I read today (last Wednesday) in the press today that SEK, the right-wing private sector union is mediating to resolve the crisis in the education sector.
This brought back memories of my first clash with this union in 1991 just after the Gulf crises when I was in charge of a private company.
My company was heavily reliant on tourism with almost 75% of its business being directly related to the number of tourists visiting the island. With the breakout of the crisis tourist bookings took a severe hit while tourist cancellations were occurring at an alarming pace.
After discussing the matter with our CFO we decided that drastic measures had to be taken if the company was to survive. We came up with two possible solutions, a redundancy plan or a freeze on salaries.
I invited the unions to present them with the two alternatives showing quite clearly that we preferred a wage freeze on both the pay scale increase as well as the wage salary increase for a six month period. This solution was less beneficial for the company as the savings would have been far less but we believed that it would be much fairer and humane than laying people off.
To my shock SEK refused to even discuss the matter of a wage freeze. When I asked them if they preferred that people are sent home they replied quite bluntly, ‘yes, we do not touch our conquests!’. One of the union negotiators who was at the meeting is now one of SEK’s rising stars.
Ten or so years later the company was once again having financial problems. We were in the middle of negotiating a new agreement with the unions and I told them that for the company to survive we cannot accept any wage increases at least for the first year of the 2 year duration of the collective agreement. We presented them with numbers showing our falling revenue and our ever increasing costs.
After heated arguments the unions (same SEK negotiator), without offering any kind of alternative to find a solution informed us that failure to agree to their demands would result in strike action.
This happened in November, by May of the following year the owners of the company were so sick of the union’s attitude that they sold the company.
Result: the new owner outsourced its labour intensive distribution network and after three months 35 per cent of the staff were made redundant. He also slashed the salaries of those that stayed on by at least 25 per cent.
Perhaps the company where I worked at may not have survived more than a few years even if the unions had accepted our terms but at least it was willing to give it a try. However, the unions gave the owners an easy choice which I am sure they have not regretted.