David Leyonhjelm’s recipe for low-wage serfdom

Senator David Leyonhjelm has penned an article lambasting the moral panic over ‘wage theft’ and prescribing a policy of full labour market deregulation:

The [wage theft] issue originates in Australia’s absurdly complex industrial relation system, with its mess of awards and agreements barely changed from the middle of the 20th century…

What this “crisis” reveals is an industrial relations system stuck in the past, lacking flexibility, and substantially contributing to our stagnant productivity and lack of wages growth. Australia badly needs an industrial relations revolution.

We need a system in which employees of all kinds can negotiate their salary and benefits, individually or collectively, without interference by the government. A system in which people can easily change employers without penalty, employers can change employees without penalty, and employers can compete for people without restraints such as no-poaching clauses.

Like goods and services generally, labour is differentiated by price and quality. Its price should be determined by its value to prospective buyers, not controlled by the dead hand of government.

Setting a minimum price, rather than allowing it to be determined by the market, simply means some labour is not worth buying…

When it comes to wage theft, the absurdity is that the real thief is the government with its excessive taxes.

Australian workers’ bargaining power has arguably never been lower. Real wages have treaded water despite improving labour productivity:

Accordingly, workers’ share of national income has cratered:

Obviously, Leyonhjelm’s proposed deregulation would obliterate workers’ bargaining power completely, resulting in an even lower share of national income going to workers.

It would ‘Americanise’ Australia’s labour market, resulting in greater inequality and creating a huge underclass of working poor.

Australian egalitarianism is already on life support. Let’s not put a knife through its heart.

Leith van Onselen

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