Australia at risk from unsustainable union pay claims, international expert warns

Unsustainable union demands around pay and conditions are driving international investment away from developed economies such as Australia, one of the world’s leading business “turnaround” experts has warned.

US business recovery specialist Greg Rayburn made the comments ahead of the 34th annual conference of the HR Nicholls Society, which will be held in Brisbane next month.

Mr Rayburn will detail his experiences with American bakery company Hostess Brands, which was forced into liquidation in 2012 as a result of nation-wide strike action after management was unable to reach a new pay and benefits deal with workers.

And he will warn that the lessons being learned the hard way by workers in the United States as a result of heavy-handed union leadership also need to be learned in Australia.

“In the Hostess matter we had a couple of large unions, and one of them understood what we were trying to do in restructuring the business and keep it viable to save as many jobs as possible.

“But one of them either didn’t understand or didn’t want to cooperate, and they went on strike and caused the demise of the business.

“So instead of saving those jobs, we ended up selling off the brands once everything had been closed down and we were free of the union contracts, for more than double what the value would otherwise have been if the business was still operating.

“And there was a real dichotomy in terms of outcomes – the people who were owed money ended up getting paid in full, but the workers were worse off.”

Mr Rayburn said the shadow of militant unions across Hostess Brands not only made it difficult to restructure the business and keep it viable, but it also made it difficult to attract capital to the business.

And he warned there was a danger for Australian businesses, particularly in the resources and manufacturing sectors, that investors would find the industrial relations landscape too hard and simply go elsewhere.

“If you have to start a new investment with pay and conditions that are not sustainable, then capital is not going to come in.

“They’ll say ‘we’ll pay 50 per less lower wages for 20 per cent less yield in another economy.  This global economy works against unions as well as businesses.”

Mr Rayburn heads an internationally recognised list of workplace relations experts speaking at the conference, Stopping the Decline: Our Urgent Jobs Plan, which will be held at The Brisbane Club on Saturday May 17.

Other speakers include Allan Drake-Brockman, Managing Partner of DLA Piper (Perth), on the difficulties businesses are experiencing in keeping their heads above water in the face of increasing militancy across the waterfront.

The Hon. Roger Gyles AO QC, Chairman of Transparency International Australia and Royal Commissioner into Productivity in the Building Industry in New South Wales will examine the impact of unlawful union activity on the building industry.  And MiniMovers founder Mike O’Hagan will discuss the challenge of job losses to cheap overseas labour.

Queensland Attorney-General Jarrod Bleijie will address the conference dinner in the evening on state industrial relations powers, the abuse of safety as a tool for workplace disruption, and the challenges facing our construction industry.

For more information, or to register for the conference, visit www.hrnicholls.com.au/events.

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