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Working Australia

I have been a bit busy this week and haven’t been able to spend much time on a blog essay for you. But I thought I might discuss a few issues that relate to the world of work and where it is going.

My good friend Charles Brass runs the Future of Work Foundation. We have been discussing issues about the future of work for more than twenty years now. He is much more qualified in this area than I am and I would urge you to contact him if you have an interest in this field of study. (If you are so interested let me know and I can give you contact details.)

In the early eighties Australia, through necessity, started to become more interested in workplace productivity. The Labor government of the time sent a delegation to Western Europe to study why Australia’s manufacturing industries were less productive and therefore less competitive than industry in that part of the world. From my (albeit failing) memory the participants in the study were representatives from the Trade and Development Committee (which I believe was a precursor to our current Productivity Commission) and the ACTU.

When they returned they produced a document called “Australia Reconstructed”. This report suggested Australia’s poor productivity was largely due to:

1. A skills deficiency in the workforce
2. A lack of flexibility due to the restrictive nature of Industrial Awards, and
3. Shortcomings in managerial skills.

After this the Government, to their credit, initiated a micro-economic reform agenda that resulted in the implementation of enterprise bargaining. In enterprise bargaining employers and unions were encouraged to correlate real wage increases with productivity improvements.

During these years I was a power station manager determined to improve the productivity of my workforce. Whilst there many drivers of workplace productivity the two that seemed to make the greatest impact to me were:

1. Employee commitment, and
2. Work design.

To better understand the dynamics of productivity, particularly as it related to technology and job design, I ran a number of interdisciplinary studies trying to anticipate how work and workplaces might be better designed to cope in the rapidly changing environment.

I have elaborated on many occasions about the need and the techniques required to gain employee commitment. (This is still the most important function of leadership.) Consequently I won’t address this here.

But a very real barrier to productivity is the jobs we give employees. For many years these jobs were prescribed by awards that had cemented into place archaic work practices, senseless demarcations and narrow demeaning jobs. This problem was greatest in the large employers that had a highly unionized workforce.

It is not my intention in this essay to describe the various strategies I used to overcome this impediment and put more productive approaches in place. Suffice is to say that when we commissioned Stanwell Power Station in the early nineties we were able to run the facility with approximately half the number of employees of our competitors.

So, I would assert, there are many productivity gains to be made if managers are brave enough to take the necessary steps.

Of course we always have those critics that suggest that by pursuing these productivity outcomes we are reducing the job opportunities for our workers.

I would argue the opposite. Sooner or later feather bedding catches up and organisations become uncompetitive and have to shed employees. Indeed one of my motivations in trying to run a power station as productively as possible was the fact that at one stage in my career I was forced to downsize a power station. It was not a task I would wish to do again. Consequently I wanted any jobs that were created in the power stations under my control to be robustly defendable in the long term.

Unfortunately the current government’s Fair Work Act seems to have undone thirty years of progress in enhancing productivity in the Australian workforce. Unlike the previous Labor governments under Hawke and Keating they vastly misunderstand the nature and dynamics of the modern workforce. Of course the position was exacerbated by the debt they owed the union movement for their very effective campaign against the Howard government’s Work Choices legislation. Employers only have themselves to blame for this retrograde step. Some, not many – but enough to have an impact, abused the freedom and flexibility the legislation allowed. The exploitation of some workers enabled the union movement to wage a campaign that sought to restore some employee rights. Unfortunately, as often is the case, the pendulum has now swung too far. Unions now are empowered to greatly interfere in the workplace and the operations of businesses and reintroduce an adversarialism that is the hallmark of militant unionism.

Union power was at its zenith in the sixties and seventies. Most unions seem hell bent in racing back to the future.

A prime example is the manufacturing industry. Australian manufacturing has been on the decline for decades. And no wonder! Manufacturing is relatively labour intensive. Consequently it is the natural province of developing countries who have some technical capability but relatively low labour costs. Manufacturing was the basis of the post-war success in Japan. The baton was then passed on to South Korea, Malaysia, India and China. As the economies of those countries improve and their standard of living rises their wage rates escalate. As a result manufacturing gets less competitive and the baton is passed onto someone else.

Recent attempts to prop up the automotive industry in Australia will prove to be ultimately futile. The investment in these uncompetitive industries is a waste of our resources. Each job preserved in this industry is costing taxpayers hundreds of thousands of dollars which would generate far more employment if transferred to more competitive enterprises.

Another phenomenon that has always intrigued me is the incessant pressure to increase the number of tradespeople. It is true that every time we have a boom our progress is constrained by the lack of trained trades staff. Consequently we have all and sundry (particularly unions with expectations of new members) advocating that we should train more apprentices.

Booms create resource shortages of many different types. (Capital investment in infrastructure being key as well.) But we need to be careful here. If we look at the proportion of the workforce who have trade qualifications, it has been on the decline for fifty years.

On a per capita basis we need fewer tradespeople than ever. Why is this? It I largely because technology is removing many of the roles that such workers were required to provide. Once upon a time we needed skilled machinists to manufacture spare parts. These days with numerically controlled machines these skills are no longer required. In the past we needed plumbers to do skilled processes like lead wiping to carry out repairs. Today they largely glue pipes together. Often we used to have to repair mechanical subcomponents. Today because of better materials corrosion is reduced and replacement of parts is more economical and less disruptive. When you hired an electrician one of the skills that was required was their fault finding ability. Nowadays in complex plant, computers do that for you. As a result many of the tasks that used to be performed by trades staff have been engineered away.

Now don’t get me wrong – good tradespeople are invaluable and most organisations will still want them. I just make the observation that at a gross level we need fewer of them. Whenas it inevitably will the boom slows we will likely find that we have trained or have in training trades staff surplus to our requirements.

This is a problem for the traditional trades unions. An even bigger problem is that many of these people, particularly those with skills in demand don’t want to work for an employer. More and more of them are starting their own businesses and contracting to large organisations.

Another problem confronting unions is the number of people who are not in full-time paid employment. Unions try to make the case that everyone has the ambition to be so employed. They ignore the self-employed that we mentioned above. They also ignore some societal trends that they can’t reverse.

The sociologist (who could hardly be described as right wing) Hugh Mackay, reported that part-time and casual work was beneficial to many people. He asserted that his research showed that those in full time employment often modified their lives to suit the demands of work, whereas those working part-time were more likely to be able to shape their working arrangements to suit their lives!

But of course unions rail against this – not because it is a problem for the workers, but it is a problem for them! It is hard to organize those members of a workforce who don’t work regular hours!

So, if we are to come to grips with a modern workforce there are a few concepts to get our heads round.

Firstly we should do all we can to foster productivity because that is the chief underpinning of increasing our standard of living.

Secondly we need to understand that our future prosperity looks far different from our past. We need to understand that we will never again have a vibrant traditional manufacturing industry. We need to find productive niches that don’t depend on low costs of production but can leverage knowledge based solutions.

Finally we need to ensure that vested interest groups, like unions, can’t constrain our industry. But this will also require appropriate legislation that ensures our workers aren’t exploited by unscrupulous employers.

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  1. 5 Comment(s)

  2.   By Greg Brown on Apr 22, 2012 | Reply

    I remember those days well Ted, when we were challenged to run a power station with an impossibly small number of people. It was impossible and would result in disaster I was told on more than one occasion by the older and respected folks at other sites, and at the time I did not agree or disagree with them, I just loved the challenge or designing an automatic power station. Press the green button to make electricity push the red to turn it off. We never got to that point but we certainly achieved things that made the vast majority of staff on site proud of the achievement. As a morale boosting exercise you can’t beat people dropping in from around the world to study what we had done. Efficiency and productivity measures don’t need to be negative but at least initially they require change and change is not something that most people enjoy.

    In relation to Australia not having a future manufacturing industry I hope you are right Ted. Certainly while we have this extremely high standard of living we can’t compete. I suggest though that it is not beyond possibility that we could find ourselves with very high unemployment and no means to support the unemployed forcing a, low income is better than no income situation. Some of the economies in Europe may well be experiencing the start of this now and I doubt that anyone considered it possible a couple of decades ago. Just goes to show that if you aren’t competitive and efficient, or blessed with a treasure chest that the rest of the world wants, you can very rapidly be relegated to the low paid menial tasks required by the global economy.

  3.   By Geoff Higgins on Apr 22, 2012 | Reply

    Great points Ted. Again, the pendulum swings too far and Australia is left under-prepared for our future.

    In our modern global economy characterised by strong bonds between nation states with much in common and by exponentially increased mechanisation, computerisation and robotisation of production, I am mystified by the armageddon argument that we must prop up our car manufacturers in case there is a global military conflagration and we need to beat the ploughshares into weapons and munitions.

    Sorry, long sentences and mixed metaphors appear to be the order of the day.


  4.   By tedscott on Apr 23, 2012 | Reply

    Thank you Greg and Geoff.

    You are right Greg. It would indeed be an indicator of a collapse of our economy and a certain reduction in our standard of living if Australia again became competitive in manufacturing!

    And Geoff I wonder if you really meant to imply that we should “beat our Fords into ploughshares”? I am certainly with you there!

  5.   By Matt Smith on Apr 24, 2012 | Reply

    If think these Issues are a result of not being ‘un-Australian’ enough. If the goal was not to be mediocre, follow the crowd, fit in, and ostracize the intelligent achiever, some of these issues may self correct. I say think for yourself, don’t be dragged down, and give no credence to self entitlement and victim mentality.

  6.   By Jack on Apr 27, 2012 | Reply

    Good show Ted! When is your new book due?

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