Whenever a problem arises a moment of reflection — or, in reality, a time to criticise and complain — is necessary. But you get a day for that, tops. Now it’s time for real solutions.
Last week the ACTU Secretary Sally McManus gave a low energy presentation identifying wage growth, inequality, and casual work as problems but coming up far short of innovative solutions.
Today the buzz is about the ACTU but if we are serious about the prosperity of future generations we must begin policies that cultivate Australia’s long-term vision on the issues of wage growth, inequality, and casual work.
Lacklustre wage growth is troubling, especially with increasing costs of energy, housing and so forth in these already heavily regulated industries’. It’s no stretch of the imagination to see continued costly regulations are not creating answers, just more problems.
Which is why low wage growth, job loss and inequality will only exacerbate under short-sighted ACTU proposals.
Mandated minimum wages create a Catch-22 in the marketplace. The only people employers can afford are the trained. However, the only available workers are un-trained but can’t get training until employed. Workers caught in the Catch-22 earn less over time, delay acquiring skillsets, and must postpone personal pursuits whilst waiting.
Jobs are also lost. In the United States less than two per cent of the workforce are at or below minimum wage, most being youth or those changing careers. The other 98 per cent work above minimum wage. A minimum wage increase will more likely eliminate these two per cent entirely instead of lift people up, as these positions won’t create enough value to exist at higher wages.
Which brings up casual work. Although casual work has remained a constant percent of the workforce for roughly 20 years, it suddenly garners union attention in 2018. Causal work results from many reasons, good and bad. It is a great way to make ends meet in between jobs, testing/learning a career, make extra for saving, or allow flexibility when life is complicated or other pursuits are desirable.
Fulltime work is however considered more desirable in many instances to both employers and employees. Why then would companies not offer more fulltime positions? There is less training involved, less chance of turnover, stability, and consistency – all things employers desire.
“If you want more of something, subsidise it; if you want less of something tax it”: and the same holds true for jobs. Had unions been serious about improving fulltime work figures, they would stop heaping up costs; whether it’s mandated time off, paid leave increases, tacking on unwanted benefits, increase hurdles to firing, or threats of picketing.
When employees and employers negotiate the right benefit packages, both parties benefit. However, mandating universal value over a marketplace adds unnecessary or even unused benefit costs until jobs are priced out of existence.
Compounding these problems over time inequality may become an issue. But focussing on inequality alone gives Australia absolutely no direction.
In a serious discussion, we can accept 100 per cent inequality or 100 per cent equality are undesirable. There is some level in the middle that is beneficial and encourages a healthy economy growing prosperity for all involved. But no one really knows where.
A quick look at the GINI index that measures family income inequality reveals this: countries we would consider opposites oftentimes will have the same level of inequality. The country of Chad theoretically has slightly lower inequality than the United States. Hong Kong and Haiti are in the top 10 most unequal countries. Australia, according to this index, already has one of the lowest levels of inequality in the world.
Focussing on inequality is a tool of divisive politics. If we are after a more prosperous future for all Australians higher or lower inequality numbers mean nothing. What is meaningful is finding the opportunity to lift those at the bottom up, without tearing success down.
Serious reform would consider halting or even reversing mandated minimum wages so many Australians are priced back into the workforce. If it’s decided a 20-year figure of casual work is undesirable, making these valuable opportunities illegal adds more trouble. Lasting solutions mean finding ways to make fulltime work desirable again.
Finally ensuring individuals and businesses, large or small, treated equally under the law is far more beneficial of a conversation than divisive inequality rants. Companies should not be given special interest in the eyes of the law or corporate welfare picking winners and losers.
Our economy is far too complicated for any bureaucrat to consider.
This is a starting point that would allow for a healthy debate to improve the lives of all. Not just those most politicly connected.
We at the H.R. Nicholls society are excited to engage in this type of discussion and look forward to continued growth and prosperity for all Australians.
Greg Pulscher is executive director of the H.R. Nicholls Society.
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