Could someone please explain to me how having the majority of workers on less money and conditions helps to stimulate the economy?

Alas, Batman. What we think of as "the economy" is not the same as the politicians' definition.

We think of it in terms of, not only a prosperous country, but how it effects ourselves and our fellow Austalians as they work work away to have a decent life and pay the bills.

The human aspect doesn't doesn't come into governments' and treasurers' reckoning (until election time, when they hand out sops). Their economy is all about trade, deficits and surpluses and screwing as much as they can - or keeping it back - from us.

I have developed an automatic switch which renders me deaf when the word "economy" is spoken by anyone on TV or radio. What they are talking about has nothing to do with my welfare or that of my fellow Australians.

Batman
Who argues that having the majority of workers on less money and conditions helps to stimulate the economy? I can’t think of anyone who has claimed that.

Holy smoke and mirrors Batman.

Some do better, some do worse. We used to have a no disadvantage test but in their wisdom this got washed down the plughole by the "Riddler" (Kevin Andrews).

I am of the opinion that this present federal government have said this on many occasions in the parliament and the press. All I require is that like all good government policy it should be able to be explained to those it affects. As we can now see the majority of AWAs set a lower rate and conditions. Not all, as some say, but if this only applies to 25% of the work force then would it have an effect on spending?

marxist economics hold than the critical factor in an economy is the
value wringed out of the workers labor ,
more specificaly it assume goods and services are traded at
their " real " costs ,
profit is generated by paying the workers less than the value of the
goods they produce

it's pretty accurate as far as it goes , the critical factor then
become how to pay the lowest paid workers even less ?

since the only people doing work are in fact those producing tradable
goods the solution become clear ,more unqualified immigrants,
preferably dumb and alienated with everyone else
eliminate highly trained technicians , prone to unionise
create a smoke wall of gobble talk about progress and productivity

presto ,things are peachy !!

the economy is into a race to the bottom , the suburbs are ghettos
seething with ressentment but the house help is cheap

I'm describing europe and america
don't have a clue about australia !

.

Batman
I challenge you to find a reference to any government spokesperson who has said that their policy is to reduce wages and coniditions for the majority of workers.

Rhian,

You won't find any government official claiming that is their policy to reduce wages and conditions as this would likely be political suicide. It is however, an article of liberal party faith that minimum wage increases and working conditions cost jobs. The purpose of workchoices and the so called fair pay comission is to ensure that these things do not increase, as this supposedly creates lots of unemployment.

The U.S has pursued these policies for a long time. What has been created over time is a large pool of working poor, many of whom are forced to work two or three jobs to keep from ending up out on the street. So ten million very low paid workers might actually use up twenty or thirty million jobs, thus negating any possible increase in employment.

Whith unprecedented sums of money now in the governments coffers, some economists have said subsidising employment would be easily affordable. It might give small and medium size business an edge to compete with the big boys. Creating a large underclass of poverty level workers is not going to solve anything.

Rhian way do you have a need to defend the government, when all I am asking was for sum one to explain the way it works.

Batman

I’m not particularly trying to defend the government, but I don’t believe they expect or intend their IR changes to have the effect of reducing wages and conditions for the majority of employees. Opponents of the legislation fear it will have that effect, but supporters believe the opposite – labour market flexibility will create more job opportunities and raise productivity so real wages can increase, and allow employees and employers to negotiate the terms and conditions to suit them both. Asking WHY the government supports lower wages for the majority of employees is a loaded and inappropriate question. They don’t support any such thing. To my mind, the key question is whether or not they are right to expect that the new laws will lead to better conditions and living standards.

Rhian

Are the employees of Coles Myer getting less - Yes
Are the employees of Woolworths getting less - Yes
Are the employees of Spotlight getting less - Yes

Did John Howard say no worker will be worse off - No

He did not answer the question because he knew some workers would be worse off.

You may well be right, Steve, but that's not the same as saying a majority are worse off.

These extremist prophecies of major disasters and collapse of the universe are absurd. The fact of the matter is that Australia is facing an unprecendented labour supply shortage, and this problem is only going to worsen as the population ages, and birth rate remains stagnant.

It would be ignorant to compare Australia to nations such as the US and those within the EU, as the economic conditions are vastly different. Australia has a much smaller population, a much greater emphasis on the service sector, and differing economic and social indicators/dynamics.

A movement away from a union based economy, has and will continue to provide greater financial gain, flexibility and opportunity, not only to the working population, but the economy itself; a competitive economy develops a strong economy. The market dictates wages and conditions..

Rhian
Can we clarify this discussion? Ok lets for the sake of the point say that only 25% of workers will be on a lower rate. I can only add anecdotal evidence to support this as I am a manager in a large construction company and I personally Know of workers how have had to start a new job on lower rates of pay. Yes skilled workers will demand higher rates of pay and will get them, but as different industries contract, the pay rates will contract with it.
Can I please bring this back to where it started? Can some one explain to me how this will work not motherhood statements and left and right wing propaganda.

nationalist conservative,

why do you think that comparing Australia to the U.S and other places is ignorant? Sure we have a much smaller population and different economic conditions to the U.S. So did New Zealand, a country with only a fifth of our poulation and a workplace culture similar to our own. When workchoice-style legislation was introduced there wages fell by around 30% on average over eight years, poverty soared and a woking poor was spawned. Unemployment was unafected(until large numbers of them came here looking for a fair go).

Open slather is open slather in any language.

Don't get too excited about service industry jobs, as Quantas and the major banks will confirm. Watch them go marching out to India and China. Who will be next?

When the free market can truly dictate wages and conditions without bothersome things like unions and government regulations getting in the way, we will have the sickest, saddest society since the industrial revolution.

Ok Batman, I'll add my 5c worth :) Try and look at the big
picture. At the end of the day, business is there to make
a profit, if it doesent, it shuts up shop and moves elsewhere
or invests that capital elsewhere. Even workers want business
to do that. If their super fund, which invests in business,
does not show a healthy return, they go elsewhere. Given
that there is about 1 trillion in super, workers own most
of business in real terms !

Every $ spent on wages costs somebody in the end. It costs
the consumer, it costs the owners, waste is where alot
of money goes. So all those people looking out the window,
counting the cars going by whilst at work, cost somebody.

Consumers want cheaper products and vote with their wallets.
Owners want more profits, that includes super fund owners.
So efficient use of labour, with minimal waste, or productivity,
is the key, to keep both owners and consumers happy.

Companies strive for that, as thats the way CEOs keep their
jobs. If not, then super funds, who represent workers, will
soon see that they don't have a job. Don't forget that
CEOs are simply very highly paid workers.

If workers are efficient, then their companies might be competitive
and survive. If they are innovative (like umm Microsoft) then
some workers can make huge money, as consumers will be prepared
to pay for the products and efficiency means that they can be
mass produced cheaply. In that case it pays business to pay those
workers huge amounts, as they are generating huge profits for
companies.

Ok, thats 6c worth :)

Fozz,

Not entirely sure where you've gained your information from, however the effect of the Employment Contract Act 1991 yielded much more positive results for both the economy and the population than you've communicated:

- Unemployment rates fell from 11 to 6%, and continues to remain steady despite the introduction of the Employment Relations Act 2000 (by a Labour government) which reverted some of the previous changes (was at 3.6% in 2004)
n.b. maori unemployment has fallen from 25% in early 90's, to 8.9%.

- The workforce participation rate is at around 76% which is much higher than the OECD average (70%)

- Industrial Disputation fell to the lowest levels in 64 years

- In the five years to 1996, employment growth was the highest in the OECD

- Real wages are rising on average over the last 15 years (between 1 and 3% p.a.), which is much more than what can be attributed to the accord in Australia in the 1980's

- Modest productivity increases

New Zealand has experienced benefits from the reforms and faces economic challenges that stem from inaction over supply shortages and the like, combined with the revoking of aspects of the ECA 1991..

We will never get a situation whereby the market dictates labour movements, however minimising government regulation is a must given the conditions that will arise over the next 15 years (with the maintenence of the key conditions as stipulated by workchoices)

I don't know whether the government thinks workers on less money stimulates the economy, however it does consider that work offers more than just income. That is, it considers that work results in social inclusion,improved self worth etc. Unfortunately, the government does have the perception that people should take any work, no matter how low paid it is. Witness the recent changes to people on Newstart who have to keep a more detailed diary of looking for work. This is to weed out "job snobs", or people who do not want to work long hours for a pittance. Of course the government is not interested in the effective marginal tax rates that affect low income people resulting from the interaction of tax with the loss of welfare benefits even though arguably, this has a significant bearing on people choosing to work.

Lower wages is good for the economy because the profit margin is increased for employers and so increases their income. Cheap labour allows employers to access cheap goods. Goods are no longer sold domestically they are exported. Australians won’t be able to afford our own produce soon. Just as well we have a drought, high inflation and import dumping from nations with an even lower income than us, our impending poverty is sure to be a great learning curve for us.

The Howard Government have forgotten most of the economy is constructed of our interaction with each other and Australia is not dependent on an export economy. We have seen employment market failure in skills shortages, family & life balance, wage deflation and social erosion. To avoid intellectual criticism the Howard government has even maintained a program of destroying our education systems with the result of both a brain drain and professional skills shortage. Further more this Government has demoralised the Commonwealth Public Service through interference and zero values policies. Talented professionals stay clear of CPS recruitment.

Howard’s economic program is not sustainable in any stretch of the imagination but it will help potential Liberal party sponsors get rich quick in the short term. Howard will have retired and Beazley will be PM by the time Howard’s IR laws hit the fan (and the rest of Howard’s bucket content with it ). It is why it is urgent for Peter Costello to become prime minister, the economy as will history will vilify this government, if Beazley wins all is lost for our self claiming glorious war time leader and his heir to his throne.

"Australia is not dependent on an export economy"

Hehe West, what do you think will happen to your Aussie Dollar,
if you don't have efficient export industries? How will you
pay for your imports? You will spiral downhill, as fast
as you can hang on to your trousers :)

Efficient labour benefits everyone, above all consumers.
Being a consumer, you in fact benefit by the efficient
use of labour in other industries. The more wasteful
that labour is used, the more your standard of living
will go down.

Lets take an example, so that the confused might understand
it. Lets say we ban imports of shirts. We will agree to
pay all employees who make shirts, 100K a year, for a
20 hour week. At the end of the day, business simply works
out the cost per unit, plus a margin of profit for risk of
capital. In groceries, thats say 2%. So on those terms
a shirt might cost you 200$. Would you be happy to
pay that? Would your standard of living go up or down,
if you had to pay 200$ for your shirts?

nationalist conservative,

I am not sure where you get your information from either. From a very wide variety of sources relating to the new zealand experience, yours is the first positive comment I have heard.

We may just have to agree to disagree. There is a lot of truth in the old saying that you can make statistics prove anything you like. I can deliver reams of information supporting my argument and no dbout you can do likewise.

How many people do you know who were actually there? I know a number of working class kiwis who have told very similar stories of falling wages and stagnant economic conditions, which is why they came here.
One of them is a hard working independent contractor who does not agree with all of my political veiws. He did, however, concede that the nz ir policy eventually ran his country into the ground.

If it was such a dazzling sucess, why was it repealed? If a previously untested economic theory worked much better than the old one for all the world to see(new zealand was globalism's poster boy), I do not believe the labour party would have removed it, just as I do not believe an incumbent labour government here will remove it if there is overwhelming evidence that it boosts the economy and does not disadvantage large numbers people. But it will not bring widespread prosperity and will hurt plenty of workers, especially those with little bargaining power and that is why it will sooner or later be gotten rid of.

Nationalist conservative I did not say Australia did not export. I was saying that the majority of economic activity in Australia is domestic activity. Australia has a low manufacturing and exportable service industry base. The grand experiment to sacrifice living standards and increase employee subsidy to production has already been trialled over and over again in our regional areas where depletion of income equates to economic and social breakdown.
Australia has already experienced Howard’s IR laws in the 19th century; because they are unsustainable those laws necessitated change.
Even in the late 20th Century labour prices did not reflect the true cost of labour. People’s time is worth far more than any business can afford. Employees subsidise business to form symbiosis in which relationship the employer has always been to an extent a parasite. This has to be because without employee charity no business can become wealthy.
Howard’s IR laws an exercise in employers biting the hand that feeds it. The propaganda says it supports mum and dad business people. If those people are so greedy and desire independence they should not employ anybody. The other rational for 19th century industrial relations is to appease those great communists, the share holders. Howard has proved incapable of learning from history and has made labour inefficient and thus set off a domino effect of making urban networks inefficient , energy consumption inefficient , social networks , Australian cultures and family organisation unsustainable.

As for your T’shirts no enterprise occurs in a vacuum but to humour you if workers cant afford to support the local grocer he in turn wont be able to afford to buy your T shirts. The cost of producing your T shirts is not only incurred by the company but is taken home by the workers.

A symbiosis has to be balanced or it will fail

"People’s time is worth far more than any business can afford."

In reality, peoples time is worth what somebody is prepared to
pay for it. Everyone has to make a living.

"As for your T’shirts no enterprise occurs in a vacuum A symbiosis has to be balanced or it will fail"

Similarly no country occurs in a vacuum. Australia has to pay its
way in the world, which it is not doing, but relying on overseas
bankers for its wellbeing. If they pull the plug, what then?

If our industries can't compete globally, long term down the
tube we go. We don't need cheap labour, but efficient and innovative
labour, to compete.

I certainly dont get paid for what I am worth and those under me certainly are not either. It is not only our time , we have families , it is their time too. Are you seriously suggesting when you have time off for illness your time suddenly is in real terms worth more? Are you saying that you would miss the birth of a child for a mere $60 an hour. Life is worth far more than what anybody is paid. The employee is donating great charity to the employer. There used to be benifits for working but AWA's is wiping those out. Under AWA's it is not economical to work. All AWA's can achieve is to make crime pay. Australians are hit by the out dated sorts of industrial systems that Howard has imposed onto the Australian people. First of all Australians Pay more charity to their employer and secondly they have to spend tax money on protecting us from the refugees and drug and arms trade the same sorts of industrial systems have created with our neighbours.

West, you are free to claim that your time is worth whatever you
like, the same with your house. You need neither work, nor
sell your house. The thing is, if you want somebody else to actually
pay you for your time, its their opinion what you are worth, the
same if you want to sell your house.

"All AWA's can achieve is to make crime pay."
They can also help to make for efficient use of labour, which
benefits everyone, including workers/ consumers, our society.
That means we can pay our bills to the world, which we can't
right now. Crime is for those who are too selfish or lazy
to make a contribution to our society and pay their way in the
world. Best to just lock
them up, as we have in the past.

Think about who employers actually are. They are in the end
shareholders and who are the mightiest shareholders in this
country? Why workers of course, with their 1 trillion$ in
super investments. Look up the shareholders index of just about
any large corp, its super funds that dominate, all workers
who are the owners.

So what you are saying yabby are that Australians are worthless and employers seek to exploit Australians motivated by mindless greed.
Already you have demonstrated AWA's create an 'Us and Them' mentality , Employers are villified for their exploitation of Australia and Australians are degraded as not worth a decent wage and condition for their labour , they are only slaves who should be devoted to making the greedy rich. I dont understand what you have got against the Australian people, they are not machines and do not deserve AWA's. Parts of the U.S are extremely rich but much of America has poverty at levels and types only seen in the under developed world.Peasant superstition or drug addiction is the only escape.women have to turn to prostitution to pay the rent. Thats the world AWA's create, it benifits an extreme minority at the expense to a nation.

Rhetoric, rhetoric and more rhetoric...

If AWA's create an 'us' and 'them' mentality, then imagine what a collective bargaining system and a unionised workplace create..

No West, I am not saying that at all. I am saying that consumers
ultimately decide the value of what you do, its them that pull their
wallets out and vote for the product/services, which the company
that you work for, produces. The company is simply the middleman,
onmarketing your labour to the consumer, in one form or another.

Yes, the company aims to make a profit, for risking capital and
for its efforts. Its owners, most of the time other workers who
have a super fund, want a return on their invested capital. If
you happen to spend alot of time picking your nose at work for
instance, that is going to cost somebody, either the consumer, or
the workers that you work for. The CEO is simply the head worker.
He is not risking his savings here, just investing time, much like
you do.

AWAs don't have to be divisive at all. Show the company that you work
for how your labour can earn them larger profits and they will have
every incentive to pay you more. If you happen to be innovative
and can show your innovative company how it can earn millions,
from something that consumers actually want to buy, it is in their
interest to pay a clever chap like you millions. Yup, they employ
you to make a profit, not to pick your nose. So what? You happen
to work to make a profit for your labour too, you are no different.

Safety nets for those people who can't sell their labour, are part
of our system. Please don't compare us to America, we are quite
different

Some of us are fortunate, if employers refuse to carry some of the cost we can simply take our skills off shore. Most Australians can not. I have never calculated cost in financial terms alone in deciding to assist an employer. What you yabbie and national conservative are not considering is that an employer is renting assistance from people to acheive wealth which cannot be acheived alone. It is not a right of an employer to employ. Most people have no choice but to participate in the labour Market. Wether we like it or not most labour is forced. It is because labour is forced that the market is corrupted in favour of the employer. This IR system is no different to cartel price fixing. Shock and Horror National_Conservative this IR system is the most communist system we have had as it is a government busting unions to support one controlling union , the employers federation.

Technically, the price of labor is the lowest reward needed to have
the worker performing its service the following day ,

" the price of living in its surrounding in a sustainable manner "

This whole discution flip back and forth between the vision of
australians as producers and consumers , the interests of one being
exactly the antithesis of the other !
as for australia and exports ,
well we export low added value production stuff and
import hight added value consumtion stuff .

wich is a balance of trade disaster .

.

West, you completely forget that even the head of the employers,
is in fact an employee, a worker, representing the interests of
owners, ie. other workers. (our trillion in super remember)

Everyone has choices. Choices to go and work for a better company,
one who appreciates their skills. Choices to do away with employment
and sell their labour direct to consumers. You West, could easily
buy a broom, bucket and mop tomorrow and start
"Westie's Cleaning Services". No need for those evil companies.
You would be free as a bird, apart from one, the consumer. If
you want consumers to pay you money, you have to sell what you have,
or they like you, have a right not to buy.

If there is a cartel, its only one, the unions. Companies cannot
shop between unions, they are faced with one option, take it or
leave it.

It seems to me Westie, that you want the power to force others,
to pay you to go to work and pick your nose or whatever. That
might suit you, but it might not suit those others, who actually
work hard, make their contribution and who want a return on their
superannuation investment Dollar. If those workers then fire
you for not doing your bit, why should you complain?

Yabbie I work hard for my income I am fortunate in two ways, I can set my own price and if Australian business can not afford my services I can simply relocate overseas. I also enjoy what I do. I have choice, most Australians do not. If there were work choices mothers wouldn’t be running around trying to work two or three jobs just to make enough to feed and house their children in the mean time being bled dry through childcare and travel cost and also looking after disabled aging parents because the federal government has cut funding and grants to aged care to redirect money into buying votes.

The problem is you are degrading Australians into aggregates. Australians are flesh and blood with real anthropogenic imperatives. Australians are the not cartoon parodies of Andy Capp the lazy good for nothing unionist. The useless worker, the bludger, Australians are real people, real battlers. The question for Australia now since Howard has imposed his 19th Century Dickens based IR laws onto the Australian People is what relevance has the commercial sector now? What positive benefit is there to the Australian people? When will they receive such a benefit? Consider that most business will dissolve and the vast majority are poorly managed, profit is inherently inefficient. What benefit is there in having a multitude of temporary businesses ripping Australians off?

West, Australia is made up of all sorts of people. Look around
you, plenty are thriving and prospering. I look at some of
the 20somethings, they have opportunities and options that
we just never had when we were 20somethings. Those that
grab them, can do anything.

The thing is, people will be people. They forget Murphy's
law, they overborrow, they make mistakes, they get into
situations of struggle. Its not wages that are the problem,
but the problem of being human, battling between emotion
and reason, some get it wrong and it will always be
that way. If say somebody is a pokies addict, doesent
matter what you pay them, they will still be in trouble.
Sadly, people often need pain to learn lifes lessons.

Crippling an economy with inefficiencies, so that businesses
cannot compete on global markets, so that we Aussies can
pay our bills to the world, is not the way to solve
anything. It just drags us all down in the end.

Let people operate at their potential. Give them choices,
let them be innovative. Don't hold them back because
of some flawed ideology. In the end, everyone benefits,
even those that get it so wrong in life.

Yabby the economy was not crippled before Howard imposed his 19th century IR laws onto the Australian people. The new IR laws are extremely ineffificient. The cost of labour has inflated through the IR laws , it is just that the cost has been directed to the Australian people who cannot afford it. The IR laws do not benefit the Australian people and so do not benefit Australia at all.The IR laws are nothing more than a party sponsor buying excersise. It is impossible to pretend that the IR laws have any benefit to Australia at all, no matter your spins on the value of the dollar ect.

West, fact is that neither you nor I can predict what effects the
new IR laws will have on the Australian economy. Time will tell.
At the moment you are simply guessing, based on your fixed
ideology. Rational thinking is about waiting to see what the
evidence shows, somewhere down the track.

What we do know is that the world has changed and is changing.
What was yesterday is past, the future matters.

Trying to compete on wage levels, is not our future in Australia,
but innovation and the flexibility associated with that, matter
vitally. We won't pay our import bills by being dogmatic.

I've seen too much heavy handed union thuggery, misuse of power
etc, to think that that is the way to adapt to a changing world.

I've been both an employer and employee, so can speak from both
sides of the fence. Smart employers know that their staff are
the most vital part of their business, so they should be looked
after. Employees who simply have no aptitude for something, are
better off finding something that they actually like doing, to
achieve win-win outcomes for all. Thats the best way to progress,
not by forcing people into straightjackets, that they might not
be happy about wearing.

West, you are completely correct..The workers are the backbone of the Nation..without the workers there is no class structure..Certainly no Upper would be more precise to say..they feed of the labour of the worker who keep the tax system up and running.Without a healthy tax system there is nothing else..our whole economy is financed from taxes...and so are our politicians..no gravy train for them if working class down tools tomorrow and all go on the dole..mmmm ..tempting.

So any system..IR laws that destroy right of workers will , eventually see a revolt..how is that good policy for the health of a working nation that relies so heavily on its tax base?

Our whole sociological structure is based on a class system designed to keep workers with their noses to the grindstone and the wheels of the economy working..its called Stratification.. the Bouergoise and the Proletariat..ie lower, Middle and Upper classes.

see link http://en.wikipedia.org/wiki/Dictatorship_of_the_proletariat

Yes Wayfarer Industrial Relations cannot be contructed on terms of financial capital alone. We work to live , not live to work. A good IR system has to be balanced upon different types of capital and who pays what. As it stands Howards 19th century IR laws are nothing more than a rip off. The cost will be most felt in the social destruction that occured last time such archaic laws were in place. Oliver Twist here we go again.

Actually not so West. The real problem with Australia is that
it started off with a British kind of attitude to labour.
The class system that you talk about.

Now look beyond that. Look at a country like Switzerland.
It has thrived, despite the high wages, far higher then
most other countries. Its thrived because of innovation,
a good training system and because of employers who
are smart enough to pay good people top money, as they
realise how important they are to a company.

I grant you that Australian management is not the best,
but I think its changing. Companies who try to screw
their staff will fail, whilst those who understand the
importance of innovation, consumers and employees, will
prosper. It stands to reason.