Slave Labour

BOB DAY

If we are so concerned about youth unemployment, why do we impose it?

It was the best of times, it was the be the value of the labour itself to the pletely at odds with the realities of the worst of times, it was the age of wis- person hiring it. modern workplace. The notion of vol- dom, it was the age of foolishness…it If all youth employment in Aus- untary acceptance of a wage unrelated was the spring of hope, it was the tralia today was provided by firms with to an award seems to offend those who winter of despair…We had every- the resources and staffing policies of see it only as ‘exploitation’. But this thing before us, we had nothing be- BHP in the 1960s, we wouldn’t have a view is demeaning to the common fore us. problem. Such companies would be sense of those it purports to protect as Charles Dickens, able to amortize, over time, the cost of well as the decency of most employers A Tale of Two Cities subsidiszing junior wages considerably and, as far as the small business sector in excess of the value of the work be- is concerned, it is a ham-fisted inter- HE paradoxes in this pas- ing done. Unfortunately, the bulk of vention in the relationship between sage from Dickens capture prospective employers of young people employee and employer. the predicament of young are in the trades or small to medium- The only sensible and intellectually T people entering the labour sized businesses which simply do not consistent position is for junior wage market today. They’ve been born into have the margins to afford such luxu- rates to be based on the value of the one of the most affluent eras in human ries. work to the person purchasing it and history—with access to better medical Under the present arrangements, set by agreement between the employ- care and longer life span than any pre- such prospective employers are pre- ers and the employees. It is, practically vious generation. As well, rapid cluded from providing gainful employ- speaking, impossible for third parties— progress on the medical, scientific and ment and on-the-job training to young except, perhaps, for the parents of a technological fronts will continue to people who are desperately looking to junior employee—to understand or transform their lives. In many respects, get a foot on the employment ladder. make judgements about what is, or is we can confidently say there’s never Employees who want to sell their serv- not, in the employee’s best interests. been a better time to be alive. ices to an employer at a price the em- Those to whom such a prospect is But the mechanisms for dealing anathema simply have not confronted with such remarkable change have sel- the fact that, as they presently stand dom, if ever, been so ill-matched for nearly all junior wage rates are set at the task. The lack of flexibility in the Australia’s … levels which make them uncompeti- youth labour market means that tive in the job market. They do not appallingly high percentages of young industrial relations is appear to have applied the traditional people are excluded from the world of still based on the test of cui bono—’who benefits’, in work. The tragically high incidence of whose interests are such arrangements? youth suicide is one direct result. An- theory of conflicting Certainly not those of the young un- other is drug addiction and related employed. crimes—which account for more than interests completely A regulatory system that excludes half the prison population—along with at odds with the so many from employment and pre- youth alcoholism, homelessness, al- vents employers from giving them work ienation, poor health, the collapse of realities of the must eventually be exposed for the family life … the list is all too familiar. scandal that it is. To those most directly And, whilst it is commonplace to sug- modern workplace affected by the intransigence of the gest that there are no simple solutions, process, it is increasingly plain that it there is something close to a panacea has less to do with concerns about so- for these ills—a job. ployer can afford are likewise prevented cial justice and a lot to do with the It has been suggested that the con- from doing so. Yet there are perfectly highly politicized role of trade unions cept of ‘competency’ can replace jun- sound reasons why prospective employ- and the tribunals themselves. Poli- ior wage rates. This notion appeals to ees might want to reach an arrange- tics—rather than economic or social many in the union movement and else- ment outside an award—a greater de- considerations—blocks our young job- where because it is marginally more gree of independence, a contribution less from access to the world of work. defensible on the basis of equity than to their own keep, job satisfaction and, The falling rate of participation in the present archaic arrangement—al- of course, the incentive of future op- the union movement among those who though the proposed mechanism for portunities are among the more com- have jobs is partly attributable to the calculating such competencies is to- mon motives. perception that unions are more con- tally implausible. Australia’s ‘rear-view mirror’ of in- cerned with protecting their own in- There is an alternative to both: that dustrial relations is still based on the terests than those of their members. the only relevant consideration should theory of conflicting interests com- The rhetoric of equity in income dis-

10 MARCH 1999 tribution pales even more quickly for the price of goods or services—like la- the issue, ‘youth unemployment is a those who have no job and have been bour—without it resulting in a decrease problem which has directly affected 4 priced out of the market thanks to a in demand for those goods and serv- out of every 10 households having 16– centrally determined award wage. The ices. Price does matter. And ‘pricing 24 year old family members in the last young, who are generally well aware of young people out of the job market’ is 5 years’. their need to acquire skills if they are not just employer rhetoric but a harsh Among the survey target group— to become productive employees, will reality over which they have no con- people living in the northern and not thank those who have precluded trol. north-eastern suburbs of Adelaide— them from on-the-job training. Over- The laws of supply and demand are acquaintance with the realities of our regulated wage-fixing systems, by con- immutable and they apply as much in Proportional Rate System was more tributing to the destruction of jobs, add the workplace as in any other market. than merely theoretical. Respondents to the inequity they profess to correct. When there are external distortions, were well aware that a scheme that As P.P. McGuinness recently ob- locks adult rates and junior rates to- served in the context of unskilled gether is incapable of adapting to con- workers, ‘it makes sense not to compel temporary conditions. In the 1970s, for employers to pay such a high minimum The burden of example, an inexperienced school- wage, but instead to preserve living supplementing the leaver or job seeker was typically only standards thought socially appropriate value of the labour 16 years of age. Today, that same inex- through the tax and social security sys- perienced person is more likely to be tem. If, for some reason, you want em- to the employer so 18 years old, and the relevant rate is ployers to pay more, this is best as to achieve the much higher than the rate for a 16- achieved through the tax system’.1 year-old. It is absurd. The same applies to youth wages. unrelated goal of a Another anomaly inherent in cen- The burden of supplementing the value minimum wage tralized wage-fixing is the preoccupa- of the labour to the employer so as to tion with ascertaining what constitutes achieve the unrelated goal of a mini- ought to be met by a ‘living wage’—a rhetorical construct mum wage ought to be met by the com- the community which ought to be recognized as such. munity at large. The community is, af- Variations in the cost of living across ter all, like the individual youth, get- at large Australia make it virtually impossible ting considerable benefit from the fact to determine what an appropriate liv- that they are employed. According to ing wage might be. A young person liv- a National Youth Affairs Research it is the weakest who suffer most. It was ing on a farm in the mid-North of Scheme Study (The Price We Pay, once the case that bricklayers em- South Australia clearly has a com- 1997), youth unemployment already ployed lads to carry their bricks, as pletely different set of circumstances to costs the Australian community more plumbers employed someone younger deal with—and thus different criteria than $2 billion a year. It is simply in- to dig trenches for them. In exchange, in deciding on what constitutes an ad- equitable to expect small business and the lads were taught a trade. Until the equate income—compared with young tradesmen to foot the entire bill and cost became prohibitive, as a direct people living on their own in the in- unrealistic to pretend that they can af- result of centralized wage-fixing, this ner-western suburbs of Sydney. That ford to do so and still remain competi- arrangement suited all parties and was people in different situations need dif- tive. Yet it is widely acknowledged that well-understood by all. fering amounts of money has nothing small business is the sector which has Historically, the collapse of that intrinsically to do with the employer- the greatest potential for generating employment-generating system is well employee arrangement. Cost of living new jobs. In the Prime Minister’s own documented. In 1951, a first-year ap- adjustments ought to be made through words, ‘The way to solve youth unem- prentice was approximately 7.5 per the welfare system—not through an ployment is to liberate the small busi- cent of a tradesman’s wage and there award system. ness sector’.2 were virtually no unemployed teenag- It is very clear to most of the peo- It is one of the long-term conse- ers. By the mid-1970s, the wage rate ple who are directly involved that the quences of the Federation settlement had doubled to 15 per cent and the intangible benefits an employer con- that we have developed a selective term ‘youth unemployment’ began to fers by taking on a young employee are blindness about economic fundamen- have some currency. The wage rate is as significant—and probably more pro- tals. ‘Historically, Australia developed now 40 per cent and youth unemploy- found in their consequences—than the a centralised wage-fixing system as a ment is now regarded as the ‘single wage transaction itself. Anyone who result of the political consensus which most important social problem of our doubts this greatly underestimates the also gave us tariff protection. It’s safe time’.4 capacity of young people to understand to say that, without the one we would In the Sexton Report, 70 per cent where their own best interests lie. They have never had the other. High tariff of respondents, unprompted, character- can see the benefits of starting on a low walls led to what’s been called “the ized the issue in those terms. Approxi- wage to learn a trade and there is in- cost-plus mentality”. Whatever goods mately 70 per cent of respondents also creasing evidence of their wholly jus- cost to manufacture—including the said they ‘would support the introduc- tified resentment of paternalistic state cost of labour—the manufacturer tion of a youth wage equivalent to the interference which prevents them from would simply add his margin to arrive dole or Austudy in return for full-time receiving those benefits. at a price’.3 apprenticeship employment or train- From a young person’s perspective, But, at some point, we have to stop ing’. Among respondents, as an indi- there must be something especially deluding ourselves that we can increase cation of the gravity and familiarity of galling and hypocritical about society’s ▲

MARCH 1999 11 double standards regarding employ- ment. One the one hand, we praise young people who undertake volunteer work. On the other hand, we hold in Opinion Polls and high regard those who have found em- ployment. Yet woe betide anyone who offers or accepts any arrangement in between. It is a ‘no-go’ area—although Baseball Bats it is self-evidently a fertile field for mutually acceptable and agreeable ar- rangements between the parties. It is inconceivable that the present What Really Went on in the system, with all its inflexibilities, will be allowed to continue indefinitely to exclude so many of our young people Queensland State Election from the world of work. Not even the most relentless demonization of the CHRIS MITCHELL motives of small business employers could achieve that end. The struggle for liberalization of the existing wage regime has echoes of the campaign T should tell astute observ- tion’s campaigning. They felt that against slavery, invoking Ernst Howe’s ers much about the divided theirs had been a service delivery gov- description of it as a ‘bitter conflict nature of modern Australia ernment, with a good record on hospi- with contemporary sentiment and the I that most of the commentar- tals and road building and that those interests of gigantic power’. Liberty. ies about the rise of One Nation and, messages had been lost in the cam- Freedom. The long struggle to break indeed, almost all the latest tome on the paign. They felt the campaign was giv- the shackles of workplace regulation subject (Two Nations) have been writ- ing their own base voters permission goes on. ten by people outside of Queensland— to lodge a protest so long as they chan- the birthplace of One Nation. nelled their vote back to the conserva- Apart from Nick Rothwell and a tives via their optional second prefer- NOTES couple of other grown-ups, the com- ences. And once the Liberal Party mentators have almost all got it wrong. opted to preference One Nation, small- 1 Sydney Morning Herald, ‘So, Back to Conservative protest politics has a ’l’ Libs in Brisbane were always going the Quack Remedies for Jobs’, page long history in Queensland. Remem- to repeat their 1989 desertion of the 15, 29 October 1998. ber the Labor Split, the Confederate conservatives. 2 The 7.30 Report, 28 February 1997. Action Party, the CEC? The interac- For its part, Labor focused almost 3 Checkpoint Charlie, a submission to tion of such politics plus an optional entirely on the one line—it was either the House of Representatives Stand- preferential voting system with an elec- a stable Beattie government or a rag- ing Committee on Youth Unem- torate just as disenchanted with John tag Coalition government relying on ployment, 1997. Howard as it was with Paul Keating, One Nation support. Mr Beattie was 4 Sexton Report, 1997. which still had (to quote Wayne Goss) on-message throughout the campaign. its baseball bat in hand and which saw He spoke of a five per cent unemploy- the ‘unread head’ Mrs Hanson as an ment target—which was an inten- underdog, was always bound to deliver tional dry run for Kim Beazley’s subse- a large amount of support to One Na- quent five per cent campaign—and tion, even though most people knew constantly referred to the ‘rag-tag Coa- they were voting out of protest. lition’. Observers of politics in Brisbane But what really sealed the June 13 will have heard this phrase thousands Queensland State election were the of times in the two months leading up campaigns of the governing Coalition to the election. parties and the Labor opposition. But, beyond that, both sides of poli- The entire thrust of the Govern- tics had internal polling several months ment’s campaign was negative, with a ahead of the election showing One Na- plea for One Nation preferences. The tion at near 30 per cent throughout Borbidge National/Liberal Coalition Central Queensland. Government had already accepted— After Premier Borbidge sacked because of its own internal research and Trevor Perrett—his then Minister for the feedback from the wiser heads in Resources and Primary Industry—for Bob Day is Managing Director of Homestead the Government—that One Nation his admission to The Courier-Mail that Award Winning Homes Pty Ltd and President of had been on a roll since the previous he had carried on a relationship with a the South Australian HIA. This is an amended October. murdered prostitute, The Courier-Mail version of his submission to the AIRC inquiry into In private conversations, with peo- polled his seat of Barambah four-and- Junior Rates of Pay. ple as high up as Premier Borbidge him- a-half months before the State elec- self, many in the Coalition expressed tion. That poll showed One Nation’s I P A concern at the negativity of the Coali- Dorothy Pratt at 28 per cent. The Cou-

12 MARCH 1999