It was much more than a “gotcha” moment – the fact Anthony Albanese didn’t know what the rate of unemployment was and his guess wasn’t even close underlined the point that Labor simply doesn’t get the labour market.
There is a huge difference between the real answer – 4 per cent – and the Opposition Leader’s guess of 5.4 per cent. The former is close to full employment with labour shortages common, while 5.4 per cent is a labour market with too many applicants per job vacancy. It’s is a difference of nearly 200,000 people.
The way Labor sees the labour market is as follows. It’s not really a market because people are involved. The bosses always have more power than the workers and many (most?) bosses treat their workers badly. Too many jobs are poor quality and insecure. The trade unions and the regulatory agencies, particularly the Fair Work Commission, are constrained in improving the outcomes for workers. Wage increases can be achieved through legislative amendment and through mandates of the FWC.
When confronted by contradictory evidence, the Labor approach is to ignore it and push on. The hope is that the messaging will appeal to a sufficient number of voters that the real facts don’t get in the way.
Take Labor’s view that the proportion of insecure, casual jobs is too high and rising. The evidence is clear that the proportion of employees who hold casual jobs has not changed for more than two decades; about a fifth of all employees are casuals. Moreover, job satisfaction levels recorded by casual employees are not significantly different from those recorded by permanent employees.
Casual jobs suit lots of workers as well as employers. Casual employees welcome the pay premium, generally 25 per cent. The right to convert, which is a regulated entitlement given to casual workers with tenure of 12 months or more, means those casual employees who would prefer the status of permanent employee can convert. The fact is that quite small proportions do so.
If it were true that employment has become less secure, as Labor believes, we would expect the figures on average job tenure to have declined. In fact, the data shows workers have been staying in their jobs for longer, a feature that dates back nearly a decade.
The proportion of workers who have been with their employer for less than one year has fallen while the proportion of workers who have been with their employer for 10 years or more has risen. As far as perceptions are concerned, most workers expect to be with their employer in 12 months. In other words, the picture Labor paints of a labour market increasingly characterised by short-term jobs is not borne out by the facts.
To be sure, there is a small gig economy (about 2 per cent of the workforce), but even here some workers with full or part-time jobs will participate to make some additional income on a flexible basis. This is one of the explanations for the rising proportion of workers – from a low base – who work more than one job.
Labor, it would seem, has a philosophical objection to the gig economy as well as to self-employed contractors and labour-hire arrangements. Of course, these types of worker are disinclined to join trade unions, which may be one explanation of Labor’s attitude on the matter. Regulatory measures to quash these forms of employment are high on the list of Labor’s policy priorities.
One of the ironies of the increase in average job tenure is its association with lower wage growth, something Labor abhors. It’s clear that one of the easiest ways to secure a substantial pay rise is to change employers (or secure an alternative job offer). If workers, for whatever reason, are reluctant to apply for other jobs and to change employers, one possible consequence is a lower rate of increase in pay.
It’s important to note that low wage growth – something that has been evident in Australia from about 2013 – has been a feature of several countries, not just Australia. The growth of the wage price index here had fallen to below 2 per cent a year before experiencing some recovery in recent quarters. Wage growth has picked up more strongly in Britain and the US, which may point to likely gains here.
One issue is whether there are global factors at play, such as technological change, patterns of trade and poor productivity, that are explaining wage outcomes here as well as elsewhere. This raises the question of whether simply changing the legislation, strengthening the role of trade unions and suggesting that the FWC mandate higher award pay rates – the Labor way – are well-considered policies.
After all, the legislation of which Labor has been complaining in recent years is legislation that was enacted under the Rudd-Gillard Labor government – the Fair Work Act. Albanese often asserts that the Coalition has a “design” to restrict wages growth, but no significant changes have been made to the design framework since Labor was in office.
The reality is that the combination of poor productivity growth and substantial growth in the labour force associated with high migrant inflows (net overseas migration of about 230,000 a year on average) has created a set of circumstances in which low wage growth was always the likely outcome. (Note that Labor and the Coalition are effectively running a joint ticket when it comes to a rapid resumption of high rates of immigration.)
As for all employers being uncaring and employers always having the upper hand, a quick perusal of the business news will tell you that securing and retaining capable workers is the single most pressing issue for many employers across the economy and across the country. Ultimately the best way to protect workers is to have tight labour markets and an abundance of job opportunities. Badly behaving employers are quickly penalised.
The bottom line is that Labor doesn’t get the labour market. Out of ignorance or paying respect to its political partner, the trade unions, Labor remains intent on misrepresenting key labour market features and pretending that mandating changes can improve workers’ pay and conditions without any downsides. If it were only that simple.
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