WorkChoices would have made financial crisis worse: commentator

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WorkChoices would have made financial crisis worse: commentator

The continuation of WorkChoices would have made the effect of the global financial crisis on Australia much worse, according to one of Australia’s leading economic/political journalists.

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The continuation of WorkChoices would have made the effect of the global financial crisis (GFC) on Australia much worse, according to one of Australia’s leading economic/political journalists.
 
George Megalogenis, writing in The Australian newspaper, says the point the deregulationists have ‘never quite grasped’ is that labour market reform is a tool for recovery, not recession.
 
Megalogenis compares the fate of the Australian economy in the GFC to that of the United States, and says that any economist who believes Australia needs another dose of tough love in the workplace hasn't looked at the United States lately.
 
Free labour market
 
‘The Americans have what John Howard sought with WorkChoices, a free labour market and an emasculated trade union movement,’ he says.
 
‘WorkChoices was meant to deliver its social dividend in a downturn, when employers could reduce pay and conditions to protect jobs.'
 
‘The US experience should give the deregulationists pause for thought.’
 
Megalogenis points out that in February 2007 when WorkChoices was the IR policy the United States had an unemployment rate of 4.5% compared to Australia’s 4.6%. Since then the US rate has moved to 9.7% while Australia’s is 5.8%.
 
6.9 million Americans sacked
 
‘More telling, 6.9 million Americans (or 5 per cent of the workforce) have been sacked since the US recession officially began in December 2007,’ Megalogenis says.
 
‘Australia, by contrast, has found jobs for an extra 100,000 people (0.9 per cent) in the same period.'
 
‘The point the deregulationists have never quite grasped is that labour market reform is a tool for recovery, not recession.'
 
‘Employers are likelier to act in the national interest if they screw their workers in good times because it helps to cement community expectations of low inflation. Screwing workers in a downturn only fulfils the prophesy of recession because lower wages beget lower consumption, which begets another round of cost-cutting.'
 
Deregulation isn't saving jobs
 
‘Just look again at the US. Deregulation isn't saving jobs; it is doing the reverse by telling employers they have no social obligation in a recession.'
 
‘Here's the real scoop about Australia. Co-operation between labour and capital has always been the superior model.’
 
Megalogenis says Australian employers have done the right thing twice.
 
‘They rejected the detail of WorkChoices in 2007 because they were part of the swing that dumped the Howard Government. And they rejected the spirit of WorkChoices once the global financial crisis struck a year ago because they didn't go on a fevered hunt for loopholes to force down wages.'
 
Applause for business
 
‘Businesses deserve some serious applause for hanging on to their staff. Not to the exclusion of the government's stimulus packages or the Reserve Bank of Australia's rapid-fire cuts in interest rates.'
 
‘But they should share the glory of the miracle economy. And so should the workers, whom the deregulationists tend to view as beads on an abacus rather than human beings.'
 
‘Australia's wage slaves are the second least greedy members of our society if you take the power spectrum as covering business, politics and the professional class at one end, the workers in the middle and the outcasts at the other end.'
 
Avarice coming from the top
 
‘The last occasion when employees could be blamed for the nation's ills was the early 1980s, when the trade unions asked for double-digit pay rises that ultimately broke the old order of protection. Count the years between, and all the avarice has come from the top.'
 
‘We had a spiv surge in the late 80s, when businesses behaved appallingly, and again in this decade when chief executives added zeros to their remuneration packages.'
 
Spoils of management
 
‘Corporate salaries and politicians' perks have in common a decidedly un-market ethos. This isn't reward for productivity but the spoils of management.’
 
Megalogenis says that in the workplace, employees have been more frugal than conservatives are prepared to acknowledge.
 
‘Telling workers to restructure one more time in the name of labour market reform is surely an exercise in the absurd,’ he says.
 
‘What exactly is the disease we are trying to cure when the profit share remains at near-record levels?’
 
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