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Jobs being slashed, but bosses paying themselves millions

In a recent article in Socialist Alternative Louise O’Shea argues that workers rights should come before profits, and if that means operating companies at a loss, or booting out the management altogether, then that is what should happen.

Such actions could be part of a wider fight for a society where profitability is no longer the determinant of production and the power to which people’s lives are subordinated, but where human needs and happiness are instead paramount.

Louise begins by quoting some Pacific Brands workers, told recently that their plants are closing over the next 18 months.

We are stunned by what has happened. We were called to the canteen and told the plant would close but before that we were being told everything was okay. I am a single mother with two children. It will be almost impossible for me to find another job in the Cessnock area and I can’t possibly live on what Centrelink pay people.

I’ve still got two children at school and two who have finished. We have a mortgage to pay and insurance – all up $2000 a month. Where are we going to get the money? I’m earning only $30,000 and my husband $45,000. We are struggling as it is.

“Clutter” is how Pacific Brands CEO Sue Morphet referred to these workers, and 1850 others like them, facing the sack at her company. “We had to clean the house” was her callous rationale for the move to “get rid of the distractions and much of the clutter that exists in this company” and restore “organic growth”.

At the Coolaroo plant of Pacific Brands in Melbourne, this human clutter consists mainly of Turkish, Vietnamese and Indian women, older workers who will struggle to find jobs elsewhere, and significant numbers who have been employed by the company for over 40 years.

One worker described the reaction to the news of the sackings: “people just sat there with their head in their hands – they couldn’t move with shock”. And as the economy continues to decline, their chances of finding new jobs narrow daily.

Access Economics predicts 300,000 workers will lose their jobs in Australia in 2009, as the “sharpest deceleration Australia’s economy has ever seen” continues.

The planned slashing of 1400 jobs at Bosch, 3400 at BHP and thousands more in the retail sector, in addition to those at Pacific Brands, is therefore a portent of things to come, and a sign the world economic crisis is beginning to have an impact on Australia.


Previous certainties, such as the possibility of retiring on a liveable income, the relative availability of jobs, and the possibility of owning a home, are increasingly being thrown into doubt for workers. The future holds far less promise than it has for decades.

As one Pacific Brands employee expressed it, “my children will be struggling for things that they need, and they will be asking. What am I going to tell them? I just can’t understand things anymore.”

For the CEOs and their rich and powerful friends it is, as always, quite a different story. The humiliation of being discarded after years of service, struggling to provide for hungry children or standing in Centrelink queues waiting for paltry and inadequate unemployment payments are not experiences they will ever be forced to suffer.

CEO pay has risen to obscene levels over the last year, despite the impending recession. Even at Pacific Brands, a company supposedly struggling to survive, management have been able to dig deep to reward themselves – increasing their pay by nearly 100 per cent over the last year. Combined remuneration for the 13 Pacific Brands company directors increased from $7.084 million to $15.459 million between the 2007 and 2008 financial years. Displaying the sort of leadership qualities that got her the job, CEO Sue Morphet singled herself out for special mention, tripling her pay from $685,775 to $1.9 million.

Pacific Brands is no exception. It is symptomatic of the inequality which pervades every nook and cranny of the capitalist system. At Bosch, where 1400 sackings have just been announced, senior management have awarded themselves bonuses of up to 155 per cent of their salaries, while the boss of Australia’s largest company BHP Billiton received over $13 million last year, and infamous Telstra CEO Sol Trujillo will this year will walk away with a $3 million payout on top of his $13.4 million annual salary package, leaving 10,000 unemployed workers in his wake.

The most recent national income distribution figures also demonstrate this reality. The Australian Bureau of Statistics reported in June 2008 that the share of national income going to wages fell to its lowest level since 1965 of 52.4 per cent, while that of profits leapt to 28.4 per cent – the highest level since records began.

Just as with birth, death and taxes, we can rest assured the rich and powerful will be the last ones taking pay cuts or enduring hardship as a result of this recession.

And while politicians from both sides of politics are eager to be seen frowning on excessive CEO pay and bonuses, none are willing to take any action that might threaten the obscene profits and privileges of the rich. Both the Labor and Liberal parties have rejected the Greens’ proposal to cap CEO salaries at a million dollars, with Labor Finance minister Lindsay Tanner – supposedly from the left of the party – being quick to dismiss such moves as “difficult” and undesirable.

Nor has the Labor government taken any serious measures to protect jobs beyond rhetorical bluster. Despite being informed of the planned sackings at Pacific Brands three weeks before they were announced, the government failed to pass on this information to the workers or their unions, significantly undermining any attempt to defend the jobs. Julia Gillard slammed the Maritime Union of Australia for their decision to place union bans on any movement of Pacific Brands machinery out of the country in solidarity with the sacked workers, threatening the union with $750,000 fines if they went ahead with any such ‘unlawful’ action.

But it is exactly this kind of action that will be needed if jobs are to be defended. Action that makes it impossible for bosses to carry through their agenda of cutbacks and demands for sacrifice on the part of workers in order to maintain acceptably high profits for the already grotesquely rich. Action that starts to mobilise the only power workers can really rely on – their own power to paralyse production, to physically disrupt the plans of the bosses, and to draw on solidarity across plants and industries that can create such a crisis that the rich and powerful resign themselves to a 12 bedroom yacht with only seven swimming pools rather than the deluxe version.

Unions need to be fighting to defend all jobs if the bosses’ offensive is to be successfully pushed back, and the appeals to “economic responsibility” or commitment to maintaining profitability that justify sackings roundly rejected. The experience at Bosch demonstrates this: workers’ acceptance of  “wage restraint” over the last few years in order to keep the company viable has not saved their jobs. Instead it has contributed to record profits at the company and huge bonuses for the management, and the slashing of 12 per cent of the workforce anyway.

Workers rights should come before profits, and if that means operating companies at a loss, or booting out the management altogether, then that is what should happen. Such actions could be part of a wider fight for a society where profitability is no longer the determinant of production and the power to which people’s lives are subordinated, but where human needs and happiness are instead paramount.



Comment from juan
Time March 18, 2009 at 11:19 pm

Long article, need time to digest it. But need to comment on our treasurer’s “prompt and decisive” response to executives’ pay out. His TV is obviously working. His statement came almost immediately after yesterday’s phony outburst by Obama!

Comment from John
Time March 19, 2009 at 7:09 am

Thanks juan.

On this executive payout issue, Swan’s prompt action is a smokescreen. First it imagines shareholders like you or me have any power. We don’t. Big investors do. And super funds. But they are all in the same boat – the very shareholders voting on ‘excessive’ payouts are themselves likely to be those who have contracts with large payouts.

Second it only covers Australian companies subject to the Corporations Act. Some companies operating in Australia who pay their high level managers performance payments will not be covered by the crackdown.

Comment from Sparkyq
Time March 19, 2009 at 1:16 pm

I left the ragtrade some thirty years ago. The writing was on the wall then. Curiously, it was Labor reducing tariffs and opening us up to cheap imports. I feel very sorry for those Pacific brand employees.
Niether the unions or our governments are without blame. The article refers to “workers rights”. They have no rights if they don’t have a job.

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