Strategic Employment Relations Event - Essay Example

Name: Course: Institution: Date: Strategic Employment Relations Event Introduction In 2011, Australia’s national carrier Qantas and three labour unions which represent Qantas employees- the Transport Workers Union (TWU) representing baggage handlers and ground staff, the Australian and International Pilots Association (AIPA) representing pilots and the Australian Licensed Aircraft Engineers Association (ALAEA) representing engineers. These three unions were engaged in a protracted industrial dispute that started with stalled pay and conditions negotiations and culminated in the grounding of all Qantas local and international flights in October. This was the most dramatic employment relations in Australia in the form of a labour dispute between an employer and employee unions that brought Qantas to the brink of collapse. This essay will examine the industrial labour dispute between Qantas and the three unions as an employment relations event. The essay will provide a detailed analysis of the dispute and examine to what extent each party in the dispute- Qantas and the three unions- acted in a strategic manner. The essay will also recommend how both parties could have acted in a more strategic manner during the dispute. The Industrial Dispute The industrial disputes between Qantas and the three unions- the Transport Workers Union (TWU), Australian and International Pilots Association (AIPA) and the Australian Licensed Aircraft Engineers Association (ALAEA)- can be traced back to pay negotiations between pilots and the management of Qantas in July 2011. The negotiations turned acrimonious when some international pilots, frustrated with what they considered to be stalling by management, made unauthorized in-flight announcements about a continuing pay dispute which aggravated Qantas’ management (Back 2011). However, the three unions would take industrial action in the form of strikes in August 2011 when the situation was exacerbated by the announcement of Qantas’ new strategic plan. In August, Qantas CEO Alan Joyce announced a five year strategic plan where in an attempt to remain competitive and profitable, Qantas would restructure its international operations by venturing into the emerging Asian market and outsource some of its demand for labour. The five year plan was a strategic response to mounting financial losses and a rapidly declining market share (Cooper 2012). The plan included launching the low-cost carrier Jetstar in Japan and creating a new premium airline in South East Asia to capitalize on the growth opportunities in the region which would be funded by Qantas but would not bear the Qantas brand. However, the issue that primarily ignited the industrial disputes was the announcement that as part of the restructuring plan, Qantas would cut 1000 jobs from its international arm (Cooper 2012: Todd 2012). This included laying off 3 percent of Qantas’ Australian-based employees such as pilots, cabin crews, management, engineering staff and airport administration staff in the restructure. The announcement to cut 1000 jobs in Australia only intensified acrimony between Qantas and the three unions who had already been embroiled in pay disputes. For example, AIPA’s principal concerns were demands for a 2.5 percent pay rise and a demand that Australian Qantas flights remain the exclusive preserve of Australian Qantas pilots (Cooper 2012). AIPA President Barry Jackson had bemoaned the move to slash 1000 jobs by claiming that Qantas management was in the process of outsourcing Qantas Australian operations offshore into Asia and employing people to work with lower Asian standards. AIPA claimed that this was a manipulation to try and circumvent their obligations under Qantas Sale Act which stipulated that Qantas retain a majority of its facilities and workforce in Australia when it was privatized. Qantas engineers and ground staff demanded pay rises that matched the prevailing inflation rates in addition to the job security which they claimed other international airline such as Virgin was offering its employees. The TWU, representing baggage handlers and catering staff, also demanded a 5 percent annual pay increase as part of a three year agreement with Qantas (Cooper 2012). In response, Qantas management had maintained that its workers were some of the most competitively remunerated both regionally and locally. Negotiations between Qantas and the three unions would stall and subsequently, what followed was an industrial action campaign by the three unions to try and force Qantas to resolve the pay and conditions disputes. In September the TWU issued various strike notices for baggage handlers and ground staff unless their demands would be met by Qantas. This included four hour and one hour work stoppages which resulted in massive flight cancellations and delays for passengers. In October 28, the day of Qantas’ Annual General Meeting (AGM), the TWU would make good of its strike threat as baggage handlers and ground staff across all major Australian airports walked off the job for an hour, affecting an estimated 10,000 passengers who were delayed due to the strike (Back 2011). Earlier, on October 8, ALAEA had also threatened and carried out industrial action when engineers walked off the job for four hours in Melbourne, Brisbane and Sydney resulting in massive delays for over 11,000 passengers as no aircraft could be inspected for safety during the stoppage (Back 2011). The protracted series of protected industrial actions under the Free Work Act and a rapidly deteriorating relationship between Qantas management and the representatives of the three unions in the bargaining process would finally force Qantas’ hand. Qantas would halt operations on October 29, grounding all local and international flights and locking out members of the three unions as a precautionary measure against further industrial action (Back 2011). The decision by Qantas to ground all aircraft effectively left 13,305 passengers who had booked flights on busy weekend stranded and saw booking plummet as Virgin stepped in to the rescue of about 20,000 stranded travellers (McCallum 2011). Announcing the controversial decision to ground all flights, CEO Joyce expressed concern over the $15 million that Qantas was losing daily due the series of strikes by the members of the three unions. He had also warned that unless action was taken to permanently stall the industrial campaign being waged against Qantas, they would have no decision but to shut down Qantas operations division by division. The move by Qantas was viewed across the board as drastic and with potentially far reaching adverse implications not just for the airline industry but for the Australian economy as a whole. For example, it was estimated that at least 70,000 passengers both locally and abroad had been affected by the protected industrial action campaign and the grounding of flights and that as a result the Australian economy lost $ 250 million daily due to the industrial dispute (Cooper 2012: McCallum 2011). The decision by Qantas to ground all flights was taken even as Australia’s national industrial tribunal, Fair Work Australia, adjourned tribunal hearing while arbitrating in the industrial dispute. However, following intense lobbying by the Prime Minister Julia Gillard, Fair Work Australia (FWA) ruled that Qantas reverse the lockout of employees of the three unions while preventing the unions from taking any further industrial action against Qantas by illegitimating any further strikes (Todd 2012). The FWA decision was made in consideration of the effect that the lockout and the grounding of flights would have on the Australian economy and subsequently, Qantas and the three unions were given 21 days within which to settle their disputes in the absence of any protected industrial action. Normal operations would resume on November 21 (Coper 2012). Strategic Behaviour In the case of the industrial disputes pitting Qantas against the three unions, each of the parties displayed strategic behaviour during the bargaining negotiations that sparked the protected industrial action campaign leading to the lockout and grounding of flights and the eventual decision by FWA. Qantas As earlier indicated, Qantas’ strategic behaviour in response to bargaining agreements was the trigger for the series of industrial disputes. Qantas adopted an adversarial approach to employment relations when CEO Alan Joyce announced the five year plan in August. Among other elements of the strategic plan, the intention to outsource some of its operations offshore was a strategic response to declining profits and pressure for wage increases from the three unions (Gennard and Judge 2005). The restructuring of its international arm which included slashing 1000 jobs or three percent of its workforce was intended to return the airline to profitability and ease its wage burden. This was a unilateral decision, made without consultation with the unions by Qantas management which the employee unions were expected to adhere to (Armstrong 2008) . As also claimed by AIPA, Qantas’ move into the Asian market was also strategic in the sense that it enabled it to circumvent its obligations under the Fair Work Act and the Qantas Sale Act which demanded that as part of the provisions for privatization, Qantas must base a majority of its operations locally (Cooper 2012). Qantas also behaved in a strategic manner as the protected industrial action escalated by making the decision to ground all local and international flights and threatening to shut down Qantas operations as a last resort to force the three unions to cease the protected industrial action campaign. By grounding all flights and locking out employees of the three unions, Qantas forced the government to intervene out of concern for the effect that the industrial dispute would have on the airline sector and the Australian economy (ABC 2011). This resulted in the decision by the national arbiter of labour or industrial disputes, FWA, to suspend protected industrial action by the three unions and reverse the employee lockout by Qantas. This decision essentially vindicated Qantas’ actions by safeguarding it from further industrial action by the striking employees (Cooper 2012). As the dispute escalated and during the lockout, Qantas also behaved in a strategic manner by using media campaign to try and attack the legitimacy of the three unions’ position during the bargaining process. This included taking full page newspaper advertisements and by using a social media campaign on Twitter to provide updates on the bargaining process to the public and to respond to any counter-factual claims that might have been made by the members of the three unions (Sproule and Woodard 2012). The Unions The three unions- the Transport Workers Union (TWU), Australian and International Pilots Association (AIPA) and the Australian Licensed Aircraft Engineers Association (ALAEA)- also behaved in a strategic manner during the industrial dispute with Qantas which exacerbated the situation and culminated in the grounding of flights. Initially, each of the unions had engaged in collective bargaining with Qantas management to resolve the dispute over pay and conditions and job security. However, as the bargaining appeared to stall, the pilots acted strategically by making the unauthorised in-flight announcements and by wearing red ties which are not part of Qantas uniform as a sign of protest (ABC 2011, Cooper 2011). AIPA also used billboards with messages such as “When you board a Qantas flight, you expect a Qantas pilot.” TWU also organized strikes and used the media to campaign against the inhumane treatment it claimed Qantas was meting out to its most hardworking staff as compared to other airlines and the large bonuses and benefits enjoyed by top management. Collectively, the three unions also exercised their rights under the Fair Work Act to launch the industrial action campaign through a series of protected work stoppages and strikes which were intended to coerce Qantas to come back to the bargaining table with a better offer. Each union announced and in most cases executed various work stoppages and strikes which caused massive passenger delays and cost the airline millions in revenue in addition to losing some of its business to rival airlines such as Virgin and Emirates who capitalized on the situation (Todd 2011). The three unions could also have acted more strategically in the dispute by lobbying the government and other stakeholders to intervene and arbitrate as their protected industrial action campaign culminated in the grounding and lockout which eventually played to Qantas’ strengths. The three unions could have approached the bargaining process with a unified voice as opposed to launching separate industrial action campaigns which would have given them more leverage in the dispute (Miller 1987). By using strikes and stoppages and attacking the legitimacy of Qantas’ position, they forced Qantas to the brink where the latter was able to exercise their power by using the threat of paralysing Qantas operations. Conclusion In the industrial dispute between Qantas and the three labour unions- a case study of an employment relations event including conflict between the employer and employee unions, both parties acted in a strategic manner. However, in retrospect, Qantas may have acted in a more strategic manner and prevented the long-drawn industrial dispute by the three unions. Instead of adopting an adversarial approach to conflict resolution as contained in the five year plan which was the spark that ignited the dispute, Qantas might have chosen to include all stakeholders- employee unions, the government and shareholders- in formulation of the strategic plan where management would have presented its case for reviving the profitability of the airline (Armstrong 2008). This would have conferred legitimacy to the outcome of the process. In the event that bargaining stalled, Qantas would then have resorted to the use of power as a last resort. The three unions could also have acted more strategically in the dispute by lobbying the government and other stakeholders to intervene and arbitrate as their protected industrial action campaign culminated in the grounding and lockout which eventually played to Qantas’ strengths. The three unions could have approached the bargaining process with a unified voice as opposed to launching separate industrial action campaigns which would have given them more leverage in the dispute (Gennard and Judge 2005). By using strikes and stoppages and attacking the legitimacy of Qantas’ position, they forced Qantas to the brink where the latter was able to exercise their power by using the threat of paralysing Qantas operations. References ABC 2011, ‘”Darkest day” as Qantas Plans Asian Move, ABC News, August 16, Retrieved on 20 July, 2012 from < http://www.abc.net.au/news/2011-08-16/unions-slam-qantas-over-job-cuts/2841954> ABC News 2011, “Qantas to Fly Again After Fair Work Terminates Dispute,” ABC News, October 31, 2011. Retrieved on 20 July, 2012 from Armstrong M. 2008, Strategic Human Resource Management 4th Edition, London: Kogan Page Publishers. Back, A 2011, ‘Qantas grounds all flights’, The Sydney Morning Herald, October 29, 2011. Retrieved on 20 July, 2012 from < http://www.smh.com.au/travel/travel-news/qantas-grounds-all-flights-20111029-1mpao.html#content> Cooper, R 2012, ‘Testing Fair Work: Australian Industrial Relations in 2011’, Journal of Industrial Relations, Vol. 54, No.3, pp 267-273. Gennard, J. & Judge, G. 2005, Employee Relations, New York: CIPD Publishing. McCallum R 2011, ‘Neither Qantas nor the unions will get all they want’, Sydney Morning Herald, 23 November. Retrieved on 20 July, 2012 from Miller, P 1987, ‘Strategic Industrial Relations and Human Resource Management- Distinction, Definition and Recognition’, Journal of Management Studies, Vol 24, No.4, pp 347-361. Sproule, K.W. and Woodard, C. J. 2012 ‘Circos: Tapping into Social Media’, A Case Collection, Paper 14. Retrieved on 19 July, 2012 from Todd, P 2012, ‘Employer and Employment Association Matters in 2011’, Journal of Industrial Relations, Vol.54, No. 3, pp 344-360. Read More