Qantas proved right in resisting unions
Qantas announced changes to its aircraft maintenance arrangements yesterday. The result is 500 staff in Victoria will lose their jobs. The unions will blame the airline and governments for job losses. Chief executive Alan Joyce will probably cop more vilification.
Already, Qantas unions have condemned the move and claim the company has a broader social responsibility to retain jobs and train more people on aircraft maintenance.
However, the announcement is another reminder of the challenges facing Qantas. It highlights the difficulties companies encounter in staying internationally competitive while managing a confrontational workplace relations system.
It is more than six months since the Qantas dispute ended in spectacular fashion. The airline grounded its fleet and Fair Work Australia terminated bargaining between the company and three unions. Industrial action ceased because, with the termination, it became unlawful.
In the meantime Qantas has negotiated a settlement with the union covering its 1600 aircraft maintenance engineers, the Australian Licensed Aircraft Engineers Association.
The settlement, approved as a workplace determination by Fair Work Australia, was a clear win for Qantas.
To set the scene. Qantas aircraft engineers were and remain the highest paid in the world. More than 90 per cent of Qantas aircraft maintenance is undertaken in Australia. The engineers average long service and low employee turnover; they appear to be satisfied with their careers
The ALAEA was regarded as the most militant of the three unions during the dispute. It vigorously pursued its claims by taking strike action, imposing work bans and cancelling planned strikes at short notice. Aggressive statements emanated from its federal secretary. He notoriously advised passengers not to fly with Qantas.
The ALAEA claim sought control of the Qantas maintenance program, pay increases of 5 per cent per annum and a doubling of redundancy entitlements. None of these claims were won.
The ALAEA wanted the heavy maintenance of new A380 and B787 aircraft performed in Australia. The union proposed a new hangar be constructed at a cost of $95 million for this purpose. Present work practices were sacrosanct; change would not be entertained. The modernisation of the fleet with different maintenance requirements apparently was irrelevant to the ALAEA.
The settlement allows heavy maintenance of the new aircraft to be undertaken overseas. A new hangar will not be built. Work practice changes to improve productivity will be entertained. The intensely competitive and volatile nature of the international airline business is recognised. The impending loss of 500 jobs demonstrates that Qantas has to adapt to remain competitive.
The pay of aircraft engineers is increased by 3 per cent a year. Fewer restrictions apply to working extended hours when circumstances dictate. Redundancy pay at the present standard of four and three weeks per year of service is retained in the settlement.
The comprehensive win for Qantas raises the question of why the company and its customers had to incur extensive losses and inconvenience during the protracted dispute in 2011.
The Gillard fair work system has transformed workplace bargaining. The rules favour unions and place them in a privileged role. Union leaders have been emboldened to expand their bargaining agendas and push for greater control over decisions about running the business.
Qantas had the capacity and foresight to resist the union strategy. Many employers lack both and concede to their detriment.
For Qantas the settlement of two claims involving international pilots and ground staff remains. These will be arbitrated by Fair Work Australia, which does not have an enviable record of recognising the competitive realities of modern business.
If uncompetitive settlements result then further Qantas jobs will be in jeopardy. Also, the viability of the Gillard fair work system will be open to more doubt.