How do you save your job when there are mass retrenchments in the wind? Or if you are running a capital-intensive, highly profitable mining operation how do you, as an employer, avoid being done over by militant unions?
The answer to these questions will determine the level of mass retrenchments looming in large sectors in Australia and whether the mining investment boom will be confined to those projects that are currently underway as capital seeks better returns in other countries.
On the eve of the industrial relations legislation review, I have just completed a remarkable video interview with the president of Fair Work Australia, Iain Ross, where we discuss productivity and many of the other challenges facing employers and employees. I commend it to you.
Ross believes Australian managers are struggling to come to grips with the new productivity challenges they face and he wants to involve Fair Work Australia before problems get to the strike stage.
Of course Australia’s most dramatic managerial worker transformation did not involve Fair Work Australia. As I have previously pointed out, the Alcoa managers and workers (including unions) at the Point Henry, Geelong aluminium smelter combined to go to the US owners in Pittsburg to end the bad managerial and work practices so there was at least a chance that a rescue package (including more carbon tax relief) could be organised (Shelter from an Aussie dollar storm, May 7).
Whether they succeeded and whether the state and federal governments come to the party will be determined in the next week or so, but a hopeless situation has been converted to one where there is a chance.
In that case managers and workers acted together and did not need a third party, but in most industries managers do not have the skills to handle these situations.
In his interview, Iain Ross unveils a dramatic new role for his body – working with managers and workers in negotiations to improve productivity. He cites retail as a possible area where Fair Work Australia might be involved in helping. He is right. Without dramatic change in managerial and work practices we are going to see some very nasty situations develop in retail.
Last week Myer shares hit yet another all-time low. David Jones is selling at levels not seen since 2005. Along with a multitude of other non-food retailers, the entire sector is facing the need to be re-engineered to improve productivity.
Ross says he is available to help and without naming individual retailers says that Australian managers are being stretched by a combination of challenges they are not familiar with – including a high dollar and a skills shortage.
Fair Work Australia wants to engage across all sectors but its engagement is to be by facilitation, not by prescription. Ross is looking to formally launch an engagement strategy next month.
In the case of miners, he has already set up a panel on major projects in energy and has had meetings with two large LNG companies in Timor and Gorgon. Ross will assign FWA members to those projects to ensure consistent and responsive service.
At this stage there are no approaches from iron ore or coal miners. Ross says that either party can approach to ask for intervention but both need to be involved.
There is no doubt that Fair Work Australia has been damaged by its involvement in the Thomson affair. Ross say that was handled by a branch of the FWA that is very separate from the conciliation and arbitration areas.
I do not know whether Ross and his people at Fair Work Australia have the skills to enable managers and workers to lift their productivity to avoid mass retrenchment. But he is right that the current generation of managers are not trained for the task.
And in the case of the mining industry, in my view the Fair Work Act (as distinct from Ross’s body) has unleashed militant unionism, which threatens a continuation of the mining investment boom much beyond 2015. While Ross would disagree that the act caused this situation, we do need a circuit breaker and maybe that person is Iain Ross.