Contributed by Joe Montero
According to the OECD, Australia is suffering from one of the highest incidences of temporary work in the industrialised world. It should not be this way. The health of the economy does not depend on it, and the rise of temporary work seriously undermines jobs and the quality of life for those locked into it.
The number of Australians working short hours or in temporary jobs, is anywhere up to a third of the workforce. It is growing and effects Fifty five percent of the young people in the workforce.
The only country worse off is the United States, where the number is now around 51 percent of the total workforce. We are quickly heading the same way.
The collective name for this type of work is now called casualised labour. Besides enforcing less than adequate pay, casualised labour denies the right to paid holidays, sick leave and other entitlements that come along with any proper job. There is often less protection, a greater risk of being put into dangerous situations at work, and increased vulnerability to having one’s wages stolen.
Casualisation exploded, because major employers became obsessed with increasing “labour flexibility,” as means of cutting costs. They locked successive governments into applying policies to help bring this about.
It has been argued, that this was a major part of creating a better use of resources, stimulating competition and growing the economy. They insisted that although there may be some initial pain, the creation of jobs would benefit everyone in the end. Jobs have been destroyed instead and the economy has not grown.
One important fact was forgotten. What might find an individual employer laughing all the way to the bank, may not be so good when applied across society.
Consider this. The nature of the economic system in its present circumstances, has forced employers into capital intensification. This means technology has been replacing labour. It has been necessary to stay in the race. In the real world, those who can operate at below the average per unit costs of production stay in the game, and those who operate above this line fall by the wayside. Many businesses are missing out as well.
The drive down this road brings a few important consequences. The main one is that there is a growing gap between the costs of production and the return from circulating the output in the market.
Although per unit costs might go down by spreading them over a higher volume of output, there is a tendency for total costs to go up. Per unit costs go down because the fixed or constant part, that which is accounted for by the technology, can be spread out, and the bigger the operation, the greater the advantage.
Labour (known as variable cost) cannot be spread out over a larger volume of output. This is why new technology replaces labour. And it is the biggest operators, with more extensive resources, who can take the best advantage. The economy becomes more monopolised and economic power falls into fewer hands.
But an unintended consequence is that the output is cheapened and the average return on investment is reduced. Lowering the costs of production through the replacement of variable capital with the other form of capital, means that the real price in the market is reduced. This real price is different from the nominal price that is determined by the value of money at the time. This has happened most spectacularly at the high-tech end.
At the same time, the return for the individual business is reduced through the fall of the individual share in the social profit. Social profit refers to the accumulated total profit for the economy. Each has a claim based on the value of what the individual contribution can be exchanged for. In the modern economy, this is measured by its costs of production determined real price firstly, and secondly, supply and demand factors.
When employers find that they are falling behind the society wide average costs of production in growing numbers, there is a further drive to cut these costs by other means. More intensified labour cutting is the result. This is achieved by even more replacement of labour by technology, speeding up the pace of work, so that there is more output per labour hour and increasing the flexibility in the application of labour. The last one is the casualisation of work. Labour is used at peak times and discarded at will in the off peak. It has the added advantages of providing the employer the capacity to transfer some of the costs of employing to the worker, in the forms of inferior conditions and contracting.
Besides being highly questionable, in terms of fairness for any society that believes the fruits of our work should be shared out, it is harmful in an economic sense.in addition to what has already been said here, the forces that have led to casualisation, propels the nation into relative over production, at the same time as they restrict the market. The drive to intensified monopolisation, leads to the collapse of many businesses.It leads to the disappearance of manufacturing and the rise in the power of the finance.
A major effort to protect and increase proper full time jobs is needed. This can be achieved through regulation and government led programs to build infrastructure and new industries.
There is a further implication in all this. The strengthening of unions in the workplace is critical to holding back the casualisation of work.
Good thinking, and problems well diagnosed, but what about this first step to solutions?