Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry
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- The problems of labour demand
Industry employmentGrowth in employment at the industry level (Figure ) confirms the state analysis. The rate of growth in mining was phenomenal, particularly after 2005, while the sudden collapse after 2013 was equally dramatic. It is important to keep employment levels in mind (Table ) and to note that mining never rose much above one quarter of a million jobs. By contrast, over the period 2000 to 2014 the retail industry added another quarter of a million jobs to rank alongside the industry of health care and social assistance as the behemoths of the Australian economy. Despite its size, retail posted mediocre growth over the period, with the period from 2008 onward essentially flat. This was indicative of the difficult times retailers have faced with subdued domestic consumer demand. More solid growth was evident among professional services and health care and social assistance, industries which share prospects for increasingly strong growth, whilst also contributing significant numbers of jobs. The latter is partly driven by the ageing of the population and most economic commentators expect continued strong growth in this industry. On the bleak side of the ledger were agriculture and manufacturing, both of which declined over the period, with agriculture losing more than 110,000 jobs and manufacturing losing nearly 160,000. While manufacturing still constitutes a major source of employment—with over 900,000 jobs—its prospects in the next few years are grim, as heavy job losses associated with automotive assembly, components and ship building look likely. These industry patterns dovetail with the analysis of inequality outlined earlier. As Bob Gregory observed in the 1990s, the disappearing middle in the wages distribution was partly driven by the loss of well paid manufacturing jobs. Gregory suggested that workers who might ordinarily have been employed in jobs in the middle of the wage distribution—such as manufacturing jobs—would have moved into lower paying jobs, ‘bumping off ’ the lower skilled workers from the wages ladder.102 There is also an occupational component to these industry changes. Despite some debate, there is good evidence for occupational polarisation in the Australian labour market, with strong growth in both the more highly skilled jobs as well as the less skilled. It is clear that the strongly growing industries contain both categories of job—such as the nurses and the cleaners, and the architects and the receptionists—though the more skilled jobs are likely to outnumber the less skilled. On the other hand, the solid presence of retail trade, despite its stagnant growth, maintains large numbers of less skilled jobs in the occupational structure.103 Figure : Growth in employment in selected industries, Australia 2000 to 2014
Trend data. Agric = Agriculture, Forestry and Fishing; Manuf = Manufacturing; Prof Serv = Professional, Scientific and Technical Services; Health etc = Health Care and Social Assistance. Source: ABS Labour Force, 6291004. Table : Employment in selected industries, Australia 2000 to 2014
Trend data. Source: ABS Labour Force, 6291004. The problems of labour demandIn the earlier discussion it was evident full-time employment growth had stalled after 2011. As we have seen, one reason for this was a slowing in overall labour demand, partly the result of the end of the construction phase of the mining boom. Losses in manufacturing employment continued as an over-valued currency weakened the international competitive position of the sector. Recent falls in the Australian dollar have seen something of a revitalisation of among some large domestic producers such as BlueScope Steel but the overall picture of manufacturing as a source of employment remains bleak. The persistent failure of the Australian economy to generate sufficient full-time employment remains the Achilles heel of the Australian labour market. This surfaces in a number of ways: problems of long-term unemployment, persistent underemployment, regional ‘blackspots’, and the collapse of full-time employment among particular sub-groups of the population. Employment generation is politically sensitive in depressed regions and outer suburbs. The link between employment and wages has also been a source of much animated discussion over the years, both from academic economists and from employer lobby groups104. A particular target has been the minimum wage, with the argument mounted that the level of the minimum wage is responsible for poor employment outcomes, particularly among the least skilled section of the population. In employer debates around WorkChoices and the FW Act, the so-called ‘job-destroying’ effects of unfair dismissal laws have also regularly surfaced. The small business lobby has argued, in particular, that they would employ more people, if unfair dismissal laws were removed. While the time frame to test this proposition is limited, the data which might allow such a task have recently become available in the form of more finely disaggregated labour mobility data. Using such data Borland tested this proposition by looking at the impact of unfair dismissal laws on the youngest age groups—those we might expect to be most affected by such legislation. Examining flows into and out of employment over the period from 1998 to 2011 Borland could discern no effect from either the Work Choices legislation nor the subsequent FW Act and concluded: ‘Changes in the rate at which workers flowed out of employment do not seem to be significantly related to the industrial relations system in place’.105 In other words, the grounds for either weakening or strengthening unfair dismissal legislation lie elsewhere than their employment effects. Ultimately, we would argue, the case for strong unfair dismissal legislation revolves around issues of fairness. If there are problems, then their likely solution lies in improving human resource management procedures within small and medium size workplaces, rather than falling back on legislative solutions.
Borland provided a Beveridge curve for the period from 1979 to 2011 in his assessment of the decade and he concluded that there was an inward shift ‘due to decreases in long-term unemployment in the 2000s’ and that there was little evidence for an outward shift due to the mining boom (despite much talk of skill shortages during that period). The increases in vacancy rates during the 2000s appear to signal movements along the same Beveridge curve, leading Borland to conclude that ‘the economy as a whole did not worsen appreciably in the 2000s’.106 Adding the additional years through to 2014, and dividing the 2000s from the 2010s, suggests that increases in unemployment in the last 3 years have seen movement back along the Beveridge curve, rather than any outward shift. While this limited shift suggests structural unemployment has not worsened over the 2000s, it remains the case that over the long-term there does appear to be a problem with structural unemployment in Australia.107 This problem is particularly evident when we consider employment to population ratios (also called employment rates) for various subgroups. Unlike the unemployment rate, these ratios take account of lower participation rates by some subgroups. The more serious levels of unemployment for such groups are often hidden by withdrawal from the labour market and employment population ratios illuminate this. In his reflections on Australian labour markets, penned in 2005, Bob Gregory expressed his disappointment with ‘the reduction in employment opportunities for the low skilled, the growing geographic and social pockets of the disadvantaged, and the increasingly heavy reliance on the welfare state’.108 In this respect, he was echoing sentiments expressed a few years earlier by a number of labour market economists who observed the polarisation of the Australian labour market that had taken place during the 1990s: This social crisis in the midst of a buoyant economy is evident from many signs in Australia’s cities, towns and rural areas. These range from mani- fest inequalities in entry to, and rewards from, economic activity to in- creasing demand on emergency relief agencies, public hospital casualty wards, crisis centres and services for the homeless … To those who focus on aggregate economic indicators talk of a social crisis, especially one driven by trends within the economy, is incomprehensible. After all, for much of the past decade employment and average real earnings have been growing strongly, and unemployment has been falling … But the disadvantage and distress in many Australian communities is real indeed, and the fact that the crisis has developed through a period of strong economic growth has been one of its most distinctive, and most disturbing, features.109 For Gregory, one of the most startling aspects of the Australian labour market after the 1970s was the loss of full-time employment for low skilled males and this was particularly perplexing given the overall reduction in wages growth that took place from the late 1970s to the mid 1990s: After a quarter of a century of real wage growth it seemed inconceivable [in the 1970s] that there would be about two decades of real wage constancy … the widely held macro view at that time was that only a few years of real wage constancy was needed to return the Australian labour market to full employment … [but] put simply, despite the large real wage reductions—relative to trend—full-time employment, particularly among unskilled men, has continued to deteriorate … Despite the real wage constancy there were no return to the pre-1975 labour market environment.110 Table : Male full-time employment to population ratios, skilled and unskilled by selected age groups
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