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Issue #1428      16 September 2009

Corporate recovery without people’s recovery?

Talk of “green shoots of economic recovery” may well be premature. There is certainly no sign of recovery for the unemployed and under-employed workers on the horizon. If there is not a change in economic policy, workers and their families can expect a “long, tough and bumpy road” ahead, as forecast by Prime Minister Kevin Rudd.

There is no doubt that the government’s economic stimulus packages are holding up demand and have so far spared Australia from some of the worst ravages of the current global economic crisis. The retail sector, usually the hardest hit during economic crises, has been largely sustained by the stimulus. The banking sector is having an incredibly smooth and profitable run, thanks also to the government’s support. (See Stranglehold of Big Four banks) Australia’s trade with China is also playing a crucial role in corporate Australia’s fortunes.

The unemployment figures so far are not as high as might have been expected during such a serious economic crisis. There are several reasons for this. The government stimulus packages have contributed to this situation. Another reason is that there is a lag between when the crisis hits and demand drops off and workers are sacked. This lag is still being played out.

The prime reason, however, appears to be the huge increase in the number of under-employed. Many employers have held off sacking workers, opting instead to impose or negotiate with trade unions, shorter hours, non-working days and the taking of accrued leave.

The official unemployment figure for July was 664,000 (5.8 percent) – a gross under-estimation as it includes people who may have only had as little as one hour of paid employment in the week. The real picture of unemployment is closer to one million.

The unemployment statistics would be far worse if it were not for the huge shift from full-time employment to part-time work. Women have traditionally (not necessarily by choice) experienced high rates of part-time employment, but for men this is a relatively new trend, heightened during the present recession.

The number of male workers in full-time work fell by 148,000 over the past 12 months. At the same time there was an increase of over 100,000 in part-time work. For women, there were 41,000 fewer full-time jobs and an increase of 87,000 in part-time work over the same period.

Shorter hours

In addition to the thousands of workers who have been sacked, thousands more have had their hours reduced by such means as non-working days, forced taking of leave, reductions in over-time and shorter hours.

According to Australian Bureau of Statistics figures, the total hours worked by all employees during July 2009 was down by 2.9 percent compared with the same month in 2008. The reduction in working time over the 12 months was 10.5 million hours per week – equivalent to 275,000 full-time jobs. These “lost jobs” do not appear in the unemployed statistics, but they are indicative of a trend towards under-employment.

The cut in working hours has resulted in a massive loss in wages and pain for those battling to meet mortgage or rental payments, and other increases in the cost of living.

These figures also indicate that there is a huge slack in employment that employers could take up by increasing hours before hiring additional labour when the economy kicks in.

Meaner and leaner

With profits slumping and shareholder dividends declining the corporate sector has been restructuring, raising of new capital (through share and bond issues) and pruning operations to restore profitability and make the most of recovery when it comes.

There have been takeovers, asset sales, sackings, new labour-saving technology, and other cost-cutting measures.

Daily there are announcements from corporations that they are cutting costs or creating efficiencies. Every announcement means more jobs lost, another attack on working conditions, and greater pressure on wages.

Employers have used the economic crisis as an excuse and the WorkChoices legislation as the weapon to attack wages and working conditions. Fair Work Australia, the Rudd government’s recycled WorkChoices, has not prevented the proliferation of non-union agreements or roll back of past gains.

The Industrial Relations Commission has almost finished its restructuring and rationalisation of the federal award system. The Commission is gutting, ripping up and merging existing awards. Labor originally promised that no worker would be worse off under its “modern awards”, an echo of earlier Howard government promises. That promise has been withdrawn. Many workers will be worse off as the government responds to pleas from employers for “special consideration”.

The Australian workforce has one of the highest rates of part-time employment of any industrialised country. At the same time it has some of the longest hours of work. These extremes reflect the flexibility that employers have been given in an increasingly unregulated and unpoliced labour market over the past two decades.

The Reserve Bank of Australia is set to increase interest rates and the government is preparing a very painful, scorched earth program of welfare and other budget cuts for when they feel confident that the corporate sector recovery is under way.

Trade unions have a long and hard fight ahead to win back many of the working conditions stripped first by the Howard government and now being removed by Labor. They also have a difficult struggle ahead to restore full-time jobs and increased wages.

As and when economic recovery sets in, it is important that there is a recovery for the people. This means a concerted job creation program, with more full-time jobs and a shorter working week without a reduction in wages.

The public sector has an important role to play in a people’s recovery through job creation, training and provision of services and infrastructure. Instead of budget slashing the government should be looking at increasing corporate taxes and drawing on superannuation funds for social spending and job creation.

The trade union movement remains largely knee capped with the threat of massive fines and multi-million dollar damages claims if they dare to take industrial action. The building unions in particular are still being subjected to harassment and persecution by the Howard government’s special building industry police force, the Australian Building and Construction Commission. Changing its name and incorporating the body in Fair Work Australia will objectively change nothing.

Real industrial relations reforms are required and these can only be achieved by the full might of a united trade union movement prepared to take a strong stand against the existing anti-union, anti-worker laws. With a strong, united trade union movement it will then be possible to win a shorter working week, better working conditions and economic recovery for the people.

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