On Collision Course

IMAGES of the perfumed picket line which cost Cathay Pacific Airways $240 million and its unblemished record, came to the fore again last week with the rumblings of another wage dispute between management and the unions. But this time the stewardesses, who earlier this year abandoned their subservient image to wave protest banners and chant slogans outside Cathay's Kai Tak offices, may not go it alone. With the airline entering one of its busiest periods, the Flight Attendants' Union (FAU), the Local Staff Union and the pilots' and flight engineers' body, the Hong Kong Aircrew Officers' Association, joined together last week to publicly reject management's latest pay offer. Together the unions represent the majority of the company's 7,500 workers. They have requested negotiations for an improved increase and say they are not considering a strike at this point, but airline analysts warn that Cathay is extremely vulnerable to industrial action. And nearly a year after the last highly publicised dispute, they say neither management nor unions appear to have learned any lessons in communication or negotiation. The Lunar New Year strike was provoked by the sacking of three cabin crew who refused to ''step down'' and temporarily perform duties below their grade. It quickly escalated into a row over staffing levels and pay, culminating in a 17-day strike during which hundreds of stewardesses camped outside Government House. The present salary negotiations again seem destined to run into Cathay's busiest time of the year, when more than one million people leave the territory for the Lunar New Year holidays - a time that gives unions a major lever in any confrontation. Cathay has offered staff a five-per cent increase, an annual increment, and a fixed monthly cash supplement of $150. The pay offer is structured so junior staff will get a higher percentage increase than their seniors. Cathay's managing director, Rod Eddington, even agreed to meet union officials to negotiate pay. But then, in an unprecedented move, he by-passed the unions and wrote directly to employees last week in an attempt to explain the company's offer. Analysts, Legislative Councillors, trade unionists and public relations experts have accused Cathay of being ''high handed'', and warn that it faces more damaging publicity with another dispute. But some also warned Cathay employees to be careful and not to negotiate the airline out of business, and possibly, themselves out of a job. Chief executive of the Hong Kong Confederation of Trade Unions, Lee Cheuk-yan, said Cathay should learn the lessons of the earlier industrial dispute and offer its staff a realistic pay increase. ''Cathay's reputation has already been badly damaged, the smiling cabin crew are no longer smiling,'' he said. ''Rod Eddington has not learnt his lesson well. I don't think his hardline stance in the strike did the company any good. Rather, it did a lot of damage. Staff-employer relations are still very sour. ''If Rod Eddington continues to play tough, the company will suffer. The company had better go through negotiations rather than face the challenge of a strike.'' Describing the pay offer as ''mean'', Mr Lee said the basic offer should be higher than the inflation rate. ''Cathay has a high profit margin compared to other airlines around the world and the staff are not getting what they deserve,'' he said. ''The fact that the three unions are getting together is a good sign; it's a good initiative and a good strategy if they strike. One sign management must not ignore is that if the three unions come together and strike, it would be something the company could not break - they could completely paralyse Cathay's operation.'' But a Beijing analyst, Koh Tehsen, said: ''I am not sure the unions are strong enough to get a strike together this year. Cathay has been relatively successful in collapsing the unions. In the end people ignored the union and went back to work.'' A Hong Kong-based aviation public relations expert said Cathay was also working hard to improve the staff-employer relationship. ''I think they realise this and are trying hard to do something about it. A lot of senior local appointments have been made this year, and in the past 12 months they have done a lot to try an improve their image. ''They have done far more in community welfare projects, like 'Change for Good', which encouraged customers to put their spare foreign coins into an envelope and hand it to a stewardess for charity,'' she said. THIS resulted from taking a fresh look at their public relations. Until the strike it had been geared towards marketing; now they realise they have to do more to build goodwill. ''They have to communicate more frankly and sincerely with staff. They are trying, but they have a long way to go.'' However, experts say the current dispute bodes ill for the airline industry in Asia. ''The era of industrial disputes seems to have reached us very suddenly. We have been fairly free of it, while other countries have been bogged down by this for 20 years or so,'' said one industry source. ''Japan has always had industrial action, and faces a serious situation now. Japan Airlines had the biggest losses of any Asian company this year; it's really in dire straits. ''It would be very sad if Cathay or any other Asian airlines went the same way.'' While Mr Koh said he did not foresee the current situation developing into a full-scale strike, he warned of the damage another dispute would do to Cathay's reputation. ''I think last year, management felt they were dealing from a position of strength. They were determined to break the strike regardless. They succeeded, they gained their short-term goal. But it was not very good for their image overall, and now there isa very good chance they will have the same problem again,'' he said. ''Cathay is one of the most profitable airlines in the world. This profitability hasn't made it down to the rank and file. Last year, there was no end in sight for the struggling airline industry, and Cathay had a legitimate reason for making the pay offer it did. The strike should never have happened. ''This year, they are in a better position. The end is in sight. They confirmed they are picking up the new Airbuses. Again they have made money, they are buying new aircraft, the pilots are paid well; but it is not the same for the flight crew,'' Mr Kohsaid. ''Pilots' wages are comparable with European and American pilots, but the flight crews are paid Asian wages. If you include the housing package, flight attendants probably earn about $15,000 with a couple of years' experience. But if you deduct housing, it comes to about $7,000 or $8,000. They have to do overtime to push it up. ''When you compare it with other employment in Hong Kong, they are not paid that well. But in other Asian countries, Korea for example, a flight attendant is still considered a well-paid job.'' The key figures behind the last dispute broke their own strike when they reported for duty on January 27. Rachel Varghese and Kenneth Patience have both left the FAU, but are still with Cathay. ''Nobody will ever go on strike again. The pain was just too much,'' Ms Varghese said, looking back. Mr Patience agreed: ''It was something we should have looked into very deeply, rather than jumping into it. ''People realise it wasn't necessary. No-one gained anything. We lost and so did the company. Nobody wanted that strike.'' But Ms Varghese admitted it did unleash unhappiness and grievances that had been bottled up: ''It was like a tight lid was being kept on all the unhappiness, and it just had to come out.'' Mr Koh suggested improved communication between management and unions would help prevent labour relations from worsening. ''Another dispute would affect Cathay's reputation worldwide. They were up there with Singapore Airlines and the really top-class airlines, but with all this mud-throwing, they will drop a few rungs. ''Cathay needs more internal communication. It is very much a 'British' company. The Chinese staff at the top are more British than the British,'' he said. A Hong Kong corporate communications consultant agreed communication was the key. ''The strike really shook them up and they put enormous effort after that into communicating with their staff, and hired someone to develop an internal communications programme,'' she said. ''But as Rod Eddington said at the time, it is difficult when you have an itinerant workforce; they are in the air, or in London or in Australia, and they don't come into the office. ''They made the mistake last year of starting off speaking very arrogantly. The public perception was of an arrogant British man against these young, twee Asian women, and the strikers played it to the hilt. ''Part of the problem is the lack of labour laws to deal with these issues in Hong Kong. The Labour Department did a really good job last year, but when legislators got involved, it became a political football over which Cathay had no control. ''In the 1980s, Cathay was the most profitable airline in the world. It gave enormous bonuses and enormous salary increases. It is now one of the few profitable airlines in the world, and it is not making very much profit,'' she said. ''Hong Kong in the 1990s is very different. They can't give the kind of pay increases they used to. ''Of course, staff have a responsibility to themselves to get as much as they can for themselves, but Cathay is now vulnerable, and the unions know that. ''The airline industry is not strong anymore, and if they insist on tearing Cathay apart, they may find they don't have an employer anymore.''