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  • Victorian Inquiry Offers Novel Routes to Regulating Gig Work

    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.

    Read our full submission to the Inquiry — Turning Gigs Into Decent Jobs — by Jim Stanford and Alison Pennington.

    The post Victorian Inquiry Offers Novel Routes to Regulating Gig Work appeared first on The Australia Institute's Centre for Future Work.

  • Austerity Threatens Women’s Access to Paid 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:

    This combination has created a ‘perfect storm’ for women in the workplace.

    However, instead of stepping up to provide countervailing support, the federal government is only exacerbating the crisis.

    This started back when JobKeeper was announced and excluded short-term casuals by design, which affects more women than men.

    And then, most recently the government targeted early JobKeeper cuts to childcare workers in what is a cruel double blow.

    Not only do more women work in child care, but more women benefit from access to affordable child care.

    The cumulative impact of Australia’s effective gender pay gap of 32 per cent (in average weekly earnings for all workers) and inadequate parental leave supports for cash-strapped families makes their work-care decisions clear cut.

    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.

    For every $1 million invested in construction only 0.2 direct jobs are generated for women.

    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.

    The post Austerity Threatens Women’s Access to Paid Work appeared first on The Australia Institute's Centre for Future Work.

  • Repairing Universities & Skills Key to Meeting COVID-Era Challenges

    Our Senior Economist Alison Pennington was interviewed by UTS The Social Contract podcast on how COVID-19 is reshaping relations between universities, government and industry. 

    Alison explains how the pandemic economic crisis presents significant challenges to Australia’s fragmented, underfunded and unplanned skills system wounded from decades of failed marketisation policies, and why sustained public investments in skills and jobs pathways will be essential to solving our economic and social challenges. 

    Listen to the episode on Whooshkaa. She is joined by Megan Lilly, head of Workforce Development at the Australian Industry Group.

    The post Repairing Universities & Skills Key to Meeting COVID-Era Challenges appeared first on The Australia Institute's Centre for Future Work.

  • Unleashing a National Reconstruction Plan Fit for Our Era

    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.

    The post Unleashing a National Reconstruction Plan Fit for Our Era appeared first on The Australia Institute's Centre for Future Work.

  • Australia Needs Universal Paid Sick Leave To Get Through the Pandemic

    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 the decision has 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 of presenteeism — 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 leave for half the private sector workforce in April. 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 Government introduced a sick leave scheme for 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.

    The post Australia Needs Universal Paid Sick Leave To Get Through the Pandemic appeared first on The Australia Institute's Centre for Future Work.

  • Pandemic Shows Australia Needs Domestic Manufacturing

    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.

    Read The Centre for Future Work’s report Powering Onwards: Australia’s Opportunity to Reinvigorate Manufacturing through Renewable Energy, which considers the potential and actual connections between renewables and manufacturing in detail.

    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.

    The post Pandemic Shows Australia Needs Domestic Manufacturing appeared first on The Australia Institute's Centre for Future Work.

  • Public Sector Pay Freezes Could Push Economy From Recession to Depression

    Governments are devoting unprecedented resources to protecting Australians against the health and economic effects of the pandemic, but a contradictory push to adopt fiscal austerity measures is also becoming apparent. Leaders of governments at all levels — federal, state and local council – have already announced plans to freeze wages and cancel previously agreed pay raises for public servants.

    Key findings:

    • At least 35% of the purported ‘savings’ from freezing public service pay is offset by the loss of direct tax revenues that would have been collected as a result of higher income and spending by public servants. And considering other tax revenue losses from the resulting slowdown in broader wage growth, even more of those ‘savings’ are never realised.
    • Pay freezes in the public sector spill over into weaker economy-wide wage growth through three key channels: a composition effect, a demonstration effect, and a macroeconomic effect.
    • Freezing pay for even short periods reduces the lifetime income and superannuation savings of public sector workers by tens of thousands of dollars, because it permanently reduces their lifetime wage trajectory.
      • A 6-month pay freeze for a typical federal APS worker will reduce career earnings by an estimated $23,500, and superannuation accumulations by another $4000 or more. The longer 2-year freeze contemplated for Brisbane local council workers would reduce career earnings by over $100,000, and superannuation accumulations by $17,500.
    • Misguided public sector wage restraint in the aftermath of the GFC short-circuited an initial recovery in private-sector wage trends in 2010-11, and helped lock in a lasting deceleration of national wages after 2013. Since then Australia has experienced the slowest sustained wage growth in the entire post-war era.

    “Pay freezes are being imposed at the very moment when public sector workers such as healthcare workers, first responders, teachers and social service providers are performing vital tasks, at personal risk to themselves, to support Australians through the pandemic. Freezing pay for these essential workers is not just morally questionable — it’s also a major economic mistake,” said Dr. Jim Stanford, Director of the Centre for Future Work.

    “The motivation for public sector wage austerity seems more ideological than fiscal or economic: pay freezes are justified with appeals to ‘shared sacrifice,’ and a symbolic desire to ‘tighten the purse strings’ at a moment when governments are about to incur their largest deficits in history.

    “However, our research shows these arbitrary pay freezes are both unfair and economically counterproductive. Government policy should be driven by economic reality, not political optics.

    “Public sector wage austerity imposed after the Global Financial Crisis helped ‘lock in’ historically slow wage growth in the private sector in the years that followed. Since then, wages in Australia have grown at their slowest sustained rate in the post-war era.

    “Australia cannot tolerate a further deceleration of wage and price inflation. Inflation was already close to zero, chronically falling below the RBA’s inflation target, even before the economy was hit by the double shock of bushfires and COVID-19.

    “Economy-wide deflation is associated with long-term depression. Australia cannot risk letting any COVID-19 recession turn into a depression. At this pivotal moment, governments’ priority should be anchoring price expectations, supporting nominal incomes, and contributing to aggregate demand. Normal wage gains should be implemented in the public sector and encouraged in the private sector.”

    The post Public Sector Pay Freezes Could Push Economy From Recession to Depression appeared first on The Australia Institute's Centre for Future Work.

  • 93 Economic Experts Back Govt Wages Subsidy in Open Letter

    Signatories to the open letter include Bernie Fraser, former Secretary to the Treasury and Governor of the Reserve Bank; Professor Roy Green, former Dean of Business at UTS; Professor Andrew Stewart, Professor of Law at the University of Adelaide; RMIT Distinguished Professor Sara Charlesworth; Professor John Howe, Director of the University of Melbourne School of Government; and Rae Cooper, Professor of Gender, Work and Employment Relations at the University of Sydney.

    The open letter states, in part:

    “The coming recession will be unprecedented in Australian history – in both its speed and its depth. Without immediate action, we expect that 1-2 million workers, or even more, could lose their jobs in coming weeks. That would drive unemployment to 15% or higher, overwhelm income support programs, and leave hundreds of thousands of businesses unable to function – even after the immediate health danger passes.

    “We recommend that the Commonwealth government immediately implement a large-scale wage subsidy scheme, similar to those already enacted in several other industrial countries.”

    “The breadth of support we received on this open letter confirms the proposal is supported by a broad cross-section of Australian stakeholders. The Government needs to move quickly now to implement this measure, and ease this pandemic’s devastating economic effects,” said Dr Jim Stanford, Director of the Centre for Future Work at the Australia Institute, and author of the open letter.

    The wage subsidy proposal has also been supported by many Australian unions, business peak bodies, and other stakeholders.

    Bernie Fraser, former Secretary to the Treasury and Reserve Bank Governor said, “Australia’s post-corona economic resurrection requires the on-going preservation both of the skills and self-esteem of our workforces, and of our business and entrepreneurial talents. If Australia is serious about ensuring the readiness of our work-forces to spring into action when the time comes, it should provide appropriate support direct to those workforces, as several other countries appear to be doing.”

    Professor John Howe, Director of the Melbourne School of Government, said, “Wage subsidies are a longstanding and legitimate form of government support for job creation and retention. In the context of the current crisis, an urgently implemented wage subsidy program will help workers retain income and stay in employment, unlike direct welfare payments. And they are more accountable than boosting cash flow to employers, which may or may not be used to save jobs.”

    Professor Roy Green, former Dean of Business at UTS, said, “The duty of the Australian Government in these extraordinary times is to ensure that a short term crisis does not become a long term disaster for the nation. In fact, the Prime Minister has referenced the need to build a ‘bridge’ to a better, stronger economy. For this to happen, the bridge must include substantial wage subsidies to retain workforces for the recovery and provide them with an income as they reskill and reposition our industries for the future.”

    The full open letter and list of signatories can be viewed here.

    A catalogue of international initiatives to support workers, compiled by the Centre for Future Work, is available here.

    The post 93 Economic Experts Back Govt Wages Subsidy in Open Letter appeared first on The Australia Institute's Centre for Future Work.

  • 81% of Australians support JobKeeper for all Casual Workers

    More than eight in ten Australians support extending JobKeeper to all casual workers.

  • Webinar: Protecting Jobs and Incomes During the Pandemic

    Jim titled his presentation “Off the Cliff”, highlighting that the immediate shutdown of so much of Australia’s work and production is producing an economic contraction unlike anything experienced in history.

    Comparing Recessions

    Watch a video recording of the webinar:

    And/or download Jim’s slides below.

    This webinar was part of the Australia Institute’s weekly pandemic webinar series.

    The post Webinar: Protecting Jobs and Incomes During the Pandemic appeared first on The Australia Institute's Centre for Future Work.