The Mining Sector in Australia - Case Study Example

Executive Summary The mining sector in Australia is witnessing problems which have been compounded due to different public relation issues like lack of infrastructure, lack of manpower, currency fluctuations, rising cost and so on. This has impacted all the organization working in the sector and BHP Billiton is one of them. BHP Billiton as a result in facing difficulty in carrying out operations and one of the most severe issues in front of the management is associated with the acute shortage of manpower. This has been aided by the 457 visas which were granted to skilled migratory workers. The overall situation has given rise to a crisis as the Fair Work Act has increased the role of employees and provided them with more power. This has multiplied the opportunities for employees and has impacted the overall working environment. The stakeholders in their regard especially the government hasn’t been able to deal with the issue and has thereby complicated the entire matter. This requires proper development of strategy from the stakeholders which will look towards dealing with the crisis and ensuring that the mining sector shows efficiency and gains from the manner in which the work will be carried out. Table of Contents Introduction 3 Purpose of the report 3 Issues in the Mining Sector 4 Fair Work Australia 5 Issues the Mining Sector if facing 7 Major Public Relation Issues for BHP Billiton 9 Role of Stakeholders 10 Conclusion 11 References 13 Appendix 15 Introduction The entire world fraternity has developed laws governing labor and has continuously evolved the labor market by developing better reforms. This has brought the required changes and has provided more power to employees which has strengthened their bargaining power and has ensured that the employees are not exploited. The Fair Work Australia is one such reform in that direction which improves the overall condition of the employees and determines the manner in which laws are governing the Australian economy. Organizations by developing a healthy relationship between the employer and employees are able to reduce the differences and work together as a unit. Industrial relation thereby serves the purpos of building healthy relationship between the employer and the employees so that the daily activities are carried out in the most effective manner. Purpose of the Report The report looks towards analyzing the different industrial relations issue which BHP Billiton has faced. BHP Billiton works in the mining sector and has faced different industrial relation issues which have restricted their performance. The report analyzes the different industrial relation issues and looks to link those with the Fair Work Australia and focuses on developing healthy relation so that the organization is able to adhere to the guidelines provided by the government. The report also highlights the different areas which BHP Billiton needs to work on so that the different industrial relation issues are better handled and will multiply the manner in which working condition improves. Issues in the Mining Sector The mining sector in Australia contributes largely towards the development of the economy and contributes positively towards the growth in GDP. The mining sector has contributed positively towards the growth especially after the global financial crisis. The concept of building healthy relations has strengthened with the passage of time. Developing healthy relationships helps both the employer and employees to perform diligently and ensures the required focus through which the objectives are achieved. Thus, industrial relation looks towards developing healthy relationship by removing the differences which exist between the management and the employees and fosters a culture through which better relations are built (Hodgson, 2006). This process helps to use the resources in the most productive manner and helps to divert all the attention and resources in a manner through which the goals will be achieved (Almond and Ferner, 2006). Organizations which are able to bring the required transformation will thereby be able to develop positive synergy and use the resources towards the growth of the business. Healthy relations also helps to keep the workforce motivated and develops the required framework where employees will be ready to change and work for the development of the organization. The effect will be positive as the production process won’t be affected and help to ensure maximum utility in using the resources effectively (Bray Waring and Cooper, 2011). This will help the organization to use their efforts for the bigger goals and will help to coordinate the activities in such a manner that the performance of all will get enhanced (Ackers, 2002). Increasing reforms and more powers being given to employees to raise their voice has made it mandatory that organizations focus on building healthy relations. This will help to reduce the external pressure from trade unions and other bodies and will provide the required time when the business can focus on improving their working style. This will also develop a positive image in the society and help to enrich societal satisfaction as the actions of the business will be towards developing healthy relations (Korczynski, Hudson and Edwards, 2006). This will also help in the future as the organization based on it can identify the required talent who can contribute towards the future goals of the business and ensure better role within the organization. Fair Work Australia The Australian economy has witnessed widespread changes with regard to the employment laws prevalent in the country. Previously, the Australian government developed labor policies by relying on the Corporation Power which falls under the Australian Constitution and has been replaced by the Fair Work System. The Fair Work System has been slowly replaced by Fair Work Australia which has filled the gaps which existed in the previous reforms and developed better rules through which employees would be able to contribute positively towards the growth of the economy and reduce the chances of exploitation of the employees (Fair Work, 2013). The Fair Work Australia ensures that employers are educated, developments are monitored and interventions are possible from government bodies if the interest of the employees is exploited. This will help to improve the development of the economy as the economic impact will be positive and will help to improve the chances of achieving higher growth rate. Development of Fair Work Australia has ensured that the competitiveness which Australia had lost after the recession of 2010 was gained (Fair Work, 2013). Fair Work Australia has helped in finding out development policies as the legislation aims at removing the enterprise agreement clause and restricts engagement of contractors and on hire basis. This thereby ensures that employees whether they are hired on a full or part time basis as contractual labors have to be paid the same compensation as those paid to the other employees. This has reduced the differences between the employees and the construction industry has been benefitted from it. This has transformed the entire business and improved the living status of people as shown below (Fair Work, 2013) The development of policies which looks towards reducing the differences which exist between the employer and the employee has improved the overall performance and thereby increased the supply of money. Increase in the money supply will ensure that the spending power of people improves which will make people different products and services present in the economy. This will also make certain section of the society which to transform their purchasing habit as the money supply increases. If along with it the country witnesses’ inflation then the value of the current depreciates and things becomes expensive. This will translate into increased cost which will make it to ensure the same business and growth rate. In addition to it changes in the exchange rate has a bearing on the international tourist as Australia look towards attracting a lot of tourist. An increase in the value of the currency through an increase in the exchange rate will make the visitors and the tourist to look towards some other destination and also make them use different mode of communication (Fair Work, 2013). This will have an effect on the number of people visiting the country. The Fair Work Australia on this aspect has looked towards ensuring that the overall process helps the economy to develop different parameters to improve their performance. Issues the Mining Sector if facing The mining sector is facing different issues which has complicated the situation for BHP Billiton and has made it difficult to carry out the different activities. The different issue which is being witnessed in all directions has affected the manner in which the mining industry works and has doubts over the future of BHP Billiton which performs in this sector. Some of the major issues which the mining sector presents are as (Edwards, 2003) Resource Nationalism: The Australian government to preserve the mining sector and to gain long term advantage of mining has ensured protectionism in the mining sector by ensuring increased taxation and reducing foreign ownership. This has impacted the working of BHP Billiton as to carry out their activities investments have reduced as foreign entities are not allowed to participate as owners. The uncertainity and destruction which has arisen due to sudden changes in the policies of the government hasn’t provided the required time for BHP Billiton where they could manage their resources differently and ensure better operations for the future. Skill Shortage: The major problem which BHP Billiton is witnessing in the mining sector is the decrease in manpower which has made it difficult to carry out operations. This has been due to the development of other investment sector which has provided better employment opportunities and has resulted in a shift in employee availability. This is matched by the fact that 457 visas have been cancelled due to increasing migration of employees and have resulted in complicating the manner in which the different issues will be addressed (Bach, 2005). This has impacted the overall working situation and has made it difficult to carry out the normal activities. Infrastructure Problem: Continuous use of minerals has depleted the minerals which are available for further use and requires development of infrastructure through which the mineral resources can be identified. The lack of initiative by BHP Billiton in this direction by not spending the required amount on infrastructure has resulted in a lack of infrastructure which will help to carry out the activities properly. This is seen in figure 2 in the appendix which shows the sntiments of the people regarding increased investmets. This has directly impacted the excavation work that was undertaken by BHP Billiton at different location and has raised the issues associated with infrastructure. Cost Inflation: BHP Billiton has been adversely affected by the inflation rate which has affected the cost of mining. BHP Billiton is witnessing a growth in cost of labor, currency fluctuation and changes in both the direct and indirect cost which has resulted in reducing the profits level and sustaining business for the long term prospect has become difficult. This is an aspect which has raised concerns and has also affected issues with employees as the organization look towards suppressing employees so that they are paid lower which will reduce cost (Arrowsmith, Marginson and Sisson, 2003). Price & Currency Volatility: BHP Billiton has been adversely affected by the rising prices and currency volatility which has made it difficult to ensure the actual cost of mining. This has made it difficult for BHP Billiton as the prices especially the cost have grown very high which hasn’t been matched by a similar increase in the selling price (Blyton and Turnbull, 2004). This has been shown in the appendix as figure 1 fluctuation in prices of currency which has thereby resulted in creating a negative impact Major Public Relation Issues for BHP Billiton BHP Billiton which works in the mining sector has to deal with different issues especially related to employees as the acute shortage of employees has made it difficult to continue operations at the present moment. This has also raised concern about the future strategy and requires proper development of mechanism to deal with it. BHP Billiton faces strong industrial issues as working in the mining sector impacts the organization directly or indirectly if something wrong happens. This can be witnessed from the case of 457 primary visa grants which were provided to temporary skilled migrant employees and had affected the working on the mining sector (Palmer, 2011). These issues raised concern regarding the policies of the government and also caught the attention of different stakeholders as the impact has been phenomenon. It is imperative that BHP Billiton maintains a good industrial relation to reduce the number of disputes. The problem will be solved as understanding each other and arriving at final decisions which doesn’t have a deep impact on one another will help to develop the required positive relations. This will reduce the number of strikes, lock outs and others which could have an effect on the ongoing process within the organization. Based on it the management will be able to impact the required training for the upliftment of the employees (Edwards, 2003). This was something which BHP Billiton was facing as continuous problems with the concerned parties especially unions impacted the working of the organization. The development of Fair Work Australia has further ensured major changes and has impacted the working of the mining sector. The Fair Work Australia aims at removing the enterprise agreement clause and restricts engagement of contractors and on hire basis. This thereby ensures that employees whether they are hired on a full or part time basis as contractual labors have to be paid the same compensation as those paid to the other employees. This has reduced the differences between the employees and the construction industry has been benefitted from it (Fair Work, 2013). The impact on the mining sector as a result has been immense as it has educated the employees and has thereby increased the number of opportunities they have. This has impacted the development of the mining sector as it has created a shortage of employees. BHP Billiton thereby has been greatly impacted by the issues related to employees and has raised concerns in all direction. The impact has been so huge that it has impacted the different shareholders and has resulted in reducing the business opportunities for the future. Role of Stakeholders The manner in which different industrial relation issues are being witnessed in the mining sector and BHP Billiton can be attributed to the fact that the different stakeholders haven’t been able to deal with the issues properly. This is clearly evident from the fact that the government was incapable of handling the 457 visa case which tarnished the image of the entire sector and created doubts in the mind of the people regarding the manner the organization is performing. This requires active participation from the government so that inflation is controlled and the business is able to gain efficiency. This will require that the government looks towards controlling the money in the economy and looks towards achieving a balance so that a balance is achieved between demand and the amount of money supply. This will also require that government absorbs the extra money in the system through the issue of bonds. This will have a positive impact on Australia as it will ensure that the benefits from Fair Work Australia are gained. This will help to multiply the effectiveness and develop the entire process through which developments are taking place. Along with it the other stakeholders will have to understand their role and have to look towards transforming the manner in which the organization works. This will ensure that the overall financial system gains efficiency and the development of different policies will ensure that the business in able to gain efficiency and the different products will be easily accepted by people all around the globe. This also allows comparison as the consumer can compare the products with the other players in the market and based on it develop the best possible strategy through which the business will be able to gain efficiency (Alexander and Lewer, 2004). This will help BHP Billiton to bring the required transformation through which efficiency will be developed and will help to multiply the efficiency in the entire system. Conclusion The paper highlights that the mining sector which contributes strongly towards the growth of the Australian economy is facing problems related to lack of infrastructure, lack of manpower, currency fluctuations, rising cost and so on. The overall working of different organizations like BHP Billiton has been affected. One of the major problems witnessed in BHP Billiton is the availability of manpower. The case of 457 visas which were granted to skilled migratory workers highlights the growing problem that the sector is witnessing. The development of Fair Work Act has ensured that the relationship between the employer and the employees improved as it has increased the role of employees. This has also helped the different stakeholders like the government to contribute positively towards the growth of the economy. The mining sector requires that the government carries out further duties and looks to strengthen the industry by development of reforms and protecting the industry so that positive effects are witnessed and the mining sector ensures proper growth. References Ackers, P. 2002. Reframing Employment Relations: The Case for Neo-pluralism. Industrial Relations Journal, 33 (1), 2–19 Almond, P. and Ferner, A. (eds). 2006 American Multinationals in Europe: Managing Employment Relations Across National Borders. Oxford: Oxford University Press Alexander, R. and Lewer, J. 2004. Understanding Australian Industrial Relations, Harcourt Brace, Sydney, 5th Edition. Arrowsmith, J, Marginson, P and Sisson, K. 2003. ‘Externalisation and internalisation of collective bargaining in Europe: variation in the role of large companies’. Industrielle Beziehungen. 10 (3), 363-92 Bach, S. (ed). 2005. Managing human resources: personnel management in transition. Oxford: Blackwell. Blyton, P. and Turnbull, P. 2004. The Dynamics of employee relations. Basingstoke: Palgrave Bray, M., Waring, P. and Cooper, R. 2011. Employent Relations: Theory and Practice, McGraw-Hill, Sydney. Edwards, P.K. 2003. ‘The challenging but promising future of industrial relations: developing theory and method in context-sensitive research. Industrial Relations Journal 36 (4), 264–282 Fair Work, 2013. Review of Fair Work Act. Business Council of Australia, Australia Hodgson, G.M. 2006. ‘Institutional economics and the analysis of work’ in Korczynski, M., Hudson, R. and Edwards, P.K. (eds). Social theory at work. Oxford: Oxford University Press Price, R. 2007. Employment Law in Principle, Thompson Law Book Company, Sydney. Journal of Industrial Relations (2011), Vol. 53, No. 3 (Annual Review Issue). Palmer, D. 2011. Starring into a skill abyss. Retrieved on April 5, 2013 from http://www.businessspectator.com.au/article/2011/7/8/interest-rates/staring-skills-abyss?OpenDocument= Korczynski, M., Hudson, R. and Edwards, P. 2006. Social theory at work. Oxford: Oxford University Press Appendix Figure 1: Currency Price Fluctuations Figure 2: Increase Investment in Mining Sector for Infrastructure Development Read More