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BA’s Redundancy Scheme Is a National Disgrace

British Airways could retain its workforce even without government support – but instead it has chosen to make 12,000 redundant and force 30,000 onto worse contracts. That is a scandal.

The coronavirus crisis has been an unprecedented struggle for workers across the UK. In my lifetime alone, the current economic situation dwarfs the financial crisis of 2008, the dot-com crash at the turn of the century, and the recession of the early ’90s. The sudden and seismic shock to the economy has led to mass-scale redundancies, and financial hardship for millions of people. When the government’s ‘job retention’ scheme ends in the autumn, we could see catastrophic levels of unemployment. 

As the pandemic worsened, many businesses were rightly praised for the efforts they undertook to protect their employees, utilising government loans where needed to retain staff on full pay or opting to furlough staff rather than laying them off. And those that have gone down the route of government support have mostly done so in good faith and in the hope that this is no more than a short-term measure.

The flip side of that is companies that take advantage of the system, using taxpayer’s money to prioritise the protection of shareholder dividends ahead of the protection of their workers. One such company is British Airways (BA), whose parent company IAG’s chief executive Willie Walsh was hauled before the Transport Select Committee last month.

Despite IAG’s total assets of £10.7 billion and profits last year alone of £2.6 billion, at the very first opportunity Mr Walsh furloughed 22,626 of his employees. In doing so, he claimed the measure was to “protect jobs and ensure that BA comes out the other side of this crisis in the best possible shape.” 

What’s clear now, just weeks later, is that the protection of jobs was never his priority – beyond those of BA’s top executives. And, despite IAG being in a position to retain its entire workforce on full pay for more than a year even without government support, Mr Walsh announced that all 42,000 of British Airways’ workforce would be made redundant, with 30,000 “fired and rehired” on inferior contracts, with worse, pay, terms, and conditions.

That’s 12,000 redundancies, while failure by those employees to sign the paperwork, which contains a clause allowing the company to temporarily lay-off workers, will result in instant dismissal. In addition, staff face up to £30,000 in loss of earnings during this period. But that’s small beer for Mr Walsh who, between 2011 and 2019 alone, pocketed £33 million in salary, bonuses and pension payments.

That’s why, in the Transport Select Committee’s report, published last month, BA was condemned for its behaviour. Committee chair Huw Merriman wrote that BA and its parent company IAG “falls well below the standards expected from an employer, especially in light of the scale of taxpayer subsidy, at this time of national crisis” adding that “it is unacceptable that a company would seek to drive this level of change under the cover of a pandemic.” In the committee’s discussions I made clear this was a betrayal of British workers – and we unanimously agreed that BA’s exploitation of the crisis for their gain was a national disgrace.

Quite simply, this is yet another example of the predatory, globalised capitalism that pervades our society, with fat cat bosses enriching themselves with seven-figure salaries while at the same time outsourcing jobs, and leaving their workers on low pay, in insecure employment and struggling to make ends meet. And IAG, like many corporate giants, is a master at it.

That’s why I’ve raised in parliament that the government must now explore all possible avenues to continue to apply as much pressure on BA and IAG, so that they reverse their wanton destruction of a loyal workforce. This should include reconsidering the preferential and lucrative slots that are given to BA and IAG at British airports. The government must ensure that the slots are given to British-based companies, those paying taxes in Britain and employing workers from this country. Anything else would be unacceptable and a betrayal of aviation workers. 

From January 1st next year, the UK will have the power to remove grandfather rights and set additional local criteria by amending the Airports Slot Allocation Regulations, 2006. Such a step would be in line with the International Air Transport Association’s guidelines. Unite the Union is asking that any local criteria should “incentivise inward investment, connectivity and social responsibility” in return for slot allocations.

Such a change would also meet the advice of the Competition and Marketing Authority, which just last year recommended to the Department for Transport that it introduce limits on the ‘grandfather period.’ In determining the length of the grandfathered period, they argued that a balance needed to be found between protecting airlines’ commercial and operational imperatives and ensuring that enough slots are made available for airlines wanting to enter or expand services. That seems entirely reasonable in a post-Covid world where the aviation industry needs to be given a level playing field to enable it to survive. 

BA’s workers have built the company up to be a proud British symbol that’s recognised the world over for the high standards that it sets. However, it’s a very different story for its management, who have long been at the forefront of a race to the bottom on wages, union busting and exploitation of its workforce. So, as I told Mr Walsh during the committee hearing, it is disgraceful that workers who in many cases have built up years of loyal service are now, in the eyes of their management, little more than collateral damage so IAG shareholders can continue to line their pockets.

There is another way, though, to ensure a sustainable aviation recovery that works for everyone. That’s why I’m backing Unite’s ‘BA Stop Think Again’ campaign, which is urging Willie Walsh to do the right thing and stand by his loyal workforce rather than throwing them on the scrapheap.

I’m also using this opportunity to urge workers to unionise to strengthen their collective bargaining power and push back against rapacious bosses. Trade union membership is at an all-time low, despite 200,000 new members joining unions in the past two years. This still leaves only 52 percent of public sector workers and just 13 percent of private sector workers as members, with a further four million workers trapped in insecure work. This crisis and the behaviour of bosses such as Willie Walsh will hopefully be the incentive millions of workers need to unionise.

I’m very clear that the aviation industry, like so many others, is critical to the success of the UK economy and the government should do all it can to support it, including ensuring that airlines and airports are able to operate in a safe environment for staff and customers as we transition out of the lockdown. Aviation recovery, like so many other areas of the UK and global economy, is going to be prolonged. Therefore, what’s needed is a transitional strategy for workers and our regional economies.

One example we should look to is France, where Emmanuel Macron’s government has unveiled a series of historic rescue packages, including one of almost £7 billion for Air France, which included £4 billion in bank loans guaranteed by the state and £3 billion of loans direct from the government. Their position, quite rightly, was that they needed to safeguard Air France’s 84,000 employees (and a total 350,000 jobs who are employed both directly and indirectly). That’s significantly more than British Airways’ 45,000 employees. This shows that it’s not an unrealistic pipe dream.

At the same time, French Finance Minister Bruno Le Maire was clear that, as part of the rescue package, Air France bosses needed to bring forward a plan for reducing CO2 emissions and “transforming its fleet to be less polluting.” Something similar would be welcome in Britain.

Far from looking ahead to a post-Covid world, all the scientific and medical evidence is pointing to a second wave, potentially with a sharper spike than the one we’ve already experienced. And, with Britain facing the highest death rate in Europe and second highest in the world, coronavirus isn’t going away any time soon.

The government isn’t going to be able to keep the taps on indefinitely and companies are going to have to put people before profits and take on their share of the burden. If they don’t, we could be facing an economic catastrophe – with millions unemployed and unable to do their bit to help rebuild the country.

That’s why the government and BA have to work closely to ensure a sustainable sectoral recovery that will protect all jobs and ensure the company comes out of this crisis as quickly and as strongly as possible. In the world of the Covid crisis, the limitations of the globalised economic system have been laid bare – a strategic, interventionist and forward-thinking government would recognise that in the new world we live in, we cannot leave the jobs and livelihoods of thousands to the whims of faceless international corporations who will cast them aside as collateral damage.

Building back better means putting workers and jobs at the heart of our economic strategy, because we all know that to reach our climate targets aviation must change. That means doing so in a way that’s not at the expense of aviation workers, but offers them hope of a greener and more secure future.