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Author: Future Admin

  • 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.

    The Victorian election: Are states filling the democratic void?

    A destructive and cynical politics is on the rise across the world with emergent right-wing populism a warning of what happens when people lose faith in political institutions.

    In Australia, the Coalition government has been characterised by ongoing austerity, the retrenchment of public resources and capability to the tune of billions of dollars, but complete paralysis on just about every other policy reform (most visibly including massive inconsistency on energy and climate policy). This has led to a democratic void in Australian society.

    Meanwhile, the recent victory of the Andrews Labor government on a bold social democratic platform of long-term investments in services, education and infrastructure projects (some with a 2050 completion date) gave Victorians a secure, positive vision of a more balanced, stable society – and voters endorsed that vision strongly.

    How is it that these two wildly different scenarios of political life can exist alongside each other?

    Many commentators have explained the Victorian election result as a mere by-product of the Coalition’s ongoing crisis (with subsequent warnings about the future of the federal Liberals). But this suggests Victorians were motivated by cynicism alone. In reality, Victorians rallied enthusiastically around a constructive, hopeful vision of State-level policy-making. Indeed, since federation, Australian communities and regions who have identified needs and desires unmet by the Commonwealth, have often turned to the state level of governance to get things done.

    The unique organisation of governance in Australia, featuring a Commonwealth composed of somewhat independent States and Territories, has preserved a realm of Australian democracy distinct from the national level of affairs. At a time of deep cynicism with federal politics, the Victorian election result shows that States can fill the democratic void left by dysfunction and tribal politics at the Commonwealth level, strengthening Australian democracy and saving it from the worst of cynical politics we see emerging elsewhere (such as Trumpism in the US).

    Where does the legitimacy of this State-based democracy come from? Despite losing (or handing over) many of their powers to the Commonwealth over time, States still retain power to administer the key public goods that Australians most value: like education, health care, civic services, and culture. These are the functions of government that people will energetically defend when they are undermined.

    While the Australian constitution allocates responsibility for big-ticket public programs like healthcare and education to the States, the Commonwealth retains powers to raise the bulk of the revenue needed to fund these expensive services. This means States operate in a contradictory financial bind: always dependent on the federal government to honour the financing of essential services that the States are constitutionally bound to provide. This gives enormous economic and political power to federal governments— a power play that has been repeated many times over Australia’s history.

    For example, a recent attempt by the Commonwealth to undermine the funding of public goods under the ‘spend within your means’ mantra was mounted in 2016, when Malcolm Turnbull and Scott Morrison tried to shift responsibility for raising revenue for public services to States. This was done without relinquishing any of the Commonwealth’s income and corporate taxation powers – all the while overseeing billions of dollars in cuts in healthcare and education in the federal Budget.

    But the constitutional and financial bind faced by State governments has gained particular significance in recent years, as decades of ‘small government’ policies wound back public services in favour of highly-subsidised private models have come to a head. Publicly-subsidised private markets in aged care, disability care, healthcare, education, VET and childcare have all been proven failures: both in the quality of services delivered, and in the standards of employment for those doing the work.

    Recent polling by the Australian Institute shows that 64 per cent of Australians want an increase in public spending funded by tax revenue from wealthy individuals and high-turnover businesses. Australians value government provision of public goods, even more than personal income tax cuts. The failure of federally-backed market experiments within spheres of life where Australians demand a proactive and productive government role, has left the political field wide open – and States are in prime strategic political terrain to fill that space.

    State action is applauded in the face of Commonwealth inaction. For instance, amidst recent turmoil in federal energy and climate policy, the Victorian, SA and ACT governments have proactively invested in renewable energy industries. And State governments in Victoria, SA, ACT and QLD have found innovative work-arounds to protect workers from new exploitative labour practices, despite the dominance of the Commonwealth in the jurisdiction of labour law: including labour hire licencing schemes, mandated minimum pay and safety conditions, and a new inquiry just launched into on-demand ‘gig’ work and its implications for the Victorian economy.

    The Victorian election results provide another clear insight into what Australians value and what they will tolerate. They confirm that Australians care about a fair society – underpinned by the public provision of healthcare and education (including a revamped TAFE sector), new infrastructure, action on renewable energy, and employment conditions that allow Australians to live a decent quality life.

    With the Andrews government’s pledges for sizeable investments in all of these endeavours ratified so strongly by voters, it shows that the failure of Commonwealth policy and politics can be mitigated by popular, publicly-minded campaigns at the State level.

    A future federal government could build on the example set by the Victorian election. It could use its much stronger policy and fiscal levers to charter a course that addresses the growing labour market power imbalances, restores the billions cut from hospitals, schools and housing, prepares our economy for a renewable energy future, and delivers a comprehensive program of tax reform.

    But until that decisive break with the failed austerity and cynicism of recent federal politics, the Victorian election results confirm that in the meantime, States can step firmly into the breach. They can and must continue to function as a key site for the expression of Australians’ demands for a more equal, inclusive, participatory society, with a proactive role for government in delivering public goods.

    The post Are States Filling the Democratic Void? appeared first on The Australia Institute's Centre for Future Work.

  • Go Home On Time Day 2018: Australians Owed $106 Billion in Unpaid Overtime

    A national survey undertaken as part of the report has shown that the average Australian worker now puts in six hours of unpaid overtime per week, which equates to working an extra two months for free every year. That’s an increase from 5.1 hours on average in last year’s survey.

    “Australians are working more unpaid overtime than ever before, and they’re paying a high price for it,” said Troy Henderson, Economist at the Centre for Future Work.

    “Time theft takes many forms, including employees staying late, coming in early, working through their lunch or other breaks, taking work home on evenings and weekends or being contacted to perform work out of hours.

    “Most Australians wouldn’t dream of working for two months without pay. But it’s spread out over the whole year, and has become part of the implicit expectations of too many jobs. ‘Time theft’ has thus become endemic across the whole labour market.

    “Today we ask that all Australians go home on time and try to limit the unpaid overtime they work. And stopping time theft is ultimately the responsibility of employers and government, too, not just individual workers: employers must value and respect the leisure time of workers, and recognise that work cannot take over our entire lives.”

    The survey indicated that even part-time and casual workers – most of whom want more paid hours of work each week – are being asked to work unpaid overtime (averaging over 4 hours per week for part-timers and almost 3 hours per week for casuals). “Given the problem of underemployment and precarious work in today’s labour market, it is especially unfair that part-time and casual workers are being pressured to work for free,” Mr. Henderson added.

    This year’s Go Home on Time Day survey also included a special questionnaire on the use of digital surveillance and monitoring in Australian workplaces. 70% of respondents said their employers use at least one form of digital surveillance or monitoring, including cameras, GPS tracking, monitoring internet or social media activity or counting keystrokes, to monitor employees – and sometimes to discipline or even dismiss them.

    “Technology can have a strong positive effect in the workplace, but our research shows it is also being used in ways that increase pressure on employees and reduce the level of trust in workplaces,” Mr. Henderson said.

    “It’s clear from our research that millions of Australians are losing out to time theft. Both underemployed workers, and those who work too much, are giving up their precious time for free. All Australian workers have the right to go home on time.”

    The post ‘Go Home On Time Day’ 2018: Australians Owed $106 Billion in Unpaid Overtime, Report Reveals appeared first on The Australia Institute's Centre for Future Work.

  • Go Home on Time Day 2018

    Please visit our special Go Home On Time Day website for more information, tips on how to get away from work on time, and free posters and shareables. There’s also an online calculator where you can estimate the value of the time theft you experience, through unpaid overtime in all its forms.

    In conjunction with Go Home On Time Day, The Centre for Future Work is releasing two new research reports on the time pressures facing Australian workers:

    Our annual update on attitudes toward working hours, the incidence of unpaid overtime and its aggregate value: Excessive Hours and Unpaid Overtime: 2018 Update, by Troy Henderson and Tom Swann. On the basis of a survey of 880 employed Australians, we estimate that the typical worker puts in 6.0 hours of unpaid overtime per week – ranging from going in early, staying late, working through lunch and tea breaks, taking work home in the evenings and weekends, responding to calls or emails out of hours, and more. That amounts to 3.25 billion hours of unpaid overtime across the whole labour market this year, worth a total of $106 billion.

    This year, our Go Home On Time Day survey also included a special section focusing on the forms, prevalence, impacts and implications of electronic and digital monitoring and surveillance in Australian workplaces. Our goal was to investigate a secondary dimension of the time pressure facing Australian workers. It is not just that work is being extended into greater portions of our days (through unpaid overtime, the use of mobile phones and computers to reach workers at any time, pressure to not fully utilise annual leave, and similar trends). In addition, even within the work day, time pressure is intensified with the expectation that every moment of work time must be used for productive purposes – an expectation that is increasingly reinforced through omnipresent systems of monitoring, performance measurement, and surveillance. The result of these twin forces is an overall inability for people to escape from the demands of work: neither at the workplace (even for short periods), nor away from it.

    Please see our companion report, Under the Employer’s Eye: Electronic Monitoring & Surveillance in Australian Workplaces, by Troy Henderson, Tom Swann and Jim Stanford.

    The post Go Home on Time Day 2018 appeared first on The Australia Institute's Centre for Future Work.

  • Secret Weapon Overlooked in Fight Against Financial Misconduct

    The Centre for Future Work has proposed to the Commission that a system of sector-wide collective bargaining in the financial industry could establish clear and ethical benchmarks for compensation, avoiding the problem of ‘conflicted remuneration’, which is behind much of the misconduct the Royal Commission has exposed.

    The Centre for Future Work’s submission to the Royal Commission proposes a uniform compensation system, to apply across the whole industry, consistent with the principles of ethical banking:

    • Uniform compensation can be achieved via a sector-wide collective bargaining system, in which employer and union representatives negotiate standard compensation patterns to apply to all participants across the industry.
    • Compensation in each job to be tied to qualifications and experience; separate pay grids could be specified in various branches of finance (including major banks, insurance, superannuation, and financial advice).
    • Clear and enforceable limits on sales- or revenue-based incentives would be specified – eliminating what the Royal Commission has confirmed is a key motivation for misconduct.
    • Instead of depending solely on government regulators to stop misconduct, enforcement of compensation standards would become part of the regular administration of the collective agreement.

    “At present, flawed pay systems create perverse incentives for banks and brokers to push debt, insurance, and financial services to Australians,” says Dr. Jim Stanford, Director of the Centre for Future Work.

    “Financial professionals can reap tens or hundreds of thousands of dollars in commissions, bonuses and so-called ‘introducing’ fees; top executives pocket millions.

    “It is inevitable that these incentives lead sales staff and executives to sidestep or ignore basic rules and standards such as ‘know your client’ rules, fee transparency and responsible lending.

    “Consumers, many of them vulnerable, end up with expensive commitments they don’t need or – in many cases – even understand.

    “Under a sectoral agreement, hundreds of managers, union officials and delegates throughout the financial industry would be responsible for enforcing the ethical pay practices spelled out in the agreement.

    “Unfortunately, Australia’s current restrictive industrial relations laws generally prohibit collective bargaining on a multi-firm or sector-wide basis.

    “These restrictions are unusual. Most industrial countries permit, and even encourage, multi-firm, pattern, or industry-wide bargaining as an efficient way to determine consistent benchmarks for pay and conditions, and ensure that ongoing economic and productivity growth translates into rising living standards.”

    The Centre’s submission argues these restrictions on sector-wide bargaining should be reconsidered in light of the pervasive pattern of financial misconduct – and the key role of perverse compensation systems in motivating that misconduct.

    “Sectoral collective bargaining could help reform compensation and reduce financial misconduct on a uniform, industry-wide basis,” Stanford said.

    “The Royal Commission should explore standardised sector-wide collective agreements as a promising response to the problems it has documented, and the Commonwealth Government should eliminate its unusual restrictions on collective bargaining to allow this important reform.”

    The post Secret Weapon Overlooked in Fight Against Financial Misconduct appeared first on The Australia Institute's Centre for Future Work.

  • Workers’ slice of Australian economic pie gets smaller

    The Australia Institute’s Centre for Future Work has today published a new research symposium documenting how workers’ slice of the national economic pie continues to get smaller.

    Key findings:

    • From peak levels of 58 per cent of GDP in the mid-1970s labour compensation — including wages, salaries, and superannuation contributions — declined to just 47 percent in 2017, their lowest level since 1960.
    • Real wages have consistently lagged behind the ongoing growth in labour productivity, meaning workers are not getting paid enough to buy back the goods and services they produce.
    • The loss of labour’s share of GDP translates into the redirection of over $200 billion in income per year from workers to other groups in society (mostly corporations).

    “In recent years, wages have barely kept up with consumer price inflation – and for many workers, they have fallen behind,” said Dr. Jim Stanford, Director of the Centre for Future Work.

    “The fact that the workers’ slice of the economic pie continues to get smaller speaks volumes about the lopsided power imbalance in today’s labour market.

    “The decline in Australia’s labour share from the 1970s peak to the present, ranks among the worst of all OECD countries, even worse than the United States.

    “Almost the entire decline in the labour share has been reflected in a corresponding increase in the share of GDP going to corporate profits – especially the financial sector.

    “In short, while the workers’ share has continued to get smaller, the share of corporate profits has continued to get larger.

    “By comparison, in some countries the labour share has been stable or rose during the same period, disproving the claim that this trend is somehow ‘universal’ or ‘inevitable’.

    “Without urgent measures to strengthen labour standards and protections, including stronger minimum wages and a restoration of meaningful collective bargaining, this decline will almost certainly continue.

    “The company tax cuts for big business now being proposed by the federal government are just the icing on top of an already-rich cake.”

    This research resulted from a special panel of experts convened by the Centre for Future Work, at the Society for Heterodox Economists conference at UNSW in Sydney last December. The papers from that panel have been peer-reviewed, and are published this week in the Journal of Australian Political Economy.

    Authors contributing to the symposium include Dr.David Peetz (Griffith University), Dr. Shaun Wilson (Macquarie University), Dr. Margaret Mackenzie (Economist, Australian Council of Trade Unions), and Dr. Jim Stanford (Economist and Director of the Centre for Future Work).

    The post Workers’ slice of Australian economic pie gets smaller appeared first on The Australia Institute's Centre for Future Work.

  • Penalty rate cuts fail to ignite jobs boom

    A new report from The Australia Institute’s Centre for Future Work examined employment and working hours in the retail and hospitality industries in the year since penalty rates were first cut.

    The report found, since the initial penalty rate reduction imposed by the Fair Work Commission on 1 July 2017:

    • The retail sector in particular performed very badly relative to the rest of the economy.
    • Total employment was unchanged in the year ending in May 2018, continuing a long-term trend of employment stagnation.
    • Full-time employment declined by 50,000 positions.
    • Average weekly hours of work declined by more than a full hour, and the underemployment ratio (share of workers who want more hours) grew almost 2 percentage points.
    • The hospitality sector (accommodation and food services) experienced similar results, including weak job-creation, a loss of full-time employment, shorter average hours of work, and higher underemployment.

    “Far from experiencing a jobs boom, the retail and hospitality sectors have significantly underperformed the rest of the economy in terms of both hiring and working hours,” says Dr. Jim Stanford, Director of the Centre for Future Work.

    “Most industries where penalty rates were unchanged did far better at job-creation than the two sectors where penalty rates were cut.

    “Employer representatives argued that reducing labour costs for work on Sundays and holidays would spur a big expansion in employment, one group even predicted 40,000 new jobs. Our report found that was simply not the case.

    “Based on a number of criteria, the retail and hospitality sectors performed among the worst of any Australian industries in the year since penalty rates were first cut.

    “While lower penalty rates are not the cause of the poor performance, our research certainly disproves inflated claims by employers and government that cutting labour costs would unleash a jobs boom.

    “If we really want more jobs, we should boost wages, improve job security, and strengthen purchasing power throughout the economy. Cutting penalty rates does the opposite.”

    The post Penalty rate cuts fail to ignite jobs boom appeared first on The Australia Institute's Centre for Future Work.

  • Manufacturing Rebound Could Be Cut Short By Skills Shortage

    The new report from the Centre for Future Work identifies key factors behind the rapid emergence of skills shortages in manufacturing, including:

    • The sector’s ageing workforce, creating a looming demographic transition for skilled worker
    • The highly specific nature of manufacturing skills (across sectors and occupations), creating difficulty for workers moving from between shrinking sectors to growing sectors
    • The need for new skills and ongoing training as companies adopt advanced manufacturing techniques and new digital technologies.

    “Manufacturing is again making a positive contribution to Australia’s economic progress after over a decade of decline. We don’t want to squander this potential,” said Dr. Jim Stanford, Director of the Centre for Future Work.

    “If Australia doesn’t get its act together on vocational training, this will be a wasted opportunity for manufacturing.

    “Recent experiments with market-based vocational training have been a waste, they have damaged confidence in the skills system among both potential students and employers.

    “Stable, well-funded, high-quality public institutions must be the anchors of any successful VET system.

    “Public institutions are the only ones with the resources, the connections, and the stability to provide manufacturers with a steady supply of world-class skilled workers.

    “No sector feels the pain of the failure of vocational training more than manufacturing, precisely because advanced skills are so essential for the success of advanced manufacturing techniques.

    “Manufacturing stakeholders need to work together to strengthen vocational education and training.”

    Key principles for rebuilding vocational education in manufacturing, discussed in the report, include:

    • A greater reliance on courses and apprenticeships through public-sector TAFE (rather than private providers)
    • Phased-in retirement programs to allow senior workers to pass on their skills to new apprentices
    • Inclusion of provisions guaranteeing access to further training in industry awards and enterprise agreements.

    The report was co-authored by Dr. Jim Stanford and Dr. Tanya Carney and prepared for the Second Annual National Manufacturing Summit at Parliament House on 26 June 2018.

    The National Manufacturing Summit engages leading representatives from all parts of Australian manufacturing: businesses, peak bodies, unions, universities, the financial sector, suppliers and government. The growing problem of skills shortages is a priority focus for this year’s Summit.

    The post Manufacturing Rebound Could Be Cut Short By Skills Shortage appeared first on The Australia Institute's Centre for Future Work.

  • For First Time, Less than Half of Workers Have a Standard Job

    A new report by the Centre for Future Work at the Australia Institute looks at the growing insecurity of work in Australia.

    The report reviews 11 statistical indicators of the growth in employment insecurity over the last five years, including: part-time work, short hours, underemployment, casual jobs, marginal self-employment, and jobs paid minimum wages under modern awards.

    All these indicators of job stability have declined since 2012, leading to a majority of Australian workers now experiencing one or more of these indicators of job – and less than half have access to what was once considered a ‘standard job’.

    “Australians are rightly worried about the growing insecurity of work. We are now seeing less than half of employed Australians holding a ‘standard job’, with dependable hours, pay, and benefits” said Dr. Jim Stanford, director of the Centre for Future Work.

    “In particular, many young people are giving up hope of finding a permanent full-time job – and if these trends continue, many of them never will.”

    The report also documents the low and falling earnings received by workers in insecure jobs:

    • While real wages for those in the best paid job category – permanent full-time jobs – have grown, wages for casual workers have declined.
    • Part-time workers in marginal self-employed positions (including so-called ‘gig economy’ workers) have fared the worst, with real wages falling 26 percent in the last five years.

    “Given current labour market conditions and lax labour standards, employers are able to hire workers on a ‘just-in-time’ basis, employing workers only when and where they are most needed and then tossing them aside afterwards,” said Dr Stanford.

    “This insecurity imposes enormous risks and costs on workers, their families, and the whole economy.”

    Dr. Stanford called on policy-makers to address growing job precarity with stronger rules to protect workers in insecure jobs, such as provisions for more stable schedules, and options to transition to from casual work to permanent positions. He also stressed the need for economic policies that target the creation of permanent full-time jobs.

    The post For First Time, Less than Half of Workers Have a ‘Standard Job’ appeared first on The Australia Institute's Centre for Future Work.

  • Government Spending Power Could Support Stronger Wage Growth

    New research from the Centre for Future Work at The Australia Institute demonstrates a strong connection between government spending and working conditions across the economy.

    “Weak labour market conditions, including record-weak wage growth, could be improved by linking public spending in all forms to improved job quality and compensation,” said Dr. Jim Stanford, Director of the Centre for Future Work.

    The Centre for Future Work report finds three main avenues through which government spending could lift wages and working conditions:

    1. Direct work and production undertaken within government and its departments and agencies (the public sector).
    2. Arms-length service-producing organisations which depend on government funding (the non-profit sector).
    3. Private-sector firms which supply government and public agencies with goods and services (the private sector).

    “It is ironic that Treasurers are always praying for stronger wage growth with every year’s budget in order to generate stronger growth and stronger revenues. Yet governments don’t pursue obvious opportunities to actually achieve that wage growth by linking labour standards to their own expenditure policies,” said Dr Stanford.

    “This is clearly a lost opportunity. Australia’s government sector is by far the single largest part of Australia’s economy.

    “This economic footprint, if wielded consistently to achieve higher wages and better jobs, could have a powerful impact on labour market outcomes.”

    Australian government economic footprint at a glance:

    • Total expenditures of over $660 billion per year, equal to 36 percent of Australia’s GDP.
    • Expenditures on current production of public goods and services of over $330 billion per year (18.5 percent of GDP), and further spending on capital investments of over $85 billion (another 5 percent of GDP).
    • Direct public sector employment of close to 2 million workers, with millions more jobs indirectly dependent on government injections of spending power.
    • Fiscal support for public and community services by arms-length non-profit agencies, worth at least another 4 percent of GDP.
    • Goods and services procured from private-sector suppliers equivalent to around 10 percent of GDP (or about $175 billion per year).

    The post Government Spending Power Could Support Stronger Wage Growth appeared first on The Australia Institute's Centre for Future Work.

  • Don’t blame it on the deficit: WA

    Contrary to calls for fiscal austerity and public sector downsizing, being made in response to the emergence of fiscal deficits in WA, the report showed that budget deficits played a useful role in stabilizing the economy during times of economic downturn, and will automatically recede as the economy recovers.

    “In reality there should be no alarm about the WA state deficit. Deficits are acceptable, and positive, during periods of weak economic growth.” says the Australia Institute’s Senior Economist, Dr. Cameron Murray.

    “In fact, that deficit merely confirms that state fiscal policy is doing what it is supposed to: providing essential public services and providing a solid base for private-sector economic activity.”

    “It is wrong to immediately conclude that the only response to a deficit must be some combination of cutting spending, reducing public sector employment, freezing or reducing public sector wages, and selling public assets.”

    The report found public sector payrolls grew modestly through the 2014-17 period. That modest growth, in contrast to the contraction in private payrolls, supported a cumulative total of $3 billion dollars in additional GDP; $1.3 billion in additional consumer spending; and $450 million in additional state revenues.

    “During WA’s recession we’ve seen compensation growth slow down in both the public and private sectors,” says Murray.

    “Importantly however, the modest, continuing wage growth we did see in the public sector acted as an automatic stabiliser, reducing the severity of WA’s downturn.”

    Total economic activity, including economic activity in the private sector, was also found to be higher as a result of the government slowly but steadily increasing its spending on public servants and the services they provide.

    “Those deficits arose in the wake of the slowdown in mining activity and corresponding deceleration of employment and economic growth, and over-zealous fiscal austerity is not the solution.”

    “Continuing growth in public sector wages and maintaining public spending during weak economic periods generates positive spillover effects for the rest of the economy,” says Murray.

    More recently, positive signs of recovery in the state economy are quickly and automatically producing a reduction in the size of the deficit. The report recommends the state government focus on supporting that continuing recovery, rather than reducing the government’s own contribution to it.

    The post Don’t blame it on the deficit: WA appeared first on The Australia Institute's Centre for Future Work.