Qantas “win” might not be a win for SMEs

It’s no surprise that we are already seeing two very distinct schools of thought emerge among entrepreneurs in regards to Qantas’ shock decision to ground its entire fleet on Saturday and force the Federal Government to intervene in its IR war.

The comments on our story about the grounding provide a nice little summary.

On the one hand is the view that Alan Joyce and Qantas have taken the action necessary to stand up to unions who do not understand the intense pressure that the company finds itself under and could therefore drive it into the ground.

One the other hand is the view that Joyce is trying to drive a national icon offshore and his actions in grounding the fleet were an overly aggressive response to the legitimate concerns held by unions, who fear their members’ jobs are set to disappear.

Both views have merit. If nothing else, the extraordinary tactics used by Joyce and Qantas are extremely divisive.

But how entrepreneurs perceive the Qantas stoush isn’t as important as the ramifications it could have for our IR system. While few SME entrepreneurs are going to find themselves in the position where the Government will intervene, the outcome of the case will have some important consequences.

It is now clear that the key motivation behind Joyce’s incredibly high-risk strategy was to force his disputes with the unions to arbitration. While the parties do have 21 days to negotiate and another 21 further days if they are making progress, no one really believes this will get a result. That means Fair Work Australia will step in to arbitrate the dispute.

It is an indication of the bitterness of this dispute that relations between the unions and company have become so poisonous that Joyce believes an arbitrated outcome will be better than a negotiated one.

But that is another big risk.

As IR lawyer Andrew Douglas told SmartCompany today, Qantas is unlikely to get the arbitration outcome it wants. That is, Fair Work Australia will probably side with the unions much more than Qantas hopes, meaning its plans to shift some of its workforce offshore to lower its cost base might end up being blocked.

So before you think that Alan Joyce has done businesses everywhere a great service by standing up to the unions, consider what will happen if, as Douglas predicts, the unions come out of arbitration with a result they can sell to their members and the public as a “win”.

In a worst-case scenario, it may mean that other unions, emboldened by this new Qantas arbitration and a Fair Work Act which has given unions more power in bargaining, are prepared to push disputes as far as they can go until their fights end up in arbitration too.

If on the other hand Qantas does come out of arbitration with what it thinks is a win, we could even see executives at other large companies consider using Joyce’s “nuclear option” to get to arbitration.

This is not where we want to be.

Writing today on The Drum, former Howard Government IR Peter Reith predictably attacks Labor’s policies as being the root cause of this problem, although University of Adelaide IR expert professor Andrew Stewart has pointed out that the current Qantas dispute would have played out much the same way under the Howard Government’s Work Choices regime.

If you put the partisan stuff to one side however, Reith does make a nice point about why arbitration is not something that we want to see in the Australian IR landscape.

“The people best able to understand the needs of a business are those working within the business. A governmental third party can never equal or do better than private sector participants. More importantly, only the people within the business can really have the necessary motive to promote the success of the business,” Reith writes.

“Good businesses spend every day trying to improve. It is a dynamic and continuing process. Only within the enterprise will you find the motive to compete with competitors to deliver better goods and services to consumers. That competition includes the competition to have good workplace relations.”

How the outcome in the Qantas fight will trickle down to the SME level is still a little unclear, although more IR battles fought under the shadow of compulsory arbitration would not be positive. It would mean far more poisonous relations between unions and employers, which serves no one.

In its judgement last night, Fair Work Australia’s full bench said there was “still prospects for a satisfactory negotiated outcome in all three cases”.

SMEs might be best to hope that these prospects – unlikely as they appear – turn into results.