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?

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.

What does it mean when you are, or you become a union member?

By Don Sutherland, 23rd March 2018

How does a non-member join their union?

One convenient way to do it is to use the ACTU’s on line joining up tool: https://www.australianunions.org.au/join .

Why are these questions relevant right now? (If not directly for you but certainly for people you know.)

There are several reasons.

In no particular order of significance they include: every Australian worker is exploited during their hours at work and they experience that as low or downward pressure on their pay, and pressure to work harder, to do more in less time; the progress of the case for an annual wage increase for at least 2.3 million workers on low wage rates; the overlapping ACTU (Australian Council of Trade Unions) publicity campaign against the broken rules of the unFair Work Act 2009 (FWA09); the revelation of dodgy and very low pay rates for Uber drivers and others in “gig jobs”, and the collapse of enterprise bargaining as a vehicle for solid wage increases (See below for a little bit more on each of these reasons.)

In a broader sense bigger and more member-driven unions will make a difference in the campaign to reverse rising inequality and poverty by winning better pay increases and establishing new rights.

So, what might your (new) union membership mean?

Well, it might mean nothing at all. You are a passive member who simply holds your union “ticket”, maybe with some idea that it is an insurance policy that you hope you won’t need in the future.

Two questions arise, “Should you stay a passive member?”  And, “What might be being an active member actually mean?” (Especially if your employer is hostile to union members.)

If your employer is hostile to union members (familiar to most workers) you can bring your membership to life to your own advantage without the employer knowing you are doing so.

Clandestine membership is sensible, even recommended, until you and your work mates judge you have the strength in your workplace to make it unnecessary.

Being informed as the basis of being an active member

The first thing that can bring your union membership to life is to become informed, including from your own initiative.

You can pay attention to union news and read the material that is available at your union’s web site or Facebook page or is sent to you through your letter box.

You are an informed member through your own action. And your boss does not know.

Being informed: the next step

You can take “being informed” to a higher level by learning about your workplace minimum entitlements (and those of your workmates). Non-members can do this also.

The legally minimum standards on pay, conditions and rights are described in the FWA09, your relevant industrial Award, and your Enterprise Agreement (if you are covered by one). There are also minimum rights in Health and Safety and Equal Opportunity laws, but these will be discussed in a separate, future post.

As a member or non-member, you can obtain a copy of the minimum pay and conditions of employment for your job that are described in the National Employment Standards and in your relevant Award, and in your enterprise agreement if you are employed under one. All of these are public documents. (Remember your boss can provide better than the minimum “voluntarily” or through an enterprise agreement. A “voluntary” better deal can be taken away whenever your boss decides to.

You can read the National Employment Standards as defined in the FWA09 here, and you can access your relevant award here.

(If you want some help to find the Award that is relevant for you then contact your union or the ACTU, or even write to me at workersradio2017@gmail.com .)

Guess what? Being well informed about your minimum rights at work will make you feel good. Given the importance of work (even when we hate it) in our lives, the amount of time we spend trying to get there, and just being there, it’s a great feeling to become more intelligent and confident than you already are.

Becoming informed together – feeling even better

You do not have to be a trained lawyer to understand the information identified above.

For decades workers have learned how to read and understand awards and another standards a) by doing it, and then b) by doing it together. (Often without the boss knowing … at least until it was agreed that it was time to “come out”.)

Once you have informed yourself about the NES, your Award, and your Agreement (if one applies to you), you can work out who among your work mates and friends you want to share your knowledge with.

You will know who it is, but, and you already know it should be someone you trust. It might be just one other work mate, or you might be in a situation where you can start with several or even more than that.

Then, you sit down with your trusted workmate(s) and show them the document (the Award, the NES or the Agreement) and, together, look closely at the bits that are relevant to your workplace.

You make your own judgement about how strong your case might be to FIRST get more support from other workers and eventually to discuss the issues with your boss, or with a paid union organiser.

You are in command of your knowledge and your case. You can also decide whether you want advice from a paid union official.

Conflict with your employer?

This is a real issue, because conflict is embedded in the employer – worker relationship. It all depends when and how it rises to the surface. Your boss employs you and your mates because your work effort delivers the total income, and within that the profit, that he or she is in business to make. The lower the price of your labour or the harder you work the better for the profit objective.

One thing is for sure, every employer has some way of discussing with their peers, even if they are in competition with each other, what the price of your labour is, and any new ideas around to push it lower, and get away with it. So, when they learn as they do from a competitor about how they can pay lower, including below the legal minimum, or dodge a health and safety requirement, they will do so. (Honourable exceptions there might be, but’s all they are.)

If your boss disappears to the golf or bowls club once a week to catch up with other employers you know what they will be talking about, and it won’t just be the state of the greens.

Getting even more informed – feeling even better but pretty sober also

Sooner or later every boss uses the “competition threat” to push back your wages, conditions and rights.

Smart workers who want to protect and improve their wages and conditions need to know who the competitor company is for the one they are employed by. There might be several.

Once you know, the next step is to work out what the pay rates and other important standards are in the competitor(s). There are lots of ways to get this information but starting with word of mouth and private conversations is a good start. (Again, we can cover this separately.)

This is where a competent and committed paid union official can be really helpful. In fact, its one of the main reasons why paid union officials were created in the first place … to share good quality information around lots of workplaces in an industry in order to deal with the problem of the “competition threat”.

There is an important discussion point here: who is the “competition threat”? Is it the workers employed by the competitor company? Or, is it the owner of the competitive company?

Almost certainly you will “be informed:” that the workers in the competitive company are having (or already have had) the same experiences that you are going through. They might already have “insights” that will help you and, almost certainly you will have insights that help them.

By being informed you are watering the seeds of solidarity and, that is an extra good feeling.

Here is a bit more on the reasons for “getting involved”.

First, Australia’s Annual Wage Review (AWR18) run by the Fair Work Commission (FWC), is well under way. The employer organisations (for all employers) and the Australian Council of Trade Unions have lodged their submissions about what the 2018 increase should be.

At least 2.3 million workers are directly affected because they are paid at or marginally above the statutory minimum rates as defined by the FWC and by the 120 odd awards that set minimum standards including the minimum rates for a range of jobs within each industry. There are also at least hundreds of thousands paid at above the minimum, but who are not covered by enterprise agreements, who are also affected by the decision one way or another.

One behalf of workers the Australian Council of Trade Unions (ACTU) has proposed an increase of $50 per week, about 7%. (For more information click here and here.) The credible employer claims are to permit an increase of only about 1.9%.

The ACTU claim is unique because it is lodged on behalf of all workers affected, whether or not they are members of their union. It is the only claim that will seek to challenge the poverty that workers on the minimum rates are subjected to.

This claim might lead to pay increases that benefit union and non-union worker alike. Should low paid workers who are not members enjoy a “benefit” enabled by their union member work mates who are in much the same or exactly the same shoes as they are?

The second reason, is the escalation of the ACTU’s “Change the Rules Campaign” (CTR) with a 6-week advertising campaign, followed in May by days of workers’ action.  Click here for more information.

The purpose of the ACTU campaign is to “Change the Rules” in the current Fair Work Act so that there are new and more powerful laws for workers, especially so that workers have more power to improve their take home pay and establish more secure employment.

On Wednesday March 22 the ACTU National Secretary, Sally McManus, delivered an important speech to the National Press Club in Canberra that outlined the purpose, aims and focal points of the CTR campaign.

One focal point is the broken rules for the Annual Wage Review process, that right now make it very hard for workers and their unions to use effective power to support their claims.

She concluded her speech by urging workers to “Join Your Union”. It will make a big difference to the CTR if there is membership growth across the board, as is now happening in some unions.

The third reason is because of what we now know about earnings in the “new economy”, or in “gig economy jobs”.

The latest research from the Centre for the Future of Work in the Australia Institute focused on Uber Drivers and was summed as follows:

The Centre for Future Work recently simulated the net incomes received by drivers working for the Uber-X service – which has come to symbolise the gig economy.  And our findings ratify the public concern.  On average across 6 Australian capital cities, we estimated that Uber-X drivers take home less than $15 per hour after paying Uber’s various fees, taxes, and the full costs of running their vehicle.  That’s well below the statutory minimum wage ($18.29 per hour), and less than half the weighted-average full minimum (adjusted for casual loading, evening, and weekend work) that waged workers in this industry should be receiving.  Underpayment of its drivers is the crucial source of Uber’s price advantage, that in turn has been crucial to its growing market share.  The report called on Australian policy-makers to reform current laws (in particular by clarifying that the concept of “employee” should indeed apply to workers in this sort of undertaking) to ensure the Uber-X drivers – and other “gig” workers – are entitled to the same basic protections as other workers in Australia.

Overwhelmingly “gig workers” tend not to be members of unions. One of the reasons for this is that they have fallen for the nonsense that they are their own boss because they can work when they like. This leaves a simple question: “How do they negotiate for a raise if they are comfy with their status as a self-employed person and work according to an “app”?”

The final reason is that enterprise bargaining, as the mechanism that was meant to enable pay and conditions above the minimum standards, has collapsed. (Please click here.) What happens in AWR’s is now even more important for most Australian workers.

Member or not? Passive or Active?

There are other reasons why becoming an active member of your union can make you a more intelligent, confident and happy worker. We have discussed these previously, along with many others, and we will return to them in future posts.

Also, we have not yet discussed the problems that do exist in our current unions. We can come back to that. Our starting point in that discussion is: as a member you have rights that make unions more democratic than any workplace and any other social organisations.

Unions are not a spectator sport.

How to join: https://www.australianunions.org.au/join