High Stakes Poker

We Deserve Job Security and High Wages . . .

The Qantas grounding was a big deal.  High stakes negotiation.  Reverberations in lots of places--if you were flying Qantas at the time.  But the whole mess illustrates the commercial realities of the early twenty-first century.  Realities that can be ignored only to one's commercial demise.  Regrettably, it is a lesson few in New Zealand have learned.

Qantas competes in what has become a global business.  Meanwhile it is an airline which has been nurtured under a cocoon of protections and indirect support by successive Australian governments.
  The Aussies like to play airlines the same way they like to play sport--with a regulatory official who is going to act in "the national interest".  Qantas is Australia, and Australia is Qantas, right.

One downside of this cosy arrangement is that higher costs inevitably get built into the DNA of the airline--in this case, high wages.  Over the past twenty years Qantas has faced competition from leaner, meaner, lower cost, lower wage airlines.  And it has started losing--first the competition was a nuisance, then neck and neck, and now Qantas is losing money.

Qantas has a good long look in the mirror.  It decides that its future is in Asia, not Australia.  Therefore it announces a plan to become both a full service airline with significant bases and hubs in Asia, and a low-cost airline under a different brand (like Jetstar).  The unions revolt.  Why?  They see more and more jobs and work going to Asia.  A sound observation.  Labour is fungible--mobile.  Business is moving to a lower cost, lower wage region.  Management sees this as make or break time--hence the thrown gauntlet.  It is right. 

No-one owes Qantas a living.  Consumers do not have to subsidise the high wages to which Qantas staff have become accustomed.  Shareholders do not have to continue to stump up capital to a losing enterprise when they can withdraw and invest their capital in leaner, meaner more productive airlines right next door.  Both labour and capital is mobile and has to compete, now, against virtually every country in the world.  No-one owes anyone a living.  It has to be earned--the hard way.  Learn it, earn it--or die.

A recent SMH article explains Qantas's Rubicon and why it has had to throw the gauntlet down.  The headline says it all:

Qantas workers must face global facts of life

Gerard Henderson
November 1, 2011

. . . .Qantas is an international airline competing on the world markets in an industry that historically returns small profits on funds invested. It cannot guarantee jobs without inhibiting its business operations.  Trade unions - representing pilots, engineers or baggage handlers - cannot prevail in the face of this economic fact of life. Nor can tribunals such as Fair Work Australia.

If the Qantas dispute is not settled by negotiation between the parties and it goes to arbitration, Fair Work Australia cannot guarantee job security.  It's possible that Fair Work Australia's tribunal, which is comprised primarily of former barristers and one-time trade union officials, might direct Qantas to preserve jobs in Australia. However, it cannot deliver on such a ruling since no tribunal can stop any business from scaling back on employment or going out of business due to its inability to compete on world markets.

On ABC TV news on Friday, the serial shareholder media tart Jack Tilburn got prime coverage when he declared outside the Qantas annual general meeting: ''The workers aren't getting proper salaries and wages and conditions. They're being strangled, they're being bulldozed, they're being knocked over.''  Tilburn ended up talking of himself in the third person when he said about Qantas: ''It's a board of dictators, says Jack Tilburn, not a board of directors.''

The fact is that Qantas pilots, engineers and baggage handlers enjoy some of the best pay and conditions in the international airline industry.  And that is precisely why Qantas management cannot guarantee that all future employees in all Qantas businesses can be remunerated at similar rates.

Journalists and editors should know this better than anyone. There is no job security in the Australian media industry - outside the taxpayer-funded ABC.  Likewise, there is no job security in financial services or retail or agriculture or construction or even mining.

No private industry that competes in the marketplace can guarantee job security.  However well-meaning, governments cannot prevail against markets.  It is not surprising that the Gillard government's decision to re-regulate the labour market under the Fair Work Act has been accompanied by an increase in unemployment and part-time and casual employment.

The Herald's economics correspondent, Peter Martin, in his analysis of the recent Bureau of Statistics figures commented that ''Australia has created so few jobs in the past three months that at the present rate it would take a quarter of a century to reach the 500,000 promised in the federal budget''.  . . .

Gerard Henderson is executive director of The Sydney Institute.

In New Zealand we have politicians on the hustings declaiming our low wage economy and the justice and wisdom of putting up our minimum wage--to compete with Australia.  Like the Qantas unions, they need to get their heads out of the sand and face reality.