Unemployment in Australia: The Coming Anarchy Written: August 2019 1 Preface We live in an era of great uncertainty. Even the most casual observer can appreciate dramatic changes have taken place in the Australian society over the past 30 years. For those of my generation, the so called ‘baby boomers’ much of the social and financial changes that have taken place since our birth have been little short of cataclysmic. It is deeply disturbing that the very values we, as a nation have historically prided ourselves on- ‘equality,’ ‘mateship’ and the ‘fair go’ are now a pale memory of how we used to be. Some still cling to such values, but for most, and particularly those of the younger generation, they have now become part of the great Australian myth. One of the most central causes of growing inequity in Australia over the past thirty years has been workforce displacement. Deeply concerning, is the role played by successive Australian governments via Centrelink and the privatised employment service system, now called Jobactive, in promulgating inequity. This knowledge is based on our family’s experience of un/underemployment, networking of others experiences, as well as text research. It is glaringly apparent that this country is now at a crossroads and faces an existential crisis in dealing with the growing, chronic problem of un/underemployment which has been festering for several decades. Clearly a massive cultural shift is required, both by politicians and the wider Australian society. The current Centrelink welfare system is anachronistic, punitive and wasteful. Its replacement with a streamlined, cost effective and incentivised system of a guaranteed minimum income, is now the only alternative to stemming an impending social collapse, caused by ballooning un/underemployment in a rapidly changing digital age. 2 The Mid 1970s to Present Day: The End of Full Employment and the Casualization of Work The mid 1970’s saw a cataclysmic shift in the Australian labour market. It marked the end of guaranteed full employment and the beginning of unemployment and corresponding workforce casualization. As the graph below illustrates, 1974 marked the end of full employment, where the number of job seekers matched job vacancies, to a point now where there are about 1.8 million persons seeking work with about 200 000 vacancies. (Source: Per Capita, 19 September 2018, Working It Out: Employment Services in Australia)1 3 (Source: Per Capita, 19 September 2018, Working It Out: Employment Services in Australia)2 In 1980, the average duration on unemployment benefits was less than 50 weeks. From 1980 the duration has climbed steadily, when in 2017 it reached a peak of about 250 weeks, or 5 years. It cannot be overstated that the official Australian Bureau of Statistics (ABS) statistics significantly disguises the real extent of the un/underemployment crisis in Australia. Employment, according to the ABS, includes “pay, profit, commission or payment in kind”. It also includes persons who have worked “for one hour or more without pay in a family business or farm” Moreover these statistics are seasonally adjusted with data obtained by telephone interviews. According to the ABS, a person who works 1 hour in a Centrelink reference period is classified as working, and not unemployed. Indeed the ABS refers to “not in employment” as: “a total lack of work… persons who are ‘without work’ should not have undertaken any work at all (not even one hour) during the reference period, nor should they have been temporarily absent from a job to which they have formed attachment.”3 This largely makes statistical comparisons between the 1950’s and 60’s era of full employment and the present day meaningless. It means there is now a burgeoning mass of casual/underemployed many of whom have very scant and precarious work who do not show up in government statistics as unemployed. This is indeed, extremely misleading and deeply disturbing. In contrast, Roy Morgan statistics “are based on weekly face to face interviews” A person is classified “as unemployed if they are looking for work, no matter when” Moreover, the findings are not seasonally adjusted. These statistics are widely regarded as a more accurate presentation of real unemployment levels in Australia. Given this, “Roy Morgan’s real unemployment figure of 11% for August (2018) is more than twice as high as the current ABS estimate for 4 July 2018 of 5.3%” Indeed. if unemployment and underemployment are calculated together the figure is about 19%4 Significantly, in 1982 casual employees constituted 13% of the Australian workforce but between May 1982 and August 1989 “the number of casual employees grew by 89%.” By 1992 it rose to 22%, then from 1992 to 1997 it rose again to 24%. Since this time, it has maintained a plateau of about 25%. Notably, these figures does not include ‘owner managers’ who are self-salaried, but don’t have leave entitlements5 Professor John Quiggin notes, “the period from the 1980’s to the mid 1990’s was one in which workers lost ground over working conditions.” He further comments, “The prevalence of long working hours, unpaid overtime and casualization all increased.”6 Hielke Buddelmeyer, Research Fellow, Melbourne Institute of Applied Economics and Social Research comments that “casual employment has generally been regarded as employment where there is no entitlement to paid leave, such as annual leave, sick leave or carers leave”7 Geoff Gilfillan, of the Parliamentary library notes that casual workers are “much more likely to face irregular and insufficient hours of work with fluctuations in earnings” with 53% experiencing earnings variability from one pay to the next8 So just how bad is the current situation? Roy Morgan estimates paint a grim picture. In August 2018 there were 1, 476,000 people unemployed. Additionally, some 1,071,000 people were classified as underemployed for this period.9 Even a cursory analysis will see that such statistics make a mockery of government backed Centrelink attempts to ‘crack down on dole recipients’ The system is in crisis, not due to the unemployed, but due to a systemic chronic malaise that has been some thirty to forty years in the making. Neo Liberal Economics- The safety net develops holes The turning point for public opinion occurred in 1973 when the oil crisis precipitated western economic stagflation, and the demise of the welfare state commenced. This economic downturn was seen by the Organisation for Economic Cooperation and Development (OECD) in its Economic Outlook as “the most serious since World War 2”10. Prior to this, the economic theories of John Maynard Keynes were widely accepted. Then it was viewed desirable for a government to run a budget deficit which “increases the flow of money through the economy which in turn increases the demand for goods and services” The welfare state was viewed as positive, as it “enabled workers and the unwaged to have more disposable income to contribute toward the private market and therefore toward the maintenance of employment” 11 Milton Friedman’s monetary ideology of ‘trickle down’ economics presented a radical departure from Keynesian theory and was soundly lauded by the Institute of Public Affairs (IPA) when he visited Australia in April 1975.12 In Friedman’s theory, the idea of government intervention in supporting the unemployed was to be discarded as unnecessary greed which resulted in higher taxes. The IPA argued that the market place should be responsible for redistributive processes, and not the State.13 This ideology became even more entrenched when the Austrian economist, Friedrich Von Hayek visited Australia in 197614. It was then that the great divide between ‘liberty’ vs ‘welfare’ became cemented. Hayek was unconcerned about the purchasing power of the poor, and more concerned with balancing the budget.15 Full support should be given to productivity in the capitalist market place. The benefits of a strong 5 economy would then, by some sort of mystical, osmotic force, ‘trickle down’ to the needy, with little, if any, government intervention required. The polarisation of wealth in 21st Century Australian Society- The End of the ‘Fair Go’ The reality of what has unfolded over the past forty years has demonstrated the callous destructiveness of Friedman and Von Hayek theories, with the growing polarisation of extreme wealth in Australian society. This reality is starkly presented by the Australian Council of Social Service (ACOSS) findings: “The average wealth of the highest 20% rose by 53% after inflation adjustment (to 2.9 million) from 2003-2016, while that of the middle 20% rose by 32% and that of the lowest 9% declined by 9%. The wealth of the highest 5% grew even more rapidly by 60% over this 12 year period”16 Indeed ACOSS revealed that in 2016 “The highest 20% of households hold 62% of all wealth, the middle 20% hold 12% and the lowest 20% holds less than 1%”17 The recent ABS Household Income and Wealth Australia report for 2017-18 has now revealed that the rich are indeed getting richer, but not so the poor. It is apparent that, “after inflation, the worth of the top 20% jumped from $1.9M in 2003-4 to $3.2M in 2017-18 a rise of 68%” However the poorest 20% experienced a pitiful jump in wealth from $34 200 in 2003 to $35 200 in 2017-18, a miserable rise of 2.9%18 The rise of the “dole bludger” mythology It is an alarming paradox that whilst wealth in Australia has become more polarised, and work more tenuous and difficult to obtain, the un/underemployed are increasingly being targeted as “the problem”. What more effective way is there to undermine this growing underclass, than to convince them that they are the problem.