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Decent sustainable work for all Australians in a global economy

21 May 2012
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The ACTU’s insecure work inquiry should be welcomed by all interested in our long term prosperity, writes Michael Horn, from the Brotherhood of St Laurence.

The inquiry has shown the creeping impact over past decades of the shift to insecure employment arrangements on the lives of workers and their families. Up to 40% of the workforce are employed under casual, contract or labour hire conditions. Reform to employment protection measures that reflect the changing patterns of work are essential. However, they will not be sufficient on their own to address the hiring needs of employers or working age Australians who desperately seek work.  

While the national unemployment rate is hovering around 5%, Australia has a higher rate of underemployment – people who have some part time work, but want more – of over 7%.  Thirty years ago, the underemployment rate was less than 3%. Put together, the unemployed and underemployed total 1.5 million people. Further, more than 800,000 people have a disability who are often excluded from mainstream social and economic life. Many of these could undertake paid work – given better support and a greater commitment from employers.

The focus on the impact of the global financial crisis has overshadowed deeper and long lasting changes to our labour market as we integrate into a global economy, characterised by increased mobility of money, goods and labour.  We still have outdated forms of protection and inadequate investment to ensure a productive workforce that maximises the participation of all working age Australians.

This is not a challenge unique to Australia. Across the OECD, serious consideration is being given to how best to modernise labour market policies, suitable for post-industrial 21st century economies, that reconcile the twin objectives of flexibility and security.

 In recent months there has been a growing call from business for a fresh wave of productivity reforms. There is a risk that this will be too narrowly conceived to create an even more flexible labour market, leading to weaker protections for workers and increased income insecurity for households. At the same time, some employers, with growing support from senior government ministers, are calling for increased migrant intake of workers to fill labour shortages – not just in mining but also in service and hospitality sectors.

There is now a fundamental mismatch between labour supply and demand, both across skill levels, regions and communities. This is an issue of national importance.  It therefore requires a constructive dialogue that goes beyond narrow parochial or short-term interests.

On the one hand, a modern dynamic Australian economy requires a flexible labour force that can be adjusted to take up emerging jobs in growth industries. Overly rigid industrial relations provisions to protect job tenure with a particular employer can inhibit business, especially small and medium size business. The distinction between job and employment security is critical. The Brotherhood of St Laurence submission to the ACTU Inquiry stressed the importance of building the portable skills (accredited training and real work experience) of the workforce, so that they can take up emerging job opportunities and achieve income security without spells of unemployment or underemployment.

This is why we called for wider ranging labour market reform that will deliver a better integrated and more coherent policy framework. This should include changes to employment protection for workers as proposed in the Howe report. But an inclusive growth framework must also include strengthening of employment assistance programs, the provision of adequate income support payments to prevent social exclusion, a stronger focus on training and skills tailored to job prospects and a focus on demand side measures to encourage workplace diversity and social procurement.

The current employment services system fails to assist job seekers who face significant barriers to employment, such as lack of ‘on the job’ experience, inadequate education, poor literacy and other basic skills and long term health conditions. According to the most recent government data only one quarter of highly disadvantaged job seekers assisted by JSA find work work, and among them over half are in casual, seasonal or contract work with little prospect of advancement.

Australia invests less in active labour market programs that assist people to obtain work compared with similar countries, ranking 7h lowest among 30 OECD nations (2009-10). We need new integrated models of employment assistance for the long term unemployed, for young people with few or no skills, and for those with multiple obstacles to work.

More generous unemployment benefits are also essential. To maintain a stable home, look for work and train in new skills, job seekers need more than $39 to live on each day. An adequate level of income support is essential to enable social and economic participation.

We also need to encourage employers to consider candidates from more diverse backgrounds - to focus on the skills required for the job rather than the characteristics of the jobseeker, such as their disability or ethnicity.  Recent Brotherhood research found that employers, in particular small and medium size enterprises, are reluctant to take on disadvantaged job seekers.  Yet there are substantial benefits for businesses that diversify their workforce.

 The evidence and insights into the current labour market obtained by the ACTU Inquiry point to the urgency of serious reform to put in place a social security system for the 21st century that balances flexibility for employers with security for all workers.  The Howe report provides an opportunity to build a consensus for broad based reform that meets a test of fairness and maximises participation in decent work. The challenge for all stakeholders is to develop a consensus, as we slowly emerge from the GFC, to ensure strong economic growth with solid jobs growth an equitable distribution of work that supports social inclusion in the national interest.

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Michael Horn is Senior Manager, Research and Policy at the Brotherhood of St Laurence.

 

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2012
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