Can Labor and the unions fix wages running mass immigration?

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It looks like our Fake Left is intent on re-regulating the the labour market while flooding it with cheap foreigners. Via The Australian:

Labor leader Bill Shorten has pledged to hold further negotiations with senior union leaders about changes to the federal workplace laws he would seek to enact if he won power.

Mr Shorten received a positive reception from union officials when he gave a behind-closed-doors address to a meeting of the ACTU executive in Melbourne yesterday.

Union leaders said Mr Shorten gave no new policy commitments but promised to engage in further discussions with the peak union body about future changes to the Fair Work Act.

“He said he was prepared to go into deeper conversations about what the new act would look like (under a Labor government),’’ one union leader, speaking on the condition of anonymity, told The Australian.

ACTU secretary Sally McManus has promised to lead a national union campaign to pressure Mr Shorten to commit to sweeping changes to workplace laws in the lead-up to the next federal election.

Unions want the ALP to commit to easing legal restrictions on strikes, reduce the bargaining power of employers, impose limits on the use of casuals and labour hire, and give increased powers to the Fair Work Commission to arbitrate disputes.

The income situation is dire enough that some measures to re-centralise wages would be welcome. I’d be looking at wider and tougher awards for one. No functional liberal capitalist economy can allow its middle classes to be hollowed out.

But I would also be deploying a whole range of pro-productivity reforms and explicitly targeting a lower currency so that greater redistribution of income did not inhibit improvements to competitiveness. Labor has at least one joker in the pack on that front in its negative gearing reforms.

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Sally McManus is an old school labour market regulator, via The Australian recently:

Ahead of the NexGen17 organising conference in Sydney this week, McManus told this column the union movement had multiple targets in its sights: the Turnbull government, Rudd-Gillard era workplace laws, the Fair Work industrial umpire, the courts and a raft of economic and social policies.

“We will be building a movement of people to rewrite the rules and bring fairness back,” McManus says. “We need strong rights to protect our jobs from being casualised and offshored, to protect our wages, and to address the imbalance of power between employers and workers.”

McManus wants a rewrite of the Fair Work laws established by the Rudd-Gillard government and largely kept in place by the Abbott-Turnbull government.

These laws wound back the Hawke-Keating deregulation agenda supported by the ACTU at the time.

“It is clear that working people have had enough,” McManus says. “They can see the impacts of inequality being at a 70-year high in their lives and communities. The pendulum has swung too far one way.

“Insecure work is the biggest issue, with employers casualising or outsourcing whole workforces to labour hire. This, along with other weaknesses in our current protections for working people, is wrecking lives and wrecking communities.

“Our current laws also give too much power to employers, such as being able to cancel EBAs and ­casualise their workforce. As inequality and the power of multinational corporations has grown, working people’s rights have not kept up and are no longer ­adequate.”

However, as MB has chronicled at length. One of the most powerful, if not the most, forces sitting on wages is the policy of running mass immigration into an oversupplied economy. If Labor and the unions don’t address the horribly corrupted visa system and lower immigration to more reasonable levels then they’re going to be pushing shit uphill getting traction for wages.

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Curing an interview in The Monthly the fire-breathing McManus turned into doe-eyed Bambi on immigration:

McManus was first drawn to left-wing activism at the age of 17 during a protest against mass teacher sackings by the Greiner Liberal state government in 1988.

“It was the feeling of power that I had, surrounded by all those people, that I’ve only found replicated in similar circumstances where there’s been big collective actions,” she says. “I didn’t put my finger on it until later, but that’s where it started.”

The daughter of a railway worker and a clerical staffer in a Parramatta pharmaceuticals factory, McManus is fiercely proud of her westie identity. The snobbery and discrimination she encountered in more well-heeled parts of town helped shape her understanding of the world as a place where money and power are life’s great determinants.

“When you were growing up and you managed to get to the beach, which would take two and a half hours on public transport, you’d get there and people would say, ‘Go home, westie.’ You’d hear the place where you grew up being run down, the usual stuff about uggs and flannelettes.”

Carlingford also gave her a firsthand look at suburban Australia’s slow and fitful evolution on racial issues. In the ’80s and early ’90s, the far-right National Action party was terrorising new Asian migrants in Sydney’s west and tapping into a deep uneasiness at the sudden influx of non-white faces.

“When I was growing up it was a very white place. In the last few years of school we had immigration from China and Korea, and all of a sudden these kids turned up who were older than us – they had to get their HSCs, but they were 19 or 20 – and I remember the racism. People graffitied ‘Asians Out’ on the Epping highway and on people’s garage doors. I’m sure I wasn’t perfect either, I was growing up in that environment. It was a reaction to change that was happening very quickly.”

That experience has informed McManus’ take on how unions should respond to the Islamophobic and anti-immigrant sentiments that have fuelled the resurgence of One Nation.

“Parts of Australia are doing it tough,” she says. “They’re doing casual work, their kids can’t get jobs, their services are crappy because they’ve been privatised, and there’s this resentment: ‘Why aren’t things the way they should be in Australia?’ Pauline Hanson is giving them false answers to that, but she’s providing an answer. Our role in dealing with that is doing our job – telling people the truth and actually having a program that’s going to make a difference in people’s lives.

“National Action and people like that had their vision of western Sydney, but that’s not how it’s ended up. Now it’s one of the most successful places in the world where people from many different cultures live together.”

Too true. But immigration is also an immensely powerful purely economic input and if you pretend that it isn’t then it may well wreck your other plans.

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Labor is better placed to shove more of the post-mining boom adjustment off wages and onto capital, most obviously via the negative gearing reforms. But it should not kid itself that mass immigration will help in this project.

If Labor doesn’t deliver labour market reform within a broader framework of improving living standards then it could deliver the worst of both worlds with mass immigration still choking productivity, fighting a re-regulated labour market that makes it even worse.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.