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The latest wages data, election strategy and #changetherules

New wages data and what it might mean

On Wednesday (November 14th) the Australian Bureau of Statistics (ABS) released its quarterly update on the Wage Price Index . This is one of several means of “measuring” changes in wages. The Reserve Bank considers this and other measures when working out what it will do regarding interest rates. The data triggered a cautious (usually), positive vibe across mainstream media and economic commentators.

What is happening (or not happening) with wages also affects the campaigns for the national elections, due by May next year, and the considerations of the Fair Work Commission (FWC) in its Annual Wage Review (AWR), now under way.

Possibly the only hope left for the survival of the LNP government is that, over the next few months, it wins the “debate” on the state of the economy. The government and the employer organizations are seeking to convince a majority that that the economy is going well on the key economic indicators, and the government is doing well on that front.

There are at least 2 critical weak points in this story. First, what happens if the economic crisis starts to takes visible shape before then? Second, when will wages and salaries start to rise and how much of a rise will be tolerable enough to convince a majority of voters that the government is managing the economy to include “something” for them?

Modest wage and salary increases will be sold to the public that a) the government and its neoliberal agenda is still working on the “things that matter”, b) that “the market works”, and c) there is absolutely no need for any significant change to the repressive, anti-worker Fair Work Act 2009 (FWA09).

Of course, the managers of the “system” – the Reserve Bank, the Treasury, and the government, and employer organizations – do want an uplift in wages, as long as it does not go too far. They know that, right now, the ACTU’s #changetherules campaign is steadily winning the public debate about inequality, poverty and wages suppression.

So, what did Wednesday’s new data really show?

A closer look shows how serious the underlying problem is … from the point of view of workers.

We should also keep in mind that, like other measures of wage movements, the reported WPI data includes executive salaries (not including bonuses). Executive salaries are much higher and are increasing at a faster pace than the real wages of real workers.

Thus, the reported average is higher than the average for real workers. For them the situation is worse than it appears in the reported data, although just how much is difficult to quantify. Further, the ABS’ treatment of changes in the quality of work makes the real WPI lower again for real workers.

Also, this data is not broken down for men and women.

My first snapshot

This chart shows the WPI increase over 5 different time periods. These are the trend figures; that is, the most reliable.

The first column shows the average of the percentage quarterly increases since this data was started in 1997 through to Wednesday’s release. 1997 is the first full year of the Howard government.

The next and following columns, starting in Dec’06 show the average over consecutive 3 year periods. 2006 is the last full year of the Howard government.

The Rudd Labor government, under Julia Gillard’s leadership as Minister, introduced the FWA09 in 2009. The FWA09 is covered basically by the last 3 columns.

The trend is obvious.

My second snapshot

In this second chart we can see what is happening in 3 selected industries: mining, manufacturing and construction.

This chart takes the financial year data (quarterly is not supplied) and is “original;”, that is, not trend. As far as I can tell there is not a big difference in the “original” and “trend” data for the WPI. (Charts can be provided for other industries, on request.)

Again, the trend is obviously downwards.

Wages, Annual Wage Review and the #changetherules campaign

The AWR 2018-19 is now under way and pretty soon the ACTU will probably announce its claim, if last year’s practice is anything to go by.

The slight uptick in the WPI, as reported, is generally attributed to the last year’s 3.5% AWR increase that started on July 1st this year. But that 3.5% was less than half what the ACTU was seeking and, what is necessary to lift the minimum wage above the poverty line. (Enterprise bargaining increases were not decisive.)

Wednesday’s WPI data confirm the validity of the ACTU’s “living wage” objective. However, will the ACTU, and its member unions, seriously mobilise its growing #changetherules movement to struggle for that objective with public actions and demonstrations? Or just leave it to its advocates?

Will the ALP’s election strategy affect the ACTU approach and, if so, how?

Changing the rules going global: unions and climate change

Last week 3 significant reports from distant parts of the world highlighted the crucial role that workers and their unions can play in fighting climate change.

Each one showed how union members can shape the character of the move away from fossil-fueled energy production and, negotiate a rapid “just transition” that provides secure jobs in renewable energy production and associated environment renewal industries.

In Latin America

In early October representatives from 15 countries throughout the Americas met in San José, Costa Rica, for the Third Regional Conference on Energy, Environment and Work. The meeting was reported by the ever growing Trade Unions for Energy Democracy, and convened by the Trade Union Confederation of the Americas (TUCA-CSA). 24 trade union centres attended along with 7 continental social movements, 4 civil society organizations and 5 universities.

“For three days, the group discussed how to respond to the predatory and repressive actions of mining and drilling companies across the continent.”

The participants developed an agreed affirmative agenda, including:

  • ending energy poverty,
  • de-privatisation,
  • recover people’s sovereignty over common resources and goods
  • reject technological determinism that gives precedence to one technology over another and,
  • de-fossilisation of the energy matrix.

Thus, representing hundreds of thousands of workers, these unions connect poverty and inequality to the impact of climate change driven by transnational corporations’ control over work and social life.

In Spain

We learned that in Spain a group of coal mining unions have negotiated a “Just Transition” agreement. The Agreement  speeds up the closure of declining coal mines and replaces these with a programme of clean energy production and environment renewal.

There seem to be 2 important factors behind this breakthrough. First, the workers and their communities, through their unions, established momentum for their demands through social and industrial action. Also, they were dealing with a government that wanted to develop a “just transition agreement”.

The Just Transition deal “… replaces subsidies to the coal industry with a sustainable development plan. Financially viable mines can remain open, but ten pits and open cast mines are expected to close by the end of the year, with the loss of 1,677 jobs. The deal covers eight companies with 12 production units in four regions of Spain. The biggest employer is state owned mining company HUNOSA, with 1,056 employees.

“The highly detailed agreement has been praised by unions as a model, and provides a package of benefits to miners and their communities.

“About 60 per cent of miners – those age 48 and older, or with 25 years’ service – will be able to take early retirement. Younger miners will receive a redundancy payment of €10,000, as well as 35 days’ pay for every year of service. Miners with asbestosis will receive an additional payment of €26,000. …

“An action plan will be created for each mining community, including plans for developing renewable energy and improving energy efficiency, and investing in and developing new industries.

Obviously, there is still much to learn about any flow-on effects to the “financially viable” mines and the damage they will continue to cause.

In Australia

The Mining and Energy Division of the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) released a report on “Just Transition” as it might apply to Australia’s mining industry and the workers threatened by its decline.

Of course “a report” is not the same as a negotiated “just transition agreement”, its still a big deal, for several reasons.

First, it is not straightforward for a union and its members – under pressure from a declining industry base and workforce – to develop a strategy on climate change. Members and their families can now draw on new, rich material to work out their campaigns for the immediate future.

The report says:

“Coal-fired power industry workers and their communities have provided Australia with energy for many decades. For this, they have also suffered from working and living in polluted or dangerous environments. In the absence of sufficient policy-making forethought and attention, they will now also carry the heaviest costs of the new national climate change priorities.

“Those costs would show up as unwelcome early retirements, unemployment, underemployment, insecure employment and work that is lower paid, less safe and less skilled. Overall, these produce reduced incomes and personal assets, both before and after retirement.”

Put in another way, leaving transition to the elusive charms of the “free market” will be a disastrous dead end for workers who have worked their guts out to provide what is taken for granted by the rest of the population.

Not just bread, we’ll take the bakery too?

The common thinking in most of the Australian union movement says that investment (and disinvestment) decisions are a matter for the employer, even when we don’t like it, as we often do.

With some exceptions, climate change has not been union business in the practical sense that it should or can be negotiated. Making sure that unions can represent workers in decisions about disinvestment (“defossilisation”), new job-creating investment based on renewables, and private or public ownership, is quite rare.

The Australian Manufacturing Workers Union has been an exception. In 2008, the Union released a ground breaking report that formed the basis of its ongoing negotiations with the then Labor government, especially in reference to its industry development policy.

Of course, the broken rules of Australia’s Fair Work Act 2009 prohibit investment decisions from being the subject matter of negotiations for the purposes of making an agreement. This prohibition must be removed and replaced with workers’ rights, including through their unions, to make claims and negotiate arrangements that protect and advance their interests during transition away from fossil fuel dependency.

As the CFMMEU report says:

Currently, law, policy and practice allow owners of coal-fired power stations to make all decisions regarding closures: when and how it suits them. The clear inference is that those decisions should be left only to the owners’ commercial considerations. This was evident in the South Australian cases but also, in 2017, for the Hazelwood plant in Victoria. Further, those owners have no social responsibilities to workers or host communities beyond the scarce regulatory requirements.

The “Concrete Proposals” in the report (page 15) are, potentially, a big step forward to ensure a strong role for unions and their workers in setting the pace of transition and, also, to ensure that workers and their communities will not be victims of it. The emphasis on tripartite processes is quite European and is understandable. Tripartite industry processes were not a gross failure, despite inadequacies, during the 1980’s.

Changing the workplace and industrial laws to strengthen workers’ rights – including the right to strike – will change the rules about “just transition” to reverse climate change, not just reversing inequality on the wages front.

“New rules” campaigns come together for the elections

Rapid action on climate and “changing the rules” in Australia’s grossly unfair workplace and industrial laws will be 2 of the major threshold issues for the next national election. (See this, for example.) The National Conference of the Australian Labor Party (ALP) coming up in December will also also have to deal with them.

The “Changing the Rules” theme is catching on. There are so many sets of broken rules, as I have commented on before. And most of them do interact with each other in various ways.

And we have this 15 year old’s insight all the way from Helsinki, Finland

…  Greta Thunberg urged marchers to fight for the major systemic changes that experts have said are necessary to limit greenhouse gas emissions and avert a looming climate catastrophe.

“Today we use 100 million barrels of oil every day. There are no politics to change that. There are no rules to keep that oil in the ground, so we can’t save the world by playing by the rules because the rules have to change. Everything needs to change and it has to start today,” declared the Swedish teenager, who traveled to the capital city of her nation’s Nordic neighbor for Saturday’s massive march.

Nails it.

Impending crisis, the broken rules of the system v the 90%

Here, Michael Roberts gives a good overview of the global picture regarding new levels of instability in the economic system. Instability is an intrinsic feature of the capitalists system we live in.

He starts as follows:

The US stock market turned volatile this week and has now erased all the gains made up to now in 2018 in just a week or so.  So much for Trump’s boast that things for rich investors have never been better.  The fall in the US market has been matched by similar drops in the European and Asian stock markets.  The all-world index has had its worst performance since the Euro debt crisis of 2012.

— Read on thenextrecession.wordpress.com/2018/10/25/correction/

What does it mean for Australia?

Australia is affected, and the impact will sharpen in the months ahead as the national election gets closer.

Living in denial is dangerous. Governing in denial is destructive. Campaigning in denial is not very smart.

That does not mean giving up. It does means re-thinking the campaigns we are active in and how we join in them, and bringing others with us. Many of our demands will be just as valid. We will have to be tougher and more united in defending and winning them.

Living … in brief

Among other things, profits and profitability will fall. There will be bankruptcies. If you are a small business employer that possibility is very sharp. If you are a worker with a job, the likelihood that you will lose it or be pressured to take a big cut in wages will escalate. If you are a worker without a job there will be downward pressure on your social welfare entitlements. Just surviving will be tougher and we will have to resist a louder call to blame it on refugees and migrant workers. It will infect our thinking and our social solidarity instincts or, it will make them stronger.

Governing … in brief

The LNP government is preparing to leave the next economic crisis to the market. Deciding to do that takes about 5 minutes and means the government is not in control.

In the meantime, they will seek to get re-elected on the basis of “their record”: current growth numbers, reduced unemployment, and very low strike figures.

Growth as GDP is barely adequate.

Unemployment has fallen. They say, for example Kelly O’Dwyer (the rather shrill and vacuous Minister for Employment and Workplace Relations), that unemployment is at 5%. She is using the volatile nominal figures not the more reliable “trend” figures that say it’s a bit higher. I haven’t seen an interview with her that deals with that.

She also does not talk about underemployment. That is now rising and more entrenched.

Campaigning … brief, but not so brief

On climate change …

Apart from the big and growing campaigns against the Adani mega coal mine there remains no coordinated national campaign. There is rich potential for this in the dozens of small initiatives and mini campaigns.

A thousand flowers blooming, each one in its own paddock, will not be good enough to win the battle to reverse climate change.

On workers rights and Changing the Rules …

The union movement’s campaign to “Change the Rules” (CtR) that seeks more power in the hands of workers to reverse inequality and poverty will be affected by instability and new crisis.

We must factor impending crisis into our strategy. Not to do so would be negligent.

Electoral intervention will not be enough.

This is true for those who want the campaign to be focussed almost entirely on getting a new Labor government. That is, an electoral strategy that focuses on the marginal seats that the Labor Party must win.

If the crisis hits not long after such a government, as it did in 2008-9, that new government – on historical form – will seek that we retreat from our most important demands. They will join with the employers, albeit with some reforms to make retreat “excusable”. Recent and longer history says that the dominant (these days) laborist tendency in our union movement will go along with that.

Compliant industrial strategy will not be enough

The CtR’s current industrial strategy is to comply with the rules (even though a percentage who attended last week’s rallies did not do that) and then whinge about them through social media and national union leader media appearances.

This is a dead end strategy because it leaves both union and non union workers fully exposed to the bankruptcies and wage cut demands that go with economic crisis.

The champions of the dead end approach are also champions of rules that restore arbitration powers to the Fair Work Commission and inspectorial and prosecuting powers to the Fair Work Ombudsman. They oppose a comprehensive “right to strike” that puts power into the hands of workers, union and non union alike.

A prospective new Labor government relies on the “dead end” champions as it prepares to win the election with the focus on the ALP National Conference in December.

A defiant strategy: electoral and industrial action before and after the national election

For those who want an strong, interventionist industrial strategy for CtR that interacts with the electoral strategy and also escalates the priority on the “right to strike”, the impending economic and climate crisis is also a big deal.

If we are “fair dinkum”, the need to change the rules by defying them – a big part of Australian history – will rise.

There is a serious option: a minimum wage increase

The National Minimum Wage Review starts soon. The Fair Work Commission will announce a timetable at any time in the next few weeks. The Review process will then start and traverse through to June 2019. This is the period leading up to and probably just after the national election.

In the next few weeks, the ACTU will prepare and present a proposal for a minimum pay increase by taking all minimum wages – the statutory and award based minimums closer to a “living wage”.

Lets start discussing that proposal now even, if necessary, before it is formalised.

Lets build an industrial campaign, reinforced by our efforts in the key electorates, that puts pressure on employer organisations, the government and the Commission to accept that proposal.

Otherwise they will dominate the public debate with the economic c risks logic of 0% increase.

All methods and tactics of campaigning can be harnessed into such a campaign.

It can be designed to appeal to all of those workers who are not in unions but who try to live on the minimum wage and those whose thieving employers pay below the minimum.

The 90% in charge

The modest efforts that the Rudd Labor government produced in 2008-9 to deal with the economic crash back then will be inadequate. They complied with the financial management rules of the day. But we know the rules of the finance system are stacked for the 1-10%, even more today. They must not be allowed to dominate “governing” as the crisis strikes and takes effect. Unless the 90 % take charge, the 90%, and the natural world we are dependent on, will suffer horrendously.

But we also have the rich working class potential to develop and win an alternative.

Not just workplace relations, a whole network of broken rules!

The ACTU’S Change the Rules Campaign draws attention to the “broken rules” – from the point of view of workers – in the Fair Work Act 2009. The campaign is borne out of a system that adds to employer power and this enables wages repression. The system thus contributes to growing poverty and inequality.

Broken rules galore

At the same time we can create a list of other “broken rules” that attack the environment we must live in, living standards, democracy and humanist values. For example:

  • First Nations peoples exploitation, oppression, incarceration
  • The finance and banking system
  • Taxation – powerful corporations pay little or no tax;
  • Social welfare payments – denying a dignified life to tens of thousands;
  • Climate change – now no rules at all;
  • Trade policy;
  • Immigration and refugee policy;
  • Corporations law.

One can go on.

Put the transnational corporations in even stronger command?

It is clear that parliamentary democracy, in its current, Australian form has seriously broken rules also.

On climate change the government has morphed into being so bad that the large corporations are saying, through the Business Council of Australia, that they will go it alone on climate change mitigation.

Maybe that has been the objective all along.

Let the most powerful have more power to control the future. After all, that’s 21st century capitalism.

Its not just the LNP government who is the protagonist, although they are at the extreme end. The ALP is a co-creator of some of them, or insipid in its efforts to “solve the problem”.

Recently, the TTP (trade policy) is a good example. A closer look at Labor’s control of the negotiations for the Fair Work Act 2009 that reproduced or established “the broken rules”, reveals another.

Broken rules: separate? Or connected?

The big question is: are all of these sets of broken rules separate and discrete?

Or, are they – in various ways – connected and mutually dependent … systemic?

If the answer to these is “No” and “Yes”, that must lead to a very different response from all of those engaged in the largely discrete struggles and campaigns against them.

The challenge from a real alternative: the seeds within the separated struggles

All of the separated struggles contain an analysis of what is wrong with the :”broken rules” and, to one degree or another, an alternative set of ideas, proposals and sometimes specific demands. Many stand well as a real alternative, new rules that are democratic and reverse exploitation of people and nature, many require further development in the realm of power and democracy.

Defeating the sets of requires a unifying programme of demands and proposals, and a strategy for a unifying Organisation that can bring them together and put them in the hands of the people for further development and political pressure. That would include an approach that “unites the identities” (gender, race, ethnicity, sexual preference, disabilities) based on a working class framework.

The driving principles would be solidarity and unifying across the struggles, more power in the hands of the people, especially at work, equality, environmental renewal, and equality.

Leaving the politics of dissatisfaction as they are now – an inadequate combination of 1) silo campaigns, 2) protest driven electing of “independent” and right wing nationalists, and 3) click activism – will not put the majority in charge of their futures.

Changing the Rules: new powers for workers, or for institutions?

In this podcast I discuss some clues about behind the scenes discussions between leaders of the ACTU and the ALP. Right now, behind the scenes meetings are discussing the new industrial and workplace relations rules that might be introduced by a new ALP government. This activity will continue right up to ALP National Conference in December, and afterwards.

Our focus is on a recent speech by ACTU Secretary Sally McManus, and a recent interview with ALP spokesperson for Workplace Relations, Brendan O’Connor. These provide some clues about whats happening now.

We also discuss: is this something that activists in the Change Rules campaign should discuss and speak up about?

Understanding its reality is the first activist step towards preparing for the next economic crisis

Global economy is facing a ‘perfect storm’

BIS fears that increasing protectionism could reverse decades of progress.
http://www.smh.com.au/business/the-economy/global-economy-is-facing-a-perfect-storm-warns-bis-chief-20180827-p4zzzq.html?btis

You don’t have to agree with or understand all of the stuff in this summary of what one of the major architects of “our” twenty first century capitalism is saying, except that another economic crisis is just around the corner. It will dovetail with the destruction of more climate change.

Among the experts I understand the Bank of International Settlements (BIS) is the international bank of banks.

The crisis they expect will have very serious consequences for any Australian government, the Change the Rules campaign, and all Australians. It will reach into every nook and cranny of all communities of the world.

Every single democratic and social justice campaign will also be affected. All will have to work out on whose side they will stand.

Will corporations and governments be permitted so much control over the handling of the crisis that the recovery that might follow is for them only?

Will campaigns like “Change the Rules” concede major demands that give more control to workers to win the even tougher struggles that the crisis will bring? Or, will it allow new control in the hands of institutions like the Fair Work Commission to resolve conflict through “consensus” and “even handedness” and “fairness”?

This is union activist business and part of their business is to make sure, even when union and political leaders are sluggish about it, that the problem is discussed among members and potential members.

Of course this should include discussions with a prospective Labor government and the Greens – including at the local level – that drive towards a government that enables much more power in the hands of workers to deal with the destructive effects of the crisis on their lives.

Understanding the reality of another crisis enables the possibilities of a different resolution to last time, a resolution that enabled continued destruction of the environment and more inequality … and an even more destructive next crisis.

The challenge for all genuinely democratic forces is how to transfer power into the hands of the majority and to therefore break the cycle.

This means the development and popular spread of an alternative programme of change for the majority – economic, political and environmental. Much of the content of this programme already exists in the mainly separated demands of the thousands of organisations that are struggling in so many different, and mainly separate ways, against the pressures on their lives, including our precious environment.

Australians could well look towards the largely coherent programme of the Corbyn forces in the British Labour Party for an example of what is meant. And examples exist in our own history. Both the ALP and the Greens have some good material in parts of their programmes. But both end up wanting to maintain the system that causes the big problems for the majority.

The next economic crisis … are we ready?

Tricky questions for activists and their leaders

Mid September is the tenth anniversary of the collapse of Lehman Brothers, the American transnational “investment” bank. Some say the collapse was the real signal for the 2007-9 financial and economic crisis that spread quickly and globally and, ruined the lives of millions of workers around the world.

What appeared to be the cause was the USA’s sub-prime housing loan default contagion. But that left begging a simple question: what was happening to the real incomes of so many workers that there was no choice but a sub-prime loan for a house to live in?

In Australia, the new Rudd Labor government, elected in 2007 off the back of 2 big campaigns, the Your Rights at Work Campaign, and the campaign for government action on climate change, inherited the management of the crisis, as its contagion spread through 2008-9.

Since then, in the period of “recovery”, rising inequality, driven by legalized wages repression, and dramatically deteriorating living and working conditions arising from climate change have occurred. For the majority everywhere it is as if there has been no recovery.

What does it mean that 21st century capitalism cannot deliver equality and environmental renewal even when it is “recovering”, or “not in crisis”? Is there any evidence that there is a capitalism that can exist without crisis?

Its possible, probably likely, that the next economic crisis is not far away. Especially in the light of Trump’s trade wars and his destruction of debt free spending power in the USA. And there are the dramatically worsening effects of the climate change crisis that interacts with that.

In Australia, the next global economic crisis may coincide with a new government that says it will break from the “trickle down economics” that is helping to bring it on.

What will the next crisis do to inequality and environmental degradation? What will the twin crises do to the lives of tens of thousands whose circumstances have been worsening while the extreme rich get richer?

Other questions flow. Should we pretend that its not going to happen? Can the crisis be averted? And, what will it do to the growing Change the Rules Campaign especially its key demands for new and “fairer” rules that enable workers and unions to reverse inequality? Can campaigning organizations prepare for such events so that the momentum they have been building is not lost? Can crisis be used to increase momentum for deeper and more meaningful change?

Such questions are relevant for all organizations and movements of the people against the “powers that be” and their government. Unless the preference is to pretend or hope that it won’t happen.

How do we know there will be another economic crisis soon?

The key word is “another”. Big economic crises are intrinsic to the way in which capitalism works, including contemporary global capitalism. They come along every 7 to 12 years and then leave in their wake millions of people whose lives are more or less impoverished by them. Experience, not just statistics but those also, tells us that recovery is for the few. Increased impoverishment contributes to the next crisis.

What was done in 2007-9?

Governments “dealt with” the crisis in various ways. Transnational corporations and global banks worked closely with governments to get a “make the public pay” policy working.

In response, Obama, governing “the home” of the crisis, dirtied his nappies by rescuing the big end of town.

In Australia, Labor’s Rudd-Swan-Gillard team applied a minimal Keynesian style solution that softened for many in the Australian 90% the worst effects of the crisis: immediate government spending and a bank guarantee. Their approach inflicted little, if any, pain on those in the 1-10% who were the protagonists in the processes that gave it birth.

Just a few years later Abbott and Hockey created their ongoing solution: harsh austerity. They were rejected for that but, under Turnbull and Cormann, this approach is not yet defeated.

And the next time around?

The next crisis will not be good for the vast majority of Australians. Some will cop it worse than others and, worsening climate change will add to an even more desperate plight for the 90%, far more than the 10%.

More specifically: what will happen to wages and inequality? To job security? To Newstart and other social security payments? Will there be new cuts to public education, public transport and public health care? Will there be development funding controlled by First Nations communities to replace the racist, bureaucratic controlled CDP? And the nation building character of the Uluru Statement? And what about the serious problems we all see in parliamentary democracy?

We know the current government, because it has the form and the genetic make-up, will insist on more austerity to far more than those suffering from it since 2008-9. Actually, there is no sign the Turnbull government is making specific preparations to prepare for the next recession. Admitting that a crisis is building would acknowledge that they have not been managing the economy very well. Their mantra that they, as an LNP government, are more competent to handle the economy better than an ALP (plus Greens?) “alternative”, was not true of the last crisis.

Labor as an alternative government?

If there is a change of government, the ALP and its co-governors (cross-benchers) will inherit (again) an economy in or about to enter crisis, through no direct fault of their own, and the massive task of climate change reversal.

As the alternative government, the ALP would prefer that the crisis hits before they win government. Then they can blame the LNP for it.

What will and should they do? Should they repeat the 2008-9 formula but with improvement (remember “pink batts”)? In whose interest should they govern? What will the powers that be in the Business Council and other employer organizations expect of them?

What about unions and “Change the Rules”?

What should our union movement prepare for and demand? Is the prospect of crisis union business? Is this the business of union members? Are our union leaders actually on to the problem?

Right now our union movement is investing primarily in a massive effort to bring down the Turnbull government, especially through the “on the ground” field campaign in marginal electorates through the Change the Rules Campaign. The ACTU trialled the campaign in the recent by-elections in the seats of Longman and Braddon. Without these union driven Change the Rules Campaigns it is arguable that Labor would not have held these seats.

The spread of these campaigns to other electorates is strengthening.

It is likely that a Labor government would push extra reasons for minimal changes only to the broken rules of the Fair Work Act 2009?

How much should our movement accommodate this, if at all? Is this just a decision for key union negotiators, as in 2007-9? The employers will expect moderation. And the “lefty” Deputy Leader of the ALP, Anthony Albanese, says Labor must work better with business. In 2007-9, as Workplace Relations Minister, Julia Gillard brought the employers into the consultation process on an equal footing. Together the spirit of consultation produced the “broken rules” that have hamstrung the workers through the years of “recovery” since. Through Albanese, is the ALP in 2018 setting itself up to repeat the dose?

Some final points: sleep walking or pro-active toughening?

Australia is a middle sized capitalist economic power. Anyone who believes that we don’t have much to worry about because of strong “growth” in the USA, continuing strong demand from China and new market possibilities in India is deluding themselves.

The character of the next crisis will be shaped by three forces, the first of which will shape the other 2.

First, from within the intrinsic global instability of the system, the contagion might start from within the financial sector again. Or, maybe from even deeper economic processes that are dependent on human labour power. The USA, again, might be the source, or somewhere else. Trump’s deliberate trade conflicts might add specific characteristics that were not so relevant 10 years ago.

The government of the USA and its interactions with “Wall Street” and other transnational corporations will be significant. What will the most powerful transnational corporations demand? Will they intervene modestly, deliberately allowing “the market” to clear out its blockages? Or, will they approve a mild Keynesian type stimulus, based on increased government social spending and money supply, especially in a form that protects their wealth and control.

Third, there will be the response of the organizations of the 90%, the working class – unions, leftist political parties, environmental, women’s and anti racist movements, and their various organizations.

Will these they allow the crisis to run its course, complain loudly, and “trust” in government to manage the process? They might advocate modest intervention in which tripartite processes of working together see it through?

Or will they intervene – put the people’s pressure on – to oppose the core dynamic of the crisis, and any tendency to resolve it by making the 90% suffer for it? What will be the demands that would make a people’s programme that protects the people”? How might such an alternative programme and effective strategy the developed?

This can only start by acknowledging how real the threat of crisis is in the first place. And behind the economic crisis there is a class based political power? Would a crisis pregnant with the possibility of new people’s power in government be encouraged? Or dampened?

Inequality and wages repression in Australia: workers’ experience is confirmed

Part 1

The latest Journal of Australian Political Economy (number 81) was published last week (click here) and reported in the Sydney Morning Herald on Saturday (click here).

This new issue provides an Australian explanation of the connections between wages repression and inequality, led by material from a symposium on this topic organised by Jim Stanford, from the Centre for Future Work, and are about “causes and consequences of the decline in labour’s share”.

Union and broader anti-poverty and social movement activists should be reading and discussing this material. It brings together a lot of stuff that has been treated to some extent, but superficially, in the daily media (mainstream and social), and also some that can be found in the ACTU and other progressive submissions to the National Wage Reviews.

The Introduction and Overview is a joint effort from Australia’s great political economist and activist, Frank Stilwell, and Frances Flanagan of United Voice (the union). They introduce and summarise all of the articles that follow.

The summary suggests that the articles reinforce widespread experience and shared data about the decline in labour share and its relationship to rising inequality, and provide new info and insights. I was not entirely convinced that we would get much insight on the “cause” of reduced labour share and rising inequality. There is no mention of exploitation in relationship to “labour’s share”, and precious little on profit.

The focus in this issue of the Journal of Australian Political Economy is on “Labour’s declining income share and economic inequality in Australia”.

Jim Stanford’s is the first and flagship article. He explains what “labour share” is, how it is measured, and what’s been happening to it. Except for a couple of important points (see more below), the exploration of “labour share” is quite meticulous and certainly enriches the capacity of labour movement activists to win debates about rising inequality.

“Labour’s share” of new wealth produced (GDP) and total national income (similar but not quite the same) is measured in Australia using data collected by the Australian Bureau of Statistics. All of this data is publicly available and free of charge at the ABS website. In this total data the other shares go to corporations, small employers and the self employed, property owners, and government.

First, Jim establishes that, without doubt the labour compensation” (that is wages plus superannuation and workers compensation paid) share has steadily declined from the mid 1970’s highpoint onwards. And, further, that this translates as a consequence into downward pressure on personal income.

There are up and down blips along the way but the decline is steady, and is supervised by both LNP (right wing, pro-employer) and Labor governments. The Hawke Labor government (starting 1983) is marked by steep decline in the “labour share”. There are 2 good graphs that show this. There is a sharp fall again after the 2008 economic crisis – inherited at the time by the new Rudd Labor government – that then rises from a low level before falling to its current extremely low level since the current LNP governments.

Second, since the mid 1980’s there is a steep fall in the cost of labour to employers, again with a couple of blips along the way.

Third, and this is a big one: real productivity increases steadily and is much higher than both of the 2 measures of “labour compensation” that Jim uses.

Fourth, continuing his demolition job on those (especially employers and their cheerleaders) who wish to deny the reality of the decline in labour share, Jim presents and explains the data about inflation and prices increases, again using 2 measures. Again there are blips, price rises and falls are more volatile, and he integrates these into the story of what is happening to the “labour share”.

Fifth, we have his neat summary: since the mid 70’s there has been an 8% fall in the “labour share” and a 7% increase in the share going to corporations. The shift away from “labour’s share” works out at about $150 billion per year. The share going to small business and self employed falls by 4%.

Finally, Jim compares what’s been happening in Australia with 25 other developed countries. He shows that what is happening in Australia is widespread but not universal. In one third of those 25 countries the “labour share” has been stable or increasing.

Thus, in reference to the “cause” of the problem Jim puts primary emphasis on institutional and policy pressures against workers and their wages. There is nothing about the intrinsic dynamic of capitalism.

Jim concludes that “economic growth alone will (not) ‘lift all boats’ and (will not) automatically ‘trickle down’ into material improvements for working Australians.”

From Jim’s material you can pin this down further: “Trickle down” under Wayne Swan (the Labor government’s Treasurer 2007-2013) and other Labor leaders has been almost as much a mantra, and a failure, as it was under the LNP’s Costello, Howard, Hockey and Morrison.

Labor, as a potential new government in 2019, will have to do much better and different than the ones that have preceded it. There is no sign that Labor’s leaders are up for that.

Part 2

What makes all of this useful? After all, as one Facebook friend said to me, correctly in my view, workers like him don’t need academic research to tell them that their standard of living is under pressure and falling; that their jobs are not, when it comes to wages etc, jobs they can rely on.

There is much truth in this, even more so when workmates are agreeing with each other and then thousands and tens of thousands attest to the same experience.

However, there are lots of workers who are not convinced and / or do not yet care, superficially at least. It is a part of winning the struggle to improve living standards to have the more detailed information and explanation that is available to to confirm and reinforce and, perhaps add to, what the majority know from experience.

This material helps to win workplace level debates (not just public media) that convince more workers to join in the struggle and to join in more vigorously. Further, it can provide insight for the union movement to develop a much better strategy than it has been using in the last 20 years.

Clearly, an industrial strategy (core business for unions) that accepts the broken rules (union practice since 2008) is not working; enterprise bargaining has been destructive for everyone, even for those who have had some wins under it, and the decline in labour’s share coincides also with a decline in union density and the decline in strike based struggles.

Now, some remarks about what I think is inadequate in Jim’s article.

The concept of “labour share” is actually a superficial way of describing what the “labour share” is all about. The labour share is a measure of exploitation. Exploitation is the core rationale for worker combination and unionism. It works like this. The “labour share” is a proportion of the total wealth produced (however it is measured and who by). But the total wealth produced is entirely dependent on the labour carried out by the workers who receive the “labour share”. The workers only get a part of the total they have produced. The “profit share” itself does not produce new wealth. The total surplus after the “labour share” is extracted, “stolen” sort of, appropriated, “taken” by those who have not produced any of it, from those who have.

Labour compensation therefore exists in relationship to profits. What’s happening to the “labour share” cant be fully understood without fully understanding what’s happening to “the profit share”. The continued downward pressure on wages does have a perverse logic in relationship to profits. There must be something going wrong with profits to require downward pressure on wages. Therefore, what is going wrong?

Jim treats this relationship quite shabbily and, therefore, amid all of the good stuff, he does not arrive at any satisfactory explanation about why both sides of government must help employers push the “labour share” downwards. He cannot describe the “causes” of the problem and that leaves him short on what the strategy could be to deal with it.

Let’s check this point in another way. At the start of his article Jim refers to a speech made by Philip Lowe, the Governor of Australia’s Reserve Bank, back in 2017. In that speech Lowe expressed concern about a low pay crisis. He repeated that in June 2018 in a speech to about 1000 manufacturing employers organised by the Australian Industry Group.

We can say this for sure: if you asked those 1000 odd employers what their prime obsession is, the answer would be profits. In their heads, listening to the Governor, they would be thinking through this question: “What does his message about wages mean for my profits, especially my profits relative to the capital I already own?”

This is the real world that workers must confront.

What is lost on the Reserve Bank Governor (at least in public), but not to employers, is that wages can only be understood properly in relationship to profits and the fixed capital that the labour (paid for with wages) brings to life to create new wealth, including those profits. (Among other things you might have noticed that he suggests workers ask for more, I guess just like Oliver Twist, and that employers should give them something. He does not call for industrial struggle.)

Its a worry for our movement when Jim and so many other labour (and environmental) economists make the same mistake. I look forward to reading the other articles to see if this mistake is remedied.

If we know what is happening to profitability we get a clearer sense of why there is a long term downward drive on wages. We are then truly analysing the problem and opening up the prospects of a strategy to deal with it.

Change the Rules and the Right to Strike at the ACTU Congress

soundcloud.com/radio-skid-row/don-sutherland-discusses-actu-congress-2018-6-july-2018

Last Friday Caroline Pryor and I, on “Workers Radio”, discussed the forthcoming ACTU Congress. We focussed on the “Change the Rules” Campaign and, in particular, the “right to strike”. In doing so we reviewed the success of a recent enterprise bargaining strike by Downers workers in the Hunter Valley that quadrupled union membership.

From the superficial to the real “real world”: underemployment, wages and the future for the majority

Don Sutherland, June 2018

I like The Guardian Australia’s Greg Jericho’s work and, as some of you may know, I share it around quite often. This piece maintains his high standards with clear information that we can all work with in various ways, including of course in the activities of the Change the Rules Campaign.

It includes this:

“It is not migration numbers per se that is the issue, but that temporary workers brought in are being done so by companies seeking to ensure lower levels of unionised labour and higher levels of non-permanent staffing, which combined reduces the capacity for workers to argue for higher wages.

In effect the system is changing to keep underemployment high in order to ensure that wages growth remains low.

And that is just how businesses like it.”

Nevertheless, there is still something missing in Greg’s approach. And this often crops up when you think about it. (It’s true also of the approach taken by the work of the Australia Institute and its Centre for Future Work, darlings of many in the labour movement, Per Capita, and the Evatt Foundation.)

In this case the pretty obvious missing bit is the simple question: “Why is it that ‘businesses like it’ like that?” That is, why do they like a high and not declining underemployment rate, associated migration numbers and low levels of unionised labour. We can add why do they like deliberately created labour laws that prevent workers from effective combination, effective unionism and effective bargaining for a better deal.

The answer to this question is for some reason tricky territory.

It is all about profits and profitability. Profits and profitability are clearly not where the employers want them to be. Getting them to a better level, especially profitability, requires extra exploitation of the workforce and this is made more possible by unemployment and underemployment being a “discipline” on workers alongside of the penal powers aligned against them in the Fair Work Act 2009.

So, there is a “logic”, although perverse, to the current situation.

Challenging that logic means you are challenging the logic of the society, the system that we live in, not just work in. Ignoring that logic means that the real-world working of the system of exploitation continues. It’s more important to prevent discrimination but not exploitation, rather to tolerate it.

Greg Jericho is not the only one to fall short in analysis. Along side of him last week the Reserve Bank Governor gave a speech to a mob of manufacturing employers (brought together by their ‘union’, the Australian Industry Group). He covered similar territory to this and other articles by Greg Jericho and, he also did not discuss profits, at least in his published speech and in newspaper reports. (There was a single and anodyne reference to “wages and incomes”.)

Of course, its quite possible that there was some discussion about profits that is not revealed in the media reporting or in the Governor’s published speech, but we don’t know about that.

If the Governor did not discuss the problem of profits informally then he would have been the only person in the room not thinking about them. Put 100 or 1000 employers in a room and the ones NOT thinking about profits will be the ones going down the toilet pretty soon.

The Governor did discuss new investment and noted the recent lift in investment. However, he was at pains to point out that much of it was not in equipment but in software and the like and he is aware of the limitations of that type. He urged more investment in new technologies by more firms. Some, he said were doing it quite well, but too many were not. All is couched in terms of productivity but of course the real benchmark is profitability. Productivity is not fundamentally about anything but profitability … in the current system. If there are any temporary positive side effects for a part of the workforce they also have their value.

Sounds like good advice from the Governor, yes?

But for most workers, it’s a problem that works like this: new technologies are a capital investment that for a time will reduce profitability … unless the rate of exploitation of the workforce is maintained and even increased. And that’s where the FWA09, especially it’s dispute settlement and bargaining laws at both the enterprise and award levels, works so well for the employers and the champions of the system like the Governor of the Reserve Bank.

It’s also about competition: getting the competitive advantage that beats your competitor and may even lead to a successful takeover of her. What that might mean for the workers employed by winners and the losers is irrelevant or at best of collateral concern.

That’s why the Governor’s whinge about wages suppression is crocodile tears – appearance and system management a la the World Bank – and that’s why he does not endorse the Change the Rules campaign.

It’s also why the parliamentary Labor Party and some of the laborist controlled unions want to restrict the scope and effectiveness, and the full potential of the Change the Rules campaign. Especially when it comes to the right to strike and the right to bargain collectively for improvements to industrial awards.