‘Militant’ unions are a thing of the past — just like strong wages growth

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One of the hardest things to learn as you get older is how difficult it is to persuade someone with facts alone.

Have a look at the graph below.

It shows how many working days have been lost to industrial disputes in Australia since early 1985.

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The most recent data is for the September quarter this year, when 11,700 working days were lost.

The peak of 699,200 days lost was in the December quarter of 1992.

Notice how something dramatic occurred after 1992 that severely reduced how many days were being lost to strikes?

That was a watershed moment in Australian industrial relations.

In 1993, the Keating Labor government passed the Industrial Relations Reform Act which legislated the full introduction of enterprise bargaining, and for the first time in Australia’s history, a limited “right to strike”.

In the years afterwards, the screws were tightened further with other legislative changes, cumulatively curbing workers’ power.

You can see strike activity is practically on life support these days, according to the Bureau of Statistics data released last week.

Nonetheless, many people still refer to “militant unions” as though it’s the 1970s, and believe unions still dominate industrial life — and politicians may find it easy to reinforce that narrative by repeating the words often enough.

Ancient wisdom knew emotion was key

Marcus Cicero, the ancient Roman politician and author, was apparently one of the most persuasive public speakers in antiquity.

He said the key to swaying audiences was to realise that humans are ruled by emotion.

If you want to persuade someone of your argument, don’t appeal to logic alone; appeal to how they feel about something.

Get them feeling angry or frightened or anxious and you’ll find it much easier to have them believing what you want them to believe.

“To sway the audience’s emotions is victory; for among all things it is the single most important in winning verdicts,” he said.

He used different techniques to persuade people.

Repetition (for obvious reasons) and pithy rhymes (because it’s easier to remember something when it rhymes) were favourites.

He liked to focus on the personal defects of his opponents, whether real or imagined, so he could avoid talking about the real issues.

He also loved “labelling” his opponents with negative adjectives whenever he mentioned them, because it had a cumulative negative effect on the emotions of people in his audience.

Think of how Donald Trump does that instinctively by using “crooked Hillary”, “sleepy Joe Biden”, “low-energy Jeb”, “cryin’ Chuck Schumer”, and “foul-mouthed Omar”, among a long list of others.

What does this have to do with industrial strikes?

The point about declining levels of industrial disputation is merely an example of how our brains can hold tightly to a narrative about something regardless of the truth.

It’s something to remember next time you hear economists talking about the paltry levels of wages growth these days.

Back in 2017, long before last summer’s bushfires and this year’s pandemic, the Reserve Bank governor Philip Lowe warned Australia’s economy was suffering a “crisis” in wages growth.

He said workers should realise they could start pushing for a larger share of the economic pie because the unemployment rate was relatively low.

At that point in the economic cycle, Australia’s unemployment rate was sitting at a four-year low of 5.5 per cent but the trend underemployment had just risen to an historic high of 8.8 per cent.

“At some point, one imagines that’s going to lead to workers being prepared to ask for larger pay rises,” Dr Lowe said.

“If that were to happen it would be a good thing.”

Share of national income going to workers keeps declining

Dr Lowe’s comments came after the Bureau of Statistics released data showing the share of national income going to Australia’s workers was close to a 50-year low.

The data showed the share of gross domestic product (GDP) being distributed via wages had fallen to 51.5 per cent, down from 54.2 per cent in the third quarter of 2016, while the share of GDP flowing into the hands of business had risen from 24.5 per cent to 27.5 per cent.

Economist Paul Dales from Capital Economics wrote a note to clients at the time explaining that as a share of GDP the compensation of Australian workers was sitting near the bottom of the international table.

“Back in 1975, Australian households received a bigger share of the economic pie than households in the US, France and New Zealand,” Mr Dales wrote.

“But the downward trend in labour’s share of GDP over the past 40 years has been more marked in Australia than in those other countries, apart from New Zealand.”

Mr Dales said workers in many industrialised countries had seen their share of the economic pie dwindle in recent decades, and it was mainly due to structural changes that reduced the bargaining power of workers, including globalisation, increased flexibility in labour markets, and improved technical innovation, which had reduced firms’ cost curves.

He said the rise in the importance of mining in Australia had also played a part, because modern mining generated relatively large profits with relatively few workers.

Fast forward to this year

New data last week showed the share of national income going to Australia’s workers has just hit another low.

In the June quarter, the labour share of national income fell below 50 per cent for the first time since 1959 after the Federal Government’s COVID stimulus payments to businesses caused company profits jump by a massive 14.9 per cent.

That trend continued in the September quarter, with the profit share lifting to another high and the wages share stuck well below 50 per cent for the second consecutive quarter.

“This means many businesses have buffers to draw on over coming months, but it also raises issues about the targeting of further measures to support the economy,” ANZ senior economist Felicity Emmett wrote in a note to clients last week.

“Strong profit growth has not translated into stronger investment. At least not yet.

“Non-mining investment fell 3.5 per cent in the third quarter to be 13 per cent lower than a year ago. Mining investment also fell [5.2 per cent in the quarter].

“The outlook remains uncertain. While the Government is trying to boost investment with large incentives like the instant asset write-off, firms are yet to commit.

“We expect, though, over time, a recovery in household consumption will feed through to stronger investment outcomes.”

So, ANZ’s economics team believes that despite the percentage of total factor income going to the commercial sector sitting at record levels in Australia, business investment will pick up noticeably once households start spending more.

Australian Greens leader Adam Bandt told the ABC that direct investment in public services and infrastructure would have provided far more effective stimulus than business subsidies in these circumstances.

“The Government’s trickle-down approach to recovery has seen profits grow while jobs and wages drop,” Mr Bandt said.

“The handouts to big business while cutting support to everyday people means Australia is coming out of the pandemic more unequal than when we went into it.”

Federal Government to push for more industrial relations changes

Federal parliament sits this week for the final time this year.

The Federal Government is expected to announce plans to give employers hit by the COVID shutdowns, such as retailers, more powers to offer their part-time workers extra hours without paying overtime rates.

They also want to make it easier for business to change workers’ duties and location of work more easily.

It will be sold as a way to support the economic recovery on the other side of the pandemic.

The proposed changes mirror the emergency flexibility provisions enjoyed by employers who accessed JobKeeper this year, but to allay workers’ concerns that the provisions in the bill will be made permanent there will reportedly be a two-year limit on some of them.

However, unions fear the bill will be a trojan horse for more casualisation of the workforce.

By business reporter Gareth Hutchens (Original ABC Article)

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