Priced out at home and abroad: ice cream edition

Advertisement

Via the ABC:

Australians are being urged to boycott some of their favourite ice creams after a breakdown in negotiations between Streets workers and the company’s owner Unilever.

Unilever has applied to Fair Work Australia to terminate the current enterprise agreement, which the unions say could leave 140 workers at the Streets factory in Minto, NSW, with a pay cut of up to 46 per cent.

Streets produces ice creams including Paddle Pops, Cornetto, Magnum and Golden Gaytime.

Steve Murphy from the Australian Manufacturing Workers Union said the only way to make Unilever listen was to hit them where it hurts.

“The Australian public, when they go into the local shop or the local servo deciding which type of ice cream they’re going to buy that makes them feel good, they want to know that the workers that have made that product are being treated fairly,” he said.

An in-principle agreement with the unions was reached after 16 months of negotiations but was ultimately voted down by employees.

Mr Murphy said the company has now gone for the “nuclear option” and workers need the public’s support.

“If you’re running an ice cream factory during an Australian summer you can’t lose money — it’s a very profitable site,” he said.

“These workers are left with no other option because Unilever has stopped listening, but to seek the support of the Australian public.”

The general manager of ice cream at Unilever Australia, Anthony Toovey, rejected the claim workers could lose half their wages.

“We want to keep making Streets locally but the current situation is just not sustainable and needs to be addressed,” he said.

“If anyone has their finger on the nuclear button here is it the union and all a boycott will do is hurt workers and local manufacturing.”

Unilever said the Minto factory lacked the flexibility needed for a seasonal business and was too costly to run.

“It is currently 30 per cent cheaper to import a Magnum from Europe, including 16,000 kilometres of frozen transport, rather than make it at Minto,” Mr Toovey said.

“If the union doesn’t want Streets to become the next Holden or Ford they need to shelve their calls for a boycott.”

After working at the Minto factory for 18 years, Michelle Parkin said many of her fellow workers and families would suffer if the negotiations failed.

“If Unilever are successful in doing this they will devastate many workers and their families and they’ll actually lose homes over this,” she said.

“It’s completely un-Australian and it’s not how we do it here.”

With two young children aged five and two, Troy Gardiner said he was among those worried about being potentially out of a home.

“I have a young family and like every other Australian I have a mortgage that I struggle to pay,” he said.

“If Unilever terminate our agreement potentially I will break my promise to my wife and my children that I will be able to provide for them.”

Lance Wilson — who has been at the factory 19 years — said he was driven by similar warnings from his fellow workers.

“These people are like second family to me and the possibility of them losing their homes is unethical and immoral,” he said.

What a marvelous metaphor for where the nation finds itself today. Priced out abroad and priced out at home. The good times of both the mining and the housing credit booms have structurally altered the private economy to over-priced houses while collapsing our competitiveness in tradable sectors.

As the adjustments to the former two great growth drivers advance, there are only two options to keep the great bloated thing aloft. You can start borrowing and spending like mad in the public sector or you fix your competitiveness to offset the decline in the former growth drivers.

Advertisement

In truth you should some of the former and lot of the latter. We’ve done the reverse:

  • raised expectations with parlour tricks and cheap excuses that of course failed, destabilsing the political economy and throwing out multiple governments;
  • blamed the vulnerable;
  • zero productivity reform;
  • deliberately juiced asset prices with failed credit containment and mass immigration;
  • blown energy prices sky high;
  • pursued strong dollar policies at every quarter;
  • deployed fiscal austerity (until recently), and
  • trashed the industrial relations structure via mass visa rorting.

When what we should have done was:

Advertisement
  • explained it the polity so that the burden of adjustment can be shared appropriately to stabilise the political economy;
  • support the vulnerable;
  • boost productivity reform so that as much of the adjustment as possible can be absorbed by efficiency gains;
  • contain asset prices;
  • contain other input prices like energy;
  • pursue weak dollar policies to ensure that as much of the deflation is absorbed externally as possible;
  • use fiscal stimulus to absorb labour market slack as the private sector deflates and deleverages, and
  • ensure industrial relations fairness so that capital doesn’t force the entire adjustment onto labour.

The Streets conflict is the perfect exemplar of the failure. Capital is looking offshore at the increased margins on offer and unions have no framework in which to sell pay restraint to workers that are being smashed by cost of living blowouts.

Above all else, the Streets conflict is a political failure. Alas, one of many more to come.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.