From the Jericho sell-out today:
Australia’s union movement is in a period of soul-searching. After three decades of labour market “reforms”, the workforce has fractured and wage inequality has deepened.
Part-time and casual jobs have increased as a proportion of the economy, along with the number of people who say they want to work more hours. Household income is lower in real terms than it was in 2011.
Labor frontbencher Mark Butler has warned that the labour movement in Australia is fast hitting a tipping point where it might cease to exist as a broad-based institution in Australian society.
…To understand what is going on with incomes in Australia, we have to look closely at what is going on in the labour market. John Buchanan, a professor and the chair of business analytics at Sydney University, has long warned about Australia’s rising income inequality.
…But how did the changes of the 80s and 90s lead to higher wage inequality? And why do some unionists have buyer’s remorse?
Buchanan and Lyons say years of legislative changes have choked the union movement of power to demand bigger pay rises. They say the shift towards firm-level enterprise bargaining in the early 90s was a key moment.
In the middle decades of the 20th century, with the onset of full employment, and in an economy protected from international competition, powerful unions used to set the pace on labour standards and wages.
When they secured wage gains in informal collective agreements in key sectors of the economy, their gains would be extended through industrial awards to workers with less bargaining power, including non-union members.
The system worked effectively to spread wage gains from the strong to the weak. Workers’ share of GDP was 46.4% in 1959 but it had lifted to 57% by the mid-70s.
…Australia was once a country with a ready resort to industrial action. But over the past 25 years, the capacity of workers to withdraw their labour through strike action has been curtailed. This has had an effect on wages.
…One of the key underpinnings of modern industrial relations system are enterprise bargaining agreements – which are generally negotiated between employers and unions and usually cover a period of three to four years. They are a key indication of where wages are going.
…there is also a structural issue occurring with EBAs. In the past the previous agreement would be the starting point of negotiations but now more and more employers are seeking to terminate agreements – which effectively puts workers back on the award rate.
Employers are also moving away from EBAs – the number of workers covered by them is now lower than it has been for more than a decade.
So, in several days of posturing Jericho has now covered off falling union power; falling EBAs; casualisation; automation and productivity. He’s forgotten to add the gig economy.
These are all micro-economic factors that are well worth discussion and are weighing on wages. What Jericho has deliberately excluded are the two major macro-economic drivers that are the really big drivers of the deflation. National income has been falling post-mining boom (with further to go) and somebody has to wear the pain to improve competitiveness to offset the falls. So far that pain has been visited mostly upon workers instead of capital owing to one simple policy tool: mass immigration.
By flooding an oversupplied labour market with cheap foreign inputs government has done two things:
- supported capital by increasing asset prices and aggregate demand, and
- reduced wages and individual living standards.
Jericho is deliberately eliminating this context, as he said he would the other day:
Immigration – because there are many desperate to hate – must be treated with extreme care by politicians and journalists, and certainly with more care than Abbott seems capable. The inherently racist parties will seek to use any discussion and any seeming evidence of the negative impact of migrants as fuel to burn their fires of hate.
There is bugger all chance that Jericho’s or Labor’s micro-economic posturing can turn wages around so long as the two major macro-economic dead weights are dragging wages to the bottom of the ocean.
To fix those you need to end the Labour supply shock and install a whole suite of new reforms to increase Australian competitiveness so that capital takes more of its share of the deflation burden.
