Greg Combet's Speech To Future Of Work Conference

Income inequality, job insecurity and the increasing intensity of work are the key issues for unions arising from workplace change says ACTU Secretary Greg Combet.

Introduction

We have heard today that complex changes are taking place in the world of work. These changes are being driven by the transformation of the economy.

The opening up of markets, economic exposure to international competition, the application of market principles to many areas of government activity, and the decentralisation of industrial relations have heralded remarkable increases in Australia’s productivity and our competitive and economic performance.

Australian unions have a solid record of providing responsible support for improved economic performance.

Unions understand how growth generates jobs and opportunities.

In recent years women’s workforce participation has increased, especially in professional jobs, part time work has generated opportunities for many people, and new technologies and business practices have made many jobs more interesting and rewarding. These are just some of the positive effects of change.

But at the end of a decade of record economic performance - where annual GDP growth averaged more than 4% and profits increased at an average annual rate exceeding 7% - we find ourselves in a society with widening inequality, and in workplaces where the employment safety net is full of holes.

The fact is that Australia’s economic prosperity in recent years has been built on the back of inequality, and the intensification of work. Economic risk has been shifted directly onto employees through casualisation, contracting and agency employment arrangements.

I see it graphically illustrated time and time again in my work.

People on $12 an hour battling for a pay rise and better standard of living, while failed executives and directors walk away with millions. People losing their entitlements while the top end of town take a golden parachute.

People meeting increased work demands with fewer staff, working longer hours for no extra pay, and hardly seeing their kids.

And the hundreds of thousands of redundancies – people losing secure permanent jobs to lower cost labour hire and contracting arrangements, or to outright corporate collapse.

Unions do not oppose improved economic competitiveness – we support it.

But we support change which is better balanced, which delivers the benefits of prosperity more fairly, which generates flexibility for employees as well as employers, and which is underpinned by decent employment standards.

Key Issues

What are some of the issues of greatest concern to unions?

First, income inequality. There have been extraordinary increases in wealth for those at the top of the labour market.

In the 1990’s pay rates for men earning $90,000 a year grew by more than 50% in real terms. Real earnings for the bottom 40% of males actually fell for most of nineties, only returning to their 1989 value in 2001.

Almost all the new jobs created in the 90s were low-paid, part time and casual.

87% of all new jobs in the 1990’s paid less than $26,000. Nearly 50% less than $15,600 a year. Middle income jobs actually declined.

One million people are paid less than $15 per hour.

Thousands of working households cannot afford holidays, basic household items, and sometimes heating, clothing and food.

Unemployment will not fall below 6%, and no consideration of the future of work should overlook the circumstances of those without work.

Inequality is a critical issue from a union standpoint.

Secondly, unions are concerned that so many jobs are insecure and lack basic levels of protection. The principle contributor in this regard is casual employment.

On current trends more than one in every three jobs in Australia will be casual by the end of the decade.

That’s one in every three employees vulnerable to the loss of their job on one hours or one days notice, with no paid sick leave, holiday pay or access to other community standards, leaving people with little capacity to borrow for a home or plan for a family.

Traditionally, people say ‘oh well, at least casuals have got a loading on their hourly rate to compensate them’. But in our new flexible world of work the reality is that only about half the casual workforce get a loading – that is it’s flexible for the employer.

In truth casual work for many people is pretty much day to day living - living without a secure future.

It’s all very well for the policy elites to say this is the price of competitiveness, but how many of you here would voluntarily give up your right to sick pay, annual leave or things like termination pay to boost your employer’s cost competitiveness and flexibility?

The third key issue for unions is the intensity of work. In ACTU surveys of over 16,000 people over the last several years, employees consistently rate the pressure they are under at work as a top priority.

People don’t mind working harder.

But our research and our experience shows that people are confronting unreasonable demands. In their workplace this means that health and safety, stress and fatigue, workloads and staffing levels are key industrial concerns.

But it also means that there is great pressure on their family and community lives.

56% of households have two breadwinners, up from 41% twenty years ago. And if the household has kids, or wants to have kids, this raises big issues – income maintenance while the female is out of work, a smooth transition back to work, child care costs, and the conflict between work commitments and school and parenting.

Casual work amplifies these pressures - no less than 40% of working mothers with kids under 12 years of age are casuals – no paid leave leading up and after the birth of a child, no paid carer’s leave when a child is sick, any time off work is lost income and potentially a lost job.

Values

But why does any of this matter? Are these trends something we should be concerned about or encouraging? Should they be accepted as the cost of our stellar economic performance?

To a significant degree that depends on your values.

If the only objective is to create more efficient and flexible labour markets - without regard to issues of equity or fairness – then the trends in the contemporary workplace and society would be viewed as positive.

Tony Abbott’s contribution to the debate suggests that’s where he’s at. He says: In the end we have to be a productive and competitive society, and greater inequality might be inevitable.

But of course, that’s not a union view. We have a different set of values. We don’t accept the inevitability of worsening inequality.

A fairer share in the new prosperity, equal access to health, education and employment, safety and fair treatment at work, the ability to participate in family and community life, and a role for government to develop these outcomes – these are fundamental beliefs in the union movement.

We believe respecting people’s rights in the workplace is a foundation of a prosperous and fair society – not an impediment to it.

We want the opportunities and the rewards that come from a strong, competitive Australian economy to be shared amongst the many and not just the few.

We want a better reconciliation of the legitimate interests of working people for security and improved living standards with the legitimate commercial interests of employers competing in an open economy. And we believe it is achievable.

Pillars for a fairer society

So, from a union point of view, what are some of the workforce related initiatives we believe are needed to achieve a fairer Australia?

I will speak about four policy areas in our mind at present:

  • A secure alternative for casual workers
  • Genuine choices which improve work and family balance
  • Measures to tackle low pay
  • Collective bargaining rights for all employees
  • A secure alternative for casual workers

    Casual part time work is the growth area of the jobs market. During the 1990’s permanent employment increased by just 5% - the number of casual jobs grew by almost 70%.

    27% of Australian workers are now casuals – that’s about 2 million people.

    A large number of these workers are women, many with caring responsibilities. But casual employment for men is expanding rapidly – almost doubling as a proportion from 12% of male employees in 1988 to 23% in 2001.

    Casuals at times are also the victims of discrimination – receiving a lesser rate of pay for the same work as permanent workers in the same workplace, and missing out on training and career opportunities.

    Casuals are not just young people in the services sector, they are 25 to 45 year olds in the prime of their working lives. Casual employment is possibly the most distinctive feature of our workforce transformation.

    Critically though, more than half of all casuals are in fact anything but casuals – they have worked in the same job on a regular basis for more than a year.

    I remember meeting a group of women in Mildura last year who worked in the dried fruits industry. They had worked for years as casuals, one of them for twenty four years, and of course they’ve never had paid holidays, sick leave or paid family leave of any kind.

    There is a place for genuine casual employment, and there is a place for people who would rather be paid a casual loading than enjoy the benefits of permanent work.

    But there is also a place for casual workers to have a genuine choice, a more secure alternative, particularly when they are in reality defacto permanent workers.

    This can be achieved by creating a right for casuals to opt for permanent employment after a minimum period in the same job, for example after six months.

    Unions have begun the process of achieving this new and important right. The manufacturing industry award now offers the opportunity to become permanent after six months of regular employment with the same employer.

    A similar change is taking place in the hospitality industry.

    If an employee has a genuine choice, and they are in practice employed on a regular continuing basis with the same employer, those wishing to access the security and benefits of permanent employment will be free to do so.

    At the moment employers have it all their own way with casual workers. Some balance is desperately needed.

    Unions will bargain for this right, and we will lobby governments to support it. We will debate at our Congress in August how it can be included in minimum award standards. It is one simple way by which well over 1 million casual workers could access employment conditions which are accepted community standards.

    Genuine choices which improve work and family balance

    More parents are working and they need more support to help them balance these sometimes conflicting responsibilities.

    Almost half of all women aged 15 to 44 have dependent children and more than 60% of these women are in the workforce.

    Paid maternity leave is a must.

    It is equitable and affordable.

    Even progressive employers are on side.

    Thanks in no small part to the hard work and commitment of Sharan Burrow and Prue Goward the argument for paid maternity leave has largely been won.

    Only John Howard stands in the way, shuffling from one possible option to another.

    But not only paid leave is an issue. Workplace policies should allow parents to choose to take longer periods of unpaid leave, for example up to two years, after the birth of a child.

    The option for parents to return to work on a part time basis should also be extended. Currently the employer has an effective veto over this.

    A genuine choice for employees needs to be developed, which allows an easier transition back to work, more time with a child, and part time access to child care. It will not happen without strengthening an employee’s right to choose part time work.

    Modern policies should also seek to support families not just following the birth of a child, but also at other key phases of work and family life.

    Flexibility in working hours is crucial in this regard.

    Most working parents presently have no control over their ability to meet the conflicting time imperatives of work and child care, work and before and after school care, and work and school holidays.

    These time pressures are the most stressful elements of many parent’s lives.

    Employers must offer employees genuine choice and flexibility with their working hours. This will not be achieved without the establishment of new employee rights.

    Later this year the ACTU will be prosecuting a test case on this issue, as well as the issues I outlined a moment ago - longer unpaid parental leave and the right to return to part time work.

    Our flexible working hours claim would entitle an employee to request changes in working hours including conversion to part time work, and place an obligation on the employer to grant such request, unless there were valid operational reasons for refusing. Any dispute would be resolved by the Industrial Relations Commission.

    As an example of what I mean, take school holidays. Our claim, if successful, would allow an employee to take leave without pay during school holidays, but continue to work full time at other times. It would effectively be a different type of part time work.

    The claim is modelled on rights recently legislated by the Blair Government.

    Hours of work in general is also an important issue in the work/family debate.

    Since 1983 average hours of work for full time employees in Australia have grown steadily.

    We now have the second longest average working hours for full time employees in the OECD and the largest proportion of people working more than 50 hours a week.

    At the same time hundreds of thousands of workers are looking for more hours so that they can earn enough to live on, and many more than this are unemployed.

    We’ve got the work rich and the work poor, the overworked and the underemployed.

    There will be no easy solutions or quick fixes here. The issue is too complex.

    But over time the ACTU believes it important that we debate solutions to long working hours alongside approaches to unemployment and underemployment, including the idea of a cap on working hours. The Europeans are moving in the direction of an average limit of 48 hours per week.

    The first step is to attain widespread community recognition of the need to develop workable and practical limits to the working week, and then to apply this in the workplace.

    The ACTU aims to stimulate discussion of this issue, and it will be a feature of our Congress in two months time.

    Measures to tackle low pay

    I indicated earlier that income inequality is a key union concern.

    We believe that action is needed on minimum wages and the tax and social security system.

    The relationships between family incomes, minimum wage rates, and the tax and family payments systems are complex.

    But the most effective strategies for lifting the living standards of the low-paid will involve coordinated action in all of these areas.

    Unions have been playing their part achieving decent increases in minimum wages in a hostile environment.

    In the past 2 years the ACTU’s minimum wage case applications have delivered $35 a week to the lowest paid workers in our community – adults workers with hourly rates of pay of less than $12 an hour.

    But more needs to be done to combat the widening inequality that has accompanied Australia’s strong economic performance.

    Many low-paid workers are slipping into poverty.

    In a country like Australia I consider this to be unacceptable.

    With all due respect to its authors, this five economists idea that you create jobs and improve the position of the low paid by freezing their pay and giving some of them a tax credit is fanciful.

    Analysis by Professor Patricia Apps (Sydney University) has even suggested the plan would increase inequality.

    Addressing the needs of the low-paid requires a strategy focused on the achievement of significant increases in minimum wages and on the delivery of improved benefits to low income households through the tax and social security system.

    This is the approach that I support.

    The first step is to secure government support for the need to address inequality, to narrow the gap.

    Tightly targeted tax and social security changes are needed because we need to find a mechanism assisting low income earners without the benefits flowing through to high income individuals – which is the problem with tax cuts delivered by raising tax thresholds or lowering marginal rates. High effective marginal tax rates for those in receipt of Government assistance are also a reason for considering this approach.

    The Blair government in England has successfully applied a combination of tax and other measures worthy of analysis.

    Minimum wages have been increased by around 13.5% over a three year period.

    Increases in minimum wages have been supported by a suite of tax credits that provide guaranteed minimum incomes at different levels for different family types. The tax credits are all structured so that maximum benefits go to households with the lowest income.

    The over-all impact of the program has been remarkably progressive and there has been no negative effect on employment levels.

    While we share concerns with groups such as ACOSS about the inequity of tax credits tied only to those in work, consideration of tax and social security, high effective marginal tax rates and minimum wages should be a focus of future Australian reform which addresses income inequality.

    Collective bargaining rights for all employees

    One of the reasons that the position of many employees and working families has weakened is because their rights at work have been diminished.

    For the better part of one hundred years the system of awards and compulsory arbitration enshrined a collective set of protections. Decentralised bargaining and deregulation has finished all that.

    But the system put in it’s place is seriously flawed and imbalanced – it’s leaving millions of people vulnerable.

    A fairer set of workplace arrangements must begin with the acknowledgment, acceptance and legal recognition of some basic employee rights.

    And the first of these is the right for individual workers to choose to come together and bargain collectively with their employer.

    This is a simple, fundamental and internationally recognised employee right yet it does not effectively exist in Australia.

    Australia is one of the few countries in the world where employers have the legal right to refuse to bargain collectively with their employees, even if every single worker wants that to occur.

    A fairly current dispute in Sydney at the Morris MacMahon factory illustrates the problem.

    Low paid workers joined the union because they wanted the union to negotiate a collective agreement on their behalf. Agreement couldn’t be found and the company refused to negotiate any further with the union, insisting instead on individual contracts on terms set by the company.

    This is exactly the situation which further entrenches the problems we are discussing today.

    The lack of an enforceable right for the employees to use their collective negotiating power directly leads to outcomes involving more casual work, low pay, more demanding work loads, lower staffing levels, and conflict between work and family obligations.

    The pendulum has swung too far in favour of employers. We will achieve more balanced outcomes when there is more balance in industrial relations.

    In the Morris MacMahon case the workers had no other recourse than to go on strike simply to achieve the right to negotiate a collective agreement. There is no access under the Howard industrial relations system to compulsory conciliation and arbitration to resolve the dispute – it’s just the law of the jungle, survival of the fittest.

    The employer can starve people back to work, or perhaps choose to replace the workforce with even cheaper labour. We simply can’t afford this approach as a society. It will have very ugly consequences.

    A collective bargaining right for employees is one simple and fundamental standard which would allow for more balanced outcomes to be achieved in the workplace. It must be seen as part of the solution to the challenges of workplace and workforce change.

    Conclusion

    The policy responses I have touched upon are only some of those that are occupying the ACTU’s mind. I have not, for example, spoken of a renewed agenda for skills and vocational training, or the case for protecting employee entitlements and improving corporate governance.

    There are many areas of policy demanding attention. But the key point is this – new standards are needed to underpin labour market flexibility.

    They are needed to prevent growing disadvantage, inequality, and the intensifying pressure on working families. They are needed to ensure that people get a fair go.

    This is not a plea to turn back the clock. It is an attempt to charter a better way forward.

    We have a collective responsibility to interpret and analyse the impact of change.

    We have a responsibility to make judgements about the desirability of these changes on the basis of our values – for unions these are values of equity and fairness.

    And if we think the market is falling short, if a better balance is required, we as participants in public policy making should act.

    Any policy response should not be paternalistic in nature – nor should it assume ‘one size fits all’.

    It needs to equip people with genuine choices.

    Unions will fight for this.

    If we achieve it, and build decent standards and rights which underpin flexibility, Australians will be able to share more fairly in the benefits of economic prosperity.

    Greg Combet
    ACTU Secretary
    Speech to Future of Work Conference
    Thursday June 12, 2003
    Merchant Court Hotel, Market Street, Sydney

    Read the ACTU’S media release - New Report: One In Three Workers Will Be Casual By 2010