The prevailing narrative about Australian economic policy — one pushed hard by the Coalition, the business sector, conservative think tanks and the mainstream media — is that industrial relations is the key area of reform and one where major gains are to be had.
The narrative defies the evidence. The government’s own Productivity Commission (PC) review of industrial relations found the current system working well and flexibly, and failed to find any evidence that industrial relations reform would increase productivity.
One of the few recommendations the PC did venture to make — to reduce penalty rates — turned out to be a dud, with no additional jobs created as a result.
But as the government prepares to launch a new round of industrial relations reform, that self-serving narrative is firmly in place. The entire debate is focused on how brave a Coalition government is prepared to be in “taking on the unions” before backing off in the face of a re-run of the union campaign against WorkChoices. Pragmatists understand that politicians will only go so far. Hardliners demand suicidal policy bravery.
That’s why the Financial Review — having complained last week that the recession wasn’t long enough to spur major reform, and expressed hope that the deterioration of our relationship with China will play that role — is already editorialising about what a disaster it is that the government hasn’t gone much further.
As a result, details around the minutiae of the industrial relations regulatory system like who qualifies as a casual — the result of employers ignoring basic protections in order to push casualisation and work insecurity as far as they can — become the areas of media coverage, when bigger stories get completely missed.
One of those stories is how Australia’s basket-case retail sector has successfully undertaken major reform, and it had nothing to do with industrial relations reform or company tax cuts (that other old faithful of the reform crowd).
Retail has struggled in recent years, with deliberate wage stagnation cutting into household spending, a shift away from goods consumption to services and dozens of regional and national chains going broke. When Amazon arrived in Australia in 2017, commentators confidently asserted that the online giant would eat Australian retail.
But the pandemic has forced Australian retailers to carve out new areas of innovation and expertise and adapt to a radically changing market. There’s nothing like the fear of sudden death for inspiring action.
The monthly retail sales figures from the Australian Bureau of Statistics (ABS) have, since March, confirmed the enormous growth in online sales. October’s sales report, released last Friday, showed that while online sales growth slowed a little in the month from September, it was still more than 65% higher than it was in October 2019 — possibly the single greatest change in Australian business activity in the pandemic.
For context, at the national level, overall turnover rose 7.1% compared to October 2019, up sharply from the 5.6% annual year-on-year growth in September. Retail sales totalled $29.6 billion in October, up from $29.2 billion in September and $27.6 billion a year ago.
Online sales made up 10.4% of total retail turnover in October 2020, or $3.07 billion, down from 10.6%, or $3.09 billion in September. But that compares to a 6.6% share in October 2019 ($1.81 billion).
Achieving that kind of volume has required a rapid switch in corporate policies, the establishment or expansion of delivery systems/fulfilment operations and rapid and continuing investment in technology — an area many Australian businesses struggle with.
It has also placed pressure on transport and logistics companies — both Australia Post and private transport operators — to handle increased volumes.
The result is that many Australian retailers have undertaken a wrenching change in their basic operations and turned themselves into hybrids. While pure online players like Kogan and Temple & Webster have attracted a lot of attention, a lot of other retailers have moved their business focus in the space of a few months in extremely difficult circumstances.
That performance, often by medium-sized firms, is in contrast to some of the titans of Australian business — Westpac, AMP, Rio Tinto — which have had shocking years. But it seems to have gone unnoticed in the business press, where the fixation is so often on how to force workers’ wages and conditions down.
The result in terms of retail sales means businesses have a greater incentive to start investing, confident that households are spending — even if they’re not doing it by going to traditional brick and mortar outlets.
“is that industrial relations is the key area of reform and one where major gains are to be had.”
Having worked in HR for much of the period from 1980 to 2020, I can assure you that all the low hanging fruit has been plucked from that tree. The middle hanging fruit is also plucked, and fruit in the canopy is barely budding.
“One of the few recommendations the PC did venture to make — to reduce penalty rates — turned out to be a dud, with no additional jobs created as a result.”
Exactly as I predicted. Both penalty rates/IR reform and tax cuts do not lead to higher employment. There is no correlation or causation unless you think that businesses employ people out of the goodness of their heart, even if they have no real work for them to do. It’s a category error, a nonsense.
IR Reform can only lead to wages and conditions going down, which feeds into increased profits, not extra jobs. Tax cuts only lead to higher after tax profits, not more jobs. The entire debate is a non-sequitur. Economists, honestly, if there was ever a use for them, it isn’t now, (except to make astrology look like a science)
I’m sure that excess economists (ie the lo!t) would be welcomed in Byron shire to fill in the worst potholes, in one of the highest R/V council areas in the nation.
They could spout an orthodoxy everytime a tyre bumped over them, providing amusement to all within earshot.
Now Bernard (and Glenn), that’s a lot better: thoughtful, calling out the ‘usual crew’ of biz lobbyists (including my old paper) with their wage/tax down down down agenda,
Maybe it is time to fix the industrial relations for the top end of town, where they are paid like they take responsibility for the companies they serve but don’t actually take responsibility and nobody holds them to account.
I don’t understand the neo-conservative fixation on driving down wages and conditions. It is cutting off their nose to spite their face.
Firstly, stressed workers/employees are not productive; content employees are. If employees are being paid properly and on time, and not stressed about where the next mortgage or rent payment is coming from, or how to put food on the table, they are productive, and the employer gets far more bang for the buck.
Secondly, for businesses wanting to turn a profit – let alone just survive – need consumers to open their wallets and spend. Not only on the basics, but also on discretionary items. Consumers are mostly workers and their families. Workers need to paid proper wages in order to have money to spend as consumers. If consumers aren’t spending, the economy grinds to a halt.
None of this is brain surgery.
Henry Ford was a hardline capitalist and he figured out very quickly that paying (at least some of) his workers enough to buy the cars they were making added to his own bottom line. Firstly, employees felt valued and secure, so naturally worked harder and were more productive. Secondly, employees spent their at least part of their wages at their place of work. Both these things added to Ford’s bottom line and overall profits.
Again, not brain surgery.