Adam Smith as we all know was an 18th century Scottish scholar with a number of famous books to his name, among them The Wealth of Nations. In this tome, Smith argues that self-interest and free, competitive markets are powerful forces for prosperity and the common good. But he does, for good measure, also demand the regulation of interest rates and laws to protect workers from their employers. No doubt all this reflects the times in which Smith lived and wrote, although many of his theses are current to these days.
When reading about the recent industrial actions at Lufthansa and British Airways I started wondering. If by some magic Mr. Smith were to come back to this world and face the predicament of many airlines (and other companies for that matter) would he demand laws to protect companies from their employees?
Mind you, I am not saying that workers should not get their due and if an employer mistreats them, there should not be proper remedies. But having this kind of rights is not the same as having unions that organize actions and set limits and demands that result in many of the workers losing out in the end.
When Boeing outsourced a lot of the 787 work, there was an outcry and even if some of the criticism was correct, opposition coming in the wake of the longest and most costly strike ever did not sit well with the management of a company that is not known for mistreating its people. The result? The second 787 assembly line was set up in a right-to-work State, clearly a loss to the Seattle area but a big win for the South.
American Airlines was planning a major aircraft order when it run into a protracted disagreement with its pilot unions who demanded that AA stick to the scope clause in their contract that specify who can fly and how many smaller aircraft and for how much. Similar clauses hamper the business plans of many other airlines, including Lufthansa. AA stopped buying…
It looks like unions have not noticed how the world has changed around them, how the airline business has become much more complicated and how much
damage protecting the salaries of mainline pilots by expressing smaller aircraft contributions in percentages does to the business.
Scope clauses and other similar constructs may be good for the individuals (for a time at least) but can potentially kill the business and then nobody wins.
Cost cutting and the need to be able to react flexibly to the changing business environment are not dirty tricks dreamed up by management. They are essential elements of a business (airline or otherwise) that has the potential to survive. Opposing them, directly or in the form of scope clauses, is a self-defeating exercise that may produce spectacular results which, unfortunately, also include the company going belly up, again leaving to winners.
A healthy industry is the best, and I dare say only, guarantee of prosperity for all involved. Picket lines with demands that defy all logic are not.
If Adam Smith were to write a book to-day with the title The Wealth of Airlines, he would definitely attack high user charges and the inefficient air traffic management system but I am sure he would also include a demand for laws to protect companies from unreasonable employee demands.
OK, until the book gets written, could we exercise common sense without having to have a new law?
You are right as far as corporate governance is fair, managing human resources as people, not as material that you can throw at your convenience!
Right measures should be accepted by everybody without problem, not having as objective to reduce costs taking into account the lowest social references of competitors.
Competition, yes, but in the same playing field!