Unemployment: The five percent fallacy The following article was published in "The Guardian", newspaper of the Communist Party of Australia in its issue of Wednesday, February 10th, 1999. Contact address: 65 Campbell Street, Surry Hills. Sydney. 2010 Australia. Fax: (612) 9281 5795. Email: <[EMAIL PROTECTED]> Webpage: http://www.peg.apc.org/~guardian Subscription rates on request. ****************************** By Anna Pha Before the last federal election the Howard Government flatly refused to set a target for reducing the unemployment rate. Now, with a little advice from their strategists, they have changed tack, and Treasurer Peter Costello is promoting a target of five per cent unemployment. The target, we are told, can be achieved if the Government is able to implement its program of "structural reforms". This program centres around removing what Costello refers to as "disincentives to employment". These "disincentives" include such things as "high" wages, taxes, unfair dismissal laws, awards, and welfare payments. Remove the disincentives and the unemployed will want to work and employers will offer them all jobs, the premise being that unemployment is caused by corporate taxes, workers pricing themselves out of the market and not wanting to work, and by unions having too much power while employers lack flexibility. This five per cent target and government policies are linked in such a way that anyone opposing the policies will be accused of opposing a reduction in unemployment. The Government is callously using the plight of the unemployed as a means of pushing its unpopular economic rationalist policies. Its "structural reform" program has little to do with job creation. Quite the contrary. Deregulation of the labour market, wage reductions, destruction of awards, deunionising workplaces, the GST, privatisation and cuts to social security payments are high on the Government's agenda. Hundreds of thousands of jobs have already been lost through privatisation and labour market deregulation. Privatisation of utilities like electricity, water and gas, carried with them the loss of 53,700 jobs last year alone. More than 24,000 Australian Public Service positions were wiped out last year. Deregulation of the labour market and the destruction of award conditions such as overtime bans and penalty rates have resulted in a smaller workforce working longer hours and one of the highest rates of casualisation of any workforce in the industrialised world. One quarter of the workforce is employed on a casual basis, including many full-time workers. This means they have no job security, can expect to be in and out of work and feel less secure when it comes to making financial commitments. Job cutting has primarily been due to privatisations, new labour- shedding technology, labour market "reforms", longer hours of work for those remaining in employment as well as the ongoing sackings of government employees. The stripping of awards, enterprise agreements, individual contracts and contracting out have laid the basis for the longer hours and reduction of manning levels. At the same time, as penalty rates and overtime bans were removed and jobs casualised, the income of many workers has shrunk. The loss of jobs and lower real wages of many in work is driving down demand for goods and services and resulting in further layoffs. Last year energy prices fell by 32 per cent, metals and minerals by 16 per cent and food by 13 per cent. The price for Australia's coking coal fell by 18 per cent in December and the price of iron ore paid by Japanese steel mills is expected to fall by 7-10 per cent this year. This decline in prices arises out of insufficient demand for the commodities on the international markets: a crisis of "overproduction". Demand depends on people having the capacity to purchase goods and services. The level of employment and level of demand are linked. If the government pushes ahead with attacks on youth wages and the minimum wage, and the Industrial Relations Commission abandons safety net increases, then more jobs will be lost. The "wage flexibility" that employers are demanding will lower wages and increase profits. It will not result in more employment opportunities. As with all their other policies, this does not create jobs, it creates bigger profits. The contracting out and privatisation of the welfare system is heading out of disaster and into catastrophe. Alternative policies The Communist Party of Australia rejects the Government's program, and calls for genuine job creation policies. These policies require government intervention and tighter regulation of the economy and workplace. These measures include: * a 30- or 35-hour week without a reduction in pay; * strict limits or bans on overtime and all overtime to be paid at higher rates; * penalty rates to be paid for all work at weekends, night and public holidays; * benefits of new technology and other measures that increase output per worker to be shared with workers in the form of shorter hours and higher rates of pay; * ACTU living wage rise of $26.60 to bring the minimum wage rate to $400 per week, followed by a further raising of minimum and low rates; * young workers to be paid according to skills and work performed, not age; * raise pensions, unemployment and other benefits; * halt and reverse privatisation programs; * expand public sector -- formerly a major employer of school leavers and apprentices -- and end contracting out of public services; * outlaw casualisation of ongoing work; * abandon GST; * restructure income tax system so that those on higher incomes pay a larger share and the burden is reduced for low income earners; * measures to ensure transnationals and other corporations pay taxes on their profits. Rather than leaving it to the markets, and currency and other speculators, to determine the fate of Australia's economy and the working people, the government should be reimposing regulations over the financial sector and restoring measures to protect local industry and jobs in accordance with an overall plan for economic development. With such policies, we can then seriously begin talking about reducing unemployment. -- Leftlink - Australia's Broad Left Mailing List As vilified, slandered and attacked by One Nation mailto:[EMAIL PROTECTED] http://www.alexia.net.au/~www/mhutton/index.html Sponsored by Melbourne's New International Bookshop Subscribe: mailto:[EMAIL PROTECTED]?Body=subscribe%20leftlink Unsubscribe: mailto:[EMAIL PROTECTED]?Body=unsubscribe%20leftlink
