And we wonder why businesses are closing down in Australia - banana republic coming to a town near you.!
ONLY $150 million a year will save Holden? Rubbish. The Holden Enterprise Agreement is the document that has utterly sunk Holden's prospects. It defies belief that someone in the company isn't being held to account for it.
Holden's management masks a union culture beyond most people's comprehension. Employment costs spiralled way beyond community standards long ago. Neither "pay freezes" nor more money will save Holden, but getting the Fair Work Commission to dissolve the agreement and put all workers on the award wage might be a start.
In 1991, the pre-enterprise bargaining award wage of a Holden entry level process worker was $462.80 a week. In 1992, Holden began enterprise bargaining and now a worker at that same classification level has a base rate of $1194.50 a week, a 158 per cent increase, or a compound increase of 4.4 per cent year on year for 22 years. Right now, base wage rates for process workers in the Holden enterprise agreement are in the $60,000 to $80,000 per year range and in recent times, "hardship payments" of $3750 were given to each worker.
The modern award for such workers mandates base rates in the $37,000 to $42,000 range. This means that before we add any of the shift penalties, loadings, 26 allowances and the added cost of productivity restrictions, Holden begins each working day paying its workforce almost double what it should. After you add in the other employment costs, I estimate Holden's workforce costs it somewhere close to triple the amount it should.
Many people who work at Holden don't actually work for Holden; they work for the union. Occupational health and safety people are given 10 days' paid time off a year to be trained by the union. Most companies do not allow unions to train their OH&S people because the knowledge is used to control the workplace to the benefit of the union.
Union delegates are also allowed up to 10 paid days a year for union training in how to be effective union delegates and two of these delegates are entitled to an extra Holden sponsorship of one paid month off to "further their industrial and/or leadership development".
Holden's rules on hiring casuals are shocking and unheard of in today's market. The agreement forbids Holden from hiring casuals except when a "short-term increase in workload, or other unusual circumstances occurs". If this situation arises Holden has to "consult and reach agreement" with the union. Further, "Engagement of the agreed number of casual personnel will be for the agreed specified tasks and the agreed specified periods." If any of this changes, Holden must get union agreement again. After three months of continuous full-time work a casual must be made permanent. It is impossible to run a business like this.
An ex-employee from Adelaide, on condition of anonymity, consented to an interview yesterday. He described the workforce as "over-managed", with one team leader for every six workers on the production line, when one for every 25 workers would suffice.
He said "some of us workers felt it wasn't necessary to get paid what we were getting paid to do the jobs we were doing", adding that their work is probably worth about "20 bucks an hour". A few years back, mates took redundancy packages in the order of "$280k plus". Workers are "like sheep" that blindly follow the union leadership. At induction, new workers are ushered into one-on-one meetings with the union rep who
heavies them into joining. "It is made clear that if you don't join the union you will be sacked," he said. Union representatives "don't actually do any work for Holden", but rather make themselves full-time enforcers of union control.
He says workers are drug tested before hiring, but "only have to stay off it for a few weeks, get in the door and then you'll be right". Workers caught taking drugs or being drug-affected at work are allegedly put on a fully paid rehabilitation program, with special paid time off of about four weeks duration, before being let back into the workforce. Australian workplaces have a zero tolerance for drug use, with instant dismissal the remedy, but at Holden "the union won't let the company sack" any workers caught dealing, taking or being on drugs. "If they did a random drug test tomorrow they'd probably have to sack 40 per cent of the workforce," he adds.
If the Holden scenario were playing out in a privately owned business, proper cost-cutting strategies would be used. If you have the will and can hire the skill, there are many ways to cut labour costs. The workers can be given a couple of years notice of significant wage drops and can receive lump sum payouts of entitlements to help bring down family debt.
Of course, these strategies are only ever used by business people who have no one else to bail them out. It seems Holden would rather leave the country than dissolve its enterprise agreement. The union thinks members are better off jobless than on award wages. Holden's fate seems sealed.
When Holden does leave, workers will receive the most generous redundancy benefits around. Holden says leaving will cost $600m. Most of this will go to staff payouts. The fellow interviewed agrees with my calculation: the average production-line worker will walk away with a redundancy package of between $300k-500k.
So there you have it, some food for thought.