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  • New Book: The Wages Crisis in Australia

    Cover

    The wage slowdown has elicited concern from economists and political leaders across the spectrum. Even Dr. Philip Lowe, Governor of the Reserve Bank of Australia, has called it a “crisis,” and suggested that faster wage growth would be beneficial for the economy.

    This new collection of 20 essays by leading labour market experts and commentators in Australia explores the causes, consequences, and potential solutions to this problem. The book is published by University of Adelaide Press. The book was launched in Melbourne on 29 November, with remarks from Natalie James, former Commonwealth Fair Work Ombudsman and Chair of the Victorian Inquiry Into the On-Demand Workforce.

    Through the links below you may access excerpts from the book, links to participating authors, and supplementary material (including commentary, other readings, and videos). Our hope is that this collection will spark a needed debate in Australia about how to get wages back on track.

    About the Editors:

    Andrew Stewart is the John Bray Professor of Law at the University of Adelaide and a Legal Consultant to the law firm Piper Alderman.

    Tess Hardy is a Senior Lecturer at Melbourne Law School, and Co-Director of the Centre for Employment and Labour Relations Law.

    Jim Stanford is Economist and Director of the Centre for Future Work at the Australia Institute.


    A digital edition of the book is available for free download from University of Adelaide Press. Paperback copies can be ordered for $60 from Federation Press; please submit inquiries to info@federationpress.com.au.

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  • Excessive Hours and Unpaid Overtime: 2018 Update (GHOTD 10th anniversary)

    2018 marks the tenth annual Go Home on Time Day (GHOTD), an initiative of the Centre for Future Work at the Australia Institute that shines a spotlight on overwork among Australians, including excessive overtime that is often unpaid.

    Over many years, the Centre for Future Work and the Australia Institute have commissioned regular annual opinion polls to investigate overwork, unpaid overtime, and other instances of “time theft” in Australia. This year’s poll of 1459 Australians was conducted between September 17-26, with a sample that was nationally representative according to gender, age and state or territory.

    Of the 1459 respondents, 880 (or 60 percent) were currently in paid work. That subsample was then asked several questions regarding their hours of work, whether they wanted more work or less, and whether they worked unpaid overtime in their jobs.

    This report summarises the results of that polling, and places it in the context of national labour force trends:

    • There is growing evidence of a sharp polarisation in Australian employment patterns, between those with full-time, relatively secure jobs, and a growing portion working part-time, casual, temporary, or insecure positions.
    • In the survey, 54 percent were employed in permanent full-time jobs, while 46 percent were employed as part-time, casual or self-employed workers. In other words, almost half of the sample experienced one or more degrees of nonstandard or insecure work – broadly in line with the experience in the overall labour market.
    • Compared with last year, there was a significant increase in those wanting more paid hours (from 34 percent to 40 percent) and a decrease in those wanting fewer paid hours (from 19 percent to 15 percent). We believe this shift reflects the high levels of underemployment in Australia’s labour force, and the ongoing struggle of those in non-standard jobs to attain enough hours of work.
    • In the survey, 20 percent of full-time workers said they would prefer to work fewer hours, and 30 percent said they wanted more. 50 percent said their hours were about right.
    • By contrast, those in part-time or casual positions work far fewer and more uncertain hours, and most would prefer to work more – 54 percent of parttime workers and 63 percent of casual workers. This highlights the problems of underemployment and inadequate incomes experienced by the growing proportion of Australian workers in insecure jobs. Only 7 percent of part-time employees and 2 percent of casuals wanted fewer paid hours.
    • At the same time as many Australian workers report they would prefer more hours of paid work, the incidence of unpaid overtime is also growing: including coming in early, leaving late, working at home or on weekends, working through regular breaks and lunch hours, responding to calls or emails out of working hours, and more. Across all forms of employment, our respondents reported working an average of 6.0 hours of unpaid labour per week (up from an average of 5.1 hours in 2017 and 4.6 hours in 2016).
    • This translates into an annual average of 312 hours of unpaid overtime per worker per year across all forms of employment. Based on a standard 38-hour workweek, this is equivalent to more than 8 weeks (or 2 months) of unpaid work per worker per year.
    • Full-time workers reported the greatest incidence of unpaid overtime: on average 7.1 hours per week. This was a substantial increase from a reported 6 hours per week in last year’s survey.
    • Part-time workers worked on average 4.2 hours per week unpaid, while even casual workers worked on average 2.8 hours unpaid.
    • The aggregate value of this “time theft” is substantial. Across the workforce, we estimate the total value of unpaid overtime at $106 billion in 2018. This widespread non-payment for so much of Australians’ working time reduces family incomes, weakens consumer spending, and exacerbates the challenge of work-life balance.
    • In an era of wage stagnation, underemployment, insecure work and significant cost of living pressures, Australian workers cannot afford to give their time away to employers for free.

    The post Excessive Hours and Unpaid Overtime: 2018 Update appeared first on The Australia Institute's Centre for Future Work.

  • Go Home on Time Day 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • Under the Employer’s Eye: Electronic Monitoring & Surveillance

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

    Part I of this report begins by describing the main forms of modern electronic monitoring and surveillance (EMS) that have placed more Australian workers “under their employer’s eye.” These methods include the use of location tracking technologies, monitoring of emails and social media content, the “gamification” of work, digital methods of performance monitoring, and even electronic systems for employee discipline and dismissal. Following sections examine the various purposes of modern EMS systems, and the extent of their application. This is followed by a brief description of the legal and regulatory system governing EMS in Australia; current regulations limiting employers’ use of these systems are sparse and inconsistent. The last section of Part I discusses the direct and indirect consequences of these new forms of monitoring and surveillance for workers. It argues that the impact of omnipresent surveillance in workplaces may be contributing to the slower wage growth which has so concerned Australian economists and policy experts in recent years; because it is now easier and cheaper to monitor and “motivate” employees through surveillance and potential discipline, employers feel less pressure to provide positive economic incentives (such as job security, promotion, and higher wages) to elicit loyalty and effort from their workforces.

    Part II of the report then reports the findings of our original survey data regarding the forms, extent and impacts of EMS systems in Australian workplaces, and the attitudes of Australian workers towards these technologies and trends. We surveyed 1,459 people between 26 October and 6 November 2018, using an online survey methodology, conducted by Research Now. The sample was nationally representative with respect to gender, age and state and territory.

    The post Under the Employer’s Eye: Electronic Monitoring & Surveillance in Australian Workplaces appeared first on The Australia Institute's Centre for Future Work.

  • Secret Weapon Overlooked in Fight Against Financial Misconduct

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  • Permanent Casuals, and Other Oxymorons

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

    Time to rethink reliance on casual work

    Casual work has become a pervasive feature of Australia’s labour market. Until the 1990s, almost all workers, even part-timers, had permanent jobs with reasonably predictable schedules and access to normal work-related entitlements (like paid holidays and sick time). But then employers became obsessed with achieving “flexibility” in hiring. Flexibility sounds like a good thing, but in practice it meant granting employers more freedom to disemploy their workers, with no notice and no severance costs. The downside for workers is lack of certainty in rostering, poor job security, and no access to paid leave. That makes it impossible to make major purchases, plan child care, or take family holidays.

    At last count, around 25 percent of paid employees in Australia (or over 2.5 million workers) were employed on a casual basis. The incidence of casual work has grown noticeably since 2012, when the mining investment boom ended and the overall labour market weakened. Casual work has grown fastest in full-time positions, and among male workers. For young workers (under 25), casual work is especially ubiquitous: 55 percent work casual. OECD data indicates that Australia now has the highest incidence of temporary work of any industrial country.

    Because it is so common, casual work has become “normalised” in the eyes of employers and policy-makers. For example, Craig Laundy, former Commonwealth Minister for the Workplace, endorsed casual work enthusiastically this year, saying it is “a completely appropriate way for many businesses and many employees to conduct their relationship.” Even business lobbyists admit that most casual staff actually work regular and predictable schedules.

    With this normalisation, many industries in Australia now rely on casual work as a permanent, core feature. Instead of using casual workers to meet temporary or seasonal fluctuations in demand, thousands of employers tap a permanent pool of casual workers to meet ongoing staffing requirements. Workers can be stuck on casual status even if they work regular shifts, for years at a time.

    In theory, employers pay a price for this super-flexibility: Australia’s casual loading rules require a 25 percent wage penalty to be paid to casual workers: compensation for lack of access to paid sick leave and holidays, and for the insecurity and instability attached to casual work. In practice, many employers do not pay this wage premium – effectively “hiding it” in lower base wages, or else evading it entirely (especially for young and foreign workers who do not understand the rules). But even if they do pay casual loading, employers should be prevented from abusing casual work as is now commonplace. After all, the inherent insecurity of casual work imposes a cost on workers and their families – a cost that grows if that insecurity is permanent.

    A series of recent legal decisions, however, is now challenging the assumption that casual work can be normal, legitimate and universal. Three particularly important cases could force employers to rethink their reliance on casual staffing:

    • A Federal Court judgment has ordered a labour hire company to pay retroactive annual leave to a mine driver who worked casual for several years, even though he was assigned to regular shifts. Employers complain this ruling somehow amounts to “double-dipping:” they claim that paying the 25 percent casual loading somehow entitles employers to deny paid holidays and other normal rights, even to long-term staff. That assumption has now been refuted.
    • The Fair Work Commission has decided to harmonise evening and Saturday penalty rates between casual and permanent workers in the retail sector. Until now, casuals were denied penalties of up to 25 percent of base wages for those shifts, compared to permanent workers. Now the penalties for casual workers will be raised to the same level as for permanent staff (although, perversely, the Commission is also in the process of cutting penalty rates for all workers on Sundays and holidays).
    • Another Fair Work Commission ruling affecting 85 different modern awards affirmed the right of casual staff to request conversion to permanent status after working regular shifts for a year. Employers can turn down those requests, but only if they would result in major changes in the applicant’s hours of work, or are otherwise “unreasonable.”

    Employers are pushing back hard against these precedents – and they seem to have the ear of the federal government. Business lobbyists predict billions in back payments arising from the annual leave decision, and are demanding legislative changes to avoid those costs. Kelly O’Dwyer, Minister for Jobs and Industrial Relations, has promised to investigate the idea. Some business groups are even proposing a brand new category of “perma-flexi” workers, who would receive a (smaller) wage loading for accepting casual status for years at a time. Anxious to preserve this highly profitable staffing practice, business leaders seem oblivious to the oxymoron inherent in their proposal for permanent casual work.

    Business complaints about the costs of treating casual workers fairly ring hollow. The 25 percent casual loading system was never intended as a carte blanche: that is, a kind of “permit” that granted employers permission to keep workers in perpetual insecurity, denied access to basic security and regular entitlements. Employers who used casual workers only where originally intended – that is, in temporary or irregular shifts – can continue to do so without significant extra costs.

    However, while promising, these recent decisions do not fully address the misuse of casual work. Casual workers should have broader options to convert to permanent status after shorter periods (say, six months) in a regular position. And the application of casual employment rules (which deny termination pay and notice of dismissal to workers, as well as access to paid leave) should be restricted to carefully-defined and genuine situations of temporary or volatile demand.

    Nevertheless, these recent decisions are an important recognition that employers have been abusing this form of employment. And they are a wake-up call to employers, who should now think hard about reducing their reliance on casual staffing – and get back to creating steady jobs that workers (and their families) can count on.

    The post “Permanent Casuals,” and Other Oxymorons appeared first on The Australia Institute's Centre for Future Work.

  • Infographic: The Shrinking Labour Share of GDP and Average Wages

    This infographic summarises the bottom-line impact on average wage incomes for Australian workers.

    Labour Share Infographic

    In the March quarter of 2018, labour income (in wages, salaries, and superannuation contributions) accounted for 47.1% of total GDP. That is down over 11 percentage points from the peak labour share (over 58%) recorded in the same quarter of 1975. The loss of that share of GDP, given total output today, is equivalent to a redirection of some $210 billion in annual income – and the research symposium showed that almost all of that income was captured in the form of higher company profits (especially in the financial sector). If it were divided equally amongst all employed Australians, that lost income share translates into foregone income of close to $17,000 per worker.

    Many thanks to Anna Chang for her creative work on the infographic!

    The research symposium highlighted several factors that have caused the long-run shift in income distribution from workers to the business sector, and resulting growth in personal income inequality in Australia. Key factors included the erosion of union representation and collective bargaining, inadequate minimum wages, and the growing power of the financial sector.  For more details, see the articles by Jim Stanford, David Peetz, Margaret Mackenzie, Shaun Wilson, and Frances Flanagan.

    The post Infographic: The Shrinking Labour Share of GDP and Average Wages appeared first on The Australia Institute's Centre for Future Work.

  • Four Views on Basic Income, Job Guarantees, and the Future of Work

    The unprecedented insecurity of work in Australia’s economy – with the labour market buffeted by technology, globalisation, and new digital business models – has sparked big thinking about policies for addressing this insecurity and enhancing the incomes and well-being of working people. Two ideas which have generated much discussion and debate are proposals for a basic income (through which all adults would receive an unconditional minimum level of income whether they were employed or not) and a job guarantee (whereby government would ensure that every willing worker could be employed in some job, such as public works or public services, thus eliminating involuntary unemployment).

    Progressives have campaigned for generations for stronger income security programs and for a commitment to full employment by government. So these ideas have a long pedigree. However, there is great discussion over both the implementation and cost of these proposals, and their broader (and perhaps unintended) economic and political consequences.

    To shed some additional, constructive perspective on these proposals, we are pleased to present four short commentaries on basic income, job guarantees, and the future of work by four leading Australian experts on the economics and politics of work.

    The four commentaries are posted below in alphabetical order of their authors:

    • Dr. Frances Flanagan, Research Director, United Voice: The Policy and Politics of Basic Income: A Few Concerns
    • Troy Henderson, Economist, Centre for Future Work: Situating Basic Income and a Job Guarantee in a Hierarchy of Pragmatic-Utopian Reform
    • Dr. Ben Spies-Butcher, Dept. of Sociology, Macquarie University: Basic Income as a Progressive Priority
    • Dr. Jim Stanford, Economist and Director, Centre for Future Work: Work, Technology, and Basic Income: Issues to Consider

    Three of the commentaries (by Flanagan, Henderson, and Spies-Butcher) were initially presented to the recent “Reboot the Future” conference in Sydney, hosted by Greens NSW Political Education Trust. The authors expanded and edited their remarks for the purposes of this symposium. We thank the organisers for their cooperation. The fourth commentary (by Stanford) arose from recent discussions within the Centre for Future Work’s voluntary Advisory Committee. Together, we think these nuanced commentaries add valuable perspective to these important but complex policy debates.

    Our publication of these commentaries coincides with this week’s annual General Assembly of the Basic Income Earth Network (BIEN), being held this year at the University of Tampere in Finland. In a personal capacity, Centre for Future Work economist Troy Henderson is presenting at the Assembly on his Ph.D. research regarding the fiscal and labour market impacts of basic income.

    We will continue to consider the advantages and disadvantages of both these important policy proposals in future research and commentary. We thank the authors for their contributions to this discussion, and welcome further feedback!

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  • Workers’ slice of Australian economic pie gets smaller

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

    Key findings:

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

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

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

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

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

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

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

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

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

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

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

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