In this short, accessible commentary, Senior Economist Alison Pennington outlines how the pandemic, the resulting recession and government COVID-era policies have increased risks to migrant workers’ financial security, and health and safety. Building more secure, inclusive labour markets can reduce risks that future major events don’t hit the most vulnerable hardest.
This commentary was prepared for presentation to the Migrant Workers Centre Conference, November 2020.
Migrant Workers & The COVID-19 Recession
by Alison Pennington, Senior Economist at Centre for Future Work
COVID infections continue to sweep Europe and the US while Australia celebrates multiple days without any cases of community transmission. But Australia’s public health success has not come without significant economic and social hardship for large sections of our community – especially migrant workers. Thousands of migrant workers were pulled off the job to stop the spread of COVID-19, and excluded from key government income support programs including JobSeeker and JobKeeper. Temporary migrant workers are still left without access to Medicare.
As the economy slowly recovers from recession, migrant workers will face even greater hardship in accessing decent jobs and incomes. The expiration of temporary work visas without supports to reconnect with new employers, and in jobs that pay enough, will expose migrant workers to more intense exploitation.
The federal government’s response to the unprecedented COVID-19 economic crisis has included big spending on tax cuts, subsidies and other business concessions as part of its “business-led recovery”. But there are many problems with how the government thinks about the economy, that will mean the economic crisis will be longer and more painful than it needs to be.
The pandemic has left deep cuts in the economy: two million people (15% of labour force) are either unemployed, working far fewer hours than normal, or have left the labour market all together since the March lockdowns; consumer spending has not fully recovered after lockdown restrictions were lifted and people prefer to save in preparation for harder times. Companies are focused on recovering or maintaining profits, cutting investments in their businesses, and cutting spending on employment and wages. Private investments have been decreasing for years and will not miraculously rebound during a recession. Trusting the private sector to lead our post-COVID economic recovery therefore is like hoping for a miracle.
Income tax cuts are mainly symbolic and do not have real and lasting impacts on boosting spending in the economy. In fact, normal pay rises are far more effective than tax cuts because the effect of wage growth is permanent and cumulative. The announced tax cuts are also unfairly designed to benefit high-income earners. 88 per cent of the combined permanent benefit of the tax cuts will go to highest-fifth of income earners whereas low- and middle-income earners will get only a one-time rebate of $1,080 at the next tax return.
Wage growth is expected to stay at 1.25 per cent in 2021 – enough only to match the slow rise in consumer prices. But a higher unemployment rate and continued increase in part-time and casual jobs will cut household incomes even more. If the government adopted measures to strengthen wages including higher minimum wages and stronger collective bargaining rights, our recovery would be on a better track.
Youth, women, migrant workers and long-term unemployed are in most need of targeted job-creation policies. But the federal government has presented no plan to create jobs for the millions of unemployed, underemployed and disenfranchised who want and need paid work. The JobMaker program provides a subsidy for 12 months to employers creating new jobs for young workers on unemployment payments. It is a short-sighted initiative that will not reach its intended claim of creating 450,000 jobs (Treasury estimate now 45,000). There is no guarantee young workers will maintain employment once the government stops paying for the subsidy. Without job protections, the program will encourage the “churning” of vulnerable young workers in low-wage, insecure jobs. It could also displace existing workers and discourage the hiring of others. Migrant workers have already experienced mass redundancies when employers chose to engage workers who qualified for the JobKeeper subsidy. Migrant worker displacement may occur under JobMaker.
Despite Australia’s macroeconomic weakness, the government intends to decrease spending by billions in cuts to the JobKeeper and Coronavirus Supplement payments in March 2021. The impacts on the jobs and incomes of low and middle-income workers will be disastrous. The real way to overcome the recession will be to restore the capacity of people to work, earn and be healthy, engaged members of a more inclusive Australian economy. This can be achieved only when the government commits to a long-term, ambitious vision for economic and social change, backed by substantial and sustained public spending. This vision should create more secure jobs, invest in climate-friendly industries, and strengthen and expand our public services like healthcare, education and skills.
Rather than wait for private sector investment, the federal and state governments can expand direct public sector employment now. They can also ensure all people residing in Australia are protected from poverty and insecurity now. Urgent measures should be taken immediately to address the pronounced risks to migrant workers’ financial security, and health and safety experienced during this crisis:
Expand JobSeeker and the Coronavirus Supplement coverage to excluded migrant workers. Reverse the punitive and economically counterintuitive cuts to the Coronavirus Supplement, and permanently restore the $550 per fortnight rate.
Expand JobKeeper coverage to all workers, and end the two-tiered wage subsidy scheme, returning the original $1,500 flat payment rate permanently.
Create a paid sick leave scheme available to all workers, regardless of their work status.
The pandemic has shone a light on the growing scourge of insecure work. Around half of all employment in Australia has one or more dimensions of precarity including casual, temporary, part-time insufficient-hours work, and self-employment. Precarious work contributed to the community spread of disease, such as in the private aged care system where widespread practices of multiple jobholding led to virus transmission between facilities.
We have worked together to eradicate COVID-19, and we can work together to eradicate insecure work. Working to build more secure labour markets for all is about reducing risks that major events don’t hit the most vulnerable hardest. Job creating investment, quality public education and skills systems, income supports for all, and extending minimum labour standards like Award wages and collective bargaining are critical to an inclusive post-COVID recovery. And by strengthening the collective efforts of workers to take action in their unions, we can put good jobs and incomes in the driving seat of Australia’s economic recovery.
With new stay-at-home orders covering many parts of the province, Ontarians are settling in for a month (at least) of daunting isolation. Restrictions are also being tightened in other provinces to slow the spread of COVID-19, until vaccines can turn the tide of the pandemic.
Despite accelerating infection and overflowing hospitals, many oppose the new restrictions on grounds that their economic costs are just too high. Business lobbyists grumble that health rules on retailers, airlines, cinemas, ski resorts, gyms, and more are onerous and unfair. Each sector invokes comparisons to others which supposedly get off easier. The common thread in their resistance is an assumption that strong health restrictions are deeply damaging the economy.
As the pandemic rolls on, however, it is increasingly clear that the best way to protect the economy is to stop COVID. Yes: lockdowns reduce economic activity and employment. But not locking down, letting the virus run rampant, causes more economic damage — on top of the toll in lives and suffering. Anyone concerned about the economy should be pleading for fast, powerful lockdowns, not demanding a return to business-as-usual.
The correlation between controlling contagion and economic recovery is clear across Canadian provinces: those with fewer COVID cases have achieved the strongest employment results since the pandemic hit. It’s not often that New Brunswick leads the nation in employment growth — but it did last year. Its near-elimination of the virus was the obvious reason.
In this context, the protestations of premiers Doug Ford and Jason Kenney that fighting COVID must be “balanced” against the interests of business were always self-defeating. Even if they were motivated solely by desire to protect business, their top priority should have been stopping COVID. The faster and harder that battle was waged, the better business fared.
The correlation between COVID suppression and economic performance is also obvious in international data. Several countries moved fast with severe but temporary restrictions on mobility and business; and they are now harvesting the fruits of their foresight. COVID-slaying nations like Australia, China, New Zealand, South Korea and Taiwan are already enjoying powerful and sustained economic recoveries. Their economies (forecast to grow by five to eight per cent this year) are racing far ahead of those still lurching from one wave of infection to the next.
No one escaped the economic fallout of the pandemic. But after powerful action to suppress contagion, these countries are now recovering strongly and predictably. Elsewhere, the economic outlook is far less certain. In Canada, for example, our hopeful summertime recovery is already disintegrating: employment is now falling again. America, Britain, and other places where COVID suppression failed miserably are faring even worse.
A particularly powerful illustration of the link between public health and economic recovery is provided by the experience of Victoria, the second largest state in Australia. After initial success limiting COVID-19’s spread, a second wave took hold in Melbourne (Victoria’s capital), infecting 600 people per day by early August. The state government ordered a strict lockdown, more severe than anything yet experienced in Canada: overnight curfew, closure of most workplaces, and strict bans on social gatherings and travel.
The government was pilloried for its response — facing sustained attacks from its federal counterpart, business groups, and conservative commentators, all lamenting Victoria’s descent into “dictatorship.” Yet after 111 long days, Victoria achieved something almost unheard of: mass community spread was stopped, and new cases fell to zero by late October. Now the state economy is blossoming: employment rebounded 2.2 per cent in November alone, retail sales grew 22 per cent the same month, and Victorians are flocking back to restaurants, pubs, and malls. All those CEOs whining about Canada’s late and half-hearted restrictions must be drooling with envy.
Leaders like Kenney and Ford were unduly influenced by short-sighted concern with business profits. Their reticence has created needless harm, for both public health and the economy. If we’d moved faster and more powerfully to limit contagion, business would already be better off.
The economy is made up of human beings who work, produce, and consume. There’s no tradeoff between the economy and the health of those same human beings. The sooner we recognize they are one and the same, the sooner we can finally get serious about winning this battle.
Jim Stanford, director of the Centre for Future Work in Vancouver, is a freelance contributing columnist for the Star. Follow him on Twitter: @jimbostanford
In this extended commentary, Senior Economist Alison Pennington explains the main components of the IR Omnibus Bill, assesses their impacts on workers’ wages and labour protections, and offers some strategic analysis on how labour advocates can work towards addressing insecure work.
Scott Morrison’s Industrial Relations Laws Are a Kick in the Teeth for Australian Workers
By Alison Pennington
The Morrison government has proposed sweeping changes to Australian labor laws intended to cut wages, entrench precarious work, and cripple unions. The proposed changes would sweep away the remnants of collective bargaining and hand dictatorial power to bosses.
Just a few months ago, Australia’s Coalition government was singing the tune of compromise and cooperation with unions. Now they’ve thrown away the songbook and taken the gloves off. Scott Morrison is giving Australian workers and unions class war — just in time for Christmas.
Thanks to pandemic stimulus spending, 2020 was already a Christmas-bonus year for big business. With company profits up nearly 19 percent since 2019, they have already benefited to the tune of billions.
But it’s never enough. So, industrial relations minister Christian Porter has introduced the Industrial Relations (IR) Omnibus bill. It’s a withering pro-business offensive aimed at slashing wages and resetting work conditions to boost profitability in the long term.
The core of Porter and Morrison’s plan will grant employers the power to expand insecure work freely and to hijack enterprise bargaining. If it goes ahead, it will inflict a double wound on the working class, by degrading the Awards system (that sets minimum wages and conditions across industries) and by weakening what little remains of unions’ collective bargaining power.
Never Let a Crisis Go to Waste
The idea that workers’ economic security should be subordinated to business demands is archaic. It’s a form of employment that unions have fought bitterly since the nineteenth century, winning historic victories to curtail piece-work or at-home work, and to end the dictatorial control of gang masters over who did and did not work, and under what conditions.
Some fruits of that multigenerational battle still remain embedded in today’s standard employment relationship, which guarantees rights to ongoing work and basic entitlements. However, neoliberalism’s decades-long onslaught has weakened unions. As a result, all of these abuses have returned, sometimes in new packaging — as is the case with the “gig economy.”
An Uber Eats part-time worker. (Jack Taylor / Getty Images)
Today, 2.6 million Australian workers are defined as “casual.” This means that one in every four workers has no right to ongoing work, and no basic holiday or sick leave entitlements.
This is justified by the claim that casual workers receive “casual loadings” (extra pay) to compensate for forfeited conditions. But this is a myth. Far from being compensated for the value of lost entitlements, most casuals are in fact much worse off.
One third of all casuals receive no loadings at all, and most casuals are not paid more than permanent workers in the same jobs. In industries with high casual density, the premium is around 4-5 percent — far from the oft-cited figure of 25 percent.
Bosses love to praise the virtues of “flexibility,” claiming that casuals don’t want permanent work. But this mantra is also a lie — half of all casuals have worked regular shifts for one year or more.
Rather than simply allowing firms to employ a few extra workers on a seasonal basis, casual work is increasingly the way that Australian businesses meet their medium- and long-term labor needs. And, in the post-COVID era, they increasingly see casual labor as the foundation for boosting profits.
Accelerated Precarity
Two recent major court cases found that businesses which employ casuals on regular, stable, and predictable schedules are liable to pay leave entitlements. It was estimated that this would cost employers over $39 billion.
In response, business lobbyists unleashed campaigns to “resolve the definition issue” so as to avoid court-ordered repayments. This — as well as the growing importance of casual work to profits — explains why Morrison and Porter have made entrenching casual work the cornerstone of their IR Omnibus bill.
They want to define casual work in the broadest possible terms. Any job deemed casual by the employer will be, legally, a casual job. This means your job can look like a permanent job and smell like a permanent job — but employers will still be able to legally engage you as a casual and strip your legal entitlements at will. This is a body blow to the present system of legal protections.
The pandemic has highlightedthe dangersof insecure work. But for the Coalition and their business allies, it changed nothing. Even while frontline, often insecure workers risked their lives, the government was keen to increase the number of workers trapped in precarious, low-wage jobs.
First, the Coalition excluded over one million casuals from the JobKeeper wage subsidy. Then, they reduced the Coronavirus Supplement, hoping to force the unemployed and vulnerable into insecure work while making it cheaper for businesses to rehire workers. Next, Liberal treasurer Josh Frydenberg announced JobMaker — a payment that directly subsidizes new, insecure youth jobs that will allow bosses to sack existing, more expensive and older workers.
The JobKeeper subsidy is set to end in March, exactly when Porter’s sharpened wage-cutting tools are due to kick in. Employers will go on the offensive, recouping lost public subsidies by taking even more from their workers.
The bill’s supposed sweetener is a measure that will require employers to offer casuals permanent work if they have been employed for twelve months, with six months of continuous regular hours scheduling. Not only will it be easy for employers to vary hours and schedules to avoid meeting that high benchmark, they will also be allowed to refuse to make an offer on so-called “reasonable grounds.”
The government was sure to define “reasonable” in incredibly broad terms and to deny workers the right to appeal a decision through the Fair Work Commission (FWC). Got a problem with your employer’s decision? The Federal Court will hear your case — but only if you have a spare ten or twenty thousand dollars lying around.
Deregulating Permanent Work
Accelerating the growth of insecure work is also about cannibalizing protections for the permanent workforce, by making permanent jobs resemble casual ones. New so-called “part-time flexi” reforms will let bosses employ permanent part-time workers as though they were casuals.
Only sixteen hours will have to be paid according to normal permanent rates and entitlements, while an additional twenty-two hours (comprising a total work week of up to thirty-eight hours) will be free of overtime loading. With the stroke of a pen, this threatens to dissolve hard-won rights that deliver predictable and stable schedules for permanent part-time workers.
With a flexible twenty-two hours of ordinary-time labor up for grabs, employers will be able to work these “part-time” workers like full-timers on a regular basis — as supervisors and managers, for example. But they won’t have the security of regular hours or receive overtime compensation for being at the employer’s beck-and-call. The flexibility will be blissful — for bosses.
For all the Coalition rhetoric about “job creation,” this wholesale deregulation of working hours really means that bosses will be able to cheaply increase hours for existing workers in line with fluctuations in demand. That will free them from having to hire more people. It’s galling that the government would present the creation of a “part-time flexi” employment category as a solution to record-high and growing underemployment.
There’s no shortage of glossy marketing. For example, low-wage work will be expanded under the guise of “roads to permanency.” But when you cut through the spin, the Coalition’s agenda is to reduce the incomes of millions and to deny millions more decent jobs. During a recession, with labor-force utilization already low, they’re arming employers with powerful weapons to cut wages and conditions in the jobs that remain. These moves will generalize despair and desperation across the entire workforce.
Hijacking Collective Bargaining
Worst of all, the IR Omnibus bill contains a trifecta of changes to the laws governing enterprise agreement (EA) making. These changes will allow businesses to draw up workplace agreements by themselves more easily — that is, without a union. They will be allowed to undercut the minimum rates and conditions outlined in industry Awards with these nonunion agreements. Additional changes will let employers lock in wages stipulated by an enterprise agreement for eight years at a time.
This is nothing less than a hijacking of what’s left of collective bargaining. In fact, handing employers unilateral power over enterprise agreement wage-setting was the cornerstone of former Liberal PM John Howard’s infamous WorkChoices legislation.
The Coalition’s plan will allow employers to bypass the Better Off Overall Test (BOOT) for two years. As it is, the BOOT ensures that new agreements do not leave workers worse off than under minimum Award conditions. The suspension of the BOOT coincides with new measures that will weaken scrutiny of subpar nonunion agreements by the FWC, unions, and employees.
The move has been taken straight from the wish list of business lobbyists. It will open a floodgate of nonunion below-Award agreements that will permanently damage living standards.
There’s a precedent for this. Under Howard’s WorkChoices, the “No Disadvantage Test” was abolished and unions were denied the right to contest agreements, leading to an explosion of nonunion agreements. Between 2004 and 2009, the proportion of nonunion agreements approved in the private sector rose from 20 to 60 percent.
After 2009, when WorkChoices was partly rolled back, the number of dodgy agreements dramatically declined to pre-Howard levels. Why? Because as part of the Fair Work Act, the Better Off Overall Test was introduced.
Even so, the WorkChoices-era surge in nonunion, low-wage agreements had a lasting, negative impact on wage growth. “Zombie Enterprise Agreements” persisted for years. For example, Merivale, a Sydney hospitality empire, paid over three thousand staff up to 20 percent below Award wages on an expired nonunion EA set in 2007 for over ten years.
This is possible because EAs live on, sometimes for years, until they’re replaced or terminated — usually on request by unionized employees. Today, tens of thousands of workers are still languishing on Howard-era below-Award enterprise agreements.
Unfair Work
The FWC has the power to change and approve agreements so long as employees remain better off overall, compared to the relevant Award. On top of this, there already exists a relatively untested provision whereby the FWC may approve agreements with below-Award conditions in so-called “exceptional circumstances,” provided they meet the overall public interest.
A couple who both lost their jobs recently watch local news in their apartment. (John Moore / Getty Images)
The IR Omnibus bill will weaponize the “public interest test” governing this power, enabling business to push even further. The Coalition’s hand-picked business leaders in the FWC will surely oblige.
Australian business and their allies in the Coalition have dedicated enormous resources to crushing what remains of collective bargaining. Their goal is to corrode the infrastructure of the labor movement’s past victories.
This is why the Coalition also wants to introduce eight-year agreements on new projects valued at over $500 million or $250 million, if the project is of national significance. Existing laws mean that employers can only seek FWC approval on agreements for new projects (called “greenfields” agreements) after six months of bargaining with the relevant union.
However, if the BOOT is scrapped, employers could feasibly draw up greenfields agreements undercutting Award conditions for up to eight years, circumventing unions and simply hiring a new workforce under the new agreement.
Since Australia’s draconian anti-union laws prohibit industrial action at any time outside an EA bargaining period, eight-year agreements give employers the power to block strikes as well as to cut wages. There is also a political logic to it: it’s a cost and risk reduction strategy, guarding against any future joint campaigns that link unions with other elements of civil society. For example, unions will face crippling fines for striking at any time during the eight-year period to support campaigns against inappropriate development, or against new mining projects.
As if this weren’t enough, the Coalition is bolstering the power of the courts and the anti-union Australian Building and Construction Commission to inflict millions of dollars’ worth of fines on unions for activities which are entirely normal and legal in other democratic countries.
It couldn’t be clearer. Just as the Coalition’s 2020 budget gifted business with billions in subsidies, tax cuts, and other handouts, this, too, is a vast gift to capital, purchased at our expense.
A Common Enemy
The union movement has a good chance of stopping the BOOT changes in the Senate, where minor parties hold the balance of power. But everything else is up for grabs thanks to the Coalition’s Christmas “spirit of compromise.”
Insecure work is the enemy of unionization. Workers living in permanent precarity and intermittent poverty are less likely to join unions. Only 8 percent of union members are casuals. And when the bargaining power of unions declines, all workers suffer.
By expanding casual work, the IR Omnibus bill will strike the harshest and most comprehensive blow to wages and living standards in many years, both now and in the future. This is why the union movement must resist insecure work everywhere it rears its head.
We need unions that are willing to build power among existing, permanent workers who are in a better position to endure the risks of industrial action. It’s still harder and more expensive to sack permanent, more senior workers. But without a fight back, this will change too — the growth of precarity means that even secure workers are on increasingly unsteady ground.
Permanent conversion rights for casuals don’t work without workplace union power. Unions must unleash aggressive collective bargaining campaigns aimed at bringing all workers under the same agreement “roof” and into permanent work. This would have to include bringing contracted-out and labor-hire work back in-house.
Since the most precarious sectors of the workforce have lower union power and no access to collective bargaining, we also need a united union movement willing to mobilize all of our 1.5 million members, linking the pockets of union power in the private sector (including construction, ports, and logistics) to our largest public sector bases in health care, education, and social services. We must weave good jobs back into the fabric of Australia’s social contract — this means fighting for jobs that offer rights to ongoing employment and basic entitlements like holiday pay, sick leave, and superannuation.
Most importantly, reviving unions after years of decline will require determined efforts to rebuild a modern workers’ movement with deep support and social roots. This will mean working with climate action, anti-poverty, welfare rights, and other social justice and community organizations.
Unions and their allies have to push for working-class politics at every level of government, from local to federal, and build a broad coalition that will put decent jobs and economic democracy at the center of a progressive vision for Australia.
Public institutions like Medicare, public education, TAFEs, superannuation, and corporate taxation are widely popular. Australians broadly agree with the need to rebuild a domestic manufacturing sector and to refund the arts and tertiary education. The union movement could be the vehicle that makes these aspirations real.
This project can be popular. This year, the profit-hungry zealots of Australian business and the Coalition’s conservative apparatchiks told us that “we must learn to live with the virus.” But Australians overwhelmingly disagreed, and instead supported the subordination of short-term business interests to the public good. Despite a well-funded conservative campaign, large majorities overwhelmingly supported shutting down the economy to save lives.
Now we must protect ourselves against another virus that would irreparably damage the quality of workers’ lives in the name of higher corporate profits. That virus is insecure work. It’s lived among us too long — it’s high time we shut it down.
This commentary is a longer version of an assessment of the new legislation prepared by Jim Stanford (originally published in The Conversation).
We Were In This Together… For a Very Short Time
By Jim Stanford
“We are all in this together,” Prime Minister Morrison solemnly intoned to Parliament in April. And during those first frightening weeks of the pandemic, there was a brief moment when it seemed like Australia’s industrial relations protagonists actually believed it. For a short time, businesses, unions, and government put aside their usual differences and worked together to get through this existential threat. For example, they negotiated quick agreements to alter dozens of Modern Awards and enterprise agreements, adjusting rules and rosters to help keep Australians on the job.
Then, building on that spirit of cooperation, the government kicked off a new process to seek consensus around further improvements to workplace laws. The government abandoned its pre-COVID effort to impose harsh new restrictions on unions. Instead, five tables were established with business, union, and government leaders, debating reforms to improve the fairness and efficiency of the IR system. Some observes even smelled a new era of Accord-making in the wind.
Well, the Kumbaya moment didn’t last long. Within weeks the parties retreated to their corners and their standard speaking points. No meaningful consensus emerged on any issue from any table. Even tentative proposals – like an idea, supported by unions and the Business Council, to combine fast-track approval of union-negotiated enterprise agreements with greater flexibility in determining their suitability – were shot down in partisan gunfire by the more strident business lobbyists.
Now, in the absence of consensus, the government has picked up its traditional hymn book and is once again singing the praises of ‘flexibility’ and deunionisation. IR Minister Christian Porter tabled a series of changes in Parliament Wednesday that will further skew the already lopsided balance of power between employers and workers.
The government didn’t just take business’s side in the debates at those 5 discussion tables: it went even further. One of the biggest changes in the new legislation (suspending rules that prevent enterprise agreements from undercutting the minimum standards of Modern Awards) wasn’t even discussed at the IR tables. This confirms that the IR gloves are off once again.
If passed in the Senate, Porter’s omnibus bill will reset several aspects of current labour relations:
Suspending the BOOT: At present, the Fair Work Commission (FWC) must ensure enterprise agreements (EAs) do not undercut minimum standards guaranteed in the Modern Awards. The new legislation instructs the FWC to approve EAs even if they fail this ‘Better Off Overall Test’ (BOOT), so long as the deal is nominally supported by affected workers (more on this below) and deemed to be in the ‘public interest.’ It is important to remember that Australia (unique among industrial countries) allows employers to implement EAs unilaterally, without any involvement by a union. The BOOT is thus necessary to prevent EAs (especially non-union EAs) from undermining workers’ minimum rights. Porter’s suspension of the BOOT is planned for two years. But even if it is restored after that (which is uncertain), EAs negotiated during that window will remain in effect for years afterward. Even after they expire, under Australian law they remain in effect until replaced with new EAs, or terminated by the FWC – neither of which is likely in non-union settings.
EA Approval Process: Anticipating that non-BOOT-compliant EAs will be actively opposed by unions, Porter’s legislation includes complementary measures aimed at speeding those deals through the FWC. Unions will be restricted from intervening around EAs they were not involved in negotiating – even non-union EAs where no union was involved. And the process must normally be completed within 21 days, thus limiting opportunities for affected workers to learn about and resist sub-Award provisions.
Defining Casual Work: The growing use of casual labour was a hot topic at the IR reform tables. Porter’s legislation clarifies the definition of casual work in the most expansive way possible: a casual job is any position deemed casual by the employer, and accepted by the worker, for which there is no promise of regular continuing employment. In other words, any job can be casual, so long as workers are desperate enough to accept it. This will foster the further spread of casual labour. Most important, it removes a big potential liability faced by employers as a result of recent court decisions, under which they might have owed back-pay for holidays and sick leave to casual staff who worked regular shifts.
Casualising Part-Timers: Further casualisation will be attained through new rules regarding rosters and hours for permanent part-time workers. Porter’s bill would extend flexibility provisions originally implemented earlier this year – during that brief moment of pandemic-induced cooperation. The rules allow employers to alter hours for regular part-timers without incurring overtime penalties or other costs (currently required under some Modern Awards). This will allow employers to effectively use part-time workers as yet another form of casual, just-in-time labour.
Long-Term Project Agreements: Finally, Porter has granted one more big wish from the business list: allowing super-long enterprise agreements at major new projects. Agreements would last for up to eight years, and can be signed, sealed and delivered before any workers start on the job (thus denying them any input into the process). Under the revised BOOT provisions, they could also undercut the minimum standards of the Awards.
These changes are being advertised as a boost for post-pandemic job-creation, but this claim is hollow. In fact, the changes in part-time and casual rules will actually discourage new hiring: since existing workers can be costlessly flexed in line with employer needs, there is no need to hire anyone else. Weaker BOOT protections will spur a wave of new EAs: most union-free, and aimed at reducing (not raising) compensation and standards. This makes a mockery of the goals of collective bargaining, and grants Australian employers further opportunity to suppress labour costs (already tracking at their slowest pace in postwar history).
So what do we make of that short-lived spirit of togetherness which purportedly sparked this whole process? In retrospect, it seems to have been just an opportunity for Coalition leaders to pose as visionary statesmen during a time of crisis. Now, mere months later, the government is back to its old script – and the pandemic is just another excuse to scapegoat unions, drive down wages, and fatten business profits.
In this commentary, which originally appeared in The Age, Centre for Future Work Senior Economist Alison Pennington discusses what the pandemic reveals about Australia’s high levels of insecure work, new work-from-home risks, and how rebuilding more secure labour markets will be critical to creating more good jobs in our post-COVID recovery.
This commentary outlines the key findings of the On-Demand Inquiry.
Victorian Inquiry Offers Novel Routes to Regulating Gig Work
Findings from a landmark inquiry commissioned by the Victorian government into the work conditions in the “on demand” (gig) economy have been released. The Inquiry confirms workplace laws have failed to keep pace with economic change.
Release of the report’s findings are timely with COVID-era unemployment surging and an expanding pool of vulnerable workers relying on “gig” work to meet living costs. How do platform “digital sweatshops” work?
Platform business models recruit workers without access to secure and better compensated jobs (especially migrant and young workers). Jobs performed are often menial and without adequate safety protections. Gig workers lack stable work schedules or incomes, and receive wages that often fall well-below social norms and legal minimums.
The major recommendations by the Inquiry chaired by former Fair Work Ombudsman Natalie James include:
A more systematic application of the “work test” currently used to classify workers as employees or independent contractors by codifying the test in the Fair Work Act (rather than common law). This would create a nationally coherent framework for extending protections including minimum pay and conditions to gig workers genuinely working for another’s business.
Alter competition laws and establish a new industry Award to enable gig workers to bargain collectively with platforms.
Strengthen the gig work regulatory regime through industry codes of conduct between platforms, governments and unions for non-employee gig workers, overseen by the Australian Competition and Consumer Commission, and allow an independent tribunal to oversee work status determinations.
We commend the Inquiry on the ambitious scale of the investigation, and the innovative pathway proposed for gig work regulation.
Three Centre for Future Work reports on gig work in Australia were cited in the final report. Research by Director Jim Stanford (with Andrew Stewart from University of Adelaide) featured in the report’s major recommendation that collective bargaining rights be extended to gig workers to lift pay and conditions of gig work.
In this commentary, originally published in the New Daily, Senior Economist at the Centre for Future Work Alison Pennington outlines how government’s austerity agenda has intensified the unequal jobs fallout and threatens to “turn back the clock” for women’s economic security.
How the government is turning back the clock for women
The increase in women’s workforce participation is the most significant labour market trend of the past 40 years.
However, in the COVID-19 health and economic crisis, the gender boundaries of paid work are being redrawn.
Worse still, the government is the one holding the pen.
Women have suffered the worst labour market impacts since the shutdowns.
Total employment fell by 7.3 per cent for women compared with 5.7 per cent for men between February and May.
About 450,000 women have lost their jobs and 350,000 left the labour market all together.
Women saw a 12 per cent decline in hours worked, compared to 9 per cent for men.
This gender inequity stems from three main channels:
Greater exposure to customer-facing industries shut down first by health orders (like hospitality and retail)
Without affordable child care, mum’s got to stay home.
There’s more bad news on the industrial relations front.
Last week the Fair Work Commission decided to freeze minimum wages for up to seven months, in the sectors with the lowest wages and most precarious jobs – which are, surprise, mostly women’s jobs.
While women have been bearing the brunt of the economic impacts of COVID19, state and federal governments have targeted stimulus spending on the most bloke-heavy industry in the economy – construction.
Yet $1 million invested in education generates almost 11 jobs for women.
In fact, education investment creates more jobs for just women than construction creates for anybody: Man or woman.
Job-generating spending for women is best directed to the public sector.
Women make up 61 per cent of all public sector workers, with the sector supporting fuller female participation – women hold 54 per cent of full-time roles but only 35 per cent of full-time roles in the private sector.
Not only would public sector pay cuts risk driving this recession into a depression, they disproportionately hurt women’s incomes.
Even temporary wage freezes (of one or two years) compound into tens of thousands of dollars in lost wages compounding over her working life.
And austerity pain radiates far beyond income losses for affected workers, reducing consumer spending (right when the economy needs more), tax revenues and enhancing deflation risk.
When the largest employer in the economy cuts wages, it has a powerful effect for other employers.
It’s not just a hunch, this is exactly what happened after the GFC.
The unnecessary 2011-12 federal public sector wages caps cut the legs out from everyone’s wages.
But the pain induced from pay cuts doesn’t end there. Because lower-wage environments breed insecure work.
People accept lower-quality jobs or juggle multiple jobs to earn the same income. Women are much more likely to work these precarious jobs.
Prime Minister Scott Morrison has acknowledged that COVID-19’s fallout has been harshest on women.
Yet his government is pushing an agenda that will ensure there will be less jobs for women, and they’ll be worse paid.
Economic inclusion of women must be targeted in a long-term, sustained public investment plan that mops up the private sector carnage and lets us build back better.
In this commentary originally published in the Newcastle Herald Centre for Future Work Senior Economist Alison Pennington explains why Australia needs a public spending program proportionate to the nature, speed and depth of this crisis, and outlines some priorities for a public-led post-COVID-19 reconstruction plan.
Why governments must spend, spend, spend to save the Australian economy
Our nation faces the most significant economic challenge in nearly a century. GDP will likely contract at least 20 per cent compared to pre-pandemic levels, with millions of jobs already on the scrapheap.
Unbelievably, a top priority for governments has become freezing or cutting wages, public sector pay freezes and an industrial relations power play to kill the Awards system.
Recent research on impacts of the NSW government’s proposed public sector wage freeze shows over 1100 jobs will be lost from workers’ lower consumption.
Cutting wages and dooming working people to poverty is senseless. But governments refuse to learn from our own historical crisis responses in the GFC and the Great Depression.
We recovered from the GFC better than other countries because government invested in keeping people in jobs (key word here is “invested”).
Others countries that walked the austerity path were mired for years with lower growth and higher unemployment.
But stimulus soon ran dry and critical failures of the business-led economy were painfully evident before the pandemic: declining business investment in new capital and innovation; the slowest sustained pace of wages growth since WWII; rising inequality; an explosion in insecure jobs and the labour underutilisation rate.
It will be impossible for this emaciated economy to “snap back”. We need a powerful public policy response proportionate to the nature, speed and depth of this crisis. Discrete government stimulus programs will not cut it.
But Scott Morrison continues to pretend his hands are tied: “if there’s no business, there’s no jobs, there’s no income, there’s nothing.” Market ideologues said this for 10 years during the Depression.
They tried to convince people government was powerless to fix joblessness and protect living standards, heralding a private-sector recovery that never came.
But there is something called public investment, Prime Minister. It’s what we did on a mass coordinated scale to ensure we didn’t return to the economic and social turmoil of the Depression.
And it’s this fully-fledged comprehensive national government spending program we need now.
Government must break the investment gridlock. There are many priorities for a public-led post-COVID-19 reconstruction plan including: repairing and expanding our public healthcare and education systems; a sustained public investment program, for transportation, energy, utilities, and social housing; and building our renewable energy systems and networks.
We have the most educated generation in our history, and young workers have been disproportionately affected by the decline in hours worked and unemployment in this crisis.
Let’s expand genuine career pathways before we lose a generation of skills, passion and potential.
Universities have been decimated by the loss of foreign students and exclusion from the JobKeeper wage subsidy.
Meanwhile, the disastrously privatised VET system cannot meet the needs of our economy for skilled workers. We need a complete reconstruction of the post-secondary skills system, with government funding injected into pillar institutions in both public universities and TAFE.
Ensuring public money is targeted to people’s needs demands greater participation across all levels of society.
We need to open avenues for collective representation – not shut them down. In the rebuild, we need new localised reconstruction and jobs plans, especially for regional communities rebuilding from bushfires, anti-union laws lifted and a new sectoral bargaining system to increase participation and coordination of workers across industries.
The only actor with sufficient investment power and planning capacity to lead economic reconstruction is government.
With the private sector wounded, it’s time we got comfortable with invoking direct tools of public investment, tools forced out of favour during a generation of market-worshipping neoliberal policy but which are essential to our recovery today.
This is a historic crossroads moment.
Should government refuse to take up the investment mantle they will plunge millions into misery only to endow a smaller layer of business the power to restructure a harsher, more unequal economy.
In 1942, years before the war ended, our national government formed a National Reconstruction Department to begin planning for post-war rebuilding.
We can unleash another national reconstruction plan fit for our era. One with a commitment to full employment at its heart, that pulls us through COVID-19 with stronger public services, and paves our way to a sustainable future.
In this commentary, which originally appeared in 10 Daily, Centre for Future Work Senior Economist Alison Pennington discusses the consequences of low paid sick leave coverage for worker safety and public health efforts during the pandemic, and reviews the merits of a universal paid sick leave scheme to address both COVID-19 and precarious work.
‘No More Heroics Going To Work Sick’ Sounds Fine Unless You Have No Paid Leave
Remember the Codral ‘soldier on’ television commercial? “With Codral you can soldier on”.
In 2008 a concerned citizen on a WA hospital pandemic influenza committee complained to the Advertising Standards Bureau (ASB), worried the ‘soldier on’ message would ingrain community habits that could undermine emergency efforts during a national/international pandemic.
The ASB dismissed the complaint, agreeing that Codral was designed to self-medicate for “sniffles”, not for more serious influenza symptoms.
Now fast-forward to the present day. The world is facing a global pandemic. It’s clear thedecisionhas not aged well.
Outlining plans to get people back to work, Chief Medical Officer Brendan Murphy announced last week “no more heroics”. Going to work with a sniffle is now “off the agenda for every Australian for the foreseeable future”.
I welcome Murphy’s sentiment. Changing social attitudes and behaviours is key to infection control.
But sentiment isn’t policy.
Murphy’s public health directive is out of touch with the reality for working Australians who, Codral or not, continue to soldier on in a labour market marred by precarity, low wages, and jobs without basic sick leave protections.
In fact, more than 3.3 million workers have no access to sick leave – almost one in three workers. This includes almost one-quarter of the workforce employed on a casual basis. One million more are independent contractors, including many so-called ‘gig workers’ — better described as misclassified employees like food delivery drivers.
Casuals without sick leave are often the most vulnerable workers in the economy. As unemployment surges they will feel increasingly pressured to work every shift they can. There are real financial consequences of taking unpaid leave from the workplace. The bills don’t stop rolling in. Rent needs to be paid.
Even before the pandemic, going to work sick is not some benign workplace habit. Taking sick leave is perceived by many bosses as a lack of commitment to the job. Workers are often punished for absences with diminished opportunities and disciplinary performance management akin to bullying. This fuels high levels ofpresenteeism — even for those with sick leave entitlements.
The new COVID-19 work regime is exposing society-wide risks of unequal sick leave coverage. About 30 percent of the workforce have the potential to work from home — predominantly professionals, managers and administrative workers. Insulated from contagion, remote workers are paid almost 25 percent more than those working outside the home. They’re more likely to be permanent, full-time workers with sick leave.
Meanwhile millions of essential workers across supermarkets, transport, cleaning and community and social services go to work each day exposed to both income precarity and higher viral loads, all without the ‘safety’ of sick leave and secure work.
The common factor in the two major workplace COVID-19 outbreaks at Cedar Meats and Newmarch House aged-care facility is labour hire: on-call work with no guarantee of future shifts. And no sick leave.
To put it bluntly: in a pandemic, insecure jobs with no sick leave will literally kill people.
The Fair Work Commission introduced two weeks unpaid sick leavefor half the private sector workforce inApril. Unpaid sick leave is, however, useless in preventing workers coming to work unwell if the outcome of sickness is still financial punishment.
This is why Australia needs universal paid sick leave: a system that allows for up to four weeks of leave to account for the full incubation, treatment and recovery lifecycle of COVID-19.
It’s easy to do this. The New Zealand Ardern Governmentintroduced a sick leave schemefor all NZ businesses, organisations and self-employed people under hardship due to COVID-19 from day dot. Australian policymakers have been slow to act on sick leave reform, but it can act now.
A universal sick leave scheme can be publicly funded and transferred to employers at a future date when they’re in better shape. To signal the transfer of obligations, the entitlement should be entered into the National Employment Standards (NES) — the set of minimum employment conditions covering all employees — with an additional scheme for independent contractors not covered by the NES.
The elephant in the room is that government intends to plough on with a ‘bosses knows best’ industrial relations agenda that would expand casual jobs (without sick leave), cut wages, and undermine workplace coordination needed to contain the disease.
But it will be impossible to resume economic activity without universal paid sick leave — lest we risk dangerous and costly outbreaks.
Trust, discipline and sacrifice has been demonstrated by Australians to flatten the curve and ensure community safety. It’s time government reflected this good will in people’s working lives.
The virus doesn’t care about the employment status of its host. We must combine principles of public health with safe, secure jobs.
Taking a codral won’t help us soldier on through this pandemic. Legislating universal paid sick leave will.
In this commentary, Centre for Future Work Economist Dan Nahum reviews the qualitative reasons why manufacturing retains a special strategic importance to the overall economy, and discusses the potential synergies between the development of sustainable energy resources and a revitalisation of manufacturing.
Rebooting the Australian Manufacturing Sector in the Era of Coronavirus and Climate Change
Since the COVID-19 crisis emerged, Australians have been starkly reminded of the importance of being able to manufacture goods domestically. International shortages of, and restrictions on, the export of medical equipment and personal protective equipment have given us all a fright. While thankfully critical shortages have not yet emerged, the crisis has confirmed that being able to domestically produce a full range of essential manufactures is a matter of national wellbeing.
For many years the conventional economic wisdom was that as a high-wage, resource-rich economy, Australia was unable to competitively manufacture — nor did it need to. Between digging up raw materials and shipping them to Asian trading partners (subsequently paying a premium for reimported manufactures made from those resources) and our pivot to a ‘service economy’, we could somehow sidestep the need to produce what we materially use. Even Treasurer Josh Frydenberg has now conceded that unbalanced strategy is not viable.
It’s true the extraction of our extraordinary mineral endowment made some Australians wealthy, but in a lopsided way: unbalanced reliance on resource extraction, combined with the long decline of manufacturing, has made Australia far more unequal — indeed, we are now more unequal than most OECD nations. Additionally, this myopic economic focus has put us at the mercy of boom-and-bust cycles in global demand for our resources.
There are many core reasons why Australia needs a healthy, proportionate manufacturing sector:
Australians are buying more manufactured goods over time; and manufacturing output is growing around the world. The absolute decline of manufacturing in Australia is an exception to the experience of other industrialised countries.
Manufacturing is the most innovation-intensive sector in the whole economy. No country can be an innovation leader without manufacturing.
Manufactured goods account for over two-thirds of world merchandise trade. A country that cannot successfully export manufactures will be shut out of most trade.
Production costs in Australia are not expensive relative to other industrial countries (now that the Australian dollar is once again trading in normal range).
Even small remote countries (like Korea, Ireland, New Zealand and Israel) are increasing their manufacturing output, and preserving and creating manufacturing jobs. Their experience demonstrates that we cannot blame geographic isolation for our deindustrialisation.
Manufacturing anchors hundreds of thousands of other jobs throughout the economy, thanks to its long and complex supply chain. A myriad of supplies and inputs are purchased by manufacturing facilities.
There’s another key reason to be optimistic about Australian manufacturing — if we create an appropriate policy environment for it. Australia is poised to take advantage of our bountiful renewable energy endowment to reinvigorate manufacturing, on the foundation of plentiful, competitive, and reliable power.
The following core policy levers would help to ensure that Australia’s manufacturing sector thrives in decades to come, enhancing our prosperity and our national security:
Targeted Tax Incentives: No-strings-attached tax cuts for corporations do not stimulate investment, innovation, or employment. Rather, fiscal incentives are more effective when they are linked directly to investment. Examples include accelerated depreciation provisions (allowing companies to write off the cost of new investments faster), investment tax credits, and public co-investments in specific strategic projects.
Investing Public Funds in Key Industries: International experience confirms that public financial assets can effectively lever greater capital investment in key industries. These include state-owned development banks (as in Japan and Korea) or other forms of sovereign wealth (as in Singapore, the UAE, and Norway). Public investment vehicles have been used successfully — indeed profitably — in numerous applications in Australia (for example, the CEFC to finance sustainable energy projects). The same principles can apply in manufacturing investment. Additionally, industry super funds could play a larger role in financing the development of strategic products and sectors.
Innovation: Empirical evidence shows successful innovation must be embodied in the hands-on process of ‘learning by doing’. And there is no other sector more directly connected to the innovation process than manufacturing. Government needs to provide tangible, direct support to innovation in manufacturing. We need better systems for linking public innovation activity with commercial applications. And we can emulate successful public equity investments in innovation-intensive businesses in other countries (like the effective methods for financing innovative firms used in Israel, Finland, and Ireland).
Sector Strategies: Government needs to identify manufacturing sub-sectors with the right criteria for success, and then co-ordinate investment and growth. These sector strategies must engage all relevant sector stakeholders (business, unions, educational institutions, research organisations, state and local governments). Even businesses which compete with each other can benefit when the whole sector succeeds. Criteria for identifying high-potential sectors include innovation, export orientation, productivity, and strong supply chain linkages.
Networks, Eco-Systems, and Clusters: Successful modern industrial policy relies centrally on connections and collaboration among players from different firms, agencies, and stakeholders. Research shows that spillovers among these diverse sector participants, and the sharing of knowledge between them, are crucial to the development of ‘critical mass’ in any high-tech industry. Often, these networks and clusters are geographically concentrated. Government cannot simply ‘create’ clusters, but it can facilitate their emergence.
Industrial Infrastructure: Government investments in public capital assets of all kinds will play a crucial role in fostering manufacturing growth. Infrastructure investments help to offset the sustained weakness of private investment, and improve weak macroeconomic conditions. One key focus of infrastructure investment should include facilities and services which support manufacturing: ranging from transportation infrastructure, to utility connections (especially renewable energy), to modern training facilities (to help better integrate TAFE and university training with industry). We should maximise the use of Australian-made manufacturing content in those (and all other) infrastructure projects.
Connecting Renewable Energy Investment to Manufacturing: Given Australia’s superabundance of renewable resources, Australia should position itself as the world’s renewable energy superpower. Renewable energy is appropriate for most industrial applications, including heavy industry, and now offers lower costs than fossil fuel sources (including gas). To expedite the transition to renewable energy, the manufacturing sector requires stability in energy policy, industrial strategies to take advantage of Australia’s renewable energy endowment, and government partnerships with firms that can benefit from and add value to Australia’s renewable energy endowment.
Skills and Capacities: Enhancing the future skills and capacities of workers must be a vital component of future sector strategies. Consistent funding for skills training at all levels is essential, as are efforts to more closely link training programs with future workforce needs in strategic sectors. Germany’s apprenticeship system is perhaps the most outstanding international role model in this area.
Leveraging Procurement: Australian governments are massive purchasers of manufactured goods. An obvious way to support domestic manufacturing is to ensure those expenditures generate the maximum possible boost to domestic industry. This also helps to reduce the final net cost of the program: since the government collects additional revenues through the new work spurred by domestic procurement decisions, offsetting the public expenditure. Other countries regularly utilise domestic content targets in procurement to support domestic producers. Australia can do the same.
Trade that Goes Both Ways: International trade is essential to the viability of most manufacturing due to the importance of economies of scale in production. Australian trade negotiators need to do far more than mutual tariff reduction to stimulate Australian manufactured exports. And Australian agencies (like Austrade) can be much more proactive in promoting Australia’s exports, through initiatives like expanded credit financing, initiatives to leverage Australian participation in global supply chains, and government support for international marketing.
A thriving manufacturing sector confers important benefits across the whole economy. Even more importantly, a large and adaptable manufacturing sector offers resilience against periodic crises such as COVID-19. If Australia does not add value through the expansion of our manufacturing sectors, we can anticipate that our relative standard of living will decline, and our vulnerability to future supply disruptions and health crises will only increase. We can and must build a manufacturing sector that is economically and ecologically sustainable, and that adds complexity and resilience to Australia’s economy.
See the Centre for Future Work’s previous research on the Australian manufacturing sector:
Manufacturing Still Matters (2016) shows that manufacturing, far from being inherently doomed in Australia, is quite viable. Similar countries manufacture successfully. It provides an agenda of policy recommendations for support of the sector.
Manufacturing: A Moment of Opportunity (2017) demonstrates that while the Australian public underestimate the size and therefore strategic economic importance of the sector, it enjoys strong popular support. Furthermore, the report identifies some promising signs of future growth in the sector.
From Consensus to Action: Report from the First National Manufacturing Summit (2018) summarises the key findings of the first National Manufacturing Summit, including areas of strong policy consensus reached among the business, industry peak bodies, trade unions, government departments, academic institutions and vocational training providers and other summit delegates. The report also identifies several priorities for further policy research.
Advanced Skills for Advanced Manufacturing (2018) argues that Australia’s present vocational education and training system, damaged by years of underfunding and failed policy experimentation, is a weak link in meeting the needs of the industry. High-skilled, high-paid jobs rely on a strong VET sector, and this report identifies twelve key reforms to achieve that.
Auto Shutdown Another Economic Blow (2016) analyses the causes and impacts of the closure of the Australian car manufacturing industry. It notes that secondary job losses will be several times larger than the direct jobs eliminated at the car plants.
Penny Wise and Pound Foolish (2016) analyses the impact of the NSW government’s decision to source railroad rolling stock manufacturing work to Korea rather than taking advantage of the opportunity to procure domestically. Governments need to account for the full range of potential costs and benefits of their procurement decisions (job creation, industry development, government revenues, and so on), not simply minimise the up-front purchase cost.
