Bloomberg News

Gillard Should Keep Out of Qantas-BHP Strikes, Unions Say

October 19, 2011

(Updates with comment from Webjet chairman in sixth paragraph.)

Oct. 20 (Bloomberg) -- Australian Prime Minister Julia Gillard’s government should keep out of disputes about wages and job security that have disrupted Qantas Airways Ltd. flights and BHP Billiton Ltd. mining, the nation’s top union leader said.

“I think it would be ill-advised for anyone to intervene,” Ged Kearney, president of the Australian Council of Trade Unions, the country’s largest labor federation, said in an Oct. 18 telephone interview. “At some stage, there has to be a negotiated outcome.”

The group, which helped the Labor government win power in 2007, plans to focus on job security over the next two to five years as companies consider moving positions overseas to pare costs, Kearney said. The number of Australian working days lost in industrial disputes tripled in the quarter ended June as wages trailed China-stoked commodity prices and corporate profits.

“There is a feeling among workers, asking, ‘Why can’t we participate in this boom? Why can’t we have a bigger share?’” said Rick Kuhn, a political analyst at the Australian National University in Canberra. “The benefits of the boom, mainly in resources, is being garnered by a thin layer of society.”

Qantas, Australia’s biggest carrier, has grounded seven aircraft and cut flights because of industrial action by three unions representing long-haul pilots, baggage handlers and engineers. About 60,000 passengers have been affected because of stoppages, according to the Sydney-based airline.

Gillard Ratings

Gillard should act before the dispute becomes “cataclysmic” for the local tourism industry, said David Clarke, chairman of Webjet Ltd., the nation’s biggest online flight-reservation company. Clarke said he has written to the prime minister advocating intervention.

“This is really a tipping point and the government must do something,” he said by telephone today. “It’s no longer a question of who is right or wrong.”

Gillard, who has the nation’s lowest approval rating for a premier in 18 years, has said the government could use Fair Work Act provisions in the Qantas dispute. The legislation, which governs industrial relations, allows the government to intervene in strikes on grounds of “public interest.”

“I am concerned about this dispute,” Gillard told radio station 3AW in Melbourne today. “Parties should come together and get this resolved in the interests of Qantas, in the interests of people who work for Qantas, in the interests of the traveling public.”

BHP Strikes

At BHP Billiton, about 3,500 coal miners have held periodic strikes since June as they seek higher wages and improved conditions. Asciano Ltd., Australia’s biggest port cargo handler, and Toyota Motor Corp. have also been hit by stoppages this year.

The number of working days lost per 1,000 employees rose to 6.5 in the three months ended June 30, from 2 the preceding quarter, according to Australian Bureau of Statistics data. That was the highest level since the 9.1 lost days for the second quarter of 2008. It trails the 18.4 recorded in April-June 2004 and the 52.2 for the second quarter of 1996.

Qantas unions have stepped up action since the company announced plans in August to cut 1,000 jobs, reduce routes and establish new ventures in Southeast Asia and Japan. The move reflects a wider union focus on keeping jobs in Australia, Kearney said.

’Disappearing’ Jobs

“There is this added concern about jobs disappearing offshore,” she said. “What the unions are arguing is, you are a profitable business overall, and there is no reason we can’t talk about strategies.”

Earnings at Qantas more than doubled to A$250 million ($255 million) in the year ended June 30. Melbourne-based BHP Billiton’s net income rose 86 percent to $23.6 billion in the same period. Australian average wages in the quarter ended May climbed 3.9 percent from a year earlier, according to government data.

Qantas pilots want to be under the same employment conditions whether they fly for the Qantas-branded unit or budget arm Jetstar, while baggage-handlers are seeking to stem the use of contract labor. Engineers want to ensure maintenance on new aircraft such as Airbus SAS A380s and Boeing Co. 787s is done in Australia, to help maintain jobs as older planes like 767s are retired.

‘Unacceptable’ Demands

“Qantas remains committed to reaching an agreement with its licensed aircraft maintenance engineers and is encouraging the union to agree to the offer which has been on the table since March,” it said in an e-mailed statement today.

Qantas Chief Executive Officer Alan Joyce, whose company deals with 15 unions, said this week that “unacceptable” demands by labor groups were putting the future of the carrier at risk.

The industrial action and plane groundings may have cut Qantas’s pretax earnings by about A$15 million in the fiscal year started July 1, Scott Carroll, an analyst at JPMorgan Chase & Co., said in an Oct. 18 report. Action by engineers in 2008 reduced earnings by about A$130 million, he wrote.

The airline is committed to reaching an agreement, and the “best way to provide job security is to have a successful business,” it said. Joyce wasn’t available for comment, Luke Enright, a Qantas spokesman, said in an e-mail yesterday.

With Gillard trailing opposition leader Tony Abbott in polls, Kearney said unions can work with whoever is in power as long as worker rights are protected. That would include not moving back toward individual work contracts and away from group agreements, she said.

Former Prime Minister John Howard’s Workchoices legislation, which boosted the use of individual deals, was a key topic in the 2007 election, which he lost to Labor. The laws were repealed in July 2009 with the introduction of the Fair Work Act.

“We will draw a line in the sand around any reversal towards the Workchoices style of industrial relations,” Kearney said.

--Editors: Neil Denslow, Lena Lee

To contact the reporter on this story: Robert Fenner in Melbourne at rfenner@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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