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Issue No. 151 | 06 September 2002 |
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Looking for the Light
Interview: Packing a Punch Bad Boss: Basher Takes Back Passage Unions: Five Star Shafting Economics: TINA – Rest In Peace International: Against Bush's "War on Terrorism" Environment: Saving the World History: A Radical Scribe Poetry: With A Little Help From My Friend Satire: Colonel Gaddafi Promotes Himself to General Review: Workplace Dictatorship
The Soapbox The Locker Room Week in Review Bosswatch Women
 Collex Decision is TerribleCharity Begins At Home
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Economics TINA – Rest In Peace
*********** The economy should serve the society. It is important to emphasise who should be the master and what should be the servant, because the priorities commonly seem to be reversed today. Our political leaders seem to expect us to adjust our social lives, and our social aspirations, in order to conform to so-called economic imperatives. That is the essence of the 'structural adjustment' process that has been creating such dramatic changes in recent years. The issue of unemployment and the working poor is a case in point. It seems that we are expected to accept the continued existence of a pool of unemployed people and a growing proportion of casual and low paid jobs as permanent features of the economic landscape. This is a bizarre situation, since the principal role of the economic system should be to provide productive jobs and decent material living standards for all members of the society. The Australian economy is failing this test, despite a decade of economic growth which our political leaders have trumpeted as indicating the success of their policies and the exceptional soundness of the national economy. True, the official unemployment rate has been clawed back from its recession peak of around 11% in the early 1990's to around 6 ˝% today. But the official rate is a gross underestimate of the actual underutilised labour reserves. Surveys by the Australian Bureau of Statistics indicate that there could be up to another 6% of 'discouraged workers' who do not identify themselves as unemployed because they have given up on the possibility of finding a suitable job in their locality. People who are working part-time but would like to work full-time comprise a roughly equivalent number. Another 2% might be added, comprising people on disability support pensions who could be considered in the potential labour force if more suitable jobs were being created. Add all those components together and the estimate of total underemployment looks closer to 20% of the Australian workforce. Newly arrived migrant groups face particular difficulties in these labour market conditions. This is part of the explanation for the notoriously higher incidence of unemployment in areas like Fairfield/Cabramatta with relatively high immigrant concentrations than in northern Sydney areas like Mosman and Hornsby. Australian Bureau of Statistics data shows that higher levels of education are correlated with lower levels of average unemployment but, interestingly, the gap between the unemployment rates of the Australian-born and migrants actively widens at higher levels of educational attainment (presumably because of difficulties migrants sometimes face in having their educational attainments recognised for employment purposes). There is evidence that the gap between the unemployment rates of immigrants and native-born Australians diminishes as labour market conditions improve. In 1993 the unemployment rate for foreign-born was 12.4% and native-born was 10.1% (a gap of 2.3%), but in year 2000 when the native-born unemployment rate had fallen to 6.2%, the rate for foreign-born people was only a little higher at 6.5% (a gap of only 0.3%). By March 2000, the gap had widened again, as the native-born unemployment rate rose to 6.5% and the foreign-born rate to 7.2% (a gap of 0.7%). These are aggregated figures and conceal the special difficulties faced by recently-arrived migrant groups and people of non-english speaking background. However, they do signal the importance of tackling overall labour market conditions. Migrants are less disadvantaged when labour market conditions are buoyant. What policy implications follow? Commitment to equality of employment opportunity requires measures to overcome the impediments to migrants accessing jobs. Policies which can help include programs for education and skill development, improving recognition of overseas qualifications, addressing obstacles such as english-language proficiency for NESB migrants, and improving the effectiveness of the Jobs Network as a means of helping people find what suitable jobs do exist. More fundamental are policies to get the economy on track so that there are jobs for all. Otherwise the policies merely shuffle the unemployment queues. The need for a strategy to create jobs for all is a matter on which all Australians - indigenous, old settlers and newer arrivals - have a common interest. The Social Costs of Unemployment and Low Wages Unemployment is particularly damaging to the social fabric because of its personal, social and economic costs. Personally, it causes hardship, not only because of the absence of income from work, but also because of the severance of social networks associated with the workplace. It can be very damaging to morale. Unemployment can also be damaging to health - mental and physical - which imposes broader costs on society because of the additional demand for health services. To the extent that unemployment is associated with a higher incidence of crime, that creates other social costs. It leads to more and more of society's resources being allocated to dealing with crime and the fear thereof, making the security services sector one of the major employment growth sectors. Therein lies an obvious irony - a major segment of job creation being driven by the adverse social consequences of an increasingly polarised society. The continuing existence of unemployment also has what economists call an 'opportunity cost' - the goods and services that society foregoes because people are not working in productive ways. A rational economy would mobilise the unemployed people for socially useful production, preferably in areas of their personal expertise and in ways that add to self-respect and social esteem. The proliferation of casual and low wage jobs also has damaging social consequences. Employers commonly say that it reflects an economic imperative - the need to have cheap labour and a 'flexible' workforce in order to survive in a competitive economic environment. Indeed, the effects of economic globalisation and neo-liberal policies, including the removal of tariffs on imported goods, have undermined the protection of their markets that some firms previously enjoyed. Some businesses have relocated overseas to take advantage of cheaper and more 'flexible' labour supplies: clothing firms relocating to Fiji or buying in garments from Fijian suppliers are a striking example. Does this justify the downward pressure on the already low incomes of Australian clothing workers, including outworkers who are mostly women of migrant background? Low wage production is a slippery slope which may seem rational for individual employers but it bodes ill for the economy and society in general. For the economy as a whole, low wage production creates predictable contradictions. Low wages undermine people's capacity to undertake the high consumption expenditures on which the buoyancy of the national economy depends. Unless the bulk of production is for export, the resulting problem of demand-deficiency can be a recurrent cause of economic recession, as J. M. Keynes emphasised more than half a century ago. And, if all other countries are pursuing the same low wage strategy, even export-orientation provides no escape from this problem - the contradiction simply becomes globalised. The economy, both nationally and globally, becomes ever more dependent on the luxury consumption of wealthy elites to continue driving the system. So growing economic inequalities come to be embedded into its normal functioning. Therein lie other contradictions. An increasingly unequal society is one in which social stresses intensify - leading to even more economic resources being allocated to 'social control'. A growing proportion of people become welfare-dependent, but the wealthy elites have become increasingly reluctant to contribute the taxes that would be necessary to finance an adequate social safety-net. Greater economic inequality is also not conducive to working together for common purposes. The willingness of society to address inherently collective concerns - most obviously the looming environmental crisis - is undermined by the growing emphasis on individualism and short run economic self-interest. Restoring Full Employment With Equity Changing political economic direction is not easy. But tackling the problem of unemployment is an obvious place to start. Capitalism has always been bedevilled by this problem, except for periods of war and, notably, the period from the end of the second world war until the early 1970's. What 'full employment' would mean today is probably quite different from the latter period when it was the norm in the Australian economy. That unusual post-war 'long boom' was a period of steady growth in 'blue collar' jobs as manufacturing industries were expanding. It was also an era when the 'male breadwinner' model was characteristic of the division of labour within households. These features gave 'full employment' a historically distinctive character. Now, manufacturing is no longer the engine of employment growth and many more women have entered waged work. So both demand and supply conditions in the labour market have fundamentally changed. A modern conception of full employment must stress the more equitable distribution of work and its link to a more equitable distribution of incomes. The French social scientist Andre Gorz has written extensively about how we might seek to reduce total lifetime working hours, giving more flexibility to workers themselves to determine inter-temporal patterns of full-time work, part-time work, education and leisure while maintaining a relatively steady wage-income stream (see for example Reclaiming Work: Beyond the Wage-Based Society). More pragmatically, the French government has legislated to impose a ceiling of 35 hours on the length of the working week. Thus runs counter to the Australian trend which, in recent years, has seen an increasing number of people working longer than standard hours, including unpaid overtime. There is evidence that both under-work and over-work is associated with a greater propensity to ill-health, so anything that produces a more equitable distribution seems worthy of consideration. Job creation could also be promoted by more actively interventionist industry policies. Harnessing the growing volume of savings in occupational superannuation funds for an integrated program of national industry investment is one avenue through which this could be pursued. At present, the short-term orientation of superannuation funds' investment strategies is counter-productive, both for retirement incomes and for national economic development. Channelling workers' savings through a national investment scheme would also open up the possibility of linking industry policy to restructuring for ecologically sustainable development. Therein lies the possibility of significant job creation, contributing both to a more positive national balance of payments and to harmonising economic and environmental goals. The principle of 'productive diversity' also warrants more attention. It is a basis for taking advantage of the diverse skills and economic capabilities of a multicultural society. A society genuinely committed to equality of employment opportunities should see ethnic diversity as an asset rather than a problem. This has been stressed in an important book by Bill Cope and Mary Kalantzis, Productive Diversity: a New Australian Model for Work and Management, and its policy implications are being increasingly discussed in forums concerned with both economic productivity and equality of employment opportunities for different ethnic groups. These are just a few examples of principles and policies that an alternative economic strategy could emphasise. They provide a counter to the prevailing neo-liberal policy program which has shown itself to be a class-biased strategy, generating vast incomes for some privileged people but ignoring the economic needs of less advantaged socio-economic groups. Chief executive officers in large corporations have been rewarding themselves with massive remuneration packages, with no evident connection to productivity, claiming that such rewards are necessary in an internationally competitive marketplace. This 'race to the top' contrasts strikingly with the 'race to the bottom' imposed on their lower-wage employees. The current round of corporate collapses reveals the shaky rationale for this strategy. It does not provide the basis for a viable economic and social future. TINA: RIP Our political leaders, wedded to the neo-liberal perspective, have often said that 'there is no alternative'. This has been labelled the TINA syndrome. But in economic and social policy there are always alternatives. As the problems of economic and environmental crisis bite harder, it now seems particularly appropriate to consider some progressive alternatives. Let's bury TINA and let her 'rest in peace'. Frank Stilwell is Professor of Political Economy at the University of Sydney
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