Qantas lock-out: The 1% declares all-out war on the 99%, and Gillard lends it a hand

by · October 31, 2011

If there was ever any proof needed that the central concerns of the #occupy movement, about rising social inequality and injustice, and the absence of democratic institutions willing to protect the interests of the vast majority, surely we got it in the behaviour of Qantas management over the last few days — and the Gillard government’s response, which took the bait and came down dramatically on the side of the bullying employer.

The lock-out — pre-planned but started with only a moment’s public notice just a day after a stormy AGM where big shareholders overwhelmingly backed CEO Alan Joyce’s 71 percent pay rise and the board’s strategic direction — also demonstrates how Australia is not immune from growing economic and political instability internationally. Within this context, there is the likelihood of this dispute accelerating popular anger at the corporate elite and exacerbating the crisis of authority of the political class and the state. And, given the high-stakes game that Joyce is playing, the result will play an important role in shaping future resistance to the effects of the crisis from below.

Qantas: A high-stakes pre-emptive strike

By acting in such a belligerent manner towards the three groups of unionised workers (pilots, engineers and ground staff) currently pursuing bargaining, Joyce is enacting a long-run strategy to increase Qantas profitability by devolving a large chunk of its operations into low-cost subsidiaries, some located offshore, to take advantage of lower wages and operating costs. But it is also about screwing more out of its existing Australian workforce through restructuring and raising the rate of exploitation. As Crikey’s airlines analyst Ben Sandilands puts it, this is about the “shutting down of what the current management sees as unaffordable excellence in its full service operations”. This is what lies behind management bluster that the unions are being “unreasonable” — for workers to be “reasonable” here would mean accepting wholesale cuts to jobs, wage and conditions and, perhaps more alarmingly, safety standards.

The hysteria over industrial action generated by Qantas spokespeople, the media (including the ABC) and certain politicians is completely at odds with what has actually happened in workers’ struggle for a modest wage rise and some guarantees about job security. Qantas has taken ads and briefed a pliant news media about “chaos” after unions have given the legally-mandatory three day warning of protected action, while simultaneously using social media to ensure its passengers come a little earlier or later to the airport to make a flight, thus causing minimal inconvenience. This explains the spectacle of reporters talking of “union-caused disruptions” in front of perfectly calm terminal activity — something that cannot be said of the current lock-out.

At least Joyce was being honest on Inside Business when he admitted this was not about Qantas facing an imminent financial crisis due to union action or competition, but about preparing for the future. He claims major losses from the carrier’s international arm in the context of increased global competition as a key factor in seeking a restructure with major concessions from the workforce. However, thanks to opaque accounting practices, management claims that within a $552 million profit last financial year there was a $200 million loss from Qantas’ international operations are impossible to substantiate. Given combined domestic, regional and international operations supplied $228 million of the total profits, this seems to be a highly unlikely figureAttempts to drill through extant figures suggest there may be more than a little fancy accounting at play.

More importantly, there is clear evidence that it is management strategy more than anything that has — intentionally, inadvertently or through bad luck — led to the rapid shrinkage of Qantas’ international market to just 18 percent of people coming and going to and from Australia. By focusing its European business through London, forcing lengthy and frustrating transfers onto BA flights, Qantas has seen its customers desert it in favour of airlines that fly one-stop to multiple European cities. Recently Qantas also traded routes with BA to cut the number of QF flights to Heathrow to just two a day.

Qantas is engaged in a race to the bottom on wages, conditions and safety because of increased domestic and international competition driven by the emergence of low-cost “no-frills” airlines, competitive state-backed carriers in Asia in the Middle East, and the pressure from other traditional airlines having to cut costs in response themselves. An MIT analysis from four years ago noted that the first half of the 2000s was marked by massive losses across the global airline industry. This led to massive restructuring and a return to profitability by 2006, but many traditional carriers were now facing even tougher competition with low-cost airlines that had higher labour productivity based on more “flexible” working conditions, direct to customer internet sales structures, and higher rates of seat utilisation. This situation has accelerated in the context of the global economic crisis, with major cuts to jobs and conditions marking the immediate post-GFC period. As former Qantas chief economist Tony Webber has pointed out, the privatisation of Qantas has also left it more exposed to competitive pressures in the international market than state-owned traditional carriers, which form just one part of a wider state capitalist project. Webber has subsequently argued for nationalisation of Qantas’ international business.

Thus for Qantas workers, Joyce’s admonition to accept his terms to make the airline profitable and so help protect jobs in the future is the classic big lie. Accepting the logic of a race to the bottom now will open the way for more attacks on workers in the future, and if Qantas succeeds that will only spur its competitors to try on the same approach thereby driving an increasingly hostile competitive environment. There is no win-win for both bosses and workers possible here.

The racist and/or nationalist attacks on Joyce for being Irish (he’s an Australian citizen) or for forcing “Asianisation” on the airline are a dangerous distraction. Defending wages, working conditions and safety is a class and not a national issue, especially as a major source of downward pressure on Qantas workers’ wages is its domestic subsidiary, Jetstar. Similarly, concerns over the Qantas “brand” accept corporate imperatives over the rights of the airline’s employees; it’s simply not a favourable terrain for the workers to fight on. The problem here is an Australian company’s private profits being backed by the Australian state.

Crisis at the top, flickers of resistance from below

That Qantas was willing to risk so much says something about the situation the Australian capitalist class finds itself in more generally, and the political weakness of the government. Dependent on indefinite Chinese pump-priming of its economy to fuel a resources boom that has left the rest of the economy behind, the business elite has become increasingly nervous about the paralysis of the Gillard government in driving serious economic reform in its interests. It is not that most Australian businesses are about to face US or European style economic conditions, but that in an increasingly interconnected world they cannot fully escape the effects of crisis elsewhere.

The fact that a combination of luck, stimulus and resources exports saved Australia from technical recession in 2008-9 has, however, led to some groups of workers finally deciding to take on their increasingly super-rich bosses, often around simple bread and butter issues. In a situation where cost of living pressures run ahead of official inflation figures, workers are hoping not to get left behind. While strike numbers are still historically very low, there have been enough disputes and a higher level of confidence to fight in some key industries, to worry some businesspeople and commentators. What is especially important is how a general popular mood against the corporations and the government gives even relatively small struggles a political edge that they didn’t have before the GFC. While there is no direct connection, the emergence of mass struggle overseas — in Egypt and more recently against austerity in Europe and now the US — is clearly framing how many ordinary people view growing talk of austerity and limits on union rights being peddled by state and federal governments here.

As Left Flank has noted before, public opinion around socioeconomic issues has generally shifted to the Left since the early 1990s, even as elite opinion has continued to shift to more emphasis on markets and the absolute rights of private business. A recent poll has shown that large numbers of people think that the government should re-nationalise Qantas (43 percent to 34 percent against), as well as the Commonwealth Bank and Telstra.

More important in the short term has been Qantas’ inability to win the public debate. The same poll last week showed that more people mostly blamed management (36 percent) than workers (13 percent) for the dispute, although 37 percent blamed both equally. This shows a significant reservoir of support for the workers’ actions that can be built on now that Joyce has engaged in such an open act of class war. Interestingly, only 24 percent thought the government should intervene, roughly the same across all parties’ voters. Yet this is what some state premiers called for and that Joyce has precipitated with the lock-out: A ruling from Fair Work Australia to terminate all industrial action and force the issue to arbitration. This demonstrates how even in this “deregulated” era the ruling class depends on state institutions to enforce its interests, even if that means forcing the hand of an ineffectual minority government. This is also about limiting what the dispute is over, as it seems likely that some of the issues around job security and restructuring may fall outside what can legally be arbitrated.

The Fair Work Act ties unions to complex procedures about when they can take action legally. In the case of this dispute, we can see how unions must give employers three days notice of action while in response bosses can lock-out at a moment’s notice and with less need to inform various parties. In addition, termination includes denying workers’ one bargaining chip — their ability to withdraw their labour — and this is what Joyce managed to engineer here.

Gillard dances to the Qantas tune

Despite weasel words about “not taking sides”, the Gillard government applied for exactly the thing that Joyce wants and his lawyers say they will accept as a minimum — termination of action. This is what “acting in the national interest” really means. Even in the case of a (temporary) “suspension” of industrial action, Joyce could have continued to ground planes for operational “safety” reasons even without officially calling it a lock-out (and his lawyers threatened to do so, this making the judges worry that a suspension ruling would only prove the FWA’s impotence before a major company hell-bent on defeating its workforce). But there was a risk in such a scenario for Joyce because the unions could have portrayed themselves as victims of Qantas bastardry.

But the fate of Qantas workers cannot rely on public goodwill alone. To date the unions’ strategy has been to threaten strikes but deliver only limited action. The pilots have engaged in purely symbolic protests. While union leaders seem to have been prepared that Joyce might try something like this on, it is not clear how much they are willing to challenge the legal restrictions on them. Their ties to the ALP, and defensiveness about the Labor government’s rolling crisis, as well as their historic subservience to arbitral processes, don’t bode well. On the other hand, while I am not privy to how Qantas workers feel more generally, it seems unlikely that after years of passivity their union leaders have actually led something of a fight without there having been a shift in the mood among the rank-and-file. Given the high stakes, they may want to take action that a year or two ago would’ve been unthinkable, even if their leaders are not happy with the prospect.

It’s important to locate this in the context of the crisis of authority being suffered by the ALP. It is not the case, as Laura Tingle suggests, that this is a straightforward chance for Gillard to recover. Labor remains committed to an industrial relations system that massively disadvantages workers through legal restrictions on their collective rights. ALP ministers were angry not because Joyce was attacking workers, but because he didn’t come to the government first.

Gillard made crystal clear that acting “in the national interest” meant resolving the dispute through “termination”, thus putting Joyce in a stronger position to dictate the outcome. It is this that Greens MP and former union lawyer Adam Bandt slated home in his attack on the Fair Work Act as a piece of anti-union legislation yesterday. How this can strengthen Gillard’s political position — except perhaps for a brief blip by appearing “decisive” — is beyond me. It is precisely Labor’s open abandonment of its traditional base to the interests of big business that explains its decline. Whether it can politically control union officials in pushing this through, or whether the officials themselves can bottle anger at such a result (which appears to be their intent by initially going along with the FWA ruling) is also not clear.

But the crisis means that it is much more likely that anti-systemic ideas of the sort that have fuelled the #occupy protests — however embryonic at this stage — will shape people’s responses to Qantas and government actions. Even mainstream commentators have been noting how the Qantas board have exposed themselves as part of the 1 percent that #occupy protests are targeting. Now it is clearer than ever that we have government for the 1 percent also.

But in another sense this is just the beginning, and not just because if Joyce gets most of what he wants in arbitration he will proceed with a nasty restructuring which can end up provoking further industrial conflict. The pressures that have led to this dispute can only accelerate without a resolution to the global economic crisis. Those pressures have not just made aggressive employer actions to maintain competitiveness more likely, but they undermine the authority of a political class which has spent the last 30 years repeating the mantra that submitting Australia to neoliberal restructuring would bring prosperity and certainty for all. Instead they have created a society where inequality, injustice, and insecurity rule, and the legal structure of the state is stacked against the 99 percent.