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Gillard Union Tilt Draws Nasser Ire as Workers Unimpressed: Jobs

Australia is the world’s happiest nation, according to the Organization for Economic Cooperation and Development. Try telling that to janitor Marie Angrilli, or BHP Billiton Ltd. Chairman Jacques Nasser.

Nasser told 320 Sydney business executives May 16 that Australian unions have excessive clout and that an “industrial relations system that pits labor against capital can never lead in the long term to an efficient and productive workplace.” He reflected nationwide corporate antipathy to Prime Minister Julia Gillard’s efforts to strengthen unions’ wage-negotiating powers.

Angrilli, who mops floors and cleans toilets at a private Melbourne girls’ college, says she and workers like her still are deprived, whatever Nasser says. “He may think his BHP (BHP) miners and their unions have too much power, but people in my industry are underpaid and we need to band together for better rights,” she said.

Gillard has reaped little political reward for siding with unions, trailing in polls even as job growth and muted inflation undermine executives’ gripes at her record. Squeezed between mining bosses decrying her as anti-business and disenchanted workers feeling little windfall from the nation’s biggest resources boom since the 1850s, Gillard has failed to craft a message that resonates with voters. Union-member Angrilli foresees a loss in elections due by late 2013.

Labor’s Gains

“Gillard’s problem with industrial relations reflects the overall story of her whole government: She’s made some important, effective changes but she just can’t sell them,” said Andrew Hughes, who conducts political-marketing research at the Australian National University in Canberra. “The opposition is saying a win in the next election will create a mandate to wind back worker and union power, and that’s looking very likely.”

Gillard’s Labor party trails the opposition by 22 percentage points in the most recent nationwide poll, which was taken May 31-June 2 by Nielsen and had a margin of error of 2.6 percent. Her agenda has prompted criticism by business leaders ranging from Nasser to Rio Tinto Group Chief Executive Officer Tom Albanese to the Australian Chamber of Commerce and Industry, the nation’s biggest corporate lobbying group.

In a bid to appeal to her Labor party’s working-class base, then-Employment Minister Gillard introduced the Fair Work Act in 2009. It overturned former Prime Minister John Howard’s unpopular “Workchoices” policy, blamed by his Liberal party for its 2007 election defeat. Howard axed some worker safeguards and made it easier for employers to fire people.

Photographer: Patrick Hamilton/Bloomberg

Julia Gillard, Australia's prime minister. Close

Julia Gillard, Australia's prime minister.

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Photographer: Patrick Hamilton/Bloomberg

Julia Gillard, Australia's prime minister.

Wage Negotiations

Gillard’s laws gave unions more power in negotiating wage deals and widened the issues they could seek to address, including the use of contract labor. In an olive branch to businesses, unions are only allowed to legally strike when campaigning for a new contract after a previous one expires and after a ballot of members.

Corporations are awaiting an independent review of the measures due to be released this month to ramp up pressure on Gillard to pare workers’ powers. In his speech, Nasser called it “an opportunity to move the pendulum back to a more appropriate balance” in industrial relations.

The complaints about excessive union power aren’t reflected in economic data. Annual wage growth has averaged 3.6 percent since Gillard became the first woman to hold the nation’s highest elected office in June 2010, less than the 3.7 percent average of the prior decade, government figures show.

Less Misery

Inflationary pressures have eased even as unemployment has dropped, leaving the so-called misery index -- the sum of the jobless and inflation rates -- at 6.8 percent last quarter. That was the lowest since 2007, when it reached levels unseen since 1970, according to data compiled by Bloomberg.

“Our labor market system brings fairness together with flexibility,” Gillard said while she attended the Group of 20 summit in Mexico this week. “We will always fight as a Labor party and a Labor government to prevent workers being ripped off,” she said.

Gillard, 50, said her government’s industrial relations system ensures “that in workplaces people can bargain above a safety net so that working with their employer, they can make their workplace more productive and they can have more rewards.”

Australia led Norway and the U.S. in the Paris-based OECD’s Better Life Index released last month, making it the top- performing economy based on criteria including income, jobs, housing and health.

Striking Miners

The mood is less cheerful in labor-management relations. BHP has been trying to negotiate with more than 3,000 workers, who have staged sporadic strikes since February over accommodation and job-security provisions at coal mines in Queensland state it co-owns with Japan’s Mitsubishi Corp. (8058)

The company’s latest offer of increasing wages by 5 percent over three years and a guaranteed annual bonus of A$15,000 ($15,284) was rejected with only 17 percent of workers supporting the plan, BHP said May 18.

Another dispute saw carrier Qantas Airways (QAN) Ltd. grounding its main fleet worldwide in October for about 48 hours to force an end to six months of sporadic strikes. Industrial regulator Fair Work Australia banned the strikes and the lockout.

Such labor strife has left an opening for Tony Abbott, head of the opposition Liberal-National coalition. He says Gillard’s administration is trying to create a “class war” in Australia.

‘Statesman’ Nasser

“We had Jacques Nasser, who is one of the great statesmen of Australian industry, point out that this government is getting it wrong,” Abbott, 54, told reporters in Melbourne on May 17. “What we’re looking at is careful, cautious, responsible change that will bring the workplace relations pendulum back to the center.”

The opposition chief has vowed to repeal new taxes on mining profits and carbon emissions, and change industrial relations laws if elected. Such pledges leave Abbott vulnerable to comparisons with Howard, said Zareh Ghazarian, a political analyst at Monash University in Melbourne.

“Abbott has to be very careful because he can’t be seen to be returning to Workchoices,” Ghazarian said.

If Gillard is ousted, the Liberal party “will go back to looking after its traditional base of multinationals to the detriment of the workers,” said Stephen Smyth, president of the Construction, Forestry, Mining and Energy Union’s mining and energy division in Queensland.

A trend of deteriorating productivity in Australia blamed by Abbott and business chiefs on the Fair Work Act has been occurring for at least a decade, according to Saul Eslake, Melbourne-based chief Australia economist for Bank of America Corp.’s Merrill Lynch division.

Productivity Challenge

“Productivity growth in Australia has declined more or less continually since 2000 under three different industrial relations regimes,” Eslake said. “It would be entirely inaccurate to say the decline in productivity growth is the result of Julia Gillard’s changes.”

Improving skills and infrastructure, and removing barriers to competition and red tape, are the most important changes needed to be addressed to boost productivity, he said.

Gillard, a former union lawyer, has stoked resource executives’ opposition by introducing taxes on carbon emitters and coal and iron-ore profits, scheduled to start July 1. Her annual budget in May scrapped a planned cut in company taxes to fund payments to low- and middle-income earners who have traditionally formed the base of her party’s support.

Gillard’s Base

Gillard is struggling to connect with voters in Labor’s heartland states of New South Wales and Victoria, where the party won more than half its seats in the last election, as their manufacturing, retail and tourism industries struggle under the weight of a currency that’s jumped about 17 percent since she took office.

In New South Wales, 60 percent of voters surveyed by Newspoll were dissatisfied with Gillard’s performance by the end of March, followed by 56 percent in Victoria state, home of Gillard’s constituency, according to data collated from six polls earlier this year with a margin of error of plus or minus 2.5 percentage points.

For Angrilli, the school cleaner who earns about A$19.50 an hour and starts her shift at 3:30 a.m., Gillard has done just enough to earn her vote again.

“Not many people I speak to agree and everything you hear about her is negative,” said Angrilli, a member of the United Voice union. “No one seems to want to listen to the good things she says -- she just can’t get her message across.”

To contact the reporter on this story: Jason Scott in Canberra at jscott14@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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