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Issue #1929      August 24, 2020

Unemployment disaster

The official number of unemployed workers in Australia continues on its upward trend reaching more than one million in July, and is set to rise further this month. But this figure, shocking as it is, only tells a part of the story.

The July figures cover a fortnight, from 28th June to 11th July, most of which was prior Melbourne’s stage 3 lock-down and before the present stage 4 restrictions which were introduced on 2nd August. The number of unemployed for August can be expected to paint a far worse picture for workers.

The Australian Bureau of Statistics’ (ABS) July labour force figures reveal that 165,000 of those who are defined as employed worked zero hours during the survey period, and that another 820,000 worked some hours but fewer than they usually work.

Underemployment stood at 1.5 million. This puts the number of underutilised (unemployed plus underemployed) workers at more than two and a half million or almost twenty per cent of the labour force.

In addition, many small businesses and self-employed people have been hit by the economic crisis.

No one is forecasting a rapid economic recovery, in particular, in the jobs market where unemployment looks to remain high for some years to come. No one, except for the Prime Minister and Treasurer are attempting to talk up the future. No one except the Prime Minister and Treasurer are talking about a quick pick-up in jobs or the economy.

RBA calls for expansionary measures

Reserve Bank of Australia Governor, Philip Lowe, has repeatedly called on the government to borrow now while interest rates are at historic lows to create jobs.

Lowe told a Parliamentary committee earlier this month, that the RBA would do all it could with its policy instruments to support a path to full employment. But, he added, “Beyond that, government policies that support people’s incomes, that add to aggregate demand through direct government spending and that make it easier for firms to higher people all have important roles to play.”

Lowe told the committee that the JobSeeker payments should be permanently increased and that the government should put more money into the economy.

On the question of the build-up of government debt, Lowe had more sound advice for the government: “When the time does come to address the build-up of debt, the best way to do this will be through economic growth.”

Apart from the reference to “making it easier for firms to higher people” (read “labour market deregulation”) his proposals are sound advice.

Head in the sand

But the government is not listening. In fact, it is headed in the opposite direction, along a trajectory that will only deepen and prolong the crisis.

The cost-cutting has started, with the withdrawal of free early childhood education and care. It should have been made permanent so that all levels of public education right through to year 12 are free. It its families who will suffer as many women are forced to leave the workforce.

The government has announced the winding down of JobKeeper and JobSeeker payments from the end of August, just at a time when unemployment is on the rise and the economy is shrinking. These measures alone, will remove billions of dollars from the economy.

A number of other measures that have kept businesses afloat will be phased out and many more bankruptcies will follow with the loss of thousands of jobs

The return of the mutual obligations regime is also a measure designed to kick the unemployed off benefits – more savings. This is yet another counter-productive, contractionary measure that creates more pain and hardship for the unemployed.

To the government these cuts are savings. They are steps towards “back in the black.” This is a government that puts profits and budget surpluses (to fund corporate tax cuts) before people. The government is looking for short-cuts to growth in profits, such as through corporate tax cuts.

Treasurer Josh Frydenberg is eager to return to the government’s full-on neoliberal agenda of budget surpluses. They are exactly the opposite to the RBA’s pleas for more government spending, for more income to generate demand.

Public sector-led recovery

As long as the government pursues its “market-led” or “private sector-led” neoliberal approach, the economic crisis will be deepened and prolonged. It cannot blame the pandemic for the harmful consequences of its policies. The government should learn some lessons from the Great Depression when wages were slashed. It took ten years and then a World War for an economic recovery to occur.

Wars are one way out of an economic crisis, where infrastructure and capital are destroyed and then recovery is based on rebuilding society. But it is a huge price to pay for a recovery, and if that war is a nuclear one, then there won’t be any recovery for anyone.

The Communist Party of Australia calls on the government to abandon its contractionary neoliberal policies and adopt expansionary measures based on increased public sector investment and higher wages and incomes for recipients of government benefits.

There are so many unmet needs such as public housing, public transport and public hospitals that could be addressed. At the same time as creating jobs, they would be of huge social benefit. Renewable energy is another area urgently requiring research and development to take advantage of Australia’s vast coastlines, land mass and sunshine.

There is an important role for the public sector to play in developing manufacturing, technological innovation and pharmaceuticals production. Australia could be a world leader in a number of these fields with the necessary public funding and development by the public sector.

As for the myth that the next generation will have to repay the public debt, as Lowe pointed out: ... “the best way to do this will be through economic growth.” That should be public sector-led, job-creating growth.

Let’s kick that off with a wage rise for all, an increase in the age and other pensions, abandoning cuts to JobKeeper and JobSeeker, and restoring free early childhood education and care.

Next article – EDITORIAL – What the hecs? Tehan’s proposal a big mistake!

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