Streets let the bear inside

The Weekend Australian, 4 November 2017

Bring a bear into the lounge room, by all means, but don’t be surprised when the bear tears up the carpet, chews the curtains and demonstrates an inability to comprehend bathroom etiquette.

When a bear is in the lounge room, it is not the bear’s fault for behaving like a bear, or for being there, because someone let it in.

Finally, there are only two options: eject the bear from the house or accept the bear as is. There is no third option of keeping the bear there but controlling it, or even reasoning with it, because it is a bear. The bear is in the house by invitation of the homeowner or the bear remains outside, at their discretion also.

In Australia, when company management has a “relationship” with a union, it is like having a bear in the lounge room. Industrial relations in this country is as simple as that, I’m afraid. By the way, your columnist is neither anti-bear nor pro-bear but merely points out that the thing destroying the lounge room is a bear, and it could be put outside.

This summer, on the beaches, the bears will fight a battle for the hearts and minds of ice cream eaters. Their dispute is with Streets, and they don’t want you to eat any of their ice creams.

“Hey @streetsicecream, PAY YOUR WORKERS”, one of the bear minions, Sam Dastyari (Labor senator for NSW), tweeted recently. The senator hasn’t let the facts get in the way of a good story, though, because Streets pays its factory workers at Minto, NSW — pays them quite well — and intends to continue paying them.

The average annual wage of a Streets production worker at Minto is $105,000 a year. This is not a king’s ransom, especially in Sydney, but it is, according to calculations done by the union, 46 per cent above the relevant award wage, which is the legal minimum. It is also 46 per cent more than someone who wants to start an ice cream business and compete with Streets is required to pay, and that is the fundamental problem.

The $105,000 comes about by virtue of a 2013 enterprise bargaining agreement between Streets and the Australian Manufacturing Workers Union.

The 2013 agreement expired in August last year, but all agreements remain in place with the force of law until replaced with a new one or terminated by the Fair Work Commission.

After lengthy negotiations between Streets and the union, the parties have been unable to reach a replacement agreement. Now, the company has applied to the Fair Work Commission to terminate the 2013 agreement.

An agreement termination technically would put workers back on to the relevant award, ­although Streets has undertaken to preserve wage rates until April next year, and still is trying to negotiate with the bear, er, union, for a new agreement.

While negotiations continue, the union has put together a $250,000 budget towards destroying the company.

With the help of the ACTU, it has crafted a ­social media campaign urging consumers to boycott Streets products.

The first clause of the 2013 agreement deals with its aims, being “to ensure the manufacture of internationally competitive, quality products, produced efficiently, within a safe and satisfying work environment. The intention of the parties is to build a partnership for the future success of the plant and to ensure a viable ice cream business in the future.”

Unfortunately, despite that statement, the agreement guarantees there will be no viable ice cream business in the future. It contains clauses that would finish off any business, with draconian restrictions on flexibility.

After reading the document, I believe there must be a God, because it is a miracle the business is still in operation. The agreement explains why, with a global business of 30 ice cream factories, the Australian site stands alone as outrageously expensive and off-the-charts uncompetitive.

For example, a frozen Streets Magnum ice cream can be imported from Europe with a total landed cost of 30 per cent less than what it can be made for here.

The agreement provides income for the union, too. One clause forces the company to buy an income protection insurance policy called WageGuard for every employee. The policy must be purchased from a company called UCover. The union has a 49 per cent interest in UCover and its national accounts last year show that more than $3.6 million from UCover was paid to the union.

ACTU secretary Sally McManus says Unilever and Streets are “bullying” their workers, and “forcing” them “to choose between an agreement they don’t want and a 46 per cent cut in wages, with crippling cuts to conditions”. The company says it needs a significant increase in flexibility and that wages will be preserved, and are not needing to be slashed, but costs must be addressed. If this can’t be achieved the plant will close.

The real choice for the workers to make is between reality and la-la land. These people need to ask themselves who they trust, the union or their employer. When making this decision, they should consider who employs them and pays their wages.

Unfortunately, though, many employees will find themselves ­financially incentivised to drive Streets out of business.

A clause in the EBA mandates that in the event of plant closure, at a minimum, each employee will receive paid notice of six months, and four weeks severance pay for each year of service, uncapped. An employee of 20 years would receive 80 weeks’ pay plus other benefits.

During the six-month notice period, the company and the union would have to consult about “additional closure payments” and if they can’t reach agreement the Fair Work Commission can decide these payments and order the company to make them.

Remember, this agreement has been voluntarily entered into by the company in the past, and is the result of years and years of compounding negotiations. The bear has been invited into the lounge room and allowed to stay.

Internationally, there is a phrase for what has happened to Streets. It is called “the Australian disease”. By virtue of enterprise bargaining folly, the Australian arm of a global business finds itself on the brink. The Australian disease is 100 per cent avoidable, curable and its effects are reversible.

Yet when a company is in the grip of the illness, the only thing it often does is keep doing what it has always done while expecting the outcome to change. Hence negotiations between the company and the union are ongoing.

If you want to support the workers, help them keep their jobs. Ignore the boycott and buy lots of ice cream.