Relatively high premiums and penalties can create incentives for employees to work less quickly, so that work in higher premium and penalty shifts is available. Moreover, the order of engagement at most Australian container stevedoring workplaces guarantees permanent operational employees preferred
5 As part of the Productivity Employment Program scheme package at CTAL,
supplementary employees are engaged before operational employees undertake double headers. This is discussed in further detail in section 7.5.
6 Anecdotal evidence and Australian Bureau of Statistics unpublished data suggest that overtime rose during the Waterfront Industry Reform Authority process. Overtime levels appear to have since declined to pre reform levels.
access to any overtime shifts before other employees.7 In combination, this
creates a perverse incentive system which rewards employees for time spent at work, rather than for the efficiency with which they undertake the work.
The MUA has suggested that ‘a big percentage of the so called eighty thousand dollars that these people earn comes out of their productivity bonus’ (Coombs 1997, p. 4). Whether productivity bonuses are substantial enough to offset the incentive to seek premiums and penalty rates is investigated in this section. Productivity schemes operate at each Australian workplace examined. They are specified in the enterprise agreements, and reward operational employees with bonus payments for the average number of container lifts achieved each week.8
At some workplaces, these payments are supplemented with bonuses for the average number of containers moved by road vehicles in the week. Their objective is to encourage operational employees to work more quickly (more container moves per hour) and thereby improve timeliness and reduce overtime costs.
There is an inherent conflict between the base-plus pay systems that reward operational employees for hours spent on the job, and the productivity bonus schemes that reward them for quicker work. Given a fixed volume of work, an increase in productivity means less hours are needed to complete a task. Operational employees must weigh the benefits of generating more income through the productivity scheme, by working more efficiently and effectively, against the extra income gained by working longer hours through overtime and foregoing leisure time. Robinson and Everett, in a review of existing productivity scheme incentives, concluded that:
any substantial or sustainable increase in stevedoring productivity at container terminals will only result, under present industrial relations conditions, from major reformulation of Enterprise Agreements in such a way as to ensure that productivity is more highly rewarded than time spent on the job. (response 10, p. 32)
7 The CTAL Sydney agreement allows supplementary employees to be engaged before permanent employees on double header shifts.
8 Productivity payments are mainly determined by the crane rate. A sliding scale bonus is paid on all crane lifts above a threshold to create a bonus pool. The bonus is paid on all lifts in the week based on the average crane rate for the week. The payable lift average ranges from 15 to 30 lifts per hour over the course of the week. At some workplaces a similar style of bonus system operates for the ‘road rate’ (container moves by road machinery such as straddle carriers and forklifts) as well.
While productivity bonus payments can vary between workplaces (for example, $5000 per person per year at Sea-Land to $11 000 at CTAL),9 they represent a
relatively small proportion of gross wages.10 Overtime and shift extensions at
P&O Ports Melbourne, for example, represent 30 per cent of the wages bill, while productivity bonuses represent 13 per cent. Similarly, in both the CTAL Sydney and Sea-Land agreements, productivity payments can be estimated to represent about 8 per cent of total wages. Consequently, productivity bonuses only account for a small proportion of the total wages bill to work a ship.
Crane rates can vary substantially between ships at the same workplace for a variety of reasons (appendix E). Some operational employees considered that productivity bonus schemes could be adjusted to account for the degree of difficulty associated with working particular ships.
Productivity schemes are pooled at the workplaces examined. Under such schemes, the workplace earnings pool is distributed equally among the permanent workforce. At some workplaces this occurs regardless of whether employees performed work in the week or not (including operational employees on leave).11
There can be ‘free rider’ problems with the pooled productivity schemes which sacrifice penalty payments in exchange for higher productivity bonuses. Individual operational employees, and indeed gangs, may have an incentive not to participate actively in achieving the productivity levels encouraged under the scheme, but simply to share in the dividends of the schemes. The incentive to free ride will be high when employees undertake tasks they feel have no direct impact on the level of productivity. Employees who are likely to see a direct effect of their work on productivity are crane operators, and straddle drivers moving containers from the crane.
Careful design of productivity schemes is needed to ensure that unintended outcomes do not occur. Both objective or quantitative measures of productivity, such as crane and road rates,12 and subjective measures, such as those relating to
quality, are important. Work can be efficient in that it produces more with less
9 Based on operational employees achieving productivity targets projected in the respective enterprise agreements.
10 Given that workplaces divide the bonus pool among the permanent workforce, weekly payments to individuals between workplaces are likely to vary considerably.
11 At P&O Ports Melbourne, operational employees on Workcare are excluded from the pool division.
12 The road rate is based on the container moves by machinery from the quay crane to the yard.
(for example, more crane lifts in fewer hours), but it may not necessarily be of a sufficient quality. Detailed discussions at CTAL highlighted difficulties experienced with the Productivity Employment Program scheme’s design of crane rate and road rate bonus contributions to the productivity bonus pool. It appears that operational employees realised that it was easier to achieve the productivity bonus under the road rate bonus than under crane rate bonus. This resulted in containers being stowed in incorrect locations and time was wasted looking for lost containers. Performance suffered accordingly.
The fact that — in practice — the earnings from overtime continue to outweigh those from productivity bonuses, indicates that the incentives in the current schemes to work more efficiently and reduce the incidence of overtime may not be of a sufficient magnitude or design.