Now more than ever, bosses and unions need to work together
This may be unpopular, but I have to say I have a soft spot for the unions.
I first started work in a saw mill at 16 and my dad told me I had to join the union and I did. There was smoko at 10 o’clock – and you were supposed to smoke, but in an early act of defiance I never took up the fags. Smoko always included a cup of strong black tea. There was no milk because there were no refrigerators in the saw mills.
All these years later I still drink black tea and I still think fondly of the union that did its best to protect us workers.
Bosses were tough people coming out of the depression of the '30s and the testing times of World War II. By the time I started in the saw mill in the '50s, they were as hard as the iron bark we milled. It was dangerous work and my union negotiated a scale of compensation for serious injuries including the loss of fingers at the saw bench.
There was a price on each of the three knuckle joints and a hard-up worker would occasionally run a finger, or part thereof, under the saw to get some extra cash for Christmas or a pressing family financial problem. The famous picture of someone holding up two fingers with the other two missing and ordering four beers grew from that time.
Much later I had two very positive experiences with unions. One was with symphony orchestras - in Australia with the Melbourne Symphony and in New York with the Philharmonic Orchestra. The musician’s unions are among the strongest in the world and no senior conductor can be appointed unless all the musicians via their union agree. It is a world-wide tradition and it works because of the voice of the people who know what is required to make wonderful music.
Around 20 years ago I became the chairman of the four great museums of Melbourne operated by Museums Victoria. The circumstances of the organisation necessitated a 10 per cent staff reduction and the union and management were at loggerheads. But we all got around the table and focused on improving productivity as well as attractive retirement packages. The deal was done, and the organisation has gone from strength to strength with productive ongoing relations between unions and management.
Today, it’s more important than ever for bosses and unions to work together to boost productivity.
The truth is that they need each other, and no one has explained it better than Martin Luther King Jnr, who said: “The labour movement did not diminish the strength of the nation but enlarged it. By raising the living standards of millions, labour miraculously created a market for industry and lifted the whole nation to undreamed of levels of production. Those who attack labour forget these simple truths, but history remembers them.”
A 2015 Business Insider Australia article on the importance of the middle class quotes a team of US researchers: “A strong union movement is not simply sufficient for high levels of intergenerational mobility and middle-class membership, but it could be necessary. If that is the case, it will be difficult to meaningfully increase intergenerational mobility and rebuild the middle class without also rebuilding unions or some comparable worker-based organisations.”
This is common sense but it’s under threat because of the enormous inequality that has been spawned since the GFC. Nobel Prize-winning economist Joseph Stieglitz points out that in the 30 years before 2008, the average boss got around 30 times the wage of a worker. But that’s now changed dramatically.
Ordinary people are not keeping up, but the bosses are leaping ahead. At one American company, Whirlpool Corp, the average full-time staffer earns just on $20,000 a year, while a CEO makes $US7 million-plus. That's 356 times the pay of the worker.
The famous financial firm KKR just reported that its medium-level employees were well paid at $US265,000 a year, but the two big bosses, Mr Kravis and Mr Roberts, earned $US113 million each, or 428 times as much as a worker.
So you can see there are problems on both sides. Unions haven’t stayed relevant otherwise more people would be joining them. And the bosses are getting more and more greedy as union influence declines.
What to do about it? I’ve always said we need to work together to boost productivity so that we can revive growth by understanding the nexus between demand, wages and profit. Bosses and unions need to better recognise their interdependence and work together. Ignoring this problem or one side yelling at the other makes no sense. I wonder if Rex Tillerson was in a union.