Job growth a welcome sign but more reform needed

A strong bounceback in employment in February has given cheer to the federal government and confirmed its economic strategy to pull the nation back from the COVID-19-induced recession is working. Scott Morrison says there are now more jobs in Australia than before the pandemic. The country’s unemployment rate dropped from 6.3 per cent to 5.8 per cent in February, with 88,700 new jobs created in the month. The Prime Minister says there is still more work to be done, particularly for young people. Josh Frydenberg says all of the jobs created were full-time, and more than 80 per cent had gone to women.

The boom in jobs growth will give the Prime Minister and his Treasurer confidence to stick to the planned withdrawal of the JobKeeper wage subsidies at the end of the month. Some exceptions have been made for special cases, including more than 8000 airline employees unable to work because of international border closures who will keep JobKeeper for another seven months. But, as Mr Morrison told reporters on Thursday: “It (JobKeeper) has done its job.” Economics correspondent Patrick Commins reports the Reserve Bank, Treasury and private sector economists expect the impact from the end of the wage subsidy will be temporary, and that the jobless rate will continue to fall over the second half of the year. Given the jobs growth numbers announced on Thursday, opposition arguments for a blanket extension for all workers cannot be justified. Rather than welfare, the emphasis must be on continuing to grow the jobs pie.

Unfortunately for business, the government has shown it does not have the stomach to fight for its already compromised industrial relations reforms, which were designed to improve productivity and unlock further jobs growth into the future. Welcoming the jobs figures, Business Council of Australia chief executive Jennifer Westacott says now is the time for business to take the baton from government and do the heavy lifting on job creation. The list of requirements for business includes the right tax incentives, a workplace relations system that encourages job creation, and cuts to red tape that inhibits investment. The government’s decision to ditch the majority of proposed IR reforms demonstrates it will not be an easy road. Further obstacles include the deferral of a Senate vote to end the investment-sapping responsible lending laws, and threats to unwind legislated tax cuts which will benefit high income earners.

The government’s modest IR reforms were opposed by Labor and eventually scuppered by obstructionist South Australian crossbencher Stirling Griff. A shadow of the proposed IR reforms was passed on Thursday, allowing casuals to request conversion to permanent employment. But the opportunity to reinvigorate the enterprise bargaining agreement system, established during the Hawke/Keating era, has essentially been lost. The BCA says the nation has been condemned to the slow lane and Australian workers condemned to lower wages as a result. Mr Morrison says the government entered the IR reform process on the basis it could play an important role in assisting the economic recovery. But with Attorney-General Christian Porter, the architect of the bill, embroiled in controversy and absent from parliament, the government lacked the firepower to fight obstructions in the Senate. Mr Morrison accused Labor and some Senate members of working against the government, and said they did not share his passion for creating jobs. “I’m a practical person, too,” Mr Morrison said. “If this Senate says it doesn’t want to support these measures, we will look for another way.”

In political terms, the government’s decision to walk back further from IR reform after first dropping its proposed exemptions to the better off overall test (BOOT) robs the ALP of an opportunity to replay the fight over Work Choices that helped defeat the Howard government. Unfortunately, pragmatism will only go so far. To keep the momentum going on the welcome economic recovery the government must be prepared to step into the ring and fight for business so that it can deliver jobs into the future and cement the economic recovery now clearly under way.