My Blog

Blog

  • Government Spending Power Could Support Stronger Wage Growth

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

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

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

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

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

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

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

    Australian government economic footprint at a glance:

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

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

  • Don’t blame it on the deficit: WA

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

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

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

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

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

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

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

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

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

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

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

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

  • Wages Crisis Has Obvious Solutions

    This recent commentary, by Centre for Future Work Director Jim Stanford, appears in the March 2018 issue of Australian Options magazine, and is reprinted with permission.

    Wage Crisis Has Obvious Solutions

    By Jim Stanford

    When the head of the central bank declares wages are too low, and urges workers to demand more money, you know you have a problem.

    After all, central bankers are traditionally the “party poopers” of the economy: they are the ones who march in and take away the punch bowl, as soon as the party gets rolling. Yet here was Governor Philip Lowe, Governor of the Reserve Bank of Australia, urging party-goers to turn up the volume. It’s like he was pouring bottles of straight tequila into the punchbowl, instead of taking it away – desperately trying to turn a boring flop into a wild shindig.

    Mr. Lowe made his surprising call at a conference last year on Australia’s economic outlook at Australian National University. He said weak wage growth was holding back national purchasing power and economic growth, and contributing to too-low inflation (which has languished below his bank’s official 2.5 percent target for several years running).

    But while his acknowledgement of the consequences of wage stagnation was refreshing, his diagnosis of the causes was incomplete and unconvincing. In fact, Governor Lowe almost seemed to blame the victims of wage stagnation – namely, Australia’s workers – for the problem. They were unduly worried about losing their jobs to robots or imports, he suggested; they should feel more “confident” in asking for higher wages. He has clearly not experienced the reality of Australia’s dog-eat-dog labour market in recent years, or felt the desperation that drives workers, especially young workers, to accept any job on offer.

    (Incidentally, the RBA’s own enterprise agreement signed last year will raise base wages by just 2 percent per year over the next 3 years … below the bank’s own inflation target!)

    While mainstream economists and policy-makers belatedly recognise the economic and social damage resulting from weak wages (even Treasurer Scott Morrison frets about the negative effect of slow wage growth on his budget balance), they’ve been distinctly reticent to connect the dots about the causes of the problem – and its obvious solutions. Lowe, Morrison, and their colleagues pretend wages will pick up automatically as the economy grows and the labour market tightens. But with official unemployment only a tick above 5 percent (still the RBA /Treasury estimate of “full employment,” according to their discredited but still operational NAIRU model), yet wages still decelerating, this faith in a market solution is increasingly far-fetched.

    Measuring the Slowdown

    The stagnation of Australian wages is visible by many indicators. The most common “headline” source is the ABS’s quarterly Wage Price Index, which reports an index of wages calculated from a representative sample of jobs (the methodology is similar to the Consumer Price Index). The WPI therefore measures changes in average hourly compensation holding constant the bundle of jobs which make up the overall labour market.

    However, one important factor in weak wages has been the changing composition of work. In particular, the growth of part-time, casual, and irregular jobs has undermined the overall level (and stability) of labour incomes. These changes are not captured in the WPI. Similarly, changes in average hours worked per week (due to growing part-time work) are also excluded from the WPI. So the WPI data understates the true extent of the wage slowdown.

    Other ways of measuring the wage slowdown show an even bigger drop-off in wage growth. These include average weekly earnings, the pay increases specified in enterprise agreements, and estimates of average labour compensation generated through GDP statistics. Trends in all these indicators are summarised in the accompanying table. Whatever measure is chosen, it is clear that there has been a dramatic slowdown in wage growth – especially visible since 2013.

    Annual wage growth fluctuated around 4 to 5 percent during the first decade of the century. Wage growth fell sharply but temporarily during the GFC – but then quickly regained pre-crisis norms from 2011 through 2013. After 2013, however, wage growth has decelerated dramatically: to 2 percent or even lower. In fact, by the broadest measure of labour compensation (wages, salaries, and superannuation contributions paid per hour of work), there has been virtually no nominal wage growth in the past year. Consumer prices, meanwhile, continue to grow at around 2 percent per year (and even faster, if escalating housing prices are taken into account). Real earnings, therefore, are flat or falling.

    What is “Normal” Wage Growth?

    Any shortfall in wage growth below the pace of consumer price increases (corresponding to a decline in the real purchasing power of workers’ incomes) is a clear sign of labour market dysfunction. But even flat real wages (ie. nominal wages that just keep pace with inflation) are problematic. After all, wages are supposed to reflect ongoing growth in real labour productivity (or at least that’s what the economics textbooks tell us). So wages should actually consistently grow faster than consumer price inflation, to fairly reflect the enhanced real output of each hour of labour.

    Therefore, a “normal” benchmark for wage growth might be the sum of long-run consumer price inflation (the RBA’s 2.5 percent target) plus average productivity growth (running around 1.5 percent per year over the past three decades). That suggests a “normal” benchmark for annual nominal wage growth should be 4 percent per year. Australian wage growth in the pre-GFC period generally fit that definition of “normal.” But since 2013 wages shifted to a significantly lower trajectory.

    Joining the Dots

    Contrary to the assumptions of free-market economics, there is no guarantee that wages will automatically grow in line with labour productivity, as a result of automatic market mechanisms. Power is always a key factor in income distribution. And labour markets never “clear,” so that labour supply (the number of workers) equals labour demand (the number of jobs). In fact, inflation-targeting policy deliberately aims to maintain a certain level of unemployment (5 percent is the target in Australia) to suppress wage demands and protect profits.

    The systematic and structural disempowerment of workers and their unions over the neoliberal era is therefore the most relevant factor in the deceleration of wage growth, and the erosion of labour’s share of total GDP. Some obvious indicators of that dramatic shift in economic and political power include:

    • A steady erosion in the real “bite” of minimum wages, which have fallen from 60 percent of median wages in 1990 to around 45 percent today.
    • The collapse of trade union membership in the face of legal restrictions, harassment, and full-protection for “free riders.” Today just 9 percent of private sector workers, and less than 5 percent of young workers, are union members.
    • A corresponding collapse in collective industrial action. Adjusted for the size of the workforce, the frequency of strikes and other industrial disputes has declined by 97 percent from the 1970s to the present decade.
    • The relegation of industry awards to a baseline “safety net,” instead of a system for supporting ongoing progress in wages and working conditions.
    • The generally pro-business shifts in economic policy, including tax cuts, deregulation, privatisation, and globalisation, which have also shifted economic power in favour of employers and hence indirectly suppressed wage growth.

    To begin to rebuild wage growth, restore labour’s share of GDP, and achieve greater equality in labour incomes will require a comprehensive, multidimensional effort to restore the power of all these wage-supporting institutions. The ACTU is tackling this challenge with gusto, with its ambitious “Change the Rules” campaign. The goal is to propose a consistent, holistic vision for repairing the institutions that support workers and their wages – and then building a strong grass roots campaign to push politicians of all stripes to adopt that vision.

    On the other hand, if we follow the advice of Scott Morrison and Philip Lowe, and simply wait for supply and demand forces to rescue wages from their current doldrums, we are going to be waiting a very long time.

    The post Wages Crisis Has Obvious Solutions appeared first on The Australia Institute's Centre for Future Work.

  • The Difference Between Trade and Free Trade

    U.S. President Donald Trump’s recent trade policies (including tariffs on steel and aluminium that could affect Australian exports) have raised fears of a worldwide slide into protectionism and trade conflict. Trump’s approach has been widely and legitimately criticised. But his argument that many U.S. workers have been hurt by the operation of current free trade agreements is legitimate; conventional economic claims that free trade benefits everyone who participates in it, have been discredited by the reality of large trade imbalances, deindustrialization, and displacement.

    Can progressives respond to the real harm being done by current trade rules, without endorsing Trump-like actions – which will almost certainly hurt U.S. workers more than they will help? Centre for Future Work Director Jim Stanford has proposed several key principles to guide a progressive vision of international trade: one that would capture the potential benefits of greater trade in goods and services, while managing the downsides (instead of denying that there are any downsides).

    Dr. Stanford’s commentary was recently published in the Australian Guardian. The column generated follow-up coverage and commentary in Australia and internationally. For example, here is an interview with Phillip Adams on ABC Radio National’s Late Night Live.

    Here is an edited version of Dr. Stanford’s commentary:

    Progressives Alternatives to So-Called Free Trade Deals

    U.S. President Donald Trump’s bellicose policies, including new tariffs on steel and aluminium, have raised fears of a worldwide slide into protectionism and trade conflict. Trump’s unilateral and xenophobic approach to trade policy is reprehensible and dangerous from any perspective. But many progressives feel conflicted about Trump’s actions. After all, he is challenging business-friendly trade deals (including the TPP and NAFTA) which labour, social and environmental advocates opposed for years. And while his policies will clearly make life worse for working and poor people in the U.S., he is nevertheless speaking to their actual experience: unlike free trade defenders, who continue to pretend that the tide of globalisation has lifted all boats.

    But many progressives feel conflicted about Trump’s actions. After all, he is challenging business-friendly trade deals (including the TPP and NAFTA) which labour, social and environmental advocates opposed for years. And while his policies will clearly make life worse for working and poor people in the U.S., he is nevertheless speaking to their actual experience: unlike free trade defenders, who continue to pretend that the tide of globalisation has lifted all boats.

    Given Trump’s domination of the debate, progressives need to work quickly to distinguish our critique of globalisation from his. In particular, we must flesh out a vision of trade policy reforms that would genuinely help those harmed by globalisation, while rejecting the nationalism and racism that underlies Trump’s appeal.

    Established policy elites still ridicule Trump’s belief that trade deals have contributed to the misery and inequality afflicting working class communities in America (and, for that matter, Australia). For them, globalisation must produce winners but no losers. And they trot out theoretical economic models (premised on assumptions of full employment and costless adjustment) to buttress their case. They concede the gains from trade may not have been evenly shared. But they deny that globalisation has anything to do with the erosion of living standards experienced in so many once-prosperous working communities.

    This patronising denial is precisely what got Trump elected in the first place. It’s not that depressed industrial towns in Pennsylvania, Ohio, and Wisconsin (the states that put Trump over the top) didn’t “share in the benefits” of free trade. It’s that their economic viability was destroyed by it.

    Acknowledging that globalisation produces losers as well as winners, allows us to imagine policies to moderate the downsides of trade – and purposefully share the upsides. The next step is to make a crucial distinction between trade and ‘free trade.’ The former is the pragmatic day-to-day flow of goods and services between countries. The latter is the set of specific, lopsided rules embodied in the plethora of trade and investment agreements enacted over the last generation.

    These ‘free trade’ rules often have very little to do with actual trade: describing tariff elimination, for example, usually takes up just a tiny part of the text of each trade deal. The rest is devoted to a raft of provisions securing and protecting the rights of private companies to do business anywhere they want, on predictable and favourable terms.

    Proof of the dissonance between trade and ‘free trade’ is provided by Australia’s lacklustre trade performance over the last two decades. Exports of actual goods and services constitute a smaller share of total GDP today, than at the turn of the century. Sure, the volume of resource exports has surged – not surprisingly, since that’s what our trading partners wanted. But resource prices have been shaky, and meanwhile our other value-added exports flagged badly. If the goal of all the free trade agreements signed since then (a dozen) was to boost Australia’s exports, they failed miserably. But of course, that wasn’t the goal: the deals were actually intended to cement a business-friendly policy environment, even in sectors that have nothing to do with international trade.

    Progressives can endorse mutually beneficial international trade, and even international flows of direct investment, without accepting the lopsided, business-dominated vision of ‘free trade’ agreements. In fact, a progressive approach to managing globalisation would actually boost real trade more effectively: by supporting purchasing power on all sides, and avoiding the contractionary race-to-the-bottom unleashed by current free trade rules.

    Here are several key principles central to a more hopeful and inclusive vision of globalisation:

    Preserve the power to regulate: Free trade deals assume government intervention in markets (regulating prices, service standards, investment, and more) is inherently illegitimate and wasteful; they establish “ratchet” rules to limit regulation and public ownership, and lock-in deregulation over time. The failure of market competition in so many areas – in Australia’s case, including electricity, vocational education, and employment services – reaffirms that trade deals must not inhibit governments from regulating businesses, no matter where they are owned.

    Eliminate investment preferences: ‘Free trade’ deals proffer all kinds of preferences and rights for businesses and investors that have no necessary connection at all to actual trade. Chief among these are the unique quasi-judicial rights and powers granted to corporations (such as investor-state dispute settlement panels); these are an affront to democracy. Progressive trade policy would abolish these preferences, and subject corporations and their owners to the same laws and processes the rest of us face. Similarly, progressive trade deals would aim to relax monopoly patent rights (for drug companies and others), rather than strengthening them.

    Manage capital and currencies: Foreign direct investments in real businesses that produce actual goods and services can certainly benefit host communities, but only so long as those operations are subject to normal public interest and regulatory oversight. Retaining the capacity to regulate foreign investment is essential to capturing maximum benefits from foreign investment. On the other hand, volatile, speculative flows of financial capital and foreign exchange have less upside, and more downside. In particular, rules should prevent the common practice of suppressing exchange rates to gain artificial advantage in international competition.

    Social clauses that mean something: Most ‘free trade’ deals, the TPP included, feature token language about protecting labour and environmental standards. These provisions are window-dressing: responding to fears that global competition will spark a downward spiral in social standards. Typically these clauses simply commit signatories to follow their own laws – with no requirement that those laws are decent to start with. Progressive trade deals would have safeguards that are enforceable, including requiring participating jurisdictions to respect universal standards or lose preferential trade rights. Where trade partners have different standards (such as, for example, levying varying degrees of carbon pricing), border adjustments must be permitted so that trade competition does not undermine environmental and social progress.

    Balanced adjustment: Trade and investment flows never automatically settle at a balanced position – even if a “level playing field” in labour and environmental standards was actually achieved. That’s because competition always has uneven effects, producing both winners and losers. Countries that experience loss of employment and production through global competition (a possibility denied by free trade theory, but commonplace in practice) must be supported with measures to safeguard domestic employment, facilitate adjustment, and boost exports. Chronic surplus countries (like China and Germany) must recycle excess earnings into expanding their own imports, thus bearing a fair share of adjustment – rather than forcing deficit countries to do all the heavy lifting.

    Active, inclusive domestic policies: Opposition to trade liberalisation is relatively mild in the highly trade-exposed social-democratic countries of Europe: like the Nordic countries, Germany, and Netherlands. Their extensive networks of social protections provide average workers with reasonable confidence they won’t be economically tossed aside for any reason: whether trade competition, or some other disruption. That’s why a key component of progressive trade policy must be a general commitment to social protection, inclusion, and job-creation. A general context of security and equity better facilitates adjustments of any kind, in response to any source of change. Indeed, collecting healthy taxes from successful industries, and reinvesting them in priorities like infrastructure, training, and communities, is precisely how to harvest the much-trumpeted gains from trade – and pro-actively share them throughout society. That’s much more feasible than hoping those benefits will somehow trickle down of their own accord.

    Claims by policy elites that international trade is the engine of all progress are vastly overblown. Our well-being mostly depends on what we do with our skills, energies and innovation right here at home. But real international trade and investment, properly managed, can certainly make a contribution to prosperity. And progressives can advance a vision of a more balanced, inclusive globalisation that has nothing in common with Donald Trump.

    The post The Difference Between Trade and ‘Free Trade’ appeared first on The Australia Institute's Centre for Future Work.

  • Subsidising Billionaires: Net Incomes of UberX Drivers in Australia

    The report considers gross revenues generated by a typical urban fare (traveling 10 km, and taking 22 minutes to complete), according to UberX’s published rate schedule. After deducting Uber’s various fees, net taxes, and the costs of providing and maintaining the vehicle, the driver is left with an average of just $8.29 from that fare (barely one-third of the gross revenue they collect). Accounting for unpaid time spent waiting for the next fare and collecting the passenger from their pick-up point, this translates into a net hourly wage (before personal income tax) of $14.62 per hour. This is well below the national statutory minimum wage, and less than half the level of the weighted-average minimum wage (including casual loading and penalty rates for evening and weekend work) that would apply to waged employees under Australia’s Passenger Vehicle Transportation Award. The underpayment of UberX drivers in Australia constitutes a subsidy paid by them to the company amounting to hundreds of millions of dollars per year; and this underpayment of drivers (in Australia and elsewhere) has been essential to the dramatic expansion of Uber’s market value (most recently estimated at almost $50 billion U.S.).

    These findings confirm that the use of digital platforms to organise and compensate irregular work, and the ability of businesses (including large global firms like Uber) to classify their workers as independent businesses in their own right, are undermining the effectiveness of traditional labour market protections (such as the minimum wage, superannuation entitlements, paid leave, and others). The report calls on Australian lawmakers and regulators to urgently address the gaps in existing labour laws, to ensure that traditional labour protections are available to workers in the “gig economy.”

    The post Subsidising Billionaires: Simulating the Net Incomes of UberX Drivers in Australia appeared first on The Australia Institute's Centre for Future Work.

  • Scare Tactics for Corporate Tax Cuts Do Not Stand Fact Checks

    “Trump tax cuts: Scott Morrison warns business will abandon Australia while we are at the beach” was the Sydney Morning Herald headline, reporting on the Coalition Government’s scare tactics to press through its tax cuts gift for business. The Treasurer used the opportunity of the Trump tax cuts to issue this “dire” warning. However, his claim does not withstand some basic empirical scrutiny.

    Fact 1: Australia is not a high tax country

    Our overall tax take is one of the lowest among the 35 OECD countries. If Mr. Morrison was correct, then by now there should have been a tsunami of investment flowing here from 27 OECD countries with higher tax-GDP ratios than that of Australia’s 28.2% in 2016. Australia’s overall tax ratio is well below the OECD average of 34%, and also below neighbouring New Zealand’s tax take of 32.1% of GDP.

    Here are reported tax ratios for 27 OECD countries, 2016.

    OECD Tax Shares
    Source: Revenue Statistics 2017 – Australia; https://www.oecd.org/tax/revenue-statistics-australia.pdf

    Fact 2: Australia’s effective corporate tax is far below its statutory 30% rate

    Australian companies may seem to face a higher statutory corporate tax rate, but once they go through all their deductions and credits they don’t end up paying an unusually high amount compared to companies in other nations. The average effective rate (10.4%) is barely one-third the statutory rate. In fact, more than a third of large companies did not pay any corporate taxes in 2016 according to the recently released ATO data.

    Effective vs Statutory Tax Rates
    Source: National Public Radio, based on US Congressional Budget Office data; https://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world

    Fact 3: Tax is low on companies’ lists of factors influencing investment location decision

    For example, the OECD noted, “it is not always clear that a tax reduction is required (or is able) to attract FDI. Where a higher corporate tax burden is matched by well-developed infrastructure, public services and other host country attributes attractive to business… tax competition from relatively low-tax countries not offering similar advantages may not seriously affect location choice. Indeed, a number of large OECD countries with relatively high effective tax rates are very successful in attracting FDI.”

    This is corroborated by the most recent World Bank survey of enterprises, which found that tax incentives are not high on the list of critical factors affecting inflows of foreign direct investment. The IMF’s recent research also reports that the net impact of corporate tax cuts to incentivise private investment is quite often negative on government revenues. The pre-tax profitability of Australian businesses has also tended to exceed that in other countries, and this is surely more important in motivating investment flows.

    Fact 4: Rigorous studies of past US tax cuts did not find a positive link between tax cuts and economic or employment growth

    For example, the oft-cited examples of the Reagan or Bush tax cuts do not in fact demonstrate that tax cuts cause growth. Admitted by President Reagan’s former chief economist, Martin Feldstein, the vast majority of growth during the Reagan era was due to expansionary monetary policy that slashed interest rates massively to help the economy bounce back from a severe recession in 1982. Increased defence spending and an expanded labour force due to an influx of baby boomers also boosted the economy. In another study with Doug Elmendorf, the former Congressional Budget Office Director, Martin Feldstein found no evidence that the 1981 tax cuts increased employment.

    The 2001 and 2003 Bush tax cuts also failed to spur growth. Between 2001 and 2007 the economy grew at a lacklustre pace—real per-capita income rose by 1.5% annually, compared to 2.3% over the 1950-2001 period. Interestingly, the two sectors that grew most rapidly in this period were housing and finance, which were not affected by the 2001 and 2003 tax cuts. Moreover, by 2006, prime-age males were working the same hours as in 2000 (before the tax cuts), and women were working less – both facts inconsistent with the view that lower tax rates raise labour supply.

    Fact 5: The most infamous case of tax cuts in the US State of Kansas was a colossal failure

    Governor Sam Brownback promised that a moderate tax cut for individuals and a big tax cut for businesses would be “like a shot of adrenaline into the heart of the Kansas economy.” Unfortunately, however, despite his 2012 tax cuts, the Kansas economy remained moribund, while neighbouring states surged ahead. In the process, the Kansas state budget was left in tatters. No wonder that the Republican-led state legislature reversed most of Brownback’s tax cuts in the face of poor growth and pressing public spending needs.

    Therefore, if Mr. Morrison is serious about repairing the budget, or stimulating growth and employment, then he should be concentrating on raising more revenues (not less) and investing in the nation – instead of cutting basic services to fund his tax cuts for the rich. He should be looking at the facts, instead of resorting to scare tactics.

    The post Scare Tactics for Corporate Tax Cuts Do Not Stand Fact Checks appeared first on The Australia Institute's Centre for Future Work.

  • Job Opportunity – Research Economist

    The successful candidate will offer:

    • A graduate degree in economics or a closely related discipline.
    • Knowledge of and experience with a wide range of labour issues, preferably including: labour market statistics and trends; characteristics and determinants of employment; industrial relations and collective bargaining; wage determination and inequality; gender, racial, and demographic aspects of labour markets; the impact of technology on employment; macroeconomic policy and labour markets; and others.
    • Demonstrated ability to write to deadline for professional and popular audiences in a credible, succinct, and accessible manner.
    • Strong quantitative skills, including ability to access statistical data, analyse it (including familiarity with statistical tools), and report it in a variety of textual, tabular and graphical formats.
    • Confident communication skills, including ability to speak to public audiences, classrooms, and the media.
    • Ability to work collegially with other members of a research team.
    • Commitment to a progressive vision of work and fairness, including the goals of equality, participation, collective representation and trade unionism.

    Responsibilities of the position will include:

    • Research and completion of several project-length research papers, briefing notes, and shorter commentary articles per year on a range of topics related to labour markets and labour market policy.
    • Ongoing monitoring and analysis of labour market data and information.
    • Helping to maintain relevant websites and databases.
    • Public speaking, presentations, lectures and courses, media interviews, and related communication and educational activities.
    • Minimal office and administrative functions.

    Ability to undertake occasional out-of-town travel (including overnight travel) is essential, as is ability to successfully work in a self-managed and autonomous manner.

    The position will be offered on a one-year term-limited basis, with possibility for renewal. Salary will be commensurate with qualifications and experience.

    Applications are especially invited from women, indigenous persons, other racial and linguistic communities, people with disabilities, and other marginalised communities.

    Please forward applications (including contact information, qualifications, experience, two samples of written work, and names and contact details for two references) in confidence to cfwjob@tai.org.au. Please cite “Economist Job Application” in the subject field of your message; supporting documents should be attached in pdf format. Receipt of applications will be acknowledged by e-mail. Only candidates selected for an interview will then be contacted; no phone calls please.

    Applications must be received by 5:00 pm AEDT on Wednesday 9 October, and interviews will be conducted in Sydney on Wednesday 23 October 2019.

    The Centre for Future Work is an initiative of the Australia Institute, Australia’s leading progressive research institution. Thank you for your interest in the Centre for Future Work.

    The post Job Opportunity: Research Economist appeared first on The Australia Institute's Centre for Future Work.

  • Excessive Hours, Unpaid Overtime and the Future of Work (GHOTD 2017)

    2017 marks the ninth annual Go Home On Time Day (GHOTD), an initiative of the Centre for Future Work at the Australia Institute aimed at highlighting the incidence of overwork among Australians, including excessive overtime (often unpaid). To investigate the prevalence of overwork and unpaid overtime, we commissioned a survey of over 1400 Australians on the incidence of overwork and Australian attitudes toward it. The results are surprising.

    Our full report, Excessive Hours, Unpaid Overtime and the Future of Work, by Troy Henderson and Tom Swann, summarises the polling, and considers the implications for labour market policies. Highlights include:

    • There is growing evidence of 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. Barely half of working Australians are now employed in standard full-time jobs, with the rest in part-time, casual or self-employed positions.
    • Many full-time workers want to work fewer hours, but most of those in part-time or casual positions want more hours. The coexistence of overwork and underemployment is evidence that labour market polarisation and insecurity is hurting the work lives of millions of Australians.
    • Across all forms of employment, Australians work an average of 5.1 hours of unpaid labour per week (up from 4.6 hours in 2016). This unpaid labour represents between 14 percent and 20 percent of the total time spent working by Australian employees.
    • The aggregate value of this “time theft” is large and growing. We estimate the total value of unpaid overtime in the national economy at over $130 billion in 2016-2017, up from $116 billion last year.
    • There would be significant economic, social, and health benefits from providing workers with stronger protections against unpaid overtime, and finding ways to better share available work.

    Our report also investigates Australians’ attitudes toward new technology in the workplace, including computerisation, automation, and digital platforms (or “gigs”):

    • Australians agree that there are significant potential benefits from new technology, and that those benefits could be experienced by businesses, consumers, and workers. Benefits for workers could include higher incomes, shorter working hours, or a combination of the two.
    • When asked which benefits they would prefer, Australians generally want to see both higher incomes and shorter working hours. 60 percent want to see higher incomes (either on their own, or in conjunction with shorter working hours), while 57 percent want to see shorter working hours (either on their own, or in conjunction with higher incomes). Australians want to see a balance between a higher material standard of living, and more time off to enjoy that standard of living.
    • However, when thinking about their own workplaces, Australians fear employers will use new technology primarily to reduce employment levels (rather than increasing incomes or reducing average working hours). 57 percent of workers think their employer will respond to new technology by reducing employment. Only 18 percent expect shorter working hours to be the outcome of technological change, and only 14 percent expect higher incomes.
    • This suggests that while Australians see the potential of new technology to improve their lives, they worry that the implementation of new technology may not translate into gains for workers.

    The jarring coexistence of overwork and underemployment, and the contradiction between Australians’ optimism regarding the potential benefits of technology and their fears about what will happen in their specific workplaces, both suggest a need for more pro-active labour market strategies to share work across all groups of workers, and to enhance the security and stability of jobs. To translate the promise of new technology into concrete benefits for workers (both higher incomes and more leisure time) will require effective measures to limit overtime (including unpaid overtime), enhance the stability of work (especially for workers in the growing number of non-standard jobs), and give workers more say in how new technology is managed.

    The post Excessive Hours, Unpaid Overtime and the Future of Work appeared first on The Australia Institute's Centre for Future Work.

  • Job Growth No Guarantee of Wage Growth

    Job Growth No Guarantee of Wage Growth

    by Dr. Anis Chowdhury

    “‘Remarkable’ jobs growth raises hopes for wages” was the headline for a recent Sydney Morning Herald opinion piece by Clancy Yeates. He bases this claim on “some brighter news on the labour market to balance the bad: there is something of a jobs boom under way”. Apparently “more jobs have been created in 2017 in net terms than any year since 2005, with 371,000 new net jobs so far this year”. Clancy Yeates also points to “the lowest number of unemployed people per unfilled position since 2012”.

    This optimism is also shared by the Treasury Secretary John Fraser. In his opening statement at the recent Senate budget estimates hearing on 25 October, he said, “We expect that a period of stronger growth and falling unemployment will lift wages in the next few years.” He further noted, “We do expect that as the cyclical constraints that have weighed on the economy recede wages growth will accelerate.”

    The RBA also holds a similar optimistic view. Philip Lowe, the RBA Governor, in his September statement observed, “Employment growth has been stronger over recent months and has increased in all states. The various forward-looking indicators point to solid growth in employment over the period ahead. … stronger conditions in the labour market should see some lift in wages growth over time.” He had the same positive view in his October statement.

    But can we really be so confident that job growth will eventually lead to wage growth? And even if it does, would it be strong enough to catch up and compensate for the losses incurred from such a long period of wage stagnation?

    Unfortunately, the answer to these questions is a resounding ‘NO’. This so-called remarkable jobs growth will not result in an eventual wage growth sufficient to close the wages gap. This has been confirmed by the latest data showing wages rose by less than expected last quarter; even a significant mandated jump in the minimum wage failed to lift the rate of growth of workers’ pay across the economy. The most broad measure of average earnings growth (derived from GDP statistics) has actually turned negative – the weakest since the mid-1960s.

    The reason for this contradiction is very simple – it is rooted in the different nature of new and old jobs. Jobs, whether part-time or full-time, are now more insecure. Just consider some recent news. The NAB has announced 6,000 job cuts by 2020 even when it announced $6.6 billion profit! Earlier Telstraconfirmed 1,400 job cuts.

    Job insecurity is not just a phenomena in the private sector. Governments – State and Commonwealth – have also joined the new trend. For example, the NSW department of Finance Services and Innovation has notified the union representing the cleaners that employment guarantees in place since 1994 “will not be extended in the new contracts from 2018”.

    The optimists seemed to have decided to ignore what Alan Greenspan, the former chairman of the US Federal Reserve, said in his Congressional hearing two decades ago (on 26 February, 1997). Explaining why “the rate of pay increase still was markedly less than historical relationships with labor market conditions would have predicted”, he said: “Atypical restraint on compensation increases … appears to be mainly the consequence of greater worker insecurity.”

    He clearly elevated job insecurity to major status in the Fed’s policy analysis. Workers have been too worried about keeping their jobs to push for higher wages. And this has been sufficient to hold down inflation without the added restraint of higher interest rates.

    But Greenspan also implied that workers’ fear of losing their jobs was not in itself a sufficient explanation for their failure to push for significant wage increases. The sense of job insecurity has to be rising over time; that is, continually getting worse. Because once the level of insecurity leveled off, and workers become accustomed to their new level of uncertainty, their confidence may revive and the upward pressure on wages would resume. That is particularly true when the unemployment rate is low, as it is today (at least officially).

    However, looking at the length of contracts, Jeff Borland, a leading Australian labour economist, finds no evidence of increased job insecurity in Australia. Others have reported similar findings, while others cite different data to indicate a growth in insecurity. A new ABS survey also showed that while there had been an increase in the number of people with more than one job since 2010-11, those doing multiple jobs as a proportion of the workforce had remained almost completely unchanged at 6%.

    Job insecurity is notoriously difficult to measure. It is not the length of contracts or whether a job is full-time or part-time, that matters. It is the constant threat of losing jobs or pay conditions despite tenure due to constant restructuring that the workers fear. It is the news like that from the ice cream manufacturer Street wanting to terminate its enterprise agreement, or announcements like the one from the NSW department of Finance Services and Innovation, which generate the sense of job insecurity.

    It is this sense of job insecurity and fear of not finding a decent job after losing one (as experienced, for example, when Holden and Toyota recently closed down) which Alan Greenspan had in mind when he calibrated Fed’s monetary policy levers. Thus, there has to be continuous restructuring in the guise of addressing falling or stagnant productivity to keep lid on wages, while the real intent is creating fears among the working class.

    When nearly half the Australian families (41%) feel job security is chief among their concerns, this supposedly remarkable jobs growth won’t generate pressure for wage growth as hoped by the optimists. “Insecure, stressed, and underemployed: The daily reality for millions of Australians”, is how David Taylor summarised the labour market in Australia. This is experienced even as profits are growing at their highest rate in two decades.

    Governments – State and Federal – should worry about rising job insecurity, instead of adding fuel to the fire with their own employment restructuring initiatives. The high level of job insecurity doesn’t just have an effect on wage growth and inflation. Recent research has found that it “cuts to the core of identity and social stability – and can push people towards extremism”. We all have a stake in creating more secure jobs, and fairly rewarding those who perform them.

    The post Job Growth No Guarantee of Wage Growth appeared first on The Australia Institute's Centre for Future Work.

  • Economic Impacts of Reductions In Penalty Rates 2017

    The workforce employed in these predominantly low-wage service sectors already experiences several dimensions of precarious and insecure work arrangements, including a heavy incidence of part-time work, casual work, and irregular hours. The income derived from penalty rates makes an important contribution to the incomes of these workers – who already struggle with balancing their personal and household budgets given these generally irregular work arrangements. Reductions in weekend income will make matters worse for a group which is already struggling. This workforce includes a disproportionate share of relatively disadvantaged populations, including women, young workers, and immigrant workers.

    The post Economic Impacts of Reductions In Penalty Rates for Sunday & Holiday Work appeared first on The Australia Institute's Centre for Future Work.