PRODUCTIVITY SPECTATOR: Kelty's productivity call to unions

With relations between business and unions turning antagonistic, the union movement, and the Labor Party, could take some lessons from Bill Kelty, and two local companies that have chosen to focus on productivity rather than arguing.

Bill Kelty is right when he says that the unions and by extension, the Labor Party, have lost their way.

When he was leading the ACTU, Kelty worked with former colleague Bob Hawke and John Button to map out what Australia's future would look like.

The accord that was struck is hailed as one of the greatest productivity drivers in recent history.

Today, after 15 years of boom times, and when wages for the ordinary worker have skyrocketed, the relationship between unions and business is increasingly antagonistic.

If we are about to re-enter an economic downturn, now is not the time for the unions to jump on business with increased demands for higher wages and better conditions.

Instead, unions should sit down with business, like Kelty did, and ask what needs to be done to not only see through this looming crisis but also determine the viability of Australian industry in this completely global market.

That's what Alcoa workers have done recently. Faced with a possible closure of the Geelong plant, unions flew to Alcoa HQ in Pittsburgh to offer productivity improvement (Shelter from an Aussie dollar storm, May 7).

The interview with Incitec Pivot CEO James Fazzino (above) offers an important lesson about the relationship between management and workers.

He was leading a continuous improvement program in one of their US factories and was amazed to discover one of the most enthusiastic participants was in fact a leading union figure on the shop floor. When Fazzino asked the man why he was so engaged in an efficiency drive, the union official replied that the best way to ensure the future prosperity of his members was to ensure the long term competitiveness of the plant.

Fazzino rightly points out that no worker wants to come in and do the same repetitive job day in, day out. He says his executive team's core purpose is to support bottom up innovations proposed by those who understand the manufacturing process best – those on the shop floor.

Hopefully Kelty's speech will be a wake-up call to the Australian labour movement. But there might not be enough time to change. Unions are already building a war chest to fight an Abbott government's reinstatement of work choices.

Instead of training union officials how best to conduct industrial action, they should be training them in how to manage and contribute to efficiency programs, like the one taking place at Incitec Pivot.

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