March 3, 2018

Future of Work (ALERA Conference)

The following are the speaking notes for a speech given at the Australian Labour and Employment Relations Association conference in Canberra in March 2018.

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Thank you for the invitation today.

Firstly, let me acknowledge the traditional custodians of the land on which we meet, and pay my respects to their elders both past and present.

Two-worlds. The problems.

Australia is the fifth most prosperous nation on earth. For many years, until just recently, we were the richest, with an unprecedented 26 years of growth.

Yet despite this great wealth, too many in Australia face homelessness, disadvantage, discrimination, joblessness, under-employment, social exclusion, unsafe communities, and inequality.

For decades the labour movement has warned that if we did not fend off massive income inequality, Australia would become a nation ripped from a script of a cyberpunk sci-fi movie.

A dystopia consisting of an all-powerful super-rich and an increasingly desperate, impoverished underclass, living in a world wracked by climate induced extreme weather catastrophes.

Despite (or perhaps because of) the global financial crisis, today we see the richest remain untouched by austerity obsessed governments.

The richest see their wealth increase by $2 million every hour.

Meanwhile, wages are stagnating for the first time in decades.

Membership of trade unions declines, fuelled in part by extreme anti-union corporations who import extreme US-style union-busting tactics.

Personal debt continues to rise.

Our public institutions have been hollowed out.

Health care costs are increasing. Pensions and superannuation are threatened.

And we face the digital revolution, automation, rise of AI and vast expansion of massive, global, vertically integrated corporations.

Economic morality.

Before talking about the future of work and digital disruption, it’s important to look at the first principles.

There has been an abandonment of moral capitalism.

My view is that welfare and morality should be integral to any discussion about the future of work, and especially for economic decisions and public regulation.

Economics should be practiced and taught as a ‘moral science’.

Most of the disagreements and uncertainties in economics stems from how economic criteria is applied – that is, moral judgements.

Ultimately, the large macroeconomic forces, globalisation, and so on – they are all the sum of decisions made by people.

When some people talk of “market forces”, we should remind them that the market is not a force of nature, and the laws of supply and demand are not like the laws of physics.

Similarly, the march of digital disruption as it exists today is not inevitable or natural, but rather the sum of decisions and actions made by people, in business and in government.

We need to see the return of economic morality.

And at the risk of sounding a bit sectional, in my view unions are integral to that morality.

As Tim Lyons, former ACTU secretary, has said, unions achieve two moral economic purposes. The first is a rights purpose, the second is a distributional purpose.

The first is based on the recognition that disproportionate power lies with the employer.

The heart of union organising is to even up the balance.

Unions are about ensuring that working people are treated fairly and given a measure of control, however modest, over their lives while at work.

Absent a union, we see gender pay gaps, insecure work, low wages, unsafe working conditions, and the treatment of working people as objects. 

The second purpose is distributional.

Unions influence the fairer distribution of the gains of economic growth.

Through collective bargaining and minimum wage laws, unions ensure working people and their communities benefit from wealth creation.

Where there are strong unions, there are more equal, prosperous societies.

It is little wonder therefore that since the global financial crisis, global capital has intensified its assault on unions, and thereby weakened collective bargaining, cut minimum wages, increased workplace insecurity, and introduced an austerity agenda.

The result is that inequality in Australia is at its worst levels in 70 years.

Precarious work and the Uberisation of labour makes it increasingly difficult for working people to bargain for fairer wages and a better life.

And decent work is integral to that better life.

Secure jobs.

Within living memory, almost every working person, whether skilled or unskilled, had decent work.

They had job security. Overtime. Guaranteed minimum hours.

The prospect of owning their own home.

The prospect of their children getting a tertiary education or trade degree.

And after their work finished, a dignified retirement.

In large part this was due to the high level of unionisation – around 50 percent in 1980.

A third of the new jobs created since 1990 have been temporary, part-time, casual or self-employed.

In some industries as high as forty or even fifty percent.

Uber and Taskrabbit are the shiny new manifestation of the 19th century factory-gate hiring.

In the ACT, the number of people in precarious jobs increased from 26,000 to over 32,000 over the past decade.

Insecure work is a gendered problem and a problem of race, disability, age.

Women are disproportionately represented in precarious, part-time and casual work.

Similarly, people from non-English speaking backgrounds, people with a disability, older people, young people, are all disproportionately employed in casual, low paid, exploitative jobs.

That bastion of left-wing activism, the OECD points to the consequence of the digital revolution and automation: the labour market is hollowing out with sharp declines in wages and security for middle-skill/middle pay jobs, a rapid rise in the number of low-skill/low paid jobs, and the vast majority of economic gains captured by those in high-pay jobs.

We used to think that it was low-skilled jobs most vulnerable to technological displacement; that is no longer true: financial analysts, lawyers and programmers are all under threat from AI, machine learning algorithms and bots.

The lack of secure work has created a paradox.

An increasing number of people work many more than 40 hours a week – rarely by choice – just to earn enough to live.

At the same time, there is enormous underemployment and unemployment.

Many people want to work more hours.

The destruction of these secure foundations of work – under the guise of Uberisation but also called labour hire and subcontracting – is having as a profound, albeit negative, impact on our society over the next two decades, as the creation of modern labour standards regime did in the 1940s.

High wages, raising and enforcing the minimum wage.

Talking of modern labour standards, Australia still has one of the highest minimum and social wages in the world.

Increases in the minimum wage and awards directly improved the living standards of low paid working people and their capacity to meet their needs.

But the minimum wage floor is failing.

Real weekly earnings for full-time workers have become less equal in the past decade — the lower the earnings, the lower the rate of growth in earnings.

(As an aside, at the same time as wage growth has declined, productivity and profits has increased. I wonder who has benefited?)

The minimum wage is no longer a protection against poverty.

In many cases, it has become a poverty trap.

Last year spoke to a cleaner in Canberra, who’s employer – a major shopping centre owner who in recent years paid no company tax at all – terminated a collective agreement and reduced the cleaner’s wage to the award minimum.

I asked her – ‘how do you cope with the reduced wages? How do you pay for rent? For food?’

She told me – ‘it’s simple. I live in public housing, so I went to Housing ACT and asked for my rent to be reduced.’

Corporations and business shift risk and costs off their balance sheets and onto working people and their communities.

The great heroic entrepreneurs who claim to take massive risks and therefore deserve massive profits, in fact are expecting their “driver partners” to take the risk but get little of the reward.

And worse, the minimum wage is increasingly being ignored, flouted, breached, by unscrupulous employers.

The scandal of 7-Eleven is not that an ASX200 company allowed the wage abuses to go unchecked while the owners lined their pockets with half a billion dollars.

The scandal is that 7-Eleven — and almost every franchise and almost every major corporation — has wage theft integrated into their business model.

It is immorality by design.

Let’s also be clear. This is no longer the case of a few bad apples. Law breaking by businesses has become a business model.

In Canberra, 40 percent of businesses break one or more workplace laws. In some industries, every single business was found to break WHS laws. We used to think that most wage-theft was confined to small businesses, but that is no longer the case.

Over half of young workers report experiencing wage theft. Let’s be clear. Adult employers are stealing wages from the children who work for them.

The exploitation in some cases is extreme and severe, including workers forced into slave-like conditions.

The regulators are unwilling or unable to enforce the laws, and most businesses know they can roll the dice. If they get caught, the penalties are minor. Most don’t get caught.

Less work, not more. And higher wages.

What is the future of work?

This is a live debate within the union movement.

Automation and robotisation are economic mega-trends that are impacting knowledge workers, service workers and industrial workers alike.

But why can’t these innovations allow us to work less and earn more?

For decades, unions have fought for the right to work less.

Before the eight-hour day, there was the twelve and sixteen-hour day.

Now, we are seeing some countries and industries with seven-hour days, even six-hour days.

Robotisation and automation could mean the creation of a jobless underclass if it is not guided by moral judgements.

But it could also mean working people benefit from the increased productivity, or have monotonous or dangerous tasks done by machines.

There is a transition taking place in almost every industry and sector.

The massive generational change in Australia and other developed nations is seeing the rise of service industries in aged care and health – our fastest growing sectors. These are also the most resistant to automation – although they are very vulnerable to digitally enabled exploitation and precarious work.

Our challenge is to ensure it is a just transition, founded in morality.

Conclusion. A new morality.

I cannot emphasise strongly enough the challenges that lie ahead.

Digital disruption will create massive amounts of wealth.

Our concern is that the next twenty years of economic gains from automation and AI are entirely captured by the richest 1 percent.

Every day, there is more evidence that the Fair Work Act, which was intended to establish balance in the power-relations between workers and employers, is broken.

It will come as no surprise to you that unions will campaign publicly for workplace laws to be fixed.

If workers can have a fair share of the gains from automation, if they gain more control over their working lives, not less, then the future of work is bright.

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