weekly ordinary time earnings were growing at an annual rate of 5.1 I