Abbott’s secret war on Australian workers

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:

  1. regulating to require labour market testing in all cases before foreign guest workers are allowed;
  2. tighter regulation of the franchise sector;
  3. a tighter definition of “independent contractors” to reduce sham arrangements that remove ordinary worker entitlements from people who in truth are employees;
  4. portable basic annual and sick leave entitlements for casual workers;
  5. 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.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
This entry was posted in Politics - national. Bookmark the permalink.
Subscribe
Notify of
guest
16 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
paul frijters
paul frijters
6 years ago

Hi Ken,

a passionate plea, which is nice to see. A few comments:

1. One of the big mistakes I see left-leaning commentators in this country make time and time again is to buy into the fantasy of ‘neo-liberalism’ or ‘de-regulation’. This is not what has happened, nor what is happening. We have never had so much regulation. Nor have we ever had so many sheltered work-shops. The hidden unemployed are now in school administration, hospital administration, ministries, super-funds, etc.

2. Labor unions were, and are, devices to share rents. They can only arise in imperfect markets and there is a straight fight between workers on the one hand and employers on the other for surplus rents. To buy into the rhetoric that unions distort markets is already to have lost to plot. They only can arise because of imperfect markets and are simply a reaction to employer power created by imperfect markets (such as natural monopolies or government-created monopolies). To reduce union power without addressing the employer power simply means you are allocating the surplus to employers (which is a political choice).

3. There are lots and lots of new unions. But they are the small unions of the wealthy and connected. The Property Council Australia. The Australian Medical Association. The associations of the finance industry and banks. The VCs of the GO8 and the 39 unis. Such are the new unions with small membership whose main role is to maintain and increase the market imperfections that protect their monopoly positions and their cartels. They are anti-market unions. These unions are thriving and winning. Politicians on both sides now do their bidding in many areas.

I truly think it is a huge mistake to buy into the ‘neo-liberal’ fantasy description of what is happening on the right-wing of politics. By adopting that rhetoric, you are setting yourself up for losership status. You make the other side sound like it is simply going with the flow of economic history and your own side as losers shouting against the inevitable forces of globalisation. Nothing could be further from the truth, but your own rhetoric makes it look like the truth.

So my main advice: change the rhetoric from ‘save us from neo-liberalism’ to ‘the population should not suffer from the privileges, rent-seeking, and political cronyism of the few’. The latter reflects the reality, the former the rhetoric that the other side would like you to use.

There is another element here, btw, which is that in hindsight the Hawke/Keating governments created an awful lot of the sheltered workshops that are now such a problem. The way in which super-annuation was set up and the public banks were privatised are cases in point.

John Walker
John Walker
6 years ago
Reply to  paul frijters

And if there is a secret script, it was written by Ed Wood , on a bad day.

GrueBleen
GrueBleen
6 years ago

Seconding Paul, a passionate plea, and a well observed one too.

And good of Paul to point out so clearly that ‘unions’ arise because of market ‘failures’ (ie the failure to share rents more or less equitably, at least as judged by the labour providers).

But of course we have had ‘contractors’ for a very long time. My father was a bricklayer in the 1940s, 50s and 60s and he never held a “job” as such. Life was a series of short term ‘casual employments’ until the brickwork on a building (usually a house) was finished at which point my father was automatically unemployed again (those were the days when, periodically when work was slow coming that my father, along with many others, would turn up at the Age office (Spencer St) very early in the morning (around 1:00am) to get the early jump on the Age job ads on Wednesday morning. Aah, those were the days.

Personally, I spent 36 years in the ICT industry (as now named, then named EDP/ADP, later IT) starting in 1974. I spent about half my career quite secure (and well salaried) in employment (though I changed employer moderately frequently), and about half as a single ‘independent’ contractor (the usual $2 company setup). In those days, independent ICT contracting was very profitable indeed. Now, not so much (the ‘good times’ are pretty much over).

Contracting can be good if demand for your labour is high – as it was throughout most of my working time – but less so otherwise. My father’s fortunes were somewhat up and down – but not always down as they seem to be now.

Andrew Norton
6 years ago

And small businesses (effectively, what many franchises are) have always operated under the radar of regulation, including IR regulation. They do not ask customers for and pay their staff in cash because this is the best financial technology available…

Rex Ringschott
Rex Ringschott(@rex-ringschott)
6 years ago

An excellent post Ken, it is really quite scary how the politically powerful are unmoved by the squeezing of Australian workers down the cost curve and out the reject chute through outsourcing, offshoring, etc.

A recent 7:30 report item on a Chinese buy-up of prime dairy land, made me realise how the small scale Australian dairy farmer will not have a hope of competing against a huge Chinese consolidated dairy – especially when the Chinese will be able to import their own labour via the FTA(more cheaply that Australian labour too no doubt), and will get the lions share of the Chinese market through their existing connections. What hope do the Australia dairy farmers have in this new regime?

rog
rog
6 years ago
Reply to  Rex Ringschott

One of the problems particular to agriculture is that the average age of farmers is increasing – as a career option young people are just not attracted to such an uncertain capital intensive lifestyle. This leaves an opportunity for foreign investment in both cash and labour.

Rafe
6 years ago

Ken,
Would you like to spell out what you regard as the five or six primary principles of classical liberalism? And your sources for that perception.

paul walter
paul walter
6 years ago
John Walker
John Walker
6 years ago
Reply to  paul walter

Paul asuming that the report is correct ( it seems more than a bit at odds with other reports about the car industry in general) , then the decision by Joe looks like a good candidate for the Darwin award ,of the year.

paul walter
paul walter
6 years ago
Reply to  John Walker

The main mistake the government made was not euthanasing itself before it got elected.

Peter Taylor
Peter Taylor
6 years ago

An excellent post, thanks. I agree with Paul’s suggestion that language should be explicitly descriptive. You end with: “Surely it isn’t beyond the wit of a competent Labor leader to explain and sell that vision, and develop policies that support it.” It seems the problem is not the lack of wit, but that the Labor party also espouses ‘neo-liberalism’ as part of its unquestioning loyalty to the USA. Also, the public are poorly served by mass media that question nothing while reporting only the government line on everything, including the so-called stock ‘market’, which is no longer a market, being manipulated by large corporations that buy back their own shares to give the impression of positive activity. Without a truly independent mass medium, there is no hope of improvement.

derrida derider
derrida derider
6 years ago

“… their aim … 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”
The infamous 1933 editorial in The Times put it better. It began: “A certain level of unemployment is necessary to preserve the proper relation between master and man…”. Though to be fair that editorial did go on to wonder if perhaps the 1933 level was not a tad higher than strictly necessary.

“casual employment ….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”

Only one out of three correct there, Ken. Casual work pays more (and is associated with higher work satisfaction!) than permanent work for the same job – as you’d expect both from award loadings and from market-driven compensating differentials. See Mark Wooden’s stuff on this. The issue is that its low paid occupations where people work casually, not that casual work is low paid for a given occupation. The ABS defines “casual work” as work that doesn’t have paid leave (annual or sick) so you’re correct by definition there – though be aware that this is quite different from the OECD’s definition of “precarious employment” or anyone’s definition of “part time” work, so be careful about cross-country comparisons. And it’s future income prospects, not whether your leave is paid or not, that banks offering mortgages are interested in.

The proportion of the workforce working “on their own account” (in the ABS classification was actually higher than the early 1980s than now. We had then a tax system with high marginal rates for high income earners but in those days it was pretty easy for “self-employed” people to dodge those rates. IOW incorporating yourself was a tax dodge; it still is, but not nearly to the same extent. Now its driven much more by industry structure as you point out.

My bottom line here is that changes in the labour market and its institutions have been much less important in driving inequality than the deeper mechanisms prevalent throughout the developed world. The workplace relations agenda is simply not as important as either side claims. As Mark Zuckerberg recently said “the machines mean there are just fewer and fewer really useful things that humans can do for a living”. IOW the machines do not destroy jobs – they just destroy “really useful” ones and replace them with less useful ones. Wages and conditions primarily reflect, rather than create, that reality.

Me, I’m for a generous Basic Income and then let the market rip – let’s defetishize work and take it from there. For it’s the work fetish that creates that “proper relation between master and man”.

paul frijters
paul frijters
6 years ago

“As Mark Zuckerberg recently said “the machines mean there are just fewer and fewer really useful things that humans can do for a living”. IOW the machines do not destroy jobs – they just destroy “really useful” ones and replace them with less useful ones. Wages and conditions primarily reflect, rather than create, that reality.”

I disagree completely and utterly with this statement as it pertains to the majority of workers in our society. The logical corollary of this statement is not that our society will get used to valuing work less than it used to (which I know is what DD hopes will happen), but that large parts of the workforce will not have a place in our society (rather tha just the bottom 20%). And, as I argued above, it is completely wrong about the main sources of inequality in Australia.

GrueBleen
GrueBleen
6 years ago

DD,

Yep, incorporating oneself was indeed a tax minimisation ploy, and not all that long ago a very effective one (as I can personally attest). Is it so effective now ? Probably not.

But I can’t agree entirely with your casual work thesis – it certainly didn’t work out like that for my father. He was neither lowly paid, nor highly paid, he was just paid the going rate, and I don’t think his job satisfaction was noticeably high. But he had no sick leave or holiday pay and he certainly had no job security.

derrida derider
derrida derider
6 years ago

Oh, as a BTW Paul is quite right about union/employer fights being about rents and hence only arising in imperfect markets. But ALL labour markets are highly imperfect – employers innately have local monopsony created by the risk and difficulty of finding another job match (which will, of course, be greater the harder it is for the worker to find one) . The usual language unions use is “unequal bargaining power”, but it is the same argument less tightly specified – it’s a game with asymmetric information and costly search.