2.7 Industrial/employee relations questions for IB Business Management

Tasman Rail Freight

[1] Tasman Rail Freight (TRF) is a privately held company that carries containers, timber and dairy products by rail between the ports and the main processing centres of New Zealand’s North Island. TRF employs 210 locomotive drivers, almost all of whom belong to the Rail Workers’ Union (RWU).

[2] Each year TRF and the RWU negotiate drivers’ pay. This year the talks have broken down. The RWU is claiming a 6 % pay rise, pointing to inflation of 4.1 % and to TRF’s record profit last year. TRF has offered 2.5 %. At the same time, TRF wants to introduce driver-only operation on long-haul trains, removing the second crew member from the cab, and new 12-hour rosters. The RWU says that driver-only operation is unsafe on remote mountain routes and that the new rosters will cause fatigue.

[3] After three meetings without agreement, the RWU announced a 4-day strike. TRF’s chief executive, Tama Paewai, says the strike would cancel 80 % of services. Several dairy exporters have warned that they will move their freight to road hauliers if services are disrupted. The RWU has offered to call off the strike if TRF agrees to refer both the pay claim and driver-only operation to binding arbitration by an independent arbitrator.

Table 1: TRF revenue and costs on an average operating day (NZ$)

Table 2: Drivers’ pay

Ubuntu Reclaim

Ubuntu Reclaim (UR) is a social enterprise in Cape Town, South Africa, set up in 2017 by Ayanda Qwabe. It employs 85 former informal waste pickers (“reclaimers”), who once collected recyclable materials from landfill sites and streets with no protective equipment and unpredictable earnings. UR collects recyclable waste from apartment buildings and offices, sorts it at its depot and sells the sorted paper, plastics and metals to recycling plants. It pays a fixed monthly wage above the national minimum wage, provides protective clothing and runs a savings scheme for its workers. UR is a private company; all surpluses are reinvested.

Excerpt 1: Email from Ayanda Qwabe to UR’s board

Prices paid by recycling plants for our sorted materials have fallen by about 30 % this year. We are now running a monthly deficit (see below). If nothing changes, our reserves will last about five months. I propose we move from a fixed wage to a piece rate of R1.40 per kilogram sorted, so that pay reflects what we earn. Our best sorters would earn more than now.

Excerpt 1 (continued): UR average monthly figures (R)

Excerpt 2: Social media post by Sipho Dlamini, UR sorter and chair of the newly formed UR branch of the Cape Reclaimers’ Union (CRU)

We left the landfill for a fixed wage, safety and respect. Now they want to pay us by the kilo again, like the old days. The average sorter does about 220 kg a day. At R1.40 that is a pay cut. We were never asked. If UR goes ahead, we will strike. #NotMachines

Excerpt 3: Results of an anonymous survey of UR workers (72 responses)

Excerpt 4: Article in a Cape Town business newspaper

The city plans to require all large apartment buildings to separate recyclables at source from 2027. This should raise the quality, and the price, of collected materials. A large waste-management company has said it will bid for the new collection contracts. Social enterprises such as Ubuntu Reclaim may struggle to compete on price, but the city says it will give “additional weight” to bidders that create jobs for former reclaimers.

Excerpt 5: Email from Lerato Khumalo, impact investment manager at a development foundation

We would consider a five-year loan of R1.2 million at a low interest rate to help UR through this period, possibly linked to converting UR into a worker co-operative. We would need to see a plan showing how UR will become financially sustainable and how labour relations will be stabilized. A strike now would make us very cautious.

Ostravice Components s.r.o. makes brake assemblies in Ostrava, Czech Republic, and supplies two car manufacturers that use just-in-time production. After management rejected a pay claim, the trade union representing production workers began a work-to-rule: no overtime, no covering for absent colleagues and every safety check carried out in full, however long it takes. The work-to-rule has lasted three weeks.

Table 1: Weekly output of brake assemblies at Ostravice Components (units)

Cooperativa Gráfica Riachuelo (CGR)

Read the resources and answer the questions that follow.

Cooperativa Gráfica Riachuelo (CGR) is a printing works in Avellaneda, near Buenos Aires, Argentina. In 2002, during an economic crisis, its owners closed the plant and left without paying three months of wages. Forty-six workers occupied the building, restarted the presses and formed a worker co-operative – one of Argentina’s “recovered companies”. Today CGR has 58 members, who all receive the same pay. Every important decision is taken by a monthly assembly of all members, and an elected council of five members handles day-to-day matters. CGR prints books, magazines and packaging.

Image: a large printing press with freshly printed book covers coming off the rollers. Painted on the factory wall above it: “Ocupar, resistir, producir” (occupy, resist, produce) and “Cooperativa Gráfica Riachuelo – since 2002”.

Resource 1 – News article from *Economía Sur*

Recovered factories at 25: still standing, but falling behind?

More than 400 recovered companies still operate in Argentina, and few have closed. But many are losing customers to faster private competitors. At CGR, printers say they lose work because quotes take too long: “By the time the assembly agrees a price, the customer has gone elsewhere – and with inflation the price is already wrong.”

Table 1: CGR’s performance

Resource 2 – Social media posts from two CGR members

Lautaro, 27, machine operator: Four hours of assembly yesterday to choose a paper supplier. We lost the school-diary job last month because nobody could sign the quote. I believe in the co-op, but we need someone who can decide. #CooperativaRiachuelo [1/2]

Norma, 61, founding member (reply): Lautaro, in 2002 the bosses decided everything and then ran away. The assembly is what saved our jobs. Speed is not worth losing our voice. Bring your ideas to the assembly! [2/2]

Resource 3 – Internal email from Héctor Sosa, CGR president, to the members’ council

From: Héctor Sosa, President

To: Members’ council

Subject: Editorial Sur Austral contract – decision needed

Editorial Sur Austral has offered a three-year contract to print school textbooks worth USD 420 000 a year. We would need a new digital press costing USD 280 000, and the publisher wants delivery within ten days of each order. Our accountant expects the contract to give a contribution of about 30 % of its value. The publisher needs our answer in two weeks; the next assembly is in four.

This is not the first time. Two proposals have been made for discussion:

1. Hire an external general manager (about USD 3 000 a month) with authority over daily operations and prices, reporting to the assembly.

2. Give an elected executive committee of five members authority to decide on purchases and contracts up to USD 50 000, while the assembly keeps strategic decisions, pay and admission of members.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – Survey of CGR members (52 replies)

Resource 5 – Extract from an interview with a co-operative business adviser

“Democratic control does not mean that everybody decides everything. Successful co-operatives separate governance – the assembly sets strategy and elects leaders – from management, which must act quickly. The danger of hiring an outside manager is that members start to see him as a new boss. The danger of doing nothing is that, with inflation, a quote that takes nine days is a quote at a loss.”

Resource 6 – Notes from CGR’s accountant

• Paper suppliers now change prices every week and hold quotes for only 48 hours.

• Two of CGR’s three presses are more than 25 years old; spare parts must be imported.

• CGR has USD 95 000 in savings. A co-operative bank would lend the rest of the cost of a press over four years.

• Ten members will reach retirement age in the next three years; four of them are the only people who can repair the old presses.

Haedong Heavy Industries builds container ships at its yard in Ulsan, South Korea. After the welders’ union began a series of rolling two-hour stoppages, management responded with a lockout of the welding and hull-assembly sections.

Define the term lockout.

Bunot Earthworks Inc. (BE)

Read the resources and answer the questions that follow.

Bunot Earthworks Inc. (BE) is a social enterprise in Albay province, in the Bicol region of the Philippines. It was founded in 2010 by Ramon dela Cruz, a civil engineer, after a typhoon destroyed many coconut farms. Bunot means coconut husk. BE buys husks from coconut farmers, separates the fibre (coir) at its small factory and weaves it into nets that hold soil in place on road embankments, river banks and old mine sites. The fibre is twisted into twine by about 600 women who work at home and are paid for each kilogram of twine they produce. BE’s mission is “turning waste husks into livelihoods and safer slopes”.

Image: a steep roadside slope covered with brown coir netting, with young green plants growing through it. Rolled nets in the foreground carry a label: “Bunot Earthworks – 100 % coconut, 100 % Bicol”.

Resource 1 – News article from the *Bicol Daily Courier*

Coir twiners demand a fair share as nets go national

Demand for natural erosion-control nets is rising as the government replaces plastic netting on roads and river banks. But the women who make the twine for BE’s nets say they earn far less than factory workers. Last month 410 of them formed the Bicol Twiners’ Association (BTA), which has joined a national labour federation. Since then, twine deliveries to BE have fallen by 40 %.

Table 1: Twiners’ earnings compared with the minimum wage

PHP = Philippine pesos.

Resource 2 – Social media posts from Marites Bañares, president of the BTA

We twist coconut fibre at home between cooking, children and farm work. That is how we like it. But PHP 27 an hour is not enough, and when a typhoon comes we have nothing – no SSS*, no sick pay. BE says it is a social enterprise. Social for whom? [1/2]

Our demands: PHP 30 per kg, SSS contributions and recognition of the BTA as our voice. Until then we will deliver only half our usual twine. We do not want to strike – but we will if we must. [2/2]

* SSS: the Philippine Social Security System, which provides sickness, maternity and retirement benefits.

Resource 3 – Internal email from Ramon dela Cruz to BE’s board

From: Ramon dela Cruz, Founder and CEO

To: Board of directors

Subject: The BTA dispute and the flood-control contract

We have been offered our biggest ever contract: 200 000 m² of nets a year for two years for a flood-control project funded by an international development bank, at our normal price of PHP 80 per m². Deliveries start in five months, with penalties for late delivery.

With the go-slow, we cannot even supply our current customers. Some board members want to buy twine-spinning machines (PHP 6 million), which could produce 150 000 kg a year at about PHP 10 per kg and would reduce our need for home twiners. Others say we should accept the BTA’s demands in full. I would prefer to negotiate – perhaps with the help of the government’s conciliation service.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – Letter from the development bank’s procurement office

Suppliers to bank-funded projects must show that workers throughout their supply chain, including home-based workers, are paid at least the legal minimum wage or an agreed fair equivalent, and that they are free to join workers’ organizations. Suppliers will be audited before the contract is signed.

Resource 5 – Cost and output information

Resource 6 – Survey of twiners (240 replies)