Commonwealth Bank: record profits, record job cuts
by Peter Mac The Commonwealth Bank of Australia (CBA) has announced a net profit of $2,665 million for the year ending June 2002 (up 11 percent on the previous year), and that it intends to sack 1500 staff in the coming year. Despite significant losses associated with the collapse of Enron and Pasminco, in the last financial year the Bank added $327 million to its funds under management. Retail deposits grew 10 percent to $64.2 billion, and housing loans soared 16 percent to $92.9 billion. The growth in profits in recent years has moved in inverse proportion to staff levels. The more staff they cut, the bigger the profits. In the four and a half years to February 2000 the CBA reduced its full-time staff by 6000 positions. The numbers on the books then rose with its takeover of the Colonial Bank, but since then another 7537 positions have been slashed. If the newly announced job cuts go ahead then more than 15,000 jobs will have been destroyed since the mid-'90s. No wonder they are making such huge profits! The Bank last week acknowledged that the 2002-2003 financial year's massive returns were due to the hard work of its staff, on which it lavished great praise, only to reward them with the promise of more sackings. The CBA plans to spend $120 million this year to cover "systems changes, re-engineering of overall processes and staff redundancies". In a wonderful example of double-speak, the Bank then announced that despite these initiatives it nevertheless did not intend to engage in "restructuring". Although the Bank will "take a $120 million post-tax restructuring charge in 2003", CBA chief Executive David Murray commented that "We prefer not to if we can avoid it as (restructuring provisions) represent an element of profit smoothing." Whichever way the bank cares to describe it, their intention is still to engage in a mass elimination of jobs. The bank expects to hire some 550 new staff, but had previously nominated some 500 employees for retrenchment, and has now announced that it intends to issue a further 1550 members of its staff with their marching orders. The bank noted that: "While every attempt will be made to redeploy displaced staff, where this is not possible staff will receive a redundancy package." However it is done, there will be a net loss of another 1550 jobs this year. The bank also alluded to economically difficult times ahead, in a weak attempt to justify its current huge profit rate and its ruthless staffing policy. This may also be a hint that further cuts lie ahead. "Against the background of this uncertain and challenging environment, the bank needs to adapt in order to ensure its continued competitiveness", thundered the Bank's CBA CEO, David Murray. Meanwhile, the remaining staff slave away under mounting pressure of work and the stress of dealing with irate customers who are sick of the long queues and ever mounting profit-swelling fees. The bank says it will at this stage retain some branches that it had previously scheduled for closure: At best, this is a temporary measure. The overall number of bank branches will certainly not increase, and no attempt will be made to rectify the personal, social and economic damage caused by bank closures in recent years, particularly within rural and regional communities. The employees' union, the Finance Sector Union, is reluctant to take industrial action regarding the retrenchments, because of the Howard Government's industrial relations laws, which could incur huge penalties outside enterprise bargaining periods. The union has already extracted an extra month for employees to seek alternative employment within the bank, and is gearing up for a fight to ensure that management really does make every effort to redeploy displaced staff. The union is planning a "work-to-rule" campaign. The Victorian Secretary of the FSU, Ms Sharron Caddie, commented: "It would be difficult for the union to take protective industrial action, but the bank is relying on remaining staff to pick up the work and we will do what we can to make sure this doesn't happen." The CBA has scrapped plans to reward its executives with a very handsome options package, partly because of objections from its shareholders, but also because of public criticism of HIH executives who helped themselves to amazingly generous "packages" from the corporate till. Criticism from the public about its huge staff redundancy rate has had little or no effect on staffing policy. The bank is in large part obliged to the Howard Government for its profits, which derive in large measure from its ability to screw down employee numbers. After all, it was the Government that brought in the industrial relations laws outlawing industrial action outside enterprise bargaining periods and undermining the centralised award system. With regard to the bank's profits and its employment policies, Treasurer Peter Costello attempted to assume an air of impartiality, announcing loftily that "It is certainly not the policy of this Government to argue the merits or demerits of bank decisions." But he couldn't restrain himself, and immediately went on to praise the bank's decision to maintain its current number of branches, and also its profit result, which, he said, highlighted the health of the banking sector as a whole. It's good to know who your friends really are.