Many Australian enterprises – ranging from medium-sized family businesses to the largest of our corporations – now face rising government-imposed costs led by wages, energy and other charges plus a legislated new industrial relations regime to lower productivity.
And with demand sluggish at best, deteriorating companies will now begin the traditional response of lowering labour costs led by reducing middle management levels via retrenchments and cutbacks in staff hiring over a wide area of the business.
While this has happened before, 2024 will be the first year in our history that a widespread labour cost reduction program is being undertaken in an era of ESG (environmental, social and governance) and the work-from-home (WFH) revolution.
There is no manual to set out the new rules, but both phenomena will be intertwined.
On the ESG front, the sexes will often be treated differently.
Males, especially in large woke culture-led organisations that have not evened their male/female ratios, may bear the brunt of the retrenchments.
Many will be bundled out the door irrespective of skills.
Male community bitterness will be deep. Smaller and family organisations will make their retrenchments on a talent basis with skilled males and females holding their positions.
But where talent is seen as equal and more males are being employed, males will be vulnerable.
While those general practices may apply, enterprises whose productivity and young person training are being reduced by the WFH revolution will see the new environment as the chance to restore “normalcy”.
The temptation will be to set a rule that says come back to the office or leave. That will certainly apply to those who regularly “work” from home on Mondays and Fridays.
But any overall rule will need to be modified by an invitation to negotiate.
Many WFH employees, particularly female, so value the right to work from home that they make sure they deliver more work than was likely in the office.
The smarter enterprises will see the change in the labour market as a chance to mobilise and restrict WFH in a way that retains essential skills, but ends the rackets.
Bloated administration in public services like Victoria, NSW and Canberra will require ministers and chiefs that have considerable strength and talent to relieve their budgets from the overstaffing and the bad WFH practices.
It will not be easy and in both the public and private sectors, the key will be not to lose valuable talent.
Meanwhile in ‘all-female’ and ‘all-male’ clubs, these issues are now being emotionally discussed. Understandably, the two club types view the changed environments from very different points of view.
We have been through a period where inflation was caused by shortages of goods and skills along with rising costs.
Skills are still short in some areas of the building industry, but the situation is changing rapidly and goods are coming in from China at lower prices.
In ”normal” circumstances, we now have an environment where it would be reasonable to expect relief on the interest rate front.
But we have elected a government that simply does not understand the link between what they are doing and the rate of inflation and therefore interest rates.
For example, the Bob Hawke leadership style would have negotiated with the unions to exchange wider tax cuts measures for wage restraint.
Not only did that not happen, but wage levels are being boosted by government policy while the complex set of industrial relations rules have a clear objective to lower productivity and increase costs.
The Albanese government does not seem to understand the government has now become the cause of inflation and the driving force behind the high interest rates.
What is happening in Australia is being duplicated in the US and Europe, but the outcomes are not being well documented in employment statistics.
Employment figures are closely watched by central bankers around the world as they try to work out when to cut interest rates.
In the US swings in immigration, rapid changes to working conditions in the wake of the pandemic and lower participation in polls are combining to create a big problem for labour market statisticians.
The US unemployment rate is sitting near levels usually consistent with a healthy labour market, but that may not be the true situation.
The Australian Bureau of Statistics says there are 1.5 million (10.3 per cent) Aussies who are either unemployed or underemployed – only about half the figure calculated by Roy Morgan Research.
The substantial discrepancy in numbers comes down to how both data-gathering agencies define unemployment. Roy Morgan counts an unemployed person as anyone over 14 who is looking for work, no matter when. The ABS classifies somebody as employed if they have worked for at least an hour in a week, even if it means working without pay in a family business or farm.
In both Australia and the US, the way employment and unemployment is calculated will be the subject of increasing debate.
Meanwhile the US bond market has no doubts – yields are rising, so delaying the likely day of interest rate reductions. What happens in the US spills over into Australia.
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