Posted: October 18, 2005

IR changes will not increase jobs!

Today I listened to a most extraordinary interview on the ABC AM program with the Federal Workplace Relations Minister, Kevin Andrews. Transcript here. The topic was the Government's pending industrial relations changes and the minister was responding to the accusations from the Salvation Army that the legislation would be unethical. The Minister said in part when he was challenged about this:

... the most fundamental ethic is to ensure everyone who wants a job can get one. Unemployment is an evil. It's especially evil when it takes away the hopes and dreams and aspirations of young people and, as the Salvation Army themselves say, giving the person an opportunity to get a job is really the first step in being able to be part of the life of this community.

So far faultless logic. I have been railing against unemployment for all my academic career which has unfortunately spanned the period of persistently high unemployment in this country and beyond. I grew up in the period of full employment and saw the advantages that bestowed on the most disadvantaged workers in our society. My adult life has been mostly spent observing unemployment and human waste. So I agree with the Minister here. So why do I think the proposed industrial relations changes are the scourge of a civilised society and the anathema to what is required to restore full employment?

First, the minister. When challenged about the fact that the proposed changes will push the bargaining power towards the employers who will be able to force employment contracts onto workers which dramatically undermine the existing minimum conditions of pay and standards, he said "Well two things. Firstly, there are protections there, and we know that about four in ten people within a year of getting a job have moved on to another job. And so it is very much a starting place for people in getting a job." This is the myth often trotted out, especially in the context of our youth being forced to take burger flipping jobs for pittances which are dressed up by the Government as apprenticeships. They not only provide no sustainable skill development but typically lead to another casualised, low pay, dead-end job. There is little evidence that those who do not participate fully in the tertiary education get any benefits in terms of career advancement from these jobs.

The minister then continued:

All I'm saying is is what the Salvation Army themselves said, and that is the most important thing for a person to get out of poverty - the only way ultimately for a person not to be on welfare - is to have a job. A fundamental responsibility of government is to create the conditions under which every Australian who wants a job can get a job, and that's what we're doing.

I agree again especially about the responsibility of government but the wheels fall off when he claims that his government are actually fulfilling that responsibilty. More after we hear more from the Minister.

When challenged about the fact that the Government will allow vulnerable workers to trade in paid public holidays, shift loadings, etc, the Minister trotted out the tired party line.

Those things will only be given away, will only be changed, if a person agrees to change them ... [asked about how someone so vulnerable can exercise choice he responded] ... Well that overlooks the fact that we've got a shortage of workers in Australia today, and the way the demographic profile is changing with our ageing population - this is only going to compound in coming years and decades. The first ethical principle so far as government is concerned in this area is to create the conditions under which as many people in this country can get a job, can be employed, and I think it's an evil, particularly for young people, who have got hopes and aspirations, I suppose we all have, but particularly young people have, to find themselves in a situation where they can't get a job. We can't be complacent in Australia. We may have unemployment down to five per cent, but that still means that there are tens of thousands, if not hundreds of thousands, of people who still don't have a job, and not having a job is something which affects each of those people individually.

Its hard to get your head around such cant! There are currently 1.8 million Australian workers who do not have enough work or who do not have work at all. Billions of dollars have been pumped into the ideologically-driven Job Network ostensibly to train the most disadvantaged workers and make them job ready (to use the vile nomenclature of the Government). So already something is wrong there. If there is a skilled shortage with 1.8 million workers wanting more work or some work and they have been run around the Job Network circus for years by pernicious and mean-spiritied Government policy aimed at compliance rather than personal development, then a major policy failure is being revealed.

The fact is that there is not a skill shortage. There are some occupational areas with modest tightening but overall the labour market is slack and slackening more. But then we consider this nonsense about how the proposed industrial relations legislation will fulfill the ethical responsibilities of the Government to generate full employment. I fully understand how the macroeconomy works and how it interacts with the labour market. There is nothing in my understanding that tells me that anything I have read in the Government's own IR advertising pamphlets will provide the system-wide liquidity necessary to stimulate aggregate demand sufficient to meet the desire by the private sector to save yet at the same time underpin enough new jobs to employ all those in need. In fact, I predict that aggregate demand will decline as workers incomes are undermined. Key sectors will suffer from the fall in demand first. In New Zealand, the workers were forced to trade in holidays as the Employment Contracts Act pushed power to the employers and the domestic tourist industry suffered badly.

It is arrant nonsense to assume that these changes will stimulate demand to the levels required to provide jobs for all that want them. The consequences will rather be a race to the bottom with those workers already employed under pressure to surrender their wages and entitlements and very little impact at all on unemployment. There may be some shuffling of the unemployment queue as workers are traded off by employers intent on undermining existing wages and conditions. Desperation is an ugly source of incentive.

If the Government was truly wanting to generate full employment and maintain strong wages growth and the commensurate high productivity growth that accompanies a high wage economy it would not push the bargaining power towards the employers in this way. It would ensure there was sufficient net spending to stimulate jobs growth. The easiest and most inclusive way to achieve this is to introduce a Job Guarantee. That would be an ethical thing for the Government to do. But instilling fear into vulnerable workers and forcing them to act upon the basis of desperation and poverty is really equivalent to State terrorism and we should declare war on it. But then this Government and its predecessors have been running the policy agenda such that high unemployment has persisted for 30 years now. It is a joke for the Government to now say it has found the answer to unemployment.

Blog entry posted by bill