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The Forum > Article Comments > Joblessness and income inequality: has Australia taken the wrong turn? > Comments

Joblessness and income inequality: has Australia taken the wrong turn? : Comments

By Fred Argy, published 27/1/2006

Fred Argy explains the relationship between jobs and income equality and asks if Australia has the right mix.

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In relation to workers at General Motors, billie wrote:

>>they currently are paid low wages and they are being offered lower wages<<

One of the most significant problems at GM right now is the drag caused their massive pension scheme, and the ballooning costs associated with their health care programmes.

How did this come about? Back in the 1950s, the union persuaded the company to fund these benefits. As the Washington Post reported last year, "Commitments for pensions and 'other post-employment benefits'... had little initial impact on GM's profit statement and didn't count as obligations on its balance sheet. So why not keep employees happy with generous benefits? It was a free lunch."

But as everybody in business knows, there is no such thing.

When the accounting rules changed, and companies were forced to show these commitments as liabilities in their balance sheet, a massive hole - over $80billion in GM's case - showed up.

What role did government policy play in all this? They certainly didn't force GM to agree to the unions' demands. What they did – eventually – was to insist that companies properly account for these demands, at which point the truth emerged.

The reality is that businesses survive when their revenues exceed their expenses. Governments have little impact on this equation in a positive direction, and plenty in the negative. If the government makes it more difficult (read: expensive) to hire the next employee, jobs are likely to suffer. In addition, the company is prevented from growing as fast as it might.

I'm still recovering from the shock I received seven-odd years ago when my business got to the size where I had to pay Payroll Tax to the State government. For every fifteen or so employees, the government actively extracts from my company the dollar equivalent of the sixteenth person.

If only there was one government minister who actually knew how businesses run. Or even someone in the Public Service with some hands-on experience, to advise. Instead we have academic timeservers advising a bunch of ex-schoolteachers and lawyers.

That's a generalization, of course.
Posted by Pericles, Thursday, 9 February 2006 12:31:42 PM
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Generalization says Pericles. I thought what he said regarding public servants advising teachers and lawyers (aka Pollies) was spookingly accurate.
Posted by hedgehog, Thursday, 9 February 2006 1:02:18 PM
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Pericles, one large multinational operating in australia had as its mission statement " We are in business to make a profit in a socially acceptable manner".

Now General Motors is still a viable organisation - it still manufactures vehicles but has moved its production to Mexico and South Africa. Surely workers in a country as rich as the United States are entitled to a reasonable standard of health care, their children should be able to be educated and they should not have to work til they drop.

The current IR climate in Australia and in the United States is not not promoting a just, civil society and organisations pursuit of the almighty profit without regard to the long term cost to the society within which they operate isn't fair and often not sustainable.
Posted by billie, Thursday, 9 February 2006 5:03:13 PM
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SHONGA, how would you know how to make a comparison to a human being, when you so obviously lack access to any standard of measurement?



Hedgehog, I respect dumb critters, especially hedgehogs. I have been lenient with you, thus far but you are starting to become repetitious and that just means boring.
Whilst I am sure you would find it amusing, the full value of a performance by me would just go over your head.



MichaelK

Oh singing rugby songs is a great British tradition and has produced such classics as “Four and Twenty Virgins”, “The Good Ship Venus” and “Eskimo Nell” (Oh you would like this one, references to Mexican Pete, a well known “wet-back”),

Actually of “the working class”, the full text of the first two versus goes

The working class
Can kiss my a**
I've got the foreman's
Job at last

I'm out of work
And on the the dole
You can stick your red flag
Up your h*le

The next couple of versus are a lament about a young lady in Gibraltar, whose condition is parodied to flying a red flag. However, I will resist its exact wording to avoid the (rightful) wrath of our able and capable censor.

And as for “wet-backs”, I am sure you, in true Mexican style, closer resemble a “peon”.




Billie – Pericles is right about GM. (Well said Pericles)

Ford are in the same state and Chrysler lurches from one financial crisis to financial crisis. Their shares (owned by those who financed all the jobs) have the status of junk bonds.

As for “viable”, in commercial (and consequently social) terms, a business is “viable” when it can be seen to be able generate a medium and long term positive cashflow and profit (short term flows can fluctuate and be funded through borrowings). GM is today where its inability to negotiate with its own work force have got it, to the edge of financial collapse.
Posted by Col Rouge, Thursday, 9 February 2006 6:04:25 PM
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billie, I'm sure you have worked for companies, and understand the way they work.

>>one large multinational operating in australia had as its mission statement " We are in business to make a profit in a socially acceptable manner"<<

You can picture the situation as easily as I can. The seminar room full of earnest beavers from human resources and marketing, sitting together in their retreat in the Blue Mountains, separating into four-person workshops to come up with a slogan like this one.

It is the sort of mission statement I would expect from Philip Morris. Defensive, defiant, and irrelevant.

The first notion you need to discard is this image of every company being run by tyrants, whose sole objective is to make the maximum amount of money for themselves. The majority of employees in Australia work for small companies, who wouldn't survive two weeks with such a philosophy.

Generalizing from the particular is a dangeraous way to arrive at the truth. To say that every company is run like Enron, or has incompetent management like OneTel, or adopts predatory marketing practices like Microsoft, is simply wrong. Employment can only be guaranteed by viable businesses, and viable businesses need a balance between profitability in the market and care for the resources used to achieve that profit. One of which is people.
Posted by Pericles, Saturday, 11 February 2006 7:52:32 AM
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Thankful for Col.Rouge's further enlightening me with British traditions, I would say that “Workers round a world- unite!” is not less common expression associating with a working class in context of this discussion than some stadium-goers’ noise reaching time by time pages not Australian newspapers only
Posted by MichaelK., Sunday, 12 February 2006 3:39:52 PM
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