More flexible workplaces, without the warrior idols

Josh Frydenberg claims his heroes Margaret Thatcher and Ronald Reagan “are figures of hate for the left because they were so successful”. In the 1980s the two warrior idols cut regulation and taxes to improve the supply side in Britain and the US. Here, Bob Hawke and Paul Keating reduced the hand of government in the economy, creating wealth and jobs. Opposition Treasury spokesman Jim Chalmers claims the Treasurer’s references to Thatcher and Reagan “would send a shudder down the spine of many Australian workers”. Really? For Dr Chalmers, who knows his Labor history before the dismal statist rule of Kevin Rudd and Wayne Swan and two-time loser Bill Shorten, this is an intellectual cul-de-sac and a worrying sign about alternative policy approaches. ACTU secretary Sally McManus chimed in with a sledge that the Iron Lady’s policies were about “crushing worker rights”. Spare us.

Let’s get a grip and return to first principles and priorities, such as jobs. The economy faces a depression if we can’t get a steady heartbeat and sales blood into a broader range of industries. Although there was a pick-up in the labour market before Victoria imposed a six-week lockdown, the effective unemployment rate is 11.3 per cent. The youth jobless rate is 16.4 per cent. Even before the pandemic, graduates were struggling to find jobs in their desired occupation, a Productivity Commission study shows. After the global financial crisis, their lot was part-time work, lower starting wages and a limited choice in occupations despite the increase in credentials. COVID-19 will make things only harder for young workers. We need a training system that meets the needs of employers and is easy for young people to navigate.

Post-crisis, it can’t be business as usual in our workplace arrangements. Employers and unions have accepted the Morrison government’s truce; the JobKeeper package provides life support to employers and employees, and demands a mutual obligation in flexibility at work over rosters and job definition. Five themed government-enabled sit-downs over workplace reform may still yield some practical options. Yet no one is suggesting a workplace revolution, as Canberra’s toxic politics allow for only incremental changes. Even still, Scott Morrison has said he will take his preferred reform options to the parliament if official talks don’t yield practical improvements.

Right now, the overly regulated labour market prices out our least experienced workers. Australia has the world’s highest minimum wage rate when measured in purchasing-power-adjusted US dollars, according to the OECD’s latest global comparison. Let’s hold off on the medal ceremony. Sure, it means low-skilled workers are relatively better off here than in other countries. Yet it’s a de facto welfare policy imposing costs right across the economy. But the unemployed or those who would like to work more hours bear the cost for this paternalism. In June the Fair Work Commission raised the minimum wage by 1.75 per cent to $19.84 an hour or $753 a week, although the rise will be staggered over seven months; employers argued for a wage freeze, given the pandemic and above-inflation pay gains in recent years.

As we argued at the time, the commission had taken a needless risk during the nation’s worst economic downturn in 90 years. In a dissenting view, panel member Mark Wooden urged his peers to put jobs and extra hours ahead of any increase in hourly rates. Small businesses, where award-reliant workers are over-represented, will now find it more difficult to stay above water as they have reduced access to credit and a lesser ability to diversify risk. A freeze was justified.

For those caught up in evanescent social media wins and delivering TV zingers, we remind them: the best way to sustained growth in incomes is through higher productivity. That can come only through more investment — in digital tools, machinery, health and skills — and economic dynamism. On Monday, the Prime Minister said he was pursuing a “uniquely Australian response” to fix the economy’s supply-side problems. Workplace reform has to be at the centre of a game plan to grow the economy at 3.75 per cent a year for the next five years. Regulating young people out of work is soul-destroying for them and self-defeating for a nation on track for $1 trillion in debt and at risk of stagnation, as are others. The October budget needs big, fresh ideas for a jobs-centric growth agenda.