Unwilling to bargain? Business is bringing on its own demise

Michael Kaine argues Qantas has trashed its own brand through outsourcing.

The debate pitting multi-employer bargaining against enterprise bargaining overlooks a critical point – the current system is routinely gamed to avoid any meaningful bargaining at all.

Judging by their rhetoric, the business community obviously considers this status quo favourable.

But if they looked past their noses they would notice the trajectory and realise that continual descent to the cheapest possible unit cost of labour will eventually spell their own demise. That’s because continuously avoiding bargaining trashes good brands, weakens demand, and allows foreign companies like Amazon to dominate our business ecosystem.

To understand where we’re headed it’s instructive to look back and where we’ve come from. When Laurie Brereton introduced laws for enterprise bargaining in 1993, he quoted Alfred Deakin’s arguments for the establishment of conciliation and arbitration. “It leaves to its opponents the creed whose God is greed, whose devil is need, and whose paradise lies in the cheapest market,” he said.

But today, shifts in capital formation and clever lawyering have completely warped Bererton’s intentions.

Qantas Group chief executive Alan Joyce. Picture: Getty Images

Moving bargaining to an enterprise level has opened up loopholes through which entities can splinter the concept of employers into ever-smaller fragments to avoid bargaining.

Qantas is a prime example.

It has abused enterprise bargaining by outsourcing jobs, locking out workers and threatened to terminate agreements. In 2011, it grounded its fleet, leaving passengers stranded.

It was a powerful signal. Qantas management no longer thought it had to countenance even moderate industrial action such as short work stoppages, or pilots wearing different colour ties. It thought it could call the shots and call the bluff of the ­nation if it didn’t get its way.

Since then, Qantas chief executive Alan Joyce has maintained the course. His management team illegally sacked nearly 2000 workers to avoid collective bargaining. They strongarmed international cabin crew into signing away entitlements through an agreement termination application that would have halved their pay.

Pilots and cabin crew were also threatened with outsourcing if they didn’t agree to work longer hours with shorter rest.

And thousands of ground crew were outsourced to Swissport – a company known for paying below-award wages and having workers sleep below baggage carousels between split shifts.

A recent Senate committee inquiry heard Qantas engages 21 separate external companies and 17 of its own subsidiaries to provide services and labour for core aviation functions. This includes five companies for engineering, and nine separate companies to perform “below the wing” functions such as ground handling, fleet presentation and catering.

So who wins? Certainly not customers. Qantas is now just a shell. By outsourcing just about everything it has trashed its brand.

Staff morale is at an all-time low, and there is no elasticity in a workforce that has snapped.

The travelling public cannot be certain if their flight will depart and, if it does, cannot be sure their luggage will arrive.

Qantas resembles an airline that runs on consignment. The travelling public cannot be certain if their flight will depart and, if it does, cannot be sure their luggage will arrive.

It relies on government protection to stay viable, but fewer and fewer Australians would feel sentimental should it be gobbled up by some bottom-feeding international competitor. It’s exposed.

This is a logical consequence of transforming a fully fledged airline that respects its staff and customers into a vassal for corporate remuneration and dividends.

Qantas’ social licence is shot.

Similar forces are being applied to food and parcel delivery, although with arguably greater ­effect. In these industries, we have moved beyond the abuse of enterprise bargaining to the abuse of ­independent contracting.

Transport supply chains were built on small business owner-operators, going right back to the days of trolley and draymen up to today’s small fleet operators and one-truck owner drivers. AmazonFlex couriers and food delivery riders are in a different league.

Of course, a food courier does not really independently contract to a gig provider in any meaningful sense. Instead an algorithm dictates the rate of pay, the way the work will be conducted and terminates them if it believes they aren’t driving fast enough.

It’s dependent contracting and it ingeniously cuts the employer out of the equation completely.

But it’s a self-defeating path for Australian business. Do we really think Australian logistics, transport or care providers can really compete on price with monolithic Silicon Valley gig platforms that don’t even countenance the ­concept of wages?

Smart employers realise the folly of the race to the bottom. Eventually we all get dragged there. It would be far better to have solid industry rates and norms that encourage Australian firms to invest in better-quality product and customers experience. This would be a much better use of resources than hiring more employment lawyers to find loopholes.

As things stand, we have entire sections of the economy operating without a minimum wage.

We need new industry-wide standards fit for the modern world. Multi-employer bargaining and the end of dependent ­contracting will change our course and propel us toward a brighter future.

Michael Kaine is the national secretary of the Transport Workers’ Union.