A FAIR DISTRIBUTION
OF WORK: An equity issue of the 21st century
JOHN CURTIN MEMORIAL SPEECH-1996
| |
A FAIR DISTRIBUTION
OF WORK: An equity issue of the 21st century
|
Return to Lecture List
Comparison
between Curtin and Howard
John Curtin was a Leader who provided strong leadership for Australia at
a critical time. At the same time, he initiated the process of social and
economic reform in Australia which looked forward to the postwar reconstruction
challenge.
Therefore, we can immediately see three distinguishing criteria between
John Curtin and John Howard.
First and foremost, John Curtin provided leadership when it was required.
That is a stark contrast with the current incumbent.
Second, John Curtin looked ahead to the challenges of the future beyond
the immediate and the popular. It is hard to imagine John Curtin failing
to confront the hard decision because the opinion polls were questionable!
A third distinguishing criterion might also be added. After all, one thing
you could always say about John Curtin was that, in great issues of national
significance, he was able to maintain a principled position. A stark contrast
with John Howard.
An example of the breadth of Curtin's forward looking agenda is reflected
by the fact that in the last weeks of his life, in the last weeks of the
Curtin Government, the full employment paper was released. The full employment
paper would have been important at any time but it is important to remember
that the issue of full employment was recognised as the equity issue of
the generation.
The
Employment Challenge
What I want to look at today are some issues concerning the role of Government
in dealing with one of the equity issues of the next generation, which relates
to the way we deal with Australia's unemployment problem. This equity issue
of the 21st century, what may well prove to be the equity issue of the next
generation, is the issue of the fair distribution of the available work.
To put this in context, it is important to briefly review the basic issues
of the conventional assessment of the employment challenge.
Conventional assessment has tended to look first at the demand side of the
labour market. We all know we need economic growth and to focus on its linkage
to job creation.
Such assessment also focuses on issues like the need for industry policy
and its impact on the rate of economic growth, the nature of that growth,
and the number and type of jobs which might be created.
There are many other demand side issues emerging which need attention such
as our export performance and the higher growth path which the nation can
sustain as a consequence of the improved export performance achieved by
the previous Government.
On the supply side, increasing priority is being given to issues related
to employment and training and investment in human capital; to issues concerning
the balance between achieving greater flexibility of the labour market and
the need for a proper social concern about fairness; issues of productivity
and special issues such as youth wages where the Government is trying to
perpetuate a view that the abolition of youth wages would have destroyed
hundreds of thousands of youth jobs.
This is an argument not dissimilar to the attitude expressed by conservatives
to the issue of equal pay in its early stages. At that stage the conservatives
purported to oppose equal pay to defend the interests of women because they
claimed to fear that women would not be employed if they had to be paid
the same wage as men.
Additionally, there have been significant changes to the nature of the workforce
including the increased participation of women in the labour force, the
increase in part-time and casual work, and the increased participation in
higher education which is leading to later entry into the workforce of many
workers.
This is not designed to cover comprehensively the issues of supply and demand
in the labour market--rather to provide a background to enable analysis
of an important emerging issue. I want to concentrate in particular on the
distribution of work.
Distribution
of Work
The evidence suggests that the distribution of work in modern western economies
is becoming increasingly unfair and the indicators suggest that the trend
towards enterprise bargaining and individual contracts exacerbates that
unfair distribution.
In Australia, as in other OECD countries, the distribution of available
paid work is becoming increasing concentrated. With unemployment at just
under 9% and underemployment, by which I mean the number of part-time workers
who would prefer full-time work, at 5.7%, Australians are feeling the effects
of this unfair distribution of work.
While the amount of paid work per head of the civilian population has declined
slightly since the 1960s, from 23.1 hours per week in 1966 to 20.6 hours
in 1996, the problem is not simply that there is less work available. There
has been a fundamental shift in the distribution of paid employment. The
total amount of paid work is being spread across a proportionally smaller
group of Australians, who are working longer and harder as a result. Therefore,
while there are increasing numbers of Australians without work or without
enough work, those who do have work are working longer hours and more overtime.
In short, we are facing the paradoxical situation in which the phenomena
of overwork and underwork are occurring simultaneously.
This same paradox was noted at the height of the 1930s Depression by the
English philosopher Bertrand Russell, who remarked that while unemployment
levels were high, those in employment were working longer and harder than
ever.
For example, while over 1,300,000 Australians are either unemployed or underemployed,
full-time employees are now working 42.2 hours a week, in comparison to
39.9 hours a week in 1989. This is an increase of 2.3 hours, or just under
6%, over seven years. As at August of this year, one in five employees are
working over 49 hours a week, and in a recent survey by Morgan and Banks
34% of respondents reported working between 50 and 59 hours a week.
Additionally, just under half of all full-time employees are working overtime
on a regular basis, 35% of whom are not being paid for that extra work.
To do a quick sum; if each of these full time employees had worked a standard
38 hour week, which is only 4.2 hours less a week, then approximately 26
million (26,185,200) hours of work per week could have been made available
and 689,084 full-time jobs could have been created to work these additional
hours, which is equivalent to 85% of our unemployment.
While it is not as simple a matter as substituting people for hours, the
figures illustrate the effect of the distribution of work on employment
and unemployment.
This overwork/underwork paradox has significant corresponding implications
on the distribution of income, which itself is economically and socially
significant. Beyond this, the unfair distribution of work also has both
long term as well as immediate social consequences, particularly on the
intergenerational issues of a cycle of unemployment. The unemployed miss
out on the social interaction, status, skill acquisition, security, self-esteem
and identity that goes with employment.
For those in paid employment, the longer hours they are being required to
work are accompanied by increases in stress, work effort and a decline in
the satisfaction with the balance between work and family. Of the 11,000
employees surveyed by the Federal Department of Industrial Relations in
1995, a majority reported that the stress in their job, and the effort required
for their job, had increased over the previous 12 months.
Disturbingly, 26% of those surveyed reported that their satisfaction with
the balance between work and family had gone down over the previous 12 months.
Given the trends which indicate that work is also becoming unevenly distributed
between families, with increasing concentration of jobs in some families
and unemployment in other families, this has become a pressing issue for
the Australian community.
It also has profound public health and worker's compensation consequences
in terms of workplace stress. But those are issues for subsequent consideration.
To add to the paradoxical nature of the work distribution issue, we are
now seeing more full-time employees reporting that they would prefer to
work fewer hours. A recent telephone survey jointly conducted by the Australian
Centre for Industrial Relations Research and Training and Newspoll found
that 33% of full-time workers would prefer to work fewer hours. It is an
absurd situation to have so many people wanting more work while many others
with jobs want less work.
Options
for Equitable Sharing
The distribution of work is an issue that will not be easy to deal with.
There are no easy solutions. But we need to start asking ourselves how we
can share employment, wealth and opportunities more equitably between those
who are in work and those who are out of work. This question is being considered
by reformers in most countries around the world but it is being ignored
by conservative governments in Australia. We need to be working now on options
for reform. I don't at this stage pretend to have all the answers--it still
needs more analysis and work. Today I want to traverse some of the options
and issues which will need to be considered in the search for a conclusion.
It is often instructive to look at, and learn from, the international experience.
In many countries, work distribution through changes to working time arrangements
is being investigated as a means to reduce unemployment. The European countries
in particular having already introduced large scale reforms of this nature
with the explicit aim of sharing the available work amongst a larger number
of people to help reduce high unemployment.
Under President Mitterand in the early 1980s, the French Government introduced
a package of measures designed to redistribute the available paid work.
This included shortening the standard working week from 40 hours to 35 hours,
shortening the working year by granting a fifth week of paid annual leave,
and shortening the length of the working life by early retirement schemes.
Whilst the shorter working week option, implemented by government decree,
proved to be unsuccessful, the early retirement schemes proved to be very
popular. The problem with reducing the working week was that there was not
enough cooperation between employers and unions. These options were all
government subsidised to some extent, with the Government reducing employer's
social security payments when they agreed to reduce working time.
Germany has also shortened the working week to 35 hours in the steel, printing
and metal work industries, after an 11 year campaign by the German Trade
Unions. Approximately 70,000 jobs were created as a result. A recent agreement
concluded in Germany between IG Metall and Volkswagen has led to a four
day, or 28.5 hour working week, which saved 30,000 jobs which would otherwise
have been axed. In depressed industries in many countries around the world,
it is increasingly common for initiatives of the Volkswagen type to be introduced
in order to save jobs, rather than actually create new jobs. But either
type of initiative has a positive impact on unemployment rates.
Denmark has introduced a successful practice of career breaks whereby employees
take one year's break from work, to be replaced, preferably, by an unemployed
person. This policy has led to a type of work rotation, which has
allowed unemployed persons to rejoin the workforce, and which subsequently
improves their chances for further employment. Under the scheme, longer
term qualified unemployed people are given preference to replace those seeking
career breaks. The Danish Employment Ministry has reported that in 1994,
three-quarters of the 15,000 unemployed persons involved in the system found
a steady job at the end of their replacement period.
In the Netherlands, all new positions in the public sector are limited to
a maximum 32 hour week. Between 1983 and 1991, the Netherlands experienced
a 30% rise in employment along with a 13% reduction in hours worked per
person. Indeed, in Denmark and the Netherlands, a relatively high proportion
of the population is engaged in work, with each person working a relatively
small number of hours.
In the 1980s, Belgium adopted a 5-3-3 initiative, whereby enterprises
were permitted to cut wages by 3% in exchange for a 5% reduction in hours,
provided that recruitment was increased by 3%. Weekly hours in Belgium are
set at a maximum of 50, similar to Malaysia, where maximum hours are set
at 48. If this 48 hour maximum is enforced throughout the Malaysian workforce,
then the example is significant because the Malaysian economy has continued
to grow at rates of between 8-10% despite the hours policy, refuting the
propositon that reductions or caps on hours is harmful to the economy.
Even Japan and Sweden, with relatively low unemployment levels, are investigating
the working time issue as a means of improving quality of life for workers.
The most recent European proposal is the European Union Working Time Directive
initiative which restricts the number of weekly hours including overtime
to 48 hours, on an average over four months. The directive can be modified
for certain industries or where a permanent presence is required. The directive
also includes provisions on the number of consecutive rest hours required
per day and per week. And last year, the major French employers' associations
and unions signed an agreement allowing employees over 57 years of age who
have made over 40 years of state pensions contributions to retire early.
The employers then recruit an unemployed person, preferably under 26. It
is expected that 100,000 people will be recruited by the end of this year.
Of all the lessons that can be learnt from the overseas experience, the
most important lesson is that initiatives in this area can only be successful
when there is a partnership between all parties to the issue. The partnership
must include unions, government, employers and employees. The most successful
of the overseas' initiatives, in terms of employment creation, have involved
agreement and effort by all parties at the enterprise level. The Labor Party
is the only party that can deliver this kind of partnership.
The
Australian Experience
On the domestic front, there are a few initiatives such as the purchased
leave scheme (48 of 52) and the career break scheme operating in the Western
Australian Department of Education. Under the career break scheme, teachers
work for four years, and take the fifth year as leave, pursuing study or
other activities. Their salary is averaged over five years, which means
that they receive 80% of their pay every year. This means that the department
is able to employ a new teacher as a replacement for the fifth year, without
it costing them any more.
Whilst these schemes are still in their infancy, if they achieve wide uptake
they have the potential to vastly improve the quality of employees' working
life and provide the opportunity to share out the work more fairly. Work
distribution will also be raised in Stage 3 of the ACTU's Living Wage Claim.
There is also support for the proposal that future productivity gains be
taken in the form of shorter hours.
It is also important to look at what market signals the current arrangements
and recent developments are sending employers when it comes to taking on
new staff. Because of the costs associated with hiring and training new
staff, and other fixed labour costs, it is often cheaper for employers to
work their existing employees longer hours rather than take on new staff.
Employers have traditionally responded to increases in demand by offering
overtime, rather than putting on new staff, and it has been suggested by
several commentators that this has been one of the factors contributing
to high unemployment over the past decade. Overtime, even with penalty rates,
gives employers the flexibility to absorb increases in demand for labour
without employing new workers. The penalty rates for overtime hours are
thus a significant market signal.
The Workplace Relations Bill is an interesting example of the wrong way
to approach contemporary labour market challenges. The Workplace Relations
Bill makes a smashing attack on the problems of the 1970s of high strikes
and low productivity. It makes worse the problem of the late 1980s and 1990s
to do with uncertainty and stress and it ignores the distribution of work
issues which will come to the forefront more and more in the early years
of the next century.
Indeed, with the emphasis on individual contracts and the dismantling of
the award system, the Workplace Relations Bill is set to vastly exacerbate
the current problems concerning the distribution of work.
For example, in the individual contracts operating in Victoria and here
in Western Australia, there has been a trend to cash out or entirely
remove penalty rates for overtime. Currently, at the Federal level, just
under 9% of certified agreements contain provisions whereby overtime is
paid at single rates. However, a recent analysis of 115 agreements made
under the Victorian Employee Relations Act 1992 found that 35% of agreements
included provisions paying overtime at single rates, and 64% of agreements
had part or all of the weekend paid at single time rates. In a third of
agreements, the overtime penalties were less than in the equivalent award.
Furthermore, most of these Victorian agreements did not include an hourly
wage increase to compensate for the abolition of the penalty rates.
These trends not only encourage, but provide incentives for employers to
use overtime, rather than new staff, to absorb increases in labour demand.
The Workplace Relations Bill and the move to individual contracts will have
a negative impact on our attempts to achieve a fairer distribution of work.
The trend to longer hours in a more deregulated system is already evident.
The June 1996 Summary of Statistics by the Western Australian Commissioner
of Workplace Agreements shows that 50.5% of employees who have moved onto
a Workplace Agreement now work longer hours than those contained in the
applicable award.
This confirmed the conclusions of a report prepared in February 1996 for
the Western Australian Trades and Labor Council by the Australian Centre
for Industrial Relations Research and Training. Their study of 25 workplace
agreements in Western Australia showed that in a large number of these,
especially in the retail, hospitality and cleaning industries, the working
week was lengthened, for example from 38 hours per week to 40, and in some
cases to 42 hours a week. There was also a discernible trend to treating
public holidays and Saturdays and Sundays as normal work days.
These identifiable trends to longer hours, and the removal of overtime and
penalty rates, are set to be repeated under the Workplace Relations Act,
when proclaimed. It is no coincidence that Western Australia and Victoria
are the two states with the highest average weekly hours for full-time employees,
at 43 hours and 42.5 hours a week respectively, as at August 1996.
Furthermore, the deregulation of working time arrangements that is set to
occur under this Act, will have adverse consequences for individual workers
in terms of the organisation of their day to day life. Predictability and
regularity of hours, which is essential for workers trying to balance work
and family commitments, is set to decline with the Act increasing employer
discretion in the setting of hours.
This deregulation of working time arrangements will be particularly significant
for women, many of whom are in casual employment, who are therefore more
vulnerable to having their working hours determined by their employer. A
recent report commissioned by the Human Rights and Equal Employment Opportunity
Commission, and prepared by the ACTU, found that many women are being disadvantaged
by having to accept employer-driven flexibility in working hours.
Work distribution options can only be implemented by a government which
focuses on this issue, gives it priority and is prepared to consult with
researchers in this area, with unions, employers and to examine the international
experience. This is essential if we are to try to be at the forefront of
distributing work more fairly.
The challenge for those of us in the Labor Party and for people in social
democratic parties around the world is to develop a 21st century model of
labour market relationships to deal with this emerging and serious social
and economic trend. It is a challenge the Labor Party is determined to meet.
Return to Lecture
List