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The fight for full employment

By Hugh Stretton - posted Friday, 19 August 2005

Two centuries ago, technical progress, the Napoleonic wars and other causes, were driving agrarian and industrial revolutions in Britain. When town and country workers used their lawful right to negotiate their changing terms of employment collectively, the government got parliament to abolish that right. Workers responded with riots and protest meetings. As a bargaining device some of them tried sabotaging their employers’ property. That was inspired, they said, by a (probably mythical) leader called Ned Ludd. Hence “Luddite”: perversely, a defence of free association has given the language a word for resisting progress. This article will suggest that we may soon have further use for its original meaning.

Party politics has famous mixtures of conflict and accord. If opposing parties both support prevailing policies, how can they compete for office? For 30 years or more from 1939 both sides of the Australian parliament not only said (as most politicians do) that they favoured full employment they actually achieved and maintained it. With that accord, how could they compete for office?

In the 1949 election Bob Menzies warned that a vote for Ben Chifley was a vote for communist dictatorship. Some of Chifley’s wilder colleagues warned the workers that Menzies would have them back down the capitalist coal mines without lifts or oxygen. Menzies won, and appointed Nugget Coombs - Labor’s hero, economic strategist and national director of Post-War Reconstruction - to command economic policy through 16 more years of steady growth, and of the full employment which they both judged to be well worth its regrettable costs in inflation.


Forty years on, anyone who wants full employment is damned by Liberal and Labor leaders alike as a Luddite likely to wreck the bipartisan innovations that have trebled our productivity since Menzies’ day: the great liberation of business from government by the neo-liberal strategy of privatisation, smaller government, lower tax, freer enterprise and trade and exchange.

Full employment would now be harder to achieve. Technical progress has reduced the numbers needed to produce the industrial goods we want. Spending has shifted to labour-intensive services, many of them provided by individuals or small businesses difficult to regulate. But the policy revolution has compounded the trouble. For 30 years now, real unemployment has run up and down between three and six times its previous level.

The increase is measured by government agencies but rarely acknowledged by politicians who pretend that the number judged by Centrelink to be entitled to the dole is the whole number of unemployed people. Last year the Australian Bureau of Statistics reported nearly twice that number as “marginally attached to the workforce”, willing to work if the jobs were there. Distrust the ABS count? In 2003 an independent three-year study for the Reserve Bank found more than 800,000 willing workers unemployed to add to the 660,000 entitled to the dole.

To count as unemployed you must show Centrelink or its Job Network agents, ten signed job rejections per fortnight - that’s 260 a year - and convince them that you don’t have any of a number of other sources of income. Most of the job seekers are willing and able to work. But applying for many jobs they know they won’t get, along with some of their dealings with Centrelink, can be deeply upsetting to them and their families. It drives some to drink and despair, to petty crime if they don’t qualify for the dole and sometimes even if they do, or to dogged endurance and care for their families. Their experience is exposed as never before by Mark Peel in The Lowest Rung: Voices of Australian Poverty, which draws on thousands of hours of conversation with unemployed people and their kin.

Sensible opponents of the current bipartisan strategy acknowledge three sources of its political success. The continuing improvement of the rich countries’ technical means of production has allowed economic growth to a level at which three quarters or so of Australians have the material conditions for happy life if they’re personally capable of it.

Despite the weakening of our industrial award and arbitration system, the minimum wage has kept up with a mix of growth and inflation, while the poorest quarter or so of US workers has fallen steadily further behind over the past 30 years. And most of our losers have not been badly served by the welfare services of the “third way”. The United States spends about 50 per cent more per head than we do on health services, but as a result of other effects of US ruthless economic policies they still have worse health than we do.


So if you don’t know any unemployed people personally, or mind our increasing inequality as long as the poorest have enough, and forget the ageing of much of our public infrastructure and the generational injustice of our rising house prices - and so on, I needn’t preach to the converted - our economic record can look good enough to justify bipartisan support for its principles, and a shift of focus from the strategy itself to the competence of its management. Its benefits are expensively advertised. Its Left critics are derided as figures of fun.

While no electable party is offering any better economic strategy, electors can’t help endorsing the one we’ve got, so it can claim national support. And plenty of the electors, like plenty of the intellectuals and politicians and business leaders who have shaped the strategy, believe in it. Not necessarily as faultless, but as a reasonable resolution of our conflicting interests and values.

This policy accord leaves the parties to compete on other grounds. Which has the best leaders? Who can we trust not to tell lies? Not to jack up taxes or interest rates or inflation? Not to mismanage our economic strategy or its global relations?

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First published in Australian Options magazine Autumn 2005. The original article can be found here.

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About the Author

Emeritus Professor Hugh Stretton is currently a visiting research fellow, University of Adelaide. He was educated at Melbourne, Oxford and Princeton Universities.

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