Million locked out of jobs
The union push for more labour market regulation will just make it harder for the unemployed to find work, says Michael Warby. The proof is in America.
Australia is now seeing a strong push from unions to extend labour market regulation---especially through increasing the coverage of State industrial tribunals.
More labour market regulation is the last thing the nation needs.
The latest budget forecasts only expect the unemployment rate to just fall below seven per cent---after seven years of strong economic growth.
Which shows how poorly the highly-regulated Australian labour market performs.
Of Australians of working age population (15 to 64), about 69 per cent are in employment. Yet 77 per cent of Americans of working age are in employment.
If Australia had the same employment/population ratio as the US, one million more of us would have jobs.
Let us think about the implications of that for the moment.
If one million more Australians had jobs, government revenue would be higher and government welfare expenses much lower.
Governments would find it much easier to fund schools, hospitals and spending on roads, bridges, etc. and top up the income of low-income households.
Many more Australians would experience the sense of worth and achievement that comes from employment.
One million more Australians in employment: something worth achieving, surely?
Not if the typically stilted debate about Minister Reith's rather limited 'second round' reforms are any indication.
It seems the same old ideological wars are being fought in much the same old ways. There is a little or no movement at the station.
Until the mid 1970s, Australia and the US had very similar employment/population ratios.
In both countries, the proportion of those of working-age in employment had climbed from 63 per cent in the late 1940s to the 66-to-68 per cent range depending on economic conditions.
Then a sharp divergence set in. In the US, the ratio hit 71 per cent, before dropping back to 68 in the recession of the early 1980s and then rising steadily, apart from a small dip in the early 1990s.
Australia's ratio declined steadily, then dropped to a low of 63 per cent in 1980s recession---a level not seen since the late 1940s---rose to 70 per cent in the late 1980s, fell sharply to 65 in the recession of the early 1990s before rising again.
Australia's labour market institutions clearly coped much worse than those of the US with economic cycles. They were also far less successful at dealing with the entry of women into the workforce.
What is the difference in labour market institutions between Australia and the US? The biggest difference is that we regulate employment relations far more than they do.
Not in matters such as occupational health and safety or anti-discrimination law---where laws in the two countries are comparable---but in wages and conditions.
If the point of such regulation is to benefit Australian workers, it is patently not working.
Australian workers earn less on average than American ones. We have similar rates of working poor.
On the US comparison, one million less Australians are workers than could be.
Why should we deregulate the Australian labour market? I can think of about a million reasons.