Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Social contract the keystone of equitable society

By Russell Lansbury - posted Friday, 5 November 2004

The Howard government has been returned to office against the backdrop of strong economic growth. Yet this masks increasing levels of inequality and insecurity within the workplace and the broader society. The workforce is sharply divided between those whose jobs are precarious and uncertain and those whose work is more secure but requires long hours of often unpaid overtime. Not surprisingly, occupational stress has been one of the fastest growing ailments in recent years.

To ensure that Australia remains not only a prosperous society but also an equitable one, a new social contract or partnership is needed between governments, employers, workers, unions and community organisations. This should rest on three pillars: access to employment for all those willing and able to work, accompanied by an adequate social security safety net; an entitlement for all citizens to education and training in order to build the intellectual capital required for the new century; and a coherent retirement incomes system that will provide sufficient coverage for a rapidly ageing population.

The first pillar requires commitment to full employment. Although the official unemployment rate has fallen to about 6 per cent, it was estimated that 16 per cent of working-age households were jobless in the past year or so. Yet it is widely acknowledged that the official statistics underestimate the real level of unemployment as there are a large number of "discouraged job seekers" who withdrew from the labour market and were not included in the unemployment rate. There were also about 12 per cent who were "underemployed" and not able to obtain enough hours per week to provide an adequate wage. Many of those in precarious employment go through cycles of unemployment as they "churn" through short-term jobs.


Successive Australian governments appear to have given up on developing active labour- market programmes designed to foster full employment. The last major policy initiative was by the outgoing Keating Labor government, which sought to target the long-term unemployed in its Working Nation programme. Attempts at job creation, whether through public works or employer subsidies, have been abandoned and the private sector has shown little inclination to provide retraining for the unemployed. Employers have preferred to meet increases in demand for labour by intensifying the workload of their existing workforce rather than training or employing new workers. The Howard government has to move beyond the rhetoric of blaming the unemployed for being "welfare dependent" and create incentives for employers to provide more jobs.

The second pillar is education and training. In the past, government departments and instrumentalities were major employers of apprentices and supplied skilled labour to the rest of industry. With privatisation, outsourcing and the rationalisation of services, governments have reduced their commitment to providing apprenticeship training. Yet many private-sector employers have been unwilling to assume responsibilities for both apprenticeship and other vocational training activities. Although the Howard government has expanded shorter traineeships under the title of "new apprenticeships", independent researchers have been critical of the quality of both the work and training provided by these schemes. Furthermore, the "reforms" in skill formation have been accompanied by stagnant financial contributions to training by employers. While there has been an increase in the proportion of the workforce gaining access to training, the actual hours of training have declined as short- term traineeships replace traditional apprenticeships. Australia has simply not kept up with the level and quality of training provided by most other advanced industrialised economies to their citizens.

The third pillar of the social contract is economic security in retirement. The Howard government has suggested that Australians need to work beyond the current retirement age and has introduced the pension bonus system to encourage people to continue working and defer receipt of the age pension. The need for the federal government to take a more active role in protecting workers' superannuation entitlements, and ensure that there are adequate retirement incomes for all Australians, is made more urgent by projections of the ageing population. Many of the assumptions on which retirement incomes have been based are no longer valid, and workers are expected to bear the risks incurred in an increasingly volatile and unpredictable economy.

It is not just the pillars of the social contract that need to be restored, but the foundations on which they rest. This requires a sense of trust and mutual obligation between workers, employers and government. It requires a willingness of government to take bold initiatives to forge a new partnership with disaffected groups within the Australian community and to implement appropriate policies. It requires a comprehensive industrial relations policy that is broader than simply enterprise bargaining and is integrated with other social and economic objectives. Effective labour-market institutions are required to ensure that economic efficiency is achieved without undermining social equity, which is the basis of a successful democratic society.

  1. Pages:
  2. Page 1
  3. All

First published in the Australian Financial Review on October 26, 2004.

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Russell Lansbury is professor emeritus in the Faculty of Economics and Business and Professor of Work and Organisational Studies in the School of Business at the University of Sydney and an adjunct professor in the Business School at RMIT.

Other articles by this Author

All articles by Russell Lansbury
Photo of Russell Lansbury
Article Tools
Comment Comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy