Sunday, 28 December 2014

Employers are constantly changing, trade unions are not

It is an axiomatic fact that the pace at which the world has evolved and is still changing has definitely quickened. Technological advances, a restless globalisation process and governments’ intervention in many aspects directly and indirectly impacting the business world are continuously prompting employers to change and adjust their organization’s structure and strategies. The pressure coming from the exogenous environment can indeed take different forms and shades, but for employers the biggest challenges and threats are those posed by the market or global market where these compete, that is, by their competitors.

The frequency at which new entrants appear in the market and mature, lacklustre, listless organizations are forced to leave this is constantly increasing. Employers are thus continually prompted to simultaneously respond to the pressure coming from a world in constant evolution and the attacks launched by competitors, which are clearly forced to adapt to and possibly anticipate the future trends, too. Individuals deciding to set and run a business have to first and foremost make accurate and careful decisions about: the market(s) these want to enter, the positioning of their brand and the consumer target these want to reach. To stay in business, employers subsequently need to engage in a struggle to hopefully beat and stay ahead of the competition and hopefully gain and maintain competitive edge.
Employers have learned over time that adapting to the current trends and hopefully anticipating the future ones is of paramount importance, insofar as having genuinely accepted that innovation, readiness to change and flexibility have to be nowadays considered as mandatory prerequisites for the success of a modern organization. It can hardly be averred on the other hand that unions have undergone a similar transformation process; it seems in fact that the way unions’ officials and representatives perform their activities has not changed by any means with the passing of the years.
The role and scope of trade unions is clearly important and indeed socially relevant. The core activity performed by labour unions is essentially that to safeguard the interest of their adherents and bargaining on their behalf the organization’s employment terms and conditions, pay included, with employers. Ensuring employee job security and adequate working conditions definitely represents a further fundamental purpose trade unions aim at accomplishing. In addition to these main objectives, unions usually also provide their members ancillary services such as financial assistance, legal advice and learning and training opportunities.
The significance and value of the role played by unions, in the light of the objectives these intend to attain, is clearly unquestionable. Notwithstanding, unions have over time mostly improved their offering in terms of ancillary services, whereas their power and effectiveness has sensibly decreased in terms of bargaining power. The European picture is indeed sorely varied; in Northern Europe countries, namely Finland, Sweden and Denmark, for instance, union density still seems to hold on, whereas in other areas of Europe, namely Austria, France, Germany, Netherlands and United Kingdom from 1980 to 2010 union density has practically halved. The reason why union membership is still high in Northern Europe countries is indeed explained by the circumstance that in those countries it has been set and run an unemployment insurance programme, Ghent System, directly managed by unions.

As a general rule, trade union membership is much more widespread amongst public sector employers, which have in relatively recent times recurrently been the object of privatization and downsizing processes, and bigger organizations. Unions do not reportedly seem to appeal to younger generations. The primary reason for employee organizations progressively losing ground is due to the circumstance that employee pay is more and more agreed by employers and employees at individual rather than at collective level. Yet, in many regions, despite the existence of national-level or industry-level collective agreements, the reward packages of professional and management roles are habitually agreed at individual level. Notwithstanding, in some areas trade unions still definitely play a remarkable role within organizations, even more so whenever employers need to implement plans of action leading to the closure of some business units, transfer of employees, layoffs and change of employment terms and conditions.

The approach unions habitually adopt to respond to employers requests whether these do not meet unions’ expectations or to support their own request during negotiations is that to call for a strike. In essence, the right to strike is virtually universally recognized and is used by unions to put pressure on employers and dissuade these from relentlessly safeguarding their interest.
Despite calling for and staging strikes does represent a very ancient practice, it is not with reference to this attitude that unions show not to have made any progress over time when sitting at the negotiations table. What in general distinguishes trade unions attitude is to assume and take for granted that once an employer has conceded any given allowance or benefit this has to be for life, irrespective of what it may happen in the future. Employer decisions and consequent concessions are indeed invariably made according to the current circumstances. When the economic and financial landscape is encouraging and the business is prospering the employer is clearly open to make even generous concessions, but when the economic and financial outlook becomes grim it is common sense and according to the circumstances even necessary for employers to limit or make no concessions. This is even more important to help employers to preserve the stability and existence of the business and protect the job of all the employees.

Taking, for instance, the Lufthansa case, the pilots' union Vereinigung Cockpit (VC), which represents approximately 5,400 Lufthansa pilots, is striving to maintain a pension programme enabling pilots to retire at the age of 55 whereas still receiving up to 60 percent of their pay, somewhat of a transition payment, until formal retirement occurs at 65. It is glaringly obvious that the German flag carrier would have never ever made the decision to grant such a privilege to its pilots at this moment in time. This is clearly a concession made in the past, namely when low-cost, no-frills carriers had not yet invaded the flight markets causing remarkable problems to the existing carriers in the short- to mid-haul flights segments and gulf airlines were not adding further pressure offering extremely competitive fares in the long-haul market.
It is not completely clear what the Lufthansa position is as regards the currently employed pilots, but it is utterly comprehensible the German airline decision to resist the pilots’ union request to extend such a privilege to new recruits. The pressure faced by pilots when performing their regular job is indeed unquestionably remarkable, but do not working for 10 years receiving 60 percent of pay before receiving full pension at 65 is a benefit which certainly has no parallel. It is unrealistic assuming that the company would have ever introduced such a “decades-old” early retirement scheme hereupon. Pilots’ union should sit at the negotiations table with the objective awareness of the current, sensibly different landscape characterizing the airline industry globally. On the other hand, however, albeit the decision to not extend to new recruits this benefit can be considered justified, the employer cannot assume to fully withdraw the scheme for existing pilots either. Postponing the moment at which the transition payment can actually be offered, whereas slightly increasing the current salary or paying a monthly amount to a pension fund in charge of providing pilots with an income during the period in between these stop working and formally retire could be, for instance, considered as viable options and a satisfactory trade-off for both parties. Negotiations are still underway, but unions request to maintain the pension scheme exactly as it stands and extend it to newcomers can be actually considered as fairly impracticable under the current circumstances.

The public opinion is habitually supporting employee initiatives, but in this specific case people at large are distancing themselves from the pilots’ union position. The German newspaper Bild wrote rather harshly that "in their cockpits, the pilots are in cloud cuckoo land" and that "for Lufthansa it's about surviving merciless competition. But the captains care only about their fat pensions and the dream of the good old days when there weren't any budget carriers." The severity of the commentator is self-explanatory of the feeling the German public has about this story; notwithstanding, this situation may clearly have serious consequences for the carrier. To cushion the blow, Lufthansa has sent to all of the customers who have joined its frequent flyer programme an e-mail explaining the current situation, representing the employer concern for its long-term competiveness capability and expressing its commitment to reach an agreement with pilots and overcome the problem as quickly as possible. Yet, as a concrete evidence of Lufthansa discomfort with the current state of play, the carrier also automatically awarded its customers a number of status miles in their mileage account.

More often than not, unions assume and maintain that whether an employer is in good health today this entails that this can make life-lasting concessions without limitations, overlooking that things can change rapidly and that, whether the current management is not cautious and prudent, is the stability of the entire business which can be put in jeopardy, what worse even irreversibly.
Staying in Germany, it did not go unnoticed the action called last November by the GDL, the labour union of national railways - Deutsche Bahn - drivers. The union called for a two-day strike to support a request for a 5 percent pay increase coupled with a reduction of the working week to 37 hours for 20,000 drivers. Irrespective of the appropriateness of the request, it cannot be denied that asking for a salary increase and a simultaneous reduction of the working time sounds rather disproportionate these days; you cannot have your cake and eat it. GDL has also attracted widespread criticism for having declined every form of mediation.
Industrial actions may sometimes produce counterproductive effects. In Germany, the frequency of these unions’ initiatives, indeed not really alarming compared to the other European countries, has prompted the German government to work on a bill aiming at averting that a relatively small number of employees may paralyze the whole country. In the GDL specific case, the Board of Deutsche Bahn has indeed tried to ask a state court to issue an injunction to prevent the strike, but the court clearly rejected the employer request.

Getting back to the airline industry, it also appears to have no absolutely clear foundations the four-day strike called by the Unac and SNPNC-FO unions’ of the French branch of easyjet during the last Christmas holiday season. The reason for the union action is in part due to the increasing frequency cabin crew schedule is modified, up to twenty times per month and all too often at very short notice, and in part to deter the company to reduce staff bonuses of 25 percent whereas increasing the management ones. Whilst the union request aiming at increasing the management awareness of the hardships faced by employees to get an acceptable work-life balance is completely and sorely justified, it is apparently not completely understandable the reference to the bonuses. According to the Luton-based airline management in fact this topic is annually discussed with unions; negotiations have just recently begun and are still underway.
Much more consistent, practical and pragmatic has proved to be the support provided by Italian Unions to the entire employee population of the Palermo branch of Accenture. On October 31st this dismissed the entire workforce formed by 262 employees. After intense negotiations, unions reached an agreement with Accenture and BT, which was indeed the only customer of the Accenture Palermo’s branch, on the basis of which the overall staff will be employed by Atlanet, a company fully owned by BT, accepting a 10 percent pay and 25 percent working time reduction.
It transpires that in this case trade unions adopted, as it should invariably be the case, a constructive and realistic approach to negotiations and it can be argued that the final agreement, given the circumstances, may be deemed as rather satisfactory. It is hardly imaginable, whether unions would have insisted for all of the employees to be hired by Atlanet with exactly the same terms and conditions these were employed by Accenture, that an agreement would have been actually reached.
Trade unions play without a shadow of a doubt a significant role within the business contest, but their role necessary needs to evolve and can no longer be intended as that to just enabling employees to have their relevant share of the cake, every time a cake seems to have been freshly baked or intervene in case of impending disaster. Unions’ perspective should more and more coincide and correspond with that of the employers, with whom these should share the main aim in terms of employment, that is, ensure and preserve employment sustainability over time. Rather than arguing with a business management over the size of the cake’s slice, these should first and foremost ensure that the employer is investing the required share of profits to gain and maintain competitive edge in the long-term, ensuring thus employment stability over time. In the not-too-distant future rather than the bonus topic these may be otherwise called to discuss redundancies, layoffs and similar undesirable issues; invariably extremely tricky to address, provided that these can be actually habitually properly addressed.

Labour unions should act as somewhat of organizations’ partners and approach the different issues both from the employee and employer perspective; employers should indeed adopt the same approach, too. Unions should thus take care about the business and its operations as much as the employer does, since this is the only, real practical way to preserve employment stability. Once unions have demonstrated that they really care about the organization future, gaining full credibility, these will be in a better position to make suggestions about, for instance, the approach to be used to share the remaining organization profits.
Nowadays, employers at large tend to offer employees adequate reward packages and terms and conditions of employment. Notwithstanding, in those cases in which this should not be the case or where employers fail to introduce and implement fair and equitable practices, trade unions can and have the duty to intervene.
This duty is not clearly limited to the subject of reward or even work-life balance per se; in the case of easyjet, for instance, the impact an exceedingly frantic schedule can have on employee well-being and the implications it may produce in health and safety terms can be remarkable. However, also in this case unions need to face the issue pragmatically and taking into consideration the employer outlook and the specific features and characteristics of the low-cost airlines. Flight attendants of no-frills airlines, for example, once the aircraft lands and passengers disembark, have habitually thirty minutes only to prepare the cabin before the new flight’s passengers board the airplane. Low-cost companies have to reduce to a minimum their stay in the airports tarmacs to reduce costs. The work of low-cost airlines flight attendants is definitely more hectic than that performed by their traditional carrier counterparts. It could be argued that it has to be by definition, but helping employers finding new, viable solutions enabling staff to maintain their performance, whereas reducing stress and efforts should be considered as one of the primary, arguably the primary, unions’ concern.
Merely protesting, claiming that things are not properly managed and call for industrial action at the drop of a hat is clearly straightforward, but whether union officials want to elevate their professional standard at a higher rank, these have to seriously and professionally analyse the current organization circumstances and the relevant industry scenario, investigate the future trends and possible developments and objectively formulate viable and likely effectual propositions. Such a new union role would be clearly appreciated by employers, which more often than not just strive to stay afloat and ahead of the increasingly harsher competition.
The final decision clearly invariably rests with the organizations’ board, but effectively supporting employers in their quest to gain and maintain competitive advantage or come up with new, viable ideas putting in serious difficulties the employers trying to implement cunning plans at the expense of their employees would definitely represent the best approach modern trade unions should adopt to do their adherents a great service.
Longo, R., (2014), Employers are constantly changing, trade unions are not; Milan: HR Professionals, [online].