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					                                       Slave Labour
                                                             BOB DAY

                       If we are so concerned about youth unemployment, why do we impose it?

     It was the best of times, it was the     be the value of the labour itself to the    pletely at odds with the realities of the
     worst of times, it was the age of wis-   person hiring it.                           modern workplace. The notion of vol-
     dom, it was the age of foolishness…it        If all youth employment in Aus-         untary acceptance of a wage unrelated
     was the spring of hope, it was the       tralia today was provided by firms with     to an award seems to offend those who
     winter of despair…We had every-          the resources and staffing policies of      see it only as ‘exploitation’. But this
     thing before us, we had nothing be-      BHP in the 1960s, we wouldn’t have a        view is demeaning to the common
     fore us.                                 problem. Such companies would be            sense of those it purports to protect as
                         Charles Dickens,     able to amortize, over time, the cost of    well as the decency of most employers
                       A Tale of Two Cities   subsidiszing junior wages considerably      and, as far as the small business sector
                                              in excess of the value of the work be-      is concerned, it is a ham-fisted inter-
            HE paradoxes in this pas-         ing done. Unfortunately, the bulk of        vention in the relationship between

     T      sage from Dickens capture
            the predicament of young
            people entering the labour
market today. They’ve been born into
                                              prospective employers of young people
                                              are in the trades or small to medium-
                                              sized businesses which simply do not
                                              have the margins to afford such luxu-
                                                                                          employee and employer.
                                                                                              The only sensible and intellectually
                                                                                          consistent position is for junior wage
                                                                                          rates to be based on the value of the
one of the most affluent eras in human        ries.                                       work to the person purchasing it and
history—with access to better medical             Under the present arrangements,         set by agreement between the employ-
care and longer life span than any pre-       such prospective employers are pre-         ers and the employees. It is, practically
vious generation. As well, rapid              cluded from providing gainful employ-       speaking, impossible for third parties—
progress on the medical, scientific and       ment and on-the-job training to young       except, perhaps, for the parents of a
technological fronts will continue to         people who are desperately looking to       junior employee—to understand or
transform their lives. In many respects,      get a foot on the employment ladder.        make judgements about what is, or is
we can confidently say there’s never          Employees who want to sell their serv-      not, in the employee’s best interests.
been a better time to be alive.               ices to an employer at a price the em-      Those to whom such a prospect is
    But the mechanisms for dealing                                                        anathema simply have not confronted
with such remarkable change have sel-                                                     the fact that, as they presently stand
dom, if ever, been so ill-matched for                                                     nearly all junior wage rates are set at
the task. The lack of flexibility in the              Australia’s …                       levels which make them uncompeti-
youth labour market means that                                                            tive in the job market. They do not
appallingly high percentages of young            industrial relations is                  appear to have applied the traditional
people are excluded from the world of               still based on the                    test of cui bono—’who benefits’, in
work. The tragically high incidence of                                                    whose interests are such arrangements?
youth suicide is one direct result. An-          theory of conflicting                    Certainly not those of the young un-
other is drug addiction and related                                                       employed.
crimes—which account for more than                interests completely                        A regulatory system that excludes
half the prison population—along with               at odds with the                      so many from employment and pre-
youth alcoholism, homelessness, al-                                                       vents employers from giving them work
ienation, poor health, the collapse of               realities of the                     must eventually be exposed for the
family life … the list is all too familiar.                                               scandal that it is. To those most directly
And, whilst it is commonplace to sug-
                                                   modern workplace                       affected by the intransigence of the
gest that there are no simple solutions,                                                  process, it is increasingly plain that it
there is something close to a panacea                                                     has less to do with concerns about so-
for these ills—a job.                         ployer can afford are likewise prevented    cial justice and a lot to do with the
    It has been suggested that the con-       from doing so. Yet there are perfectly      highly politicized role of trade unions
cept of ‘competency’ can replace jun-         sound reasons why prospective employ-       and the tribunals themselves. Poli-
ior wage rates. This notion appeals to        ees might want to reach an arrange-         tics—rather than economic or social
many in the union movement and else-          ment outside an award—a greater de-         considerations—blocks our young job-
where because it is marginally more           gree of independence, a contribution        less from access to the world of work.
defensible on the basis of equity than        to their own keep, job satisfaction and,        The falling rate of participation in
the present archaic arrangement—al-           of course, the incentive of future op-      the union movement among those who
though the proposed mechanism for             portunities are among the more com-         have jobs is partly attributable to the
calculating such competencies is to-          mon motives.                                perception that unions are more con-
tally implausible.                                Australia’s ‘rear-view mirror’ of in-   cerned with protecting their own in-
    There is an alternative to both: that     dustrial relations is still based on the    terests than those of their members.
the only relevant consideration should        theory of conflicting interests com-        The rhetoric of equity in income dis-



10                                                                                                                    MARCH 1999
tribution pales even more quickly for       the price of goods or services—like la-     the issue, ‘youth unemployment is a
those who have no job and have been         bour—without it resulting in a decrease     problem which has directly affected 4
priced out of the market thanks to a        in demand for those goods and serv-         out of every 10 households having 16–
centrally determined award wage. The        ices. Price does matter. And ‘pricing       24 year old family members in the last
young, who are generally well aware of      young people out of the job market’ is      5 years’.
their need to acquire skills if they are    not just employer rhetoric but a harsh           Among the survey target group—
to become productive employees, will        reality over which they have no con-        people living in the northern and
not thank those who have precluded          trol.                                       north-eastern suburbs of Adelaide—
them from on-the-job training. Over-            The laws of supply and demand are       acquaintance with the realities of our
regulated wage-fixing systems, by con-      immutable and they apply as much in         Proportional Rate System was more
tributing to the destruction of jobs, add   the workplace as in any other market.       than merely theoretical. Respondents
to the inequity they profess to correct.    When there are external distortions,        were well aware that a scheme that
    As P.P. McGuinness recently ob-                                                     locks adult rates and junior rates to-
served in the context of unskilled                                                      gether is incapable of adapting to con-
workers, ‘it makes sense not to compel                                                  temporary conditions. In the 1970s, for
employers to pay such a high minimum
                                                   The burden of                        example, an inexperienced school-
wage, but instead to preserve living            supplementing the                       leaver or job seeker was typically only
standards thought socially appropriate          value of the labour                     16 years of age. Today, that same inex-
through the tax and social security sys-                                                perienced person is more likely to be
tem. If, for some reason, you want em-          to the employer so                      18 years old, and the relevant rate is
ployers to pay more, this is best                as to achieve the                      much higher than the rate for a 16-
achieved through the tax system’.1                                                      year-old. It is absurd.
    The same applies to youth wages.            unrelated goal of a                          Another anomaly inherent in cen-
The burden of supplementing the value             minimum wage                          tralized wage-fixing is the preoccupa-
of the labour to the employer so as to                                                  tion with ascertaining what constitutes
achieve the unrelated goal of a mini-           ought to be met by                      a ‘living wage’—a rhetorical construct
mum wage ought to be met by the com-              the community                         which ought to be recognized as such.
munity at large. The community is, af-                                                  Variations in the cost of living across
ter all, like the individual youth, get-              at large                          Australia make it virtually impossible
ting considerable benefit from the fact                                                 to determine what an appropriate liv-
that they are employed. According to                                                    ing wage might be. A young person liv-
a National Youth Affairs Research           it is the weakest who suffer most. It was   ing on a farm in the mid-North of
Scheme Study (The Price We Pay,             once the case that bricklayers em-          South Australia clearly has a com-
1997), youth unemployment already           ployed lads to carry their bricks, as       pletely different set of circumstances to
costs the Australian community more         plumbers employed someone younger           deal with—and thus different criteria
than $2 billion a year. It is simply in-    to dig trenches for them. In exchange,      in deciding on what constitutes an ad-
equitable to expect small business and      the lads were taught a trade. Until the     equate income—compared with young
tradesmen to foot the entire bill and       cost became prohibitive, as a direct        people living on their own in the in-
unrealistic to pretend that they can af-    result of centralized wage-fixing, this     ner-western suburbs of Sydney. That
ford to do so and still remain competi-     arrangement suited all parties and was      people in different situations need dif-
tive. Yet it is widely acknowledged that    well-understood by all.                     fering amounts of money has nothing
small business is the sector which has           Historically, the collapse of that     intrinsically to do with the employer-
the greatest potential for generating       employment-generating system is well        employee arrangement. Cost of living
new jobs. In the Prime Minister’s own       documented. In 1951, a first-year ap-       adjustments ought to be made through
words, ‘The way to solve youth unem-        prentice was approximately 7.5 per          the welfare system—not through an
ployment is to liberate the small busi-     cent of a tradesman’s wage and there        award system.
ness sector’.2                              were virtually no unemployed teenag-             It is very clear to most of the peo-
    It is one of the long-term conse-       ers. By the mid-1970s, the wage rate        ple who are directly involved that the
quences of the Federation settlement        had doubled to 15 per cent and the          intangible benefits an employer con-
that we have developed a selective          term ‘youth unemployment’ began to          fers by taking on a young employee are
blindness about economic fundamen-          have some currency. The wage rate is        as significant—and probably more pro-
tals. ‘Historically, Australia developed    now 40 per cent and youth unemploy-         found in their consequences—than the
a centralised wage-fixing system as a       ment is now regarded as the ‘single         wage transaction itself. Anyone who
result of the political consensus which     most important social problem of our        doubts this greatly underestimates the
also gave us tariff protection. It’s safe   time’.4                                     capacity of young people to understand
to say that, without the one we would            In the Sexton Report, 70 per cent      where their own best interests lie. They
have never had the other. High tariff       of respondents, unprompted, character-      can see the benefits of starting on a low
walls led to what’s been called “the        ized the issue in those terms. Approxi-     wage to learn a trade and there is in-
cost-plus mentality”. Whatever goods        mately 70 per cent of respondents also      creasing evidence of their wholly jus-
cost to manufacture—including the           said they ‘would support the introduc-      tified resentment of paternalistic state
cost of labour—the manufacturer             tion of a youth wage equivalent to the      interference which prevents them from
would simply add his margin to arrive       dole or Austudy in return for full-time     receiving those benefits.
at a price’.3                               apprenticeship employment or train-              From a young person’s perspective,
    But, at some point, we have to stop     ing’. Among respondents, as an indi-        there must be something especially
                                                                                                                                    v




deluding ourselves that we can increase     cation of the gravity and familiarity of    galling and hypocritical about society’s



MARCH 1999                                                                                                                    11
double standards regarding employ-
ment. One the one hand, we praise
young people who undertake volunteer
work. On the other hand, we hold in
high regard those who have found em-
                                                        Opinion Polls and
ployment. Yet woe betide anyone who
offers or accepts any arrangement in
between. It is a ‘no-go’ area—although
it is self-evidently a fertile field for
mutually acceptable and agreeable ar-
                                                         Baseball Bats
rangements between the parties.
    It is inconceivable that the present
system, with all its inflexibilities, will
                                                      What Really Went on in the
be allowed to continue indefinitely to
exclude so many of our young people
from the world of work. Not even the
                                                      Queensland State Election
most relentless demonization of the                                                   CHRIS MITCHELL
motives of small business employers
could achieve that end. The struggle
for liberalization of the existing wage
regime has echoes of the campaign                                T should tell astute observ-    tion’s campaigning. They felt that
against slavery, invoking Ernst Howe’s
description of it as a ‘bitter conflict
with contemporary sentiment and the
interests of gigantic power’. Liberty.
                                                         I       ers much about the divided
                                                                 nature of modern Australia
                                                                 that most of the commentar-
                                                     ies about the rise of One Nation and,
                                                                                                 theirs had been a service delivery gov-
                                                                                                 ernment, with a good record on hospi-
                                                                                                 tals and road building and that those
                                                                                                 messages had been lost in the cam-
Freedom. The long struggle to break                  indeed, almost all the latest tome on the   paign. They felt the campaign was giv-
the shackles of workplace regulation                 subject (Two Nations) have been writ-       ing their own base voters permission
goes on.                                             ten by people outside of Queensland—        to lodge a protest so long as they chan-
                                                     the birthplace of One Nation.               nelled their vote back to the conserva-
                                                         Apart from Nick Rothwell and a          tives via their optional second prefer-
NOTES                                                couple of other grown-ups, the com-         ences. And once the Liberal Party
                                                     mentators have almost all got it wrong.     opted to preference One Nation, small-
1 Sydney Morning Herald, ‘So, Back to                    Conservative protest politics has a     ’l’ Libs in Brisbane were always going
  the Quack Remedies for Jobs’, page                 long history in Queensland. Remem-          to repeat their 1989 desertion of the
  15, 29 October 1998.                               ber the Labor Split, the Confederate        conservatives.
2 The 7.30 Report, 28 February 1997.                 Action Party, the CEC? The interac-              For its part, Labor focused almost
3 Checkpoint Charlie, a submission to                tion of such politics plus an optional      entirely on the one line—it was either
  the House of Representatives Stand-                preferential voting system with an elec-    a stable Beattie government or a rag-
  ing Committee on Youth Unem-                       torate just as disenchanted with John       tag Coalition government relying on
  ployment, 1997.                                    Howard as it was with Paul Keating,         One Nation support. Mr Beattie was
4 Sexton Report, 1997.                               which still had (to quote Wayne Goss)       on-message throughout the campaign.
                                                     its baseball bat in hand and which saw      He spoke of a five per cent unemploy-
                                                     the ‘unread head’ Mrs Hanson as an          ment target—which was an inten-
                                                     underdog, was always bound to deliver       tional dry run for Kim Beazley’s subse-
                                                     a large amount of support to One Na-        quent five per cent campaign—and
                                                     tion, even though most people knew          constantly referred to the ‘rag-tag Coa-
                                                     they were voting out of protest.            lition’. Observers of politics in Brisbane
                                                         But what really sealed the June 13      will have heard this phrase thousands
                                                     Queensland State election were the          of times in the two months leading up
                                                     campaigns of the governing Coalition        to the election.
                                                     parties and the Labor opposition.                But, beyond that, both sides of poli-
                                                         The entire thrust of the Govern-        tics had internal polling several months
                                                     ment’s campaign was negative, with a        ahead of the election showing One Na-
                                                     plea for One Nation preferences. The        tion at near 30 per cent throughout
                                                     Borbidge National/Liberal Coalition         Central Queensland.
                                                     Government had already accepted—                 After Premier Borbidge sacked
                                                     because of its own internal research and    Trevor Perrett—his then Minister for
                                                     the feedback from the wiser heads in        Resources and Primary Industry—for
Bob Day is Managing Director of Homestead            the Government—that One Nation              his admission to The Courier-Mail that
Award Winning Homes Pty Ltd and President of         had been on a roll since the previous       he had carried on a relationship with a
the South Australian HIA. This is an amended         October.                                    murdered prostitute, The Courier-Mail
version of his submission to the AIRC inquiry into       In private conversations, with peo-     polled his seat of Barambah four-and-
Junior Rates of Pay.                                 ple as high up as Premier Borbidge him-     a-half months before the State elec-
                                                     self, many in the Coalition expressed       tion. That poll showed One Nation’s
                                           I P A     concern at the negativity of the Coali-     Dorothy Pratt at 28 per cent. The Cou-



12                                                                                                                           MARCH 1999

				
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