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Labor's flawed fightback

By Henry Thornton - posted Tuesday, 19 July 2005

Lindsay Tanner is an intelligent bloke. He has laid a glove on the Libs in an article in The Herald Sun headed "Howard's law of the jungle." (July 5, 2005) But the fight back is flawed, although the voters may not realise that.

Tanner writes as a man who, as an employer, has had to sack people, cop unfair dismissal claims and negotiate wages and conditions with his staff. Not many parliamentarians of either colour can make that claim.

He says: "I had to deal with all sorts of threats to the union's financial position … It's not easy being an employer. Not all workers are competent and committed."


Henry, that is this writer, is currently dealing with exactly that situation so the statement strikes a real chord.

Tanner makes the case for "some balance and fairness in the employment relationship". This is something we would all agree with, certainly John Howard would agree with it. However, Tanner claims "Howard's new laws go way too far. They will destroy the limited balance and fairness large numbers of Australian workers currently rely on.

"With strikes at record lows and employment strong, they are directed at problems that don't exist."

There are several points to make in reply. The labour market is by no means as satisfactory as Tanner implies. If one adds to the officially unemployed, the people who are self-employed independent contractors (there are now more of these than union members, incidentally) working less than they'd like to work; employees who get less than the amount of paid work than they'd like to get; people in their 50s or 60s who are "retired" but would rather be working; and people on disability pensions who would be better off with paid employment if they could find it, it is easy to make the case that the effective rate of unemployment is closer to 15 per cent than 5 per cent. (Thanks to Professor John Freebairn, of Melbourne University, for this estimate.)

So the labour market is far from delivering outcomes that all members of the potential workforce are happy with. Also, of course, surveys show significant numbers in paid employment are unhappy with their wage, do not feel appreciated by their employer, and so on. For example, a forthcoming Roy Morgan international labour market poll shows that only 51 per cent of working Australians are "very satisfied" or "satisfied" with their current wage, only 56 per cent are satisified with job recognition and only 41 per cent are satisfied with job opportunities in their current position.

Overall, however, the same Roy Morgan survey shows that 75 per cent of Australian workers in paid employment are "very satisfied" or "satisfied" with their job, higher than the percentage answering the same way in the United Kingdom. This should come as no surprise as conditions of employment are generally tougher in the UK.


Allowing for those who are now unemployed or underemployed, the proposed reforms may well increase overall satisfaction. From a narrowly economic point of view, flexibility of wages and conditions will mean more people will be employed. Of course, union leaders will immediately say "flexibility" is code for "wage reductions." But if 15 per cent of the potential workforce is partly or wholly unemployed, downward wage flexibility might be just what they need to find a job.

(Many years ago, I wrote of the vested interests of various parties who effectively stand in the way of full employment. Protecting wages is an example of looking after those who have jobs at that rate, but it does nothing for those who might have a job at a lower rate of pay.)

However, the government makes the case that, on average, wages might well be higher after its reforms are in place. Certainly it is a fact that real wages have risen much faster under the current government than under the Hawke-Keating Government and its "Accord" with the ACTU.

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First published in Henry Thornton on July 11, 2005.

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About the Author

Henry Thornton (1760-1815) was a banker, M.P., Philanthropist, and a leading figure in the influential group of Evangelicals that was known as the Clapham set. His column is provided by the writers at

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