This page was mostly written whilst my glucose was low. Expect a few abnormalities.

  1. Analyze whether Airbus managers were right originally to offer a 2.7% pay rise to staff. [9]

    A 2.7% pay rise is very low, considering that inflation was 7%, this means that Airbus were offering employees a below inflation pay rise, so they would have a lower quality of living as a result. In addition to this, the financial performance of Airbus was positive - meaning that they reported record profits providing no reason for them to use poor financial performance as an excuse for their low pay offer. To compound these factors, Airbus’s main rival Boeing were experiencing difficulties at the same time, providing Airbus with a comfortable lead.

    Airbus was aiming to pay out a dividend of €1.50 per share, which would have been hampered by a larger pay rise to staff. Managers were clearly trying to balance the desires of the shareholders with those of the employees, however they overlooked the economic climate of the country and tried to offer employees and insulting low offer, which lead to disruption at Airbus.

    So, whilst managers had a reason for making a low offer, it was a poorly considered decision that would definitely have backfired on Airbus. A competent manager should have seen that employees would be dissatisfied and acted to protect their reputation and avoid the dispute.

  2. Assess two reasons why Airbus might benefit from treating staff as an asset not a cost. [8]

    Staff are not a typical resource like aluminium or a warehouse. They have much more intricate requirements, rights and feelings. By treating them like an inanimate resource, Airbus looses a key element of their employer-employee relations; they cannot build trust with their staff and nor can they construct an environment where employees feel seen as equals. This will reduce the productivity and the willingness to help of staff at Airbus, seriously damaging the company in future.

    By treating staff as as an asset rather than a cost, they can offer luxuries to them to entice them to work harder and to continue working at Airbus, rather than moving to a more appealing competitor. This will lead to greater productivity, lower absenteeism and an overall more appealing environment.

    Additionally, the positive environment that they will create for staff will aid in the recruitment process, allowing Airbus to attract more skilled staff to take up jobs within their firm. This requires very little additional effort on top of what Airbus offer their existing employees, so could save on marketing costs for recruitment. Whilst staff are a cost, they are also an asset, and by recognising the latter, Airbus can foster a much better relationship, which benefits all involved parties in the long run.

  3. Evaluate how Airbus staff may benefit from the collective bargaining efforts of ‘Unite’ rather than an individual approach to wage negotiations.

    Individuals have almost always got no clout, no bite. They can ask their manager for a pay rise and if their manager says no, they can’t do anything about it. They can accept it or try and get a different job. However, for most people this is entirely impractical. A union changes this balance by giving the employees power to make their voices heard. The main difference is that instead of an individual employee raising an issue over pay, a large group of employees can raise an issue together, backed by legislation to protect them and a union. A union can also take action to force an employer to comply with certain demands. Strikes and industrial action are the most extreme form of expressing a concern, and should only be used as a last resort. However, the threat of a strike is enough to make most employers seriously try to mitigate a situation.

    In Airbus’s case, the managers didn’t take enough action early on and it lead to strike action happening. This could not have happened without the union, meaning that employees would not have been able to be heard. So for employees, collective bargaining is both a useful and a vital tool.

    Individual bargaining may have occasionally been effective, but it would have created an uneven pay stratum, leading to inequality within an organisation.