This is the second of two posts musing about Labor’s failure to deal with the full implications of the neoliberal revolution that the Hawke-Keating government unleashed from 1985. That revolution was significantly easier for the Coalition to embrace, because extreme classical liberal ideology was already a part of its policy gene pool.
For Labor, however, neoliberal policies were almost wholly antithetical to the party’s history, culture and raison d’etre. Although Paul Kelly’s conception of the Australian Settlement is a bit simplistic, it provides a useful framework to understand the extent of the shock to Labor values. The White Australia Policy had already been swept away in the 1960s and replaced by multiculturalism by the Whitlam government. But the aftermath of the Arab oil shocks and the collapse of Bretton Woods convinced Hawke and Keating, no doubt under heavy tutelage from Treasury and Finance bureaucrats, to jettison the other two major pillars of the Australian Settlement: tariff protectionism and completely centralised wage fixing by way of arbitrated awards.
It was argued at the time that Australian wages and conditions had been featherbedded by protectionism and the arbitration system, we had become internationally uncompetitive and would soon become a “banana republic” or the poor white trash of Asia if radical action wasn’t taken. Deregulation, especially of the labour market, was the answer. I remember (but can’t now find the quote) someone from the newly formed HR Nicholls Society commenting that their aim at least was to restore competitiveness by engineering a situation where every worker would be motivated because they would come to work every day afraid they might lose their jobs unless they toed the line.
As Labor leaders, Hawke and Keating did not embrace the extremes of HR Nicholls Society aspirations. Instead they brokered a series of “Accords” that forced down real wages in return for a “social wage”. Today, under the most ideologically right wing Coalition government Australia has ever known, we are experiencing the final outworking of those Hawke-Keating deregulatory decisions, and it isn’t pretty.
Long term unemployment among lower skilled workers is at record levels, as our remaining large-scale manufacturing businesses close up and shed staff. Most of these people are on the scrapheap permanently, with no realistic hope of retraining and obtaining meaningful employment. Hence ghettoes like Elizabeth in SA, and Broadmeadows, parts of Geelong and Dandenong near Melbourne. Former Rudd and Swan speechwriter Dennis Glover writes powerfully about them in his recently published book “An Economy is Not a Society“, while failing to suggest any real solutions.
Meanwhile, corporations continue to “downsize” and outsource their workforces, either as casuals workers employed by labour hire companies and with no job security, sick pay, annual leave etc; or as “independent” contractors with an equally complete lack of security or any of the protective terms and conditions for which the trade union movement has fought for more than a century. Although I don’t condone the thuggery of the CFMEU, it is no coincidence that the building industry is today the focus of industrial militancy. Its businesses have long been the most enthusiastic implementers of (spurious) “independent” contractor arrangements and equally dodgy casual worker arrangements mediated by labour hire companies, often run by underworld characters like George Alex or Mick Gatto.
Some Labor-aligned pundits like Greg Jericho argue that casualisation of the workforce isn’t really a problem. The actual percentage of the workforce working on a casual basis rose significantly to 19% after Hawke-Keating deregulation (with “independent” contractors making up around 9% of the workforce), but has stayed overall at that level since about 1996. Apologists point to surveys showing that many casual employees when surveyed give a range of positive reasons for “choosing” to go casual. They include the opportunity to learn new skills and to work on “interesting projects” or being able to “control their destiny”.
But how many of them really did freely choose casual employment, which is usually lower paid than full-time permanent employment, has almost none of the leave and other benefits of a permanent job, and lacks the job security that allows borrowing from a bank to buy a home? Isn’t it more likely that many of these respondents “chose” casual work because it was all that was available, and then gave face-saving positive answers to surveys rather than be seen as desperate losers in the job market.
As for “independent” contractors, both my law firm’s previous legal practice software provider ActionStep and my current one LEAP have recently almost completely “outsourced” their workforces, with employees overnight becoming independent contractors. I strongly suspect the former employees did not embrace contractor status by choice; they either agreed or they didn’t have a job at all. Service to the customer is much less satisfactory, the outsourced contractors have “flexibility” but no security, but I’m sure LEAP is doing very nicely.
Nowadays the Coalition shills of labour market deregulation have a much more subtle propaganda line than the overtly threatening message of the HR Nicholls Society of the 1980s. They masquerade as the worker’s friend, helping them to stand up against the evil unions:
Speaking to SmartCompany, Small Business Minister Bruce Billson would not confirm or deny any specific changes to contracting law, but says the government has been pushing for clarification and more support for independent contractors as Australia’s workforce changes.
Billson says there are currently “quaint characteristics” to laws surrounding independent contractors and “inconsistencies” in the way the laws are implemented.
“I’d like to see clarity and certainty so small business isn’t left wondering what regulators and government agencies might come up with next,” says Billson.
“We want a more surefooted and certain environment for individuals seeking to make contributions to the economy in the very legitimate way.”
Billson blamed the “self-serving union movement” of the previous Labor government for making it more difficult for businesses and the self-employed.
“Fair Work was tasked at the behest of the union agenda, making life for independent and self-employed contractors more difficult than needed to be,” he adds.
Arguably the most repugnant aspect of the Coalition/business concerted push to turn Australia into a low wage grossly unequal economy like the US is the almost complete lack of effective regulation of the burgeoning franchise industry. As last week’s story on the 7-Eleven group starkly showed (not to mention United Petroleum and Australia Post), typical franchise arrangements/business models give franchisees little effective choice but to illegally underpay their workers if they want to survive in business. Hence the use of young unskilled workers and especially foreign students who can be coerced into accepting illegally low wages by threats of exposure and deportation for breaching their student visa work conditions. The remarkable silence of Abbott government Ministers in the face of these stories actually speaks volumes.
At the same time, we see experts being vilified by Abbott as “racists” where they dare to point out the incontrovertible fact that the China-Australia Free Trade Agreement will sacrifice Australians’ jobs at a time of high unemployment by allowing Chinese companies to import their own workers into Australia without doing any local labour market testing. As the 7-Eleven story shows, such foreign workers can readily be intimidated into accepting illegally low wages, despite largely unenforced rules requiring that guest workers be paid Australian wages under 457 and similar visas.
The Coalition may be afraid to overtly tinker with the Fair Work Act after its Work Choices political suicide under John Howard, but the Abbott government is clearly implementing a determined “race to the bottom” strategy to reduce ordinary Australians’ wages by stealth through all available indirect means.
Labor’s political and industrial wings have been largely ineffective in combatting these developments. Most Australians don’t even know it’s happening, despite the fact that wages have been flat for years now. Most of the mainstream media is totally disinterested, and tamely swallows the standard neoliberal nonsense pumped out both by the Libs and brainwashed Labor politicians.
We certainly can’t and shouldn’t wholesale re-regulate Australia’s economy. Hawke-Keating’s market-based deregulatory reforms were unavoidable, mostly a good idea, and have been largely successful. But markets aren’t self-regulating, they are human creations that need nurturing and some reasonable level of regulation to minimise exploitation of the powerless, nor in the real world are ordinary human consumers rational utility maximisers. There are many possible ways to mitigate the labour market abuses discussed in this post. They may include:
- regulating to require labour market testing in all cases before foreign guest workers are allowed;
- tighter regulation of the franchise sector;
- a tighter definition of “independent contractors” to reduce sham arrangements that remove ordinary worker entitlements from people who in truth are employees;
- portable basic annual and sick leave entitlements for casual workers;
- a negative income tax to underpin a social wage for low paid Australians whether or not they are in the workforce.
Why isn’t Labor talking about these or any other policies to fight back against Abbott’s war on Australian workers? Why can’t Mr Shorten even manage to get across the message that this war is happening under our very noses? Abbott’s version of neoliberalism is a nasty, brutish, greedy, fearful, bullying dystopia. Australians can see this, which is why he is so unpopular. They also know that society is more than just classical liberal market freedoms (important though they may be). A good society involves family and broader social bonds and obligations. We don’t like bludgers or cheats, but we’re mostly generous-spirited people (except towards asylum seekers) and we expect a society that is both prosperous and fair. Surely it isn’t beyond the wit of a competent Labor leader to explain and sell that vision, and develop policies that support it.