Australian labour unrest threatens industry: Business groups

Country facing resource boom, labour shortage and threats of work stoppage
By Michael Smith and Michael Perry
||Last Updated: 05/31/2011

SYDNEY (Reuters) — Australia is facing what employers say is its worst period of industrial unrest in decades, with disputes hitting airlines, ports and mines as unions use an unprecedented resources boom and labour shortage to fight for a greater share of profits.

Business leaders say the spate of disputes is threatening investment and exports and rekindling Australia's old reputation as an industrial relations minefield — a claim unions reject as scaremongering.

Australian Mine and Metals Association chief executive Steve Knott said Asian investors he had met were concerned the nation was heading back down the path of being an unreliable supplier.

"They are concerned about their investment and reliability of supply," Knott told Reuters.

"When they see images of containers being held up on the waterfront or aviation industrial disputation, and in our own sector some fairly high wage outcomes on the back of industrial disputation, some serious alarm bells start ringing."

The Maritime Union of Australia last week imposed limited work bans and no overtime at some Patrick port operations over pay and safety issues. Patrick, controlled by Asciano Group, operates container terminals in Australia's four largest container ports: Melbourne, Sydney, Brisbane and Perth.

Patrick was at the centre of Australia's last major industrial dispute in 1998. That strike lasted six months, trapped about A$500 million worth of cargo on Australian wharves and cost Patrick losses of A$26.1 million.

Patrick locked out and sacked its entire workforce of 1,400 and joint administrators were appointed to four of its labour hire companies in an effort to break union control of Australia's ports.

Not like 1998

In addition to the Patrick action, Qantas Airways is trying to resolve pay disputes with aircraft engineers and pilots who are threatening to walk off the job over restructuring plans, potentially grounding flights. Qantas pilots have not been on strike since 1966.

BHP Billiton also faces possible strikes at some of its coal mines in Queensland state as early as next week as unions and management argue over the use of contractors and the role of union delegates, local media said on Monday.

The current crop of industrial disputes has so far had minimal impact on the economy or the lives of Australians, unlike the violent and protracted waterfront dispute in 1998.

While there may be a spike in industrial unrest in coming years as workers and unions seek to tap into a resources boom which the Reserve Bank of Australia says is set to last 20 years, few see a return to the strike-prone days of the 1970s and 1980s.

"If you compare the level of industrial action this year to 20 to 30 years ago, there is no comparison," said John Howe, director of the Centre for Employment and Labour Relations Law at Melbourne University.

Howe said labour laws limiting union action and declining union membership would prevent a return to widespread union militancy.

"In the mining industry, the issue is its success," said Howe.

"You have to put it in perspective, the economy is successful, business has just got to face up to the fact that they have to share some of those profits with the people who actually do the work."

Unions reject warnings of a wages and strike breakout and say comparisons to those earlier strike-prone days are unrealistic.

The Australia Council of Trade Unions (ACTU) cite wages growth at 3.8 per cent over the past year as "moderate and consistent with long-term trends" and a fall in industrial action.

"Far from a wages breakout, working Australians are struggling to keep pace with the fast-moving Australian economy," said ACTU Secretary Jeff Lawrence, citing rising cost of living in Australia.

"Wage growth has been moderate — the real breakout has been profits," said Lawrence.

Australian company profits were A$63.5 billion in the March quarter, up 9.5 per cent from the same period a year earlier, official data showed on Monday.

Political headache

A significant outbreak of industrial action would be a headache for Australia's Labor government, which holds a majority of just one seat.

It would give the conservative opposition ammunition to attack the government as a poor economic manager, and raise the old spectre of a Labor government and its ties to trade unions.

Prime Minister Julia Gillard's government is lagging in opinion polls but with no election due until 2013, the industrial unrest would have to be protracted to have any major impact.

A strong jobs market — the central bank expects unemployment to fall to 4.25 per cent from 4.5 per cent over the next two-and-a-half years — is also likely to keep a lid on any significant worker anger.

The number of industrial disputes across Australia has declined markedly over the past 20 years, according to Australia's Bureau of Statistics.

The number of industrial disputes fell in 2010 to 215, compared with 233 a year earlier. In 1987 there were more than 1,500 industrial disputes, the ABS said.

Trade union membership in Australia has also been falling for decades, reducing the reach of industrial action.

In 1986, 46 per cent of Australian employees or 2.6 million people were trade union members. By 2007 the unionization rate had declined to 19 per cent or 1.7 million workers.

Still, business groups warn that a rise in industrial action could drive investors away.

Qantas chief executive Alan Joyce said last week the prospect of industrial action was threatening the airline's operations.

"Our international business is losing money, our international business, if these demands are met, will go back even further," Joyce told ABC television.

The director of workplace policy at the Australian Chamber of Commerce and Industry, David Gregory, said Japan and other north Asian countries that are big importers of materials from Australia could look at doing business elsewhere if disputes escalated.

"These disputes do remind us of an era that we thought we had left behind. We thought these days we were more mature and understood there were better ways to resolve disputes other than taking industrial action," Gregory told Reuters. "The disputes we have seen at Patrick, Qantas and BHP at some of its coal mines in Queensland, they are at the very least unfortunate particularly given the profiles those companies have."

Gregory and some fund managers said recent changes to industrial relations legislation had encouraged strikes.

A new law, called the Fair Work Act, introduced in 2009, regulates industrial action.

It can grant workers the right to stage a legally "protected" strike, after a secret ballot, but also has the power to order an end to strikes if they are significantly harming the economy, with the penalty of significant fines.

"It's a concern," said Luke Sinclair, investment manager at Karara Capital.

"The first point is there have been changes to the industrial relations legislation, and the second point is you've got a tighter labour market. The combination of those things is going to make it a bigger issue in the future than it has been in the recent past."

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