What a future: impossible climate, a life of renting and a crappy job

The older I get, the more I worry about the nightmare we oldies are leaving for our children and grandchildren. The obvious, in-your-face problem is climate change, but other difficulties are everywhere you look.

Now the northern hemisphere has been introduced to the joys of bushfires and heatwaves with, I imagine, a cleanser of flooding to come, global warming has become global boiling. Climate change is now — and will get a lot worse even before we oldies have popped off.

We wasted decades worrying about the economic cost of doing something about climate change, now we’re facing the daunting economic costs of not having done anything about climate change.

We’ve exchanged a government of closet climate-change deniers for a government that knows what it should do, but is dragging its feet under the influence of two powerful unions representing the interests of a relative handful of mine workers who don’t want to look for jobs elsewhere.

Then there’s the way the older generation of home owners has allowed the lure of ever-rising house prices to permit successive governments to turn housing into an inheritance lottery.

Australia is dividing into two distant tribes: the owners and the renters. If you have the good fortune to be born to home-owning parents (perhaps with an investment property or two on the side), the Bank of Mum and Dad will ensure you too eventually become a home owner, able to pass your good fortune on to your own kids.

But pick renters as your parents — or have too many siblings — and you, like them, will be a life-long renter. As will your kids.

And, naturally, governments couldn’t possibly oblige landlords to give their tenants more security and better maintenance without the landlords giving up and leaving thousands homeless on the streets. (Yeah, sure.)

HECS HELP debt is adding to the difficulty of making it onto the home ownership merry-go-round. The scheme was designed to have people who benefit from a university education contribute towards its cost without discouraging kids from poor families from seeking to better themselves.

But incessant tinkering by successive governments has turned HECS into a millstone.

And all that’s before you get to the gig economy, better thought of as the rise of insecure employment. The security of having a full-time, permanent job is something the older generation has been able to take for granted. Not so the youngsters.

In the latest surge of inflation, businesses haven’t hesitated to pass on to customers the higher cost of imported inputs, often seeming to add a bit extra for luck.

But in the decade or two before then, price rises were modest, sometimes even falling below 2 per cent a year, despite healthy growth in profits.

One way that businesses kept prices low was to find new ways of holding down labour costs. With the gig economy, people seeking to earn a living from digital sites are treated as contractors rather than employees.

They thus get no guaranteed work, no paid sick or holiday leave, no workers’ compensation cover and no employer contributions to their superannuation. Their work is precarious.

But that’s just the bit that gets the publicity. Less talked about are the various devices businesses have used to minimise labour costs, shift risks onto workers, and weaken the legal link with their workers by using labour-hire companies, setting up franchise arrangements and disposable subsidiaries.

Above all, workers have been hired as casuals. Casual employment is meant for cases where work is intermittent, short-term or unpredictable. But these days many casuals work full-time, most work the same hours from week to week, more than half can’t choose the days on which they work, and most have been with their employer for more than a year.

Casual workers get no sick or holiday pay, meaning if they’re too sick to work they earn no income. If they take a break, they have to live on their savings.

In principle, they get a 25 per cent loading instead. But get this: as best we can tell from official statistics, less than half actually receive it.

And because they’re casuals, they get no job security. Permanent employees can’t be sacked without due cause. If they’re laid off, they get redundancy money. Casuals don’t have to be sacked and don’t get redundancy. They just don’t get rostered on.

Some companies avoid union wage rates and conditions by using workers actually employed by labour-hire companies.

Last week, workplace relations minister Tony Burke announced further details of the government’s plan to make it easier for casual workers to apply to become permanent. Earlier he’d announced plans to require labour-hire workers to be paid the same as the regular employees doing the same work beside them.

Naturally, the employer groups cried that this would “increase business costs and risks” – which I take as a tacit admission that causal workers have been underpaid.

It’s not much, but it’s a step towards giving the younger generation a better future.

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Job insecurity: close your eyes and you can't see it

Well, that’s a relief. Labor and the unions are claiming we have a problem with increasing casualisation and job insecurity, but The Australian Financial Review has looked up the official figures and discovered that, if anything, the proportion of casual workers has been falling. So, the problem’s a furphy? Sorry, ain’t that simple.

Strictly speaking, the Australian Bureau of Statistics’ labour force survey doesn’t measure “casual” employment, and certainly makes no attempt to measure whether jobs are secure or insecure, precarious or solid as a rock.

What it does do is ask the workers it surveys whether their job entitles them to annual and sick leave. We’re left free to assume that those who say no must be “casuals”, whereas those who say yes must be “permanents”.

It is true that, by this measure, the proportion of all workers who are casuals grew strongly in the decades before 2000, but then was little changed until the onset of the pandemic in 2020.

But it’s also true that the absolute number of casuals continued to rise until the pandemic.

In the two years since February 2020, the number has fallen – by 61,000, or 2.3 per cent – and so have casuals as proportion of total employment.

I very much doubt the pandemic has cured us of insecure employment.

With some people unable to work because they had the virus or were in isolation, and with our borders closed to the usual supply of temporary workers from overseas, employers became acutely short of labour. But I wouldn’t assume that what employers do during a pandemic is what they’ll keep doing when conditions improve.

So whether the labour movement is wrong to say casualisation is increasing is open to debate. And even if the proportion of casuals continues to decline in the years ahead, does that mean insecure employment isn’t worth worrying about?

In any case, casualisation isn’t really what Laborites are on about. It’s job insecurity that’s the issue. And a casual look at the statistics won’t tell you much about that either.

One man who has taken a very careful look is David Peetz, a professor of employment relations at Griffith University. He summarised his findings in two articles for The Conversation.

He started by taking a closer look at what the figures say about the nature of casual jobs. Why do some jobs need to be casual, and why do some employers need casual jobs?

Surely the answer is that employers want flexibility because they need some people to work at varying times for short periods.

But Peetz found that about a third of casuals worked full-time hours. About half had the same working hours from week to week, and were not on standby. More than half could not choose the days on which they worked.

Almost 60 per cent had been with their employer for more than a year. And about 80 per cent expected to be with the same employer in a year’s time.

What this suggests is that many workers classed as casuals don’t need to be casual in the traditional sense. Peetz found that only 27 per cent of casuals worked varying hours and had no minimum guarantee of hours.

This means a huge proportion of the workers classed as casual because they’re not eligible for paid leave could be classed as permanent, but aren’t.

Why not? One possibility is that the employer simply wants to save on the cost of leave. But defenders of the status quo assure us casual workers receive a special 25 per cent loading in lieu of paid leave. What’s more, many casuals prefer the loading to the entitlement, we’re assured.

The statistics bureau no longer asks workers who say they have no leave entitlement whether they receive a loading – or whether it’s as high as 25 per cent. But back when it did ask, less than half of casuals said they got it.

I wonder how many cases of “wage theft” involve the non-payment or under-payment of leave loading. As for people wanting cash now not paid leave in the future, that’s a sign they’re living hand-to-mouth on a wage too low to give them financial security.

Peetz argues the reason so many people working regular full-time jobs are classed as casuals is because employers have the bargaining power to impose insecurity on some of their less-skilled or less senior workers.

Even if the employer isn’t also saving on how much they have to pay the worker, they get the “flexibility” of being able to get rid of workers without notice or redundancy payout. The worker may not even be formally terminated, just not be given any more hours.

Did someone mention job insecurity?

Looking more broadly, Peetz found that the real causes of insecurity aren’t the type of contract workers are on – casual or permanent, full-time or part-time – but rather the way organisations are being structured these days.

“This is designed to minimise costs, transfer risk from corporations to employees, and centralise power away from employees,” he argued.

This motivation helps explain the dramatic increase in franchised businesses. It’s the franchisee that bears responsibility for scandals such as underpaying workers.

Other corporations call in labour-hire companies to take on responsibility for their workers. This cuts costs and transfers risk down the chain – thus making jobs more insecure. Labour-hire workers are usually casual full-time workers, he argues.

Some companies set up spin-offs or subsidiaries. Some just outsource to contracting firms.

“On the other hand, some organisations have found relying on part-time casuals counterproductive, as workers had no commitment and became unreliable. Some large retailers now use ‘permanent’ part-timers rather than casuals,” he wrote.

Between 2009 and 2016, “casual” part-timers grew by just 13 per cent, whereas “permanent” part-timers grew by 36 per cent.

Businesses have used their power to cut their labour costs. Many workers’ jobs have become less secure in the process.

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Aged care crisis a clue we’ll be paying higher, not lower taxes

Do you like paying tax? No, I thought not. With so many other calls on our pockets, it’s easy to tell ourselves we’re already paying enough tax – probably more than enough.

Trouble is, our reluctance to put more into government coffers doesn’t stop us demanding the government spends more on additional and better services.

This presents a problem for politicians on both sides. They solve it by ensuring that, particularly in election campaigns, they tell us what we want to hear, not the unvarnished truth.

They’re often promising a tax cut sometime after the election, but also telling us their plans to spend more on this and more on that. What they don’t mention is what might have to happen after the election to ensure the tax cuts and spending increases don’t add too much to government debt.

But we’ve become so distrusting of our politicians that, in more recent years, they spend less time telling us how wonderful their own policies are and more time telling us how terrible the other side’s policies would be. Fear works better than persuasion.

Scott Morrison won the last federal election partly by claiming the Liberals are the party of lower taxes, whereas Labor is the party of “tax and spend”. It worked so well he’s bound to say it in this year’s election campaign.

So, it’s worth examining the truth of the claim. It strikes a chord because it fits voters’ stereotypical view that the party of the bosses must surely be better at running the economy and managing the government’s budget than the party of the workers.

But just because it fits our preconceived notions doesn’t make it true. It’s true that Labor’s record shows it to be a party that spends more on public services, and so has to tax more. What’s not true is that the Liberals are very different.

The record simply doesn’t support their claim to be the lower taxing party. If you look at total federal tax collections as a proportion of national income (gross domestic product) – thus allowing for both inflation and population growth – over the past 30 years, taxes have been highest under the Howard government and the present government.

Most of this has happened without explicit increases in taxes and despite governments usually having tax cuts to wave in our faces as proof of their commitment to lower taxes.

So, what’s the trick? An old one that all of us know about but few of us notice: bracket creep. It works away behind the scenes slowly but steadily increasing the proportion of our incomes paid in income tax. This usually ends up increasing tax collections by more than governments ever give back in highly publicised tax cuts.

Now, however, the aged care sector’s inability to cope with the additional pressures from the pandemic – where they’re so desperate for workers they even want help from the Army’s clodhoppers – offers a big clue about the tax we’ll be paying in the coming three years: more not less.

Ever since the public rejected Tony Abbott’s plans for sweeping spending cuts in 2014, the government has been trying to keep a lid on government spending in areas where there wouldn’t be much pushback.

By this means the Libs have had remarkable success in limiting the growth in government spending overall but, as the Parliamentary Budget Office has warned, they’re holding back a dam of spending. They can’t keep it up forever.

Eventually, problems and pressures from the public get so great, the government has to relent and start catching up. You can see that in this week’s election-related decision to reverse some of the cuts in grants to the ABC.

But a more significant area where the government’s been trying to limit the money flow is aged care.

It’s clear the sector’s problems getting everyone vaccinated and coping with COVID-caused staff shortages have just piled on top of all its existing problems.

The longstanding attempt to limit costs by moving the sector to for-profit providers has failed, with businesses making room for their profit margin by cutting quality. The aged care workforce is understaffed, underqualified, underpaid and overworked.

Most jobs are part-time and casual; staff turnover is high. When a work-value case before the Fair Work Commission is decided, hourly wage rates may be a lot higher.

After the royal commission’s shocking revelations, the government had no choice but to ease the purse strings, spending an additional $17 billion in last year’s budget. But it’s already clear a lot more will need to be spent to get the care of our parents and grandparents up to acceptable standards.

Turn to the national disability insurance scheme and its problems, and it’s clear we’ll end up having to spend a lot more here, too.

And that’s before you get to the failure of the job network – “employment services” – and the chaotic understaffing of Centrelink.

We have a lot of repressed government spending to catch up with. Don’t let any pollie tell you they’ll be putting taxes down.

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We should make the economy less unequal - and we can

Since the working year doesn’t really get started until after Australia Day, it’s not too late to tell you my New Year’s resolutions. Actually, they’re more in the nature of re-affirming my guiding principles as an economic commentator. Why are we playing the economic game? Who are the people it’s supposed to benefit? And would all the policies I write in support of lead us towards or away from these ultimate objectives?

My first principle is that “the economy” – all the daily effort we put into producing and consuming goods and services – should be managed to benefit the many, not the few.

But it’s hard to believe this has been our overriding objective, particularly in recent decades. Although most of the activity in the economy is undertaken by the private sector – households and businesses – this activity is regulated by the public sector, governments.

Since our governments are democratically elected, this ought to mean that governments govern in the interests of all voters, not just some. But, as we all know, sometimes it doesn’t work out that way.

Sometimes governments pander to the majority when it gangs up against an unpopular minority – asylum seekers, for instance. Other times, governments act in the interests of powerful individuals, businesses and interest groups.

Since the two main political parties have become locked in a hugely expensive contest to influence voters at election time, they seem to have become more receptive to the interests of businesses able to donate generously to party coffers.

The notion that the economy will work best when governments manage it in ways that best suit the interests of business was hugely reinforced by the 30-year reign of a fad called “neoliberalism” – a movement started by naïve econocrats and economists (and supported by yours truly) that was soon hijacked by businesses and politicians who saw an opportunity to advance their own interests.

The neoliberal era is over – the proof of which you see every time Scott Morrison announces another government subsidy to a new gas-fired power station, oil refinery or Snowy Mountains scheme.

But our new project, to redress the balance of benefit in favour of ordinary workers and consumers, has a long way to go. It will make more progress when more voters understand the need to give ordinary players in the economic game a bigger share of the prizes.

Business invariably justifies its demand for favourable treatment by the jobs it creates. But increasingly, those jobs are of a lower quality than we have come to expect.

Many are casual, part-time and insecure. They come with fewer safeguards: sick and holiday pay, workers compensation coverage, super contributions. Pay rises are fewer and meaner. Wage theft has become common.

Voters need to realise the rise of crappy jobs in the “gig economy” is not some inescapable consequence of technological progress. It’s a policy choice that governments have made using the power we give them.

Were voters to tell politicians more forcefully that such a deterioration in the quality of the working life of the rising generation is unacceptable, they would act to stop less-scrupulous businesses finding ways to avoid or evade the labour laws that protect the rest of us.

All this is happening while the share of national income going to profits has risen strongly, at the expense of the share going to wages. And the share of income collected by the top 1 per cent of Australia’s income earners has risen to about 9 per cent of total income.

A capitalist economy wouldn’t work as well as it does were entrepreneurs not always trying new ways to increase their profits. The trouble is that not all the ways they try are of benefit to the rest of us, not just themselves and their shareholders.

In such cases, governments should not shirk their responsibility to act in the interests of the many not the few. Nor should we fear that, unless we give businesses free rein in their pursuit of higher profits, our business people will lose all interest in running businesses.

So, a longstanding view of mine is that we’d all be better off if business executives focused less on maximising profits (and their related bonuses) and more on giving their customers value for money and ensuring all their employees had rewarding jobs.

Not just jobs that were better paid and more secure, but more emotionally satisfying because they gave workers more autonomy – more freedom to choose the best ways of doing their job – and jobs better fitted to a worker’s particular strengths and preferences.

Easier said than done? True. Particularly because, though governments can prohibit certain undesirable practices in the treatment of workers, they can’t legislate to force bad bosses to be good ones.

Not easy, but not impossible to reshape the economy to improve it for ordinary people, not just bosses. And we won’t get any improvement until we accept that it is possible, and that we should measure the politicians we vote for according to their willingness and ability to spread the benefits of economic life less unequally.

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Job insecurity is about shifting risks, not being flexible

One thing we’ve learnt from the pandemic is that, for those who rely on evidence rather than anecdotes, what we believe to be The Truth keeps changing as we learn more. Take the way the medicos changed their tune on mask-wearing as more evidence came in.

It’s the same with the truth about job insecurity. The unions have gone for years claiming that work has become less secure, and in recent years the rise of the “gig economy” – where people get bits of paid work via a digital platform such as Uber or Deliveroo – means many people have found that claim a lot easier to believe.

But the training of economists says you should base conclusions about the economy on statistical evidence, not anecdotes or even personal experience. And the trouble is, a quick look at the Australian Bureau of Statistics’ figures for the labour force shows little sign of growing job insecurity.

The bureau doesn’t measure insecurity as such. Nor, since there’s no legal definition yet, does it even measure casual employment directly. But, since casual workers aren’t paid annual and sick leave, the bureau’s figures for those workers who say they aren’t eligible for paid leave are taken to be a measure of casual employment.

By this measure, although casual employment grew strongly to about a quarter of all workers in the 20 years to the turn of the century, that’s hardly changed in the 20 years since then. So where is all the growing insecurity?

Of course, since the big companies running the gig platforms on the internet have gone to great lengths to ensure the people getting work from them aren’t classed as their employees, they aren’t included among the casual employees.

No, they’d be counted as “self-employed”. But the figures show no great change in the proportion of workers who are self-employed over the past 20 years.

So where’s all this growing job insecurity we hear about? Short answer: buried much deeper in the figures.

Before we get to that, one thing we can say with confidence, however, is that though the gig economy is highly visible and gets much publicity in the media, it isn’t all that big relative to a labour force of more than 13 million people.

And, contrary to what some young people who spend too much time on their phones imagine, it’s highly unlikely that most work is in the process of moving to some internet platform. No, the issue of insecure employment is much bigger and wider than what happens to the gig economy.

One labour market expert who’s been working to explain why job insecurity is real despite its seeming absence from the stats is Professor David Peetz, of Griffith University.

In a piece he wrote for my second-favourite website, the universities’ The Conversation, in 2018, Peetz argued that the real causes of job insecurity aren’t the type of contract people are on – casual or permanent – but the way businesses are being structured these days.

These new organisational structures are designed to minimise costs, transfer risk from corporations to employees, and shift power away from employees, Peetz says.

Another part of his explanation is that the statisticians’ nationwide totals conceal changes in some industries but not others. (Other academics, from Curtin University, have used their own index of precarious employment to show that insecure employment is above average in the accommodation and food services, agriculture, and arts and recreation industries, but below average in the utilities, financial services, and public administration industries.)

Peetz says that “large corporations want to minimise their costs and risks, avoid accountability when things go wrong, and ensure products have the features they want.”

One instance of changing organisational arrangements is the dramatic increase in franchised businesses – where what looks like the local branch of some national chain is actually owned by a local small business person.

“The franchisee bears responsibility for scandals such as underpaying workers,” he says.

“Other corporations call in labour hire companies to take on responsibility for their workers. This cuts costs and transfers risk down the chain – which means jobs are more insecure.

“Most people working for franchises, spin-off companies, subsidiaries and labour hire firms are still employees. It’s more efficient for capital to control workers through the employment relationship than to pay them piece rates as contractors. That would run the risk of worker desertion or of shortcuts affecting quality.” (One powerful reason most of us won’t end up in the gig economy.)

In research published this month, Peetz drills into previously unpublished statistics from the bureau on casual workers to discover more of the elusive truth about “precarity” (my nomination for ugliest new word of the year).

He found that about a third of workers classed as “casual” because of their lack of leave entitlements worked full-time hours. More than half had the same working hours from week to week. More than half could not choose the days on which they worked.

Almost 60 per cent had been with their employer for more than a year, and about 80 per cent expected to be with the same employer in a year’s time.

Does any of that fit your mental image of what it means to be a casual worker? Get this: Peetz found that as few as 6 per cent of those we class as “casuals” work varying hours or are on standby, have been with their employer for a short time, and expect to be there for a short time.

Note that employers can usually dispense with the services of casual employees without giving them any notice, nor any redundancy payout.

“Overall,” Peetz concludes, “what I’ve found suggests the ‘casual’ employment relationship is not about doing work for which employers need flexibility. It’s not about workers doing things that need doing at varying times for short periods.

“The flexibility is really in employers’ ability to hire and fire, thereby increasing their power. For many casual employees there’s no real flexibility, only permanent insecurity.”

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