RSS Feed for This PostCurrent Article

The Employment Dilemma

It is often easy for me to write my blog essay and pontificate on various issues and take a disinterested point of view. (Some of you might dispute that assertion.) Let me state from the outset that it is impossible for me to have a totally impartial view on this week’s subject. I want to talk to you about employment in Australia. This is a very important subject as most of you would concede. It is even more important to me because I have an unemployed son.

My son has a disability – he is autistic. That provides some barriers to employment. Notwithstanding that he held a paid job for seven years before his employer ran into difficulty and had to retrench workers, including him.

He really wants to work. Initially, after being made redundant, he was positive and optimistic about gaining employment. Then after twelve months or so of looking for work, applying for jobs and attending interviews his enthusiasm has waned, as you would suspect it would, and his self-confidence is considerably reduced as well. He is not without skills, having a Certificate IV in Administration and a Certificate III in IT. Yes I know these are limited and probably minor skills but they are indicative that he will do what he can to be employed.

So what’s the problem?

Well his disability is certainly a problem. He has limited social skills and doesn’t present well to a prospective employer.

But probably more importantly, the economy isn’t producing the job opportunities that he might be competent to access. If you disregard his disability he is competing for unskilled and semi-skilled work that is becoming less important in our modern economy. Researchers in social trends have commented on the increasing difficulty of people, especially males, to access such work.

This is not surprising. I have been interested in the changing nature of work for the last forty years. I have attended many conferences and presented papers in such forums as a result of this interest.

Technology has made the lowly skilled workforce largely redundant. Simple jobs are easy to automate or to computerise when it is economical to do so. The union movement has accelerated this trend by seeking to continually increase the wages of people doing such work. Their motives in doing so, I don’t question. Certainly we must be cautious that people doing this work are not exploited. But we need also to be concerned that employers can afford the employment of these lower skilled workers who probably don’t add as much value as the so-called “knowledge-workers”.

Australia’s current economic and employment status is worrying. The ex-Labour Senator, John Black recently wrote:

“Rudd, Gillard and Swan have handed over a government going backwards financially and an economy which generated an additional jobless figure of 90,000 persons in the year to August. The unemployment rate is 5.6% and rising. Our labour market is now increasingly unemployed, under-employed, under-utilised or discouraged and vulnerable to domestic or external shocks.”

The majority of the jobs created in the last six years under Rudd and Gillard have been in the Government sector. And guess what? They don’t increase the nation’s wealth – they only add to our tax burden.

But I don’t want to trivialise these issues. They are not easy, and in the end we have to make a value judgment.

So let’s look at the issues constraining employment, the cost of removing them and whether the benefit exceeds the cost.

Small business is the nation’s greatest employer. As a result I suspect we should look there and see what we find. Now this is not going to be an assiduously researched work. You will find many opportunities to disagree and dispute my assertions which are largely based on anecdotal evidence and my subjective knowledge of industry based on my experience and work as a manager, consultant and coach.

It would be hard to dispute, however, that the prime determinants of worker employability are:

  • Skills,
  • Cost, and
  • Flexibility.

Those with sought after skills, such as pressure welders or mining engineers, have a very favourable position, being greatly sought after and commanding high salaries. One might even argue that our rate of economic growth is being retarded by the lack of such skilled personnel. So if we want to make ourselves immune to the vaguaries of the economic cycle and ensure our long-term employability, skilling is important. But the only reason this works is the value added to a business by such skills is sufficient to generate revenue to pay the high wages. Our unskilled and semi-skilled workers struggle to make this equation work for them.

I have tremendous admiration for those who run small businesses. They have to work hard to succeed and often take considerable financial risk to do so. Liquidity is often an issue and they need to watch their costs and vigorously pursue their revenue if they are to pay their bills and make a little profit. Many such businesses are labour intensive and the biggest cost is the wages bill. Recent changes in the Fair Work Act have made life difficult for them.

Perhaps two hundred metres from where I live, there is a small suburban shopping centre. Recent changes to the Act have made penalty rates more onerous and apprentice wages higher. My butcher, who used to open at 6:00am, now opens at 7:00am. The greengrocer used to open at 5:00am and on public holidays. He now opens at 7:00am and is closed on public holidays. The hairdresser declares she will no longer train apprentices but only hire experienced hairdressers who can generate enough revenue to cover their wages. The baker used to start one of his casual employees (a pensioner who does some part-time work to top up his income) at 5:00am to deliver pies and pasties to the local service stations and other outlets to sell to the tradesmen on their way to work. He can only afford to start him at 6:00pm now. So where businesses are profitable enough some employees have gained higher wages as a result of the increased penalty rates and apprentice wages, but many more have had their paid employment reduced or removed altogether because of these unnecessary imposts on small business.

So is this a good outcome? I told you earlier it all comes back to value judgments. So some have been able to earn a little more, but perhaps many others now earn less, including some who have lost their jobs altogether.

 

It is worth looking at the overall employment outcomes. What we are seeing is that not only are Australians losing jobs as a result of these imposts but many more are underemployed. As John Black, who I quoted above, has stated:

“Our labour market is increasingly unemployed, under-utilised or discouraged and vulnerable to domestic or external shocks.”

We are increasingly restricted by regulations that prescribe when we can work and how long (remember the controversy regarding employing school children for less than three hours after school?) and the various hourly rates prescribed by archaic traditions. For example, once upon a time when we were largely a devout Christian nation there might have been some justification for paying people extra to work on Sundays. In today’s secular Australia it is difficult to make that case. If people want to work outside the hours prescribed by our archaic awards without attracting so-called “penalty rates” they should be allowed to do so.

This is particularly true with part time workers. In one of his early books the social commentator Hugh Mackay found that one of the benefits of part-time work was that workers could adjust their work to suit their lifestyles whereas full time employees adjusted their lifestyles to suit their work. We should allow people to make their decisions about when they work to suit themselves. For an employer an hour’s work whether it be from 9:00 to 10:00am or from 7:00 to 8:00pm during the week or an hour’s work on a Sunday generally provides no more utility to the employer and the employer shouldn’t be penalised for it. Or alternatively if it does provide more utility let the market sort it out and have the employer pay what they believe the hour is worth. There are many of us who would be happy to work outside normal hours because it suits our lifestyle as Mackay pointed out. Retailers and Restaurants would be advantaged by such an approach and I am sure would employ more as a result if such flexibility was allowed. It is interesting that many of the professional people who attract the highest wages work whenever they are required without impost to the employer.

I am not advocating that people should be required to work inordinately long hours and I certainly see a place for overtime payments to prevent employee exploitation. But the penalties that are applied for working on particular hours of the day or for particular days of the week make little sense to me.

The prevalence of these outdated restrictions on employment prevents my son and many others who don’t belong to that elite group whose skills are in demand from gaining meaningful work.

For many years I was a director on the Board of the Beacon Foundation, an organisation focussed on solving the issue of youth unemployment. What we found was that many unemployed youth came from families where there had been one or two generations of unemployed and welfare was seen as an acceptable outcome even if you were work-capable. It was necessary to change the ethos in these young people that unemployment, and consequently welfare, should be the exception and not the norm. Artificially restricting the access of such people to paid work doesn’t help.

Whilst we might be complacent that unemployment in Australia is currently 5.8% (albeit rising and compounded by the issue of underemployment) in our most disadvantaged regions youth unemployment is often 25% or more. We know that these abysmal statistics in such communities are also associated with drug and alcohol abuse and crime. On top of this, one report I read just before publishing this piece suggests that over 100,000 jobs have been lost in Australia in the last quarter.

In the end our standard of living is largely determined by our productivity. These employment arrangements are a severe restriction on productivity, particularly as it relates to small business. It is time we had a fundamental rethink of such issues.

Employment helps give people a sense of meaning and importance in their lives. If we found a sympathetic doctor or psychologist we could probably make case why my son could access a disability pension. Neither he nor I want that outcome. He is capable of useful work, as his work history indicates, and he would benefit from paid employment where he could be a meaningful contributor to society. I am sure if there was appropriate deregulation of the workforce, along the lines suggested above, then he would have a far greater likelihood of such an outcome.

Trackback URL



  1. 4 Comment(s)

  2.   By Esther Cook on Oct 13, 2013 | Reply

    Bit hard to disagree with you Ted.. an equally paid hour of utility no matter what time of days seems to work in less unionised … governmentised economies. I cite Taiwan factories working 3 shifts a day .. lights blazing day and night .
    Youth employment and apprentships have been priced out of the labour market ! NZ maybe not as bad as Oz with penalties because we cant afford to be . The working poor has become the norm for unskilled labour!
    My most recent encounter is ‘carework’ for the elderly which is paid a minimum wage of $13.00 hour if no quals .. but if you need someone to give insulin injections the rate jumps to $39/hr and the working day finishes at 4.00pm. No one can or will work at 6.00 pm when evenin care is needed.
    Just a thought .. I dont know your son , but if he can make cups of tea and sandwiches , unwrap pills from daily perscription cards, fold washing and pick up the ocassional groceries.. then the cash economy awaits him .. especially sleep overs so worn out partners can get some sleep !
    Such simply human work is still there but has been wrapped in PC rules!
    Better stop now before I start swearing !

  3.   By lloyd Casey on Oct 13, 2013 | Reply

    As a former Union advocate, I would be seen as somewhat biased, particularly to Ted because we had some formidable differences of opinion when I represented workers under his command as a CEO of a large publicly owned organisation.
    However, unlike some who have only worked in the one dimension, as one who has also represented the interests of a large public employer during the last seven years, like Ted, I believe anecdotal evidence and my subjective knowledge of industry based on my experience and work as a manager brings some balance to my views.
    My brother in law suffers Asperger’s disorder, this is similar to autism and like Ted’s son, Bill had a greater desire for work than he did for some form of ongoing Government pension and after all, work is part and parcel to who society say we are.
    While I share my political criticisms and disdain for Rudd, Gillard and Abbott equally, it was nevertheless a Commonwealth government program that secured Bill (not his real name) meaningful employment, albeit it as low skilled orderly at a private hospital.
    While Bill’s has limited skills in recognising acceptable social cues, he can muck out a loo, and clean up the spew, like you an me. Are we seriously saying that while he can do the job but is socially unlike you and me, his labour is worth any less than ours for doing the same unskilled work? As a human being I would hope not and I seriously doubt that Ted would think so?
    Like Power Stations, hospitals are a seven day a week operation; we need people to work afternoons, through the nights and on week-ends. I recall negotiating penalty rates for such hours with Ted when I was a union official, it was probably 7:30 at night and he asked my colleague and I what we were being paid for working that hour.
    It was a great question, my colleague and I were not being paid penalty rates but we were working hours which we wanted worker under his charge to be paid a premium. My colleague, God bless him, had an equalising retort to explain the apparent hypocrisy, “this is like the priesthood, we are in a calling”.
    And so we were, but how often can you or I make at the conclusion of our day at 11 pm on a Saturday night seek an audience with a politician of any persuasion, a lord mayor, a Councillor, a CEO of any corporation, a judge, a lawyer, an engineer, a dentist, an accountant, a bank manager, or indeed yourself or any other so called highly skilled and valued individual, to deal with the issues Bill’s working hours will not otherwise allow him to raise.
    When Bill can do all of the above, I will be the first to support the concept that shift and week-end penalties should be abolished. However, and until such time comes to the fore, my view remains unchanged, Bill should not only be paid the same rate as anyone else, he deserves an additional premium to work the hours that you, me and Ted don’t.
    As to using technology to eradicate unskilled job opportunities, one would be hard pressed at out doing the Queensland Electricity Industry during the 1990’s, but as Ted would know, that was more about ideology than anything else. “Towards 2000”.

  4.   By Mark Shaw on Oct 13, 2013 | Reply

    Ted

    As always well written, well presented and well argued.

    I agree there is no easy answer but like you I think the settings are currently out of wack.

    Best wishes

  5.   By tedscott on Oct 13, 2013 | Reply

    Thank you Esther – always the practical and shrewd point of view. Worth your weight in gold Esther -even if you are a Kiwi.

    Lloyd you certainly bring back memories. I won’t reply in detail to your comments. But let me make one point. The union movement are always interested in creating jobs – largely because it increases their membership and consequently their power. You might say that the motive of small business is no better because they are interested in creating jobs to make a profit. The union movement have been successful in creating many jobs but because of their motivation the jobs are not value-adding, often demeaning and unsustainable in the long-run. When small business creates a job you can be generally assured it is doing something useful and because it contributes to profit is more sustainable in the long run. And seeing you replied to my blog at 1:30am Lloyd I am as glad as I always was that you are not claiming penalty rates.

    Thanks also Mark for your kind comments.

Sorry, comments for this entry are closed at this time.