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Issue #1926      August 3, 2020

Workers in the firing line

The government is determined to extend the additional “flexibility” given to employers to change wages, hours of work and work performed at short notice. Employer bodies are now pressing for these “flexibility” measures to become permanent for the government to completely deregulate the labour market.

The JobSeeker supplement is also providing critical assistance, enabling many unemployed to put food on the table.

“Flexibility” is government and employer spin for a return to the master-servant relations of the 19th century when workers had virtually no rights. The government’s aim is to boost private profits and bring about an economic recovery on the backs of workers, the unemployed and other vulnerable groups.

Under present arrangements, employers are also permitted to reduce wages paid to workers who receive the JobKeeper payment of $1,500 per fortnight, regardless of what they were being paid prior to receiving JobKeeper and whether they are working the same or even more hours.

Despite attempts by some employers to rort the JobKeeper scheme, there is no doubt that JobKeeper has proved to be a lifeline for millions of workers and their employers. The JobSeeker supplement is also providing critical assistance, enabling many unemployed to put food on the table.

It is important that these payments are maintained at their current rates beyond the end of September, but the government is short-sightedly making substantial reductions in the payments. This will have a significant contractionary impact on the economy. Stimulatory policies are required. People need more money in their pockets, not less.

At present 3.5 million workers receive JobKeeper and a little under one million JobSeeker. The government predicts that a few hundred thousand more will join the dole queues as JobKeeper winds down and the economy slides deeper into recession. At the same time it estimates that there will be 1.4 million by the end of the year, and one million in the first quarter of 2021.

As for the Coalition’s Australian Building and Construction Commission (ABCC), it is doing its job, continuing to harass, intimidate and bully workers and their unions for doing nothing more than protect workers’ rights and safety.

The ABCC has extraordinary powers to deny workers the right to silence. If they refuse to comply, they could be sent to jail. Now the ABCC is taking intimidation even further, threatening to prosecute workers for attending political rallies. Workers and union officials are facing massive individual fines of tens of thousands of dollars, yet again doing the government’s dirty work.

Casuals hit

Australia has one of the highest rates of casualisation of its workforce of any OECD country. As a result, hundreds of thousands of workers have missed out on JobKeeper. It also enables employers to sack workers without any obligation to make redundancy payments.

Casuals have also been impacted by the lack of savings as they are not entitled to sick and annual leave. Many have been forced to draw on their meagre superannuation savings.

At the time of writing, 770 cases of COVID-19 in Victoria have been linked to private care centres. The spread between centres was facilitated by the large number of casual staff who are employed at more than one centre. Contracting out has also been a factor in the spread.

Victorian Premier Daniel Andrews looked clearly frustrated when he pointed out that the federal, not state government has responsibility for these private centres. Angry family members are furious at the lack of information about their relatives and the poor quality of care.

These centres which are regulated by the federal government are not required to meet staff-patient ratios, unlike the state centres where they are regulated.

The centres are run for profit, and some of the corporations that run them make hundreds of millions of dollars in profits, mostly sourced from government subsidies. Staff shortages, lack of appropriate equipment and inadequate training also play a role in the present crisis.

FAILED POLICIES

Instead of stimulatory measures the government is set to implement a highly contractionary package. The extent of these measures can be seen from its anticipated spending on JobKeeper and JobSeeker. Over the six months to the end of September it will have spent a bit under $70 billion on the two schemes. Once the cuts come into place it estimates spending over the following six months will be $17 billion – a reduction of $53 billion.

The mean spirited, anti-worker ideology of the government drives the cuts to JobSeeker and JobKeeper payments after the end of September. That cut of $53 billion will have a massive contractionary impact on the economy. It is crazy to withdraw that amount and it will be extremely painful for recipients of those payments and to the many small businesses that rely on people having money to spend.

At the same time PM Scott Morrison has announced a $270 billion spending spree to boost Australia’s military capacity to fight US wars, in particular against the People’s Republic of China.

Counter-productive cuts

JobKeeper will remain at $1,500 a fortnight before being cut to $1,200 for the last three months of the year. There is another cut to $1,000 for the first three months of 2021. That is for workers who were employed for twenty or more hours per week if their employer qualifies.

For casual and part-time workers on less than twenty hours per week, the amounts fall from $1,500 to $750 from October and then to $650 for the first three months of 2021.

The reduction in JobSeeker payment will only make the unemployed more desperate to accept any work under any conditions. For the last three months of 2020 the payment will be cut by $300 a fortnight to $815.70 or $58 a day. JobSeeker recipients also face the uncertainty of what they might receive in 2021. Hundreds of thousands of workers will be driven into poverty by the cuts announced so far.

The reintroduction of the mutual obligations test for the unemployed to receive JobSeeker is cruel, inhumane, and demoralising, a characteristic of the government’s treatment of victims of its policies and the most vulnerable. This is in an environment of non-existent jobs and growing unemployment. It is a crude method to cut more people off and make it difficult for newly unemployed people to gain access to the payment.

Cutting incomes will reduce the capacity of people to purchase goods and services. The government clearly understood the need for a stimulus to the economy when it introduced JobKeeper and JobSeeker. That need is as great or even greater than ever. The cuts will drive the economy deeper into crisis and prolong any recovery.

Treasurer Josh Frydenberg is trying to keep up appearances of handing out support at the same time as pursuing his priorities: a budget surplus and lowering the mounting government debt.

The present level of those payments must be maintained and expanded to cover visa, student, casual, “illegals,” and other groups of workers who have been left out.

The government also plans to cut taxes – inline with its neoliberal policies.

Deficit is not the problem

For some time now, the government has been doing a “balancing act” between the lives and health of people, and what it claims will help the economy. This trade-off is a smokescreen for its obsession with returning the budget to a surplus as quickly as possible and slashing mounting government debt.

The budget deficit is not the problem. The government’s policies are.

The deficit should be looked at in the wider context of the whole economy. The latest figures are an $86 billion deficit for the financial year just ended and $284 billion in 2020-21. Just over a third of this deficit has nothing to do with any packages. It is largely a result of a decline in economic conditions, much of it because of a decline in personal and company income tax.

This anticipated budget deficit, if spent on stimulatory measures, will not be a burden on the economy or budget. The government can borrow at 0.04 per cent interest for five years and 0.9 per cent for ten years (according to RBA figures). It would become a burden if interest rates were high.

JobKeeper and JobSeeker could be funded at their present levels by slashing the more than half a trillion dollars currently allocated for military spending. Unlike killing machines, it would save lives and be of benefit to the environment.

Job cuts have begun

In the meantime, just when the government talks about the importance of job creation, it is quietly cutting public sector jobs. Many of the cuts have been targeted at science, the arts and culture, and renewable energy.

CSIRO scientists are busting their guts to develop a vaccine for COVID-19, while many of their fellow employees are losing their jobs. The latest cuts are to key scientists, engineers, and researchers in the field of energy. The government has cut 619 CSIRO jobs over the last year alone.

At the same time, while attention is on the pandemic, it is quietly cutting jobs from the ABC. The ABC has lost 1,100 jobs as a result of budget cuts by the Morrison government. In the latest hit, 250 staff joined the ranks of the unemployed. In addition, it has just cut twelve per cent of staff at the National Gallery of Australia. Last month it also axed sixty positions in the Department of Foreign Affairs and Trade.

It is crazy to cut $53 billion from JobSeeker and JobKeeper payments while announcing a $270 billion spending spree on Australia’s military capacity.

Choice

The government has a choice: a profit-led “market”-led or a public sector-led recovery.

It could pursue the pro-big business, austerity measures, a path it plans to follow. In particular this would involve deregulation including the labour market, further privatisations, and tax cuts for the wealthy. As stated above, this would result in contracting the economy and deepening and prolonging the economic crisis. Some aspects of opening up could see the widespread proliferation of the virus.

Or, it could apply the lessons of past post-recession and depression recoveries and adopt stimulatory measures, while putting the interests of the people first and retaining JobKeeper and JobSeeker at their present levels. This includes investing in the public sector to simulate growth and meet the unprecedented demand for government services. Job creation in the health, community, public housing and renewable sectors would serve useful social goals.

Australia’s manufacturing sector was found wanting when the pandemic hit. It had over successive decades been wound down with many skills and facilities lost. This is another area crying out for assistance and job creation.

New research from the Australia Institute’s Centre for Future Work reveals that Australia ranks last among all OECD countries for manufacturing self-sufficiency. While this indicator confirms the dramatic decline of domestic manufacturing in recent years, it also reveals the enormous potential benefits that would be generated by rebuilding manufacturing back to a size proportional to our national needs: $180 billion in new sales, $50 billion in additional GDP, and over 400,000 new jobs.

Such measures would assist people, be stimulatory and ease the depth and pain of the crisis.

Next article – EDITORIAL – Frydenberg – A confused economist

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