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Issue #1536      22 February 2012

Employers’ “solution” to crisis

More job cuts, increased exploitation

Thousands more jobs are set to go as sackings and closures continue in the airline, manufacturing and retail sectors. Those whose jobs remain are threatened with massive cost-cutting attacks on their wages and working conditions. In the mining sector, technology is replacing workers. State and federal governments are adding to the toll with budget cuts and contracting out of work. Trade unions are bracing for further attacks by employers and governments as employer bodies pressure the government to reinstate individual employment contracts and place further restrictions on the right to strike.

Jobless expansion

Rio Tinto has announced that its iron ore trains in the Pilbara region of Western Australia will be “driverless” within three years. It plans to invest $843 million on special software that will replace 500 drivers. It claims the trains will deliver better safety results as well as be more efficient with fuel usage and scheduling. This move follows a recent announcement that it is buying 150 driverless dump trucks for its Pilbara mines.

The company says the train drivers will be redeployed in other areas as their mining operations expand. Job wise this still means 650 less jobs even if some individual workers are not thrown onto the unemployment scrap heap. The industry already has the highest rate of exploitation of any in Australia. In some mines, they are making as much as a million dollars profit per employee. Their employees, who work in the most difficult conditions, away from home and long hours at a time are paid only a fraction of that.

The ANZ has announced cuts of 1,000 jobs from its 24,000-strong Australian workforce by September. It is just the latest announcement by the major banks. They have already cut 2,000 jobs this year.

According to Finance Sector Union (FSU) national secretary Leon Carter, over 10,000 jobs could disappear from the banking sector in as little as two years as the Big Four banks continue to axe positions and raise interest rates. This is an industry that made $24 billion in profits last year!

Qantas’ latest round of sackings could see 1,500 jobs go. The crash of Strategic Aviation, the owner of the new “lost cost” airliner, Air Australia, will add to the toll.

Alcoa looks set to close its aluminium plant in Geelong, with the loss of 600 jobs.

Reckitt Benckiser is closing its Sydney operations and will manufacture Mortein brand insect sprays overseas.

Woolworths is selling its Dick Smith franchises. The sale will take place after a restructuring that will see up to 100 electronics stores closed. Some sacked employees may be found work in Woolworths stores.

The Sleep City Group with its 64 bedding stores has gone belly up. And so the list of casualties continues.

The private sector is not alone in sacking workers. The federal government’s four percent “efficiency dividend” (up from 1.5%) for 2012-13 looks set to see the loss of the equivalent of 5,500 full-time jobs. The Gillard government has set up a working group to plan even more cuts to departments in the coming years. Thousands more jobs look set to go.

A Community and Public Sector Union (CPSU) survey of staff in the federal public service has revealed a significant decline in the quality of services due to past cuts, an increase in mistakes as staff are expected to undertake increased workloads and meet impossible targets.

State governments are on the rampage too. The Victorian Baillieu government, for example, is slashing 3,600 public service jobs. The public service is already overstretched. Victoria’s population has grown 20 percent in the last decade but the service is one third less in size than it was 20 years ago, according to the CPSU.

Every job lost means personal hardship for the workers and their families involved. In addition, millions of workers face job insecurity. Apart from those facing the immediate threat of sacking or shorter hours, around 40 percent also live on a day to day basis in casual and contract employment, uncertain of what the future holds for them.

These workers are extremely vulnerable when it comes to gaining their legal entitlements regarding wages and working conditions. Joining a trade union, demanding their rights, let alone taking industrial action, can mean joining the ranks of the unemployed.

The ACTU is waging a “Secure Jobs, Better Future” to tackle some of these issues. See

With the exception of the export-based resources sector, the Australian economy is entering what looks set to be a deep and prolonged recession. There is a crisis of “over production”: there are more goods and services than there is demand for them. Every drop in income, every increase in interest rates or rent, every rise in petrol, electricity and other prices, means less money left over to spend on other things, less demand for goods and services. Every rise in productivity (output per worker) without a corresponding increase in wages also deepens the crisis.

The Business Council of Australia (BCA) representing the CEOs of some of the largest corporations in Australia, has called on the federal government to do more to boost productivity, cut costs and save jobs.

Translating the BCA’s demands into simple English, they mean boosting the output per worker (speed-ups, reduced manning levels, longer hours, etc), lower wages per unit of production and large handouts from government.

Trains and trucks do not buy goods and services. They certainly do not increase demand for goods and services. Workers and their families do. Pensioners and the unemployed do. Their incomes must be raised and prices reduced.

Yet individual employers, narrowly focused on their own profits continue down the economically and socially disastrous path of cost-cutting – sacking workers, increasing workloads, speeding up production, reducing wages, casualising workforces, reducing working hours and increasing prices. Those that can are shutting plants and moving offshore to cheaper labour and less regulated labour (including health and safety) environments. Construction and resource companies are looking to import non-unionised labour to work under slave conditions at $3 an hour.

This compounds the crisis, reducing demand for goods and services and resulting in more sackings. It is a downward spiral, with innocent, hard working people and their families the victims. Every dollar extra in profits results a dollar less in wages and salaries, in a dollar less to spend on what is produced.

At the same time, the retail, manufacturing and hospitality sectors are crying out for people to spend more. Manufacturing and hospitality are also affected by the higher value of the Australian dollar, a direct result of neo-liberal financial deregulation and lifting of tariffs under free trade agreements.

Qantas claims it has to make “hard decisions” to stay “internationally competitive”. As a privately owned, profit-driven corporation that has some validity as an argument looking at it from the interests of shareholders. And that is the problem: private ownership and the drive for private profits – the system of capitalism.

The private sector, for all of its opposition to government regulation and public ownership, is not adverse to assistance from the public purse. According to Gary Bracks, chairman of the Productivity Commission, the government spent $8.5 billion in subsidies on the manufacturing sector in 2009-2010. The car manufacturers are lined up for more corporate welfare. There is no certainty that Holden or Toyota will remain in Australia in the longer term, even with handouts.

The Rudd government during the financial crisis seemed to realise the need to stimulate demand in the economy to stave off a recession. But this approach has been replaced by one of achieving a budget surplus while reducing corporate taxes regardless of the social land economic consequences.

Instead of corporate handouts and “hard decisions” (budgetary cuts, sackings, etc), the federal and state governments should be embarking on job creation programs through the public sector, in such areas as housing, transport, alternative energy sources, education, health, aged care, community services and infrastructure.

The economy should be planned, with the government, not the “markets” determining the future of Australia’s manufacturing base and other industry development. Central to this is the expansion of the public sector and where necessary the take over of private corporations or establishment of new public ones in key areas such as banking, insurance, the airline industry and communications.  

Next article – Editorial – Abolish the PHI rebate

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