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.