Economics 101 for the ABCC

The Australian Building and Construction Commission's decision to press charges against 54 steelworkers for attending a political rally, with potential fines of up to $42,000 per person, is abhorrent on any level. No worker should face this kind of intimidation for participating in peaceful protest.

But why is the ABCC, established to police construction workers and their unions, now going after steelworkers? It claims that since the factory they work at sells steel to construction sites, it is in effect part of the construction industry. But that claim, if taken seriously, means that the whole economy -- and all workers -- are subject to the ABCC's crusade.

In this commentary, Jim Stanford explains the basic economics of supply chains to the autocrats at the ABCC:

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Budget 2019-20: Ooops, They Did It Again!

You would think that after 5 consecutive years of wage forecasts that wildly overestimated actual experience, the government might have learned from its past errors – and published a wage forecast more in line with reality. But not this government. They are still trying to convince Australian workers, who haven’t seen real average wages rise in over 5 years, that better times are just around the corner. And rosy wage forecasts are helpful in justifying their equally optimistic revenue forecasts: since if Australians are earning more money, they will be paying more taxes!

So the 2019-20 Commonwealth budget, tabled Tuesday evening by Treasurer Josh Frydenberg, featured another valiant prediction that fast wage growth is indeed still “just around the corner.” Despite a slowdown in wage growth in the last months of 2018, this budget simply replicates last year’s wage forecast – but delayed by one more year. Crucially, there  is no discussion justifying why Australian workers might have confidence in this year’s forecast, when the last five so widely missed the mark (and always in the same direction).

Our analysis of the 2019-20 Commonwealth budget focuses on the wages crisis facing Australian workers, and challenges the claim that cutting personal tax cuts can somehow compensate workers for the fact that their wages are not growing.

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A Historic Opportunity to Change Direction

A unique conjuncture of economic and political factors has created an opportunity for a historic change in the direction of Australia's workplace and industrial policies. That's the conclusion of Dr. Jim Stanford, Economist and Director of the Centre for Future Work, in a major review article published in Economic and Labour Relations Review, an Australian academic journal.

In a broad overview of the current problems in Australia's labour market, and the weaknesses of existing labour market policies, Stanford argues that the prospects are ripe for a fundamental shift in the emphasis of Australian industrial laws and labour standards.

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8 Things to Know About the Living Wage

8 Things

There has been a lot of discussion about “living wages” in recent years – in Australia, and internationally. And now the idea has become a hot election topic. The ACTU wants the government to boost the federal minimum wage so it’s a true living wage. Opposition leader Bill Shorten has hinted he’s open to the idea. Business leaders predict economic catastrophe if the minimum wage is increased.

As the debate heats up, here’s a quick guide to 8 things you need to know about the living wage:

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Job Creation Record Contradicts Tax-Cut Ideology

by Jim Stanford

The Australian Bureau of Statistics released its detailed biennial survey of employment arrangements this week (Catalogue 6306.0, "Employee Earnings and Hours"). Once every two years, it takes a deeper dive into various aspects of work life.

Buried deep in the dozens of statistical tables was a very surprising breakdown of employment by size of workplace.  It turns out, surprisingly, that Australia's biggest workplaces (both private firms and public-sector agencies) have been the leaders of job-creation over the last two years.

This runs against the common refrain that small business is the "engine of growth."  In fact, workplaces with less than 50 employees actually shed employees (14,000 in total) since 2016.  Curiously, it was only smaller businesses that received the much-vaunted reduction in company tax (from 30 to 27.5 per cent), also beginning in 2016.

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The REAL Diary of an Uber Driver

ABC recently announced plans for a new 6-part television drama called “Diary of an Uber Driver.”  The Centre for Future Work's Director Jim Stanford wonders if this drama will truly constitute insightful drama - or whether it will serve to whitewash the labour practices of a controversial, exploitive industry.

A version of this commentary originally appeared on the 10 Daily website.

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Industry-Wide Bargaining Good for Efficiency, as Well as Equity

In this commentary, Centre for Future Work Associate Dr. Anis Chowdhury discusses the economic benefits of industry-wide collective bargaining. In addition to supporting wage growth, industry-wide wage agreements generate significant efficiency benefits, by pressuring lagging firms to improve their innovation and productivity performance. The experience of other countries (such as Germany and Singapore) suggests that this system promotes greater efficiency, as well as equity -- although other wealth-sharing policies are also needed.

Dr. Chowdhury's full comment is posted below.

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Are States Filling the Democratic Void?

The recent Victorian election results showed Australian voters want governments to play a pro-active role delivering public services, infrastructure, improved labour standards, and sustainability. They showed that in a time of deep cynicism with federal politics, States (and Territories) can play an important role filling the democratic void left by dysfunction and policy paralysis at the Commonwealth level.

This commentary from Alison Pennington, economist at the Centre for Future Work, explores what the energetic campaign in Victoria revealed about our unique system of dual governance and the potential for pro-active and progressive policy making. This commentary was originally published in New Matilda.

  

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Workers’ Share of Economic Pie Shrinks Again

For the third consecutive quarter, the share of Australian GDP paid out in wages, salaries and superannuation contributions to workers has shrunk.  Data for the September quarter of 2018, released by the Australian Bureau of Statistics on Wednesday, shows that labour compensation accounted for just 46.85% of total economic output – one of the lowest on record.

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"Permanent Casuals," and Other Oxymorons

Recent legal decisions are starting to challenge the right of employers to deploy workers in "casual" positions on an essentially permanent basis. For example, the Federal Court recently ruled that a labour-hire mine driver who worked regular shifts for years was still entitled to annual leave, even though he was supposedly hired as a "casual." This decision has alarmed business lobbyists who reject any limit on their ability to deploy casual labour, while avoiding traditional entitlements (like sick pay, annual leave, severance rights, and more). For them, a "casual worker" is anyone who they deem to be casual; but that open door obviously violates the intent of Australia's rules regarding casual loading.

Here is a commentary from Jim Stanford, Director of the Centre for Future Work, discussing the implications of these decisions for the mis-use of casual work.  The commentary was originally published on the Ten Daily website.

 

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