Archives for posts with tag: industrial relations

A story in Saturday’s Financial Review ($) was relevant to my interests in more ways than one. The story included this quote from Professor Mark Wooden:

Melbourne Institute professorial research fellow Mark Wooden said mandatory penalty rates inhibited employment by artificially keeping costs high. “I just came back from Europe and you don’t think of Europe as being a cheap place for eating out but it is cheaper than Australia,” he said.

I decided to try and figure out if he was right: are European restaurants cheaper than Australia? If so, do they just seem cheap because of our elevated exchange rate?

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Three types of blog posts I’m sick of writing, and I’m sure you’re sick of reading, are generic defences of the Fair Work Act, angry screeds against predictable partisanship from The Australian, and basic summaries of labour force data. Yet every time I swear to myself that I’m going to take a break from each of these genres, someone writes something that gets me sufficiently riled up that I feel compelled to respond. John Black’s piece in yesterday’s Oz, titled ‘Workers at the mercy of a jittery economy‘, ticked all the boxes. He uses a highly selective and skewed bundle of labour force data to try to make the case that the Fair Work Act is the cause of rising unemployment. Here’s my response.

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I have a new piece at Guardian Australia, responding to Peter Reith’s claim that the rise in unemployment is due to the Fair Work Act.

The campaign by The Australian newspaper against the Fair Work Act has had a few phases. I’d like to go through a few of their key claims and evaluate them against recent data.

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[A]dopting an incomes policy was like jumping out of a second storey window: nobody in his right mind would do it unless the stairs were on fire… The stairs were aflame in Australia in 1983, when the Hawke Government won office.  -Peter Cook.

The Accord is back in fashion. The past few months have seen a lot of pining for the “Hawke-Keating model,” particularly the compact between the two wings of the labour movement. A lot of the discussion seems to me to lack a sense of what made the Accord necessary (in the eyes of the protagonists), what made the Accord possible, and the ways in which our current circumstances differ from those of 1983.

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How would we know if the labour market was ‘flexible’? One way is to look at how the jobs market responds to economic shocks. During the GFC, when the Howard Government’s labour laws were still in effect, the number of hours worked in Australia fell while the number of people in employment didn’t fall.

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At 11:30 this morning, the ABS published the Australian national accounts for the March quarter of this year. Among other things, they show that the rate of productivity growth has surged – in the past year, labour productivity in the market sector grew at its fastest pace in over a decade. I’m sure this will be a major focus of the news coverage tomorrow, just as the disappointing productivity numbers were closely examined in early 2011. Just in case The Australian doesn’t choose to highlight the issue, here’s a handy chart for your reference:

Labour productivity in the market sector – year ended growth

Source: Calculations based on ABS 5206, table 1.

While it’s true that you should be careful about drawing too many conclusions from the quarterly productivity data, that was just as true this time last year when various pundits leapt on the data to suggest that the Fair Work Act has damaged Australia’s productivity performance.

Economists usually think that people’s revealed preferences (what they do) are more important than their stated preferences (what they say they’ll do). With that in mind, let’s consider George Calombaris’ claim that the minimum wages he has to pay his staff on Sundays make it uneconomical to open his restaurant(s). Is it true? Well, he claims that it is uneconomical to open on Sundays, yet he nevertheless opens on Sundays. Why would he do that if it were true that his costs exceeded his revenue?

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