EPMU and Air NZ

Some (not all) on the left are very upset with the Engineers Union (EPMU) for the proposal to save half the 600 jobs being made redundant at Air NZ. This is an interesting debate between (in my view) those who want to actually achieve something for their members and those who prefer protest over solutions.

Comrade Tweek has a copy of the Alliance press release. Let’s look at some of their complaints:

1) The unions have hired Michael Stiassny who “is not known as a workers’ champion” and specialises in company restructuring and insolvency

This is in fact a brilliant move by the EPMU. If they hired Jane Kelsey or Brian Easton to come up with a plan to convince Air NZ they don’t have to make all 600 jobs redundant, then Air NZ would spend around 2 minutes considering the proposal. By hiring someone with real credibility in terms of corporate restructuring, they have made it far far harder for Air NZ to not take the proposals seriously.

2) Only 300 of the 600 jobs are being proposed to be saved

Well given a choice between 0 and 300 jobs being saved, EPMU is working in the best interest of its members. They have obviously concluded that there is no chance of persuading Air NZ to keep all 600 jobs, so they have gone for a compromise.

Now Span says that as Air NZ is already profitable, then Air NZ doesn’t need to cuts jobs.

3) Span basically suggests that as long as the airline won’t go bankrupt it should not cut jobs, and the EPMU should not accept any reduction in terms or conditions

It’s hard in a few sentences point out the fatal flaws of an ideology which says as long as a company doesn’t go bankrupt, it shouldn’t cut costs. Let me just say that I don’t think you’ll find a lot of people wanting to invest in such a company in the first place.

4) In relation to an argument from me over cost of capital, Span says the Government has wider interests to consider

Firstly I can’t think of a more inefficient way to help people by having government owned companies forced to feather-bed. Muldoon tried it and it was a disaster. Since giving that up we now have 3% unemployment.

But as importantly people overlook that it is an opportunity cost for the Government. If the Government did not have say $1b tied up into Air NZ, it could then spend an extra $80 million or so a year (every year) on say free doctors visits for kids – unless the return from the investment in Air NZ is equal to or greater than it would get by paying off debt.

5) Len Richards says the unions should lead a nationwide campaign to force the Government to intervene and save the 600 jobs

The reason the EPMU has not decided to do this is because Andrew Little is not a moron. He know that such a gesture has a 0.001% chance of success, would allow the comrades to feel good about having tried, but in the end achieve absolutely nothing for his members.

The Government knows that if it interfered in this particular redundancy decision, then no Government Department, agency or company could ever make staff redundant again due to fear of pressure leading to Ministerial intervention.

Mr Little also knows that government intervention would also lead to the resignations of the entire Air NZ Board, some of its senior management and send the share price hurtling down-wards.

The EPMU may not succeed with their alternate plan, but good on them for pulling out all stops to try and achieve the best results for their members. I hope Air NZ carefully consider their proposal.