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  • Seminar Presentation: Superannuation & Wages in Australia

    Seminar Presentation: Superannuation & Wages in Australia

    by Jim Stanford

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    Centre for Future Work Director Jim Stanford gave a seminar presentation in Sydney on 21 November based on his research paper about the historical and empirical relationship between superannuation contributions and wage growth.

    Watch a summary version of his talk below.

    The full paper is posted at: The Relationship Between Superannuation Contributions and Wages in Australia.


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    The Relationship Between Superannuation Contributions and Wages in Australia



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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Precarity and Job Instability on the Frontlines of NDIS Support Work

    Insecure & Precarious Work, Public Sector, Procurement & Privatisation

    Precarity and Job Instability on the Frontlines of NDIS Support Work

    by Donna Baines, Fiona Macdonald, Jim Stanford and Jessie Moore

    Authors

    Donna Baines

    Fiona Macdonald

    Acting Director, Centre for Future Work

    Jim Stanford

    Jessie Moore

    The national roll-out of the NDIS holds the prospect of a significant enhancement in both the resources allocated to disability services in Australia, and the autonomy and flexibility of service delivery for people with disability. But it also constitutes an enormous logistical and organisational challenge. And the market-based service delivery model built into the NDIS is exacerbating those challenges, by unleashing a widespread fragmentation and casualisation of work in disability services.

    In this new report, researchers document the experience of front-line disability service workers under the NDIS based on first-hand qualitative interviews.

    The report was a joint initiative of two leading academic researchers (Prof. Donna Baines, formerly of the University of Sydney, and Dr. Fiona Macdonald of RMIT) and the Centre for Future Work. Researchers conducted detailed face-to-face interviews with 19 front-line disability service workers, mostly in the Newcastle, NSW region. (Newcastle was one of the locations chosen for NDIS trials, so workers in the region have more experience with the reality of NDIS delivery problems.)

    The interviews indicated 8 major problems negatively affecting the stability, quality and sustainability of work for disability support workers:

    1. The new system is not providing sufficient support for participants with intellectual and other cognitive disabilities, including in designing and managing individual programs of care;
    2. DSWs are experiencing increased instability and precarity in their jobs, elevated levels of mental and physical stress, and irregular hours and incomes;
    3. New workers joining the disability services sector are often less skilled, less trained, less experienced, and sometimes reluctant;
    4. DSWs experience particular challenges working in the private realm of NDIS clients’ homes;
    5. The informal and inconsistent provision of transportation and other necessary functions to NDIS clients results in a significant shift of costs and risks to workers;
    6. DSWs are experiencing increased levels of violence in their work;
    7. Relationships with managers have changed dramatically under the new system, undermining effective supervision, coaching, and training; and
    8. Worker turnover, given the insecurity of work and income and the challenging conditions of work, is extreme.

    The deterioration in job stability and working conditions under the NDIS will inevitably impact on the quality of service experienced by NDIS clients; it will also exacerbate the overarching challenge of recruitment and retention facing disability service providers as they try to attract the 80,000 new full-time equivalent workers required to operate the scaled-up NDIS.

    The researchers conclude with several policy recommendations to improve the quality and stability of work for disability support workers, and the quality of care for participants.



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  • Excessive Hours and Unpaid Overtime: 2019 Update

    Labour Standards & Workers’ Rights

    Excessive Hours and Unpaid Overtime: 2019 Update

    by Bill Browne

    Author

    Bill Browne

    Director, Democracy & Accountability Program

    Media release



    ‘Go Home on Time Day’ 2019: Australian Employers Pocketing $81 Billion Worth of Unpaid Overtime, Report Reveals

    New research from The Australia Institute’s Centre for Future Work estimates that Australian workers are currently working an average of 4.6 hours of unpaid overtime each week, which translates to 6 weeks of full time work without pay, per employee, per year – with an annual worth of $81.5 billion for Australian employers.



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  • Tolerate Unemployment, but Blame the Unemployed

    Employment & Unemployment, Macroeconomics

    Tolerate Unemployment, but Blame the Unemployed

    The Contradictions of NAIRU Policy-Making in Australia
    by David Richardson

    Author

    David Richardson

    Senior Research Fellow

    Media release



    Chronic Unemployment a Consequence of Deliberate Economic Policies

    Selected media impact

    For the last generation macroeconomic policy in Australia has been based on the assumption that unemployment must be maintained at a certain minimum level in order to restrain wages and prevent an outbreak of accelerating inflation. Now, after six years of record-low wage growth – which weakened even further in the latest ABS wage statistics – it is time for that policy to be abandoned.

    In a comprehensive critique of unemployment and monetary policy in Australia, Senior Research Fellow David Richardson shows there is no stable statistical basis for the assumption that inflation will accelerate without end if unemployment falls below its so-called “natural” or “non-accelerating inflation rate” (NAIRU, commonly thought to be around 5%). And the economic and social costs of deliberately maintaining high unemployment are very large.

    Richardson’s paper, Tolerate Unemployment, but Blame the Unemployed: The Contradictions of NAIRU Policy-Making in Australia, has been published today by the Centre for Future Work. The study was reported in the Sydney Morning Herald and other papers.

    Among its major findings:

    • Officially recorded unemployment is only the tip of the iceberg of total underutilised labour in Australia. Counting underemployment, discouraged workers, and “marginally attached” workers, there are around 3 million Australians who would like to work (or would like more work) but can’t find it: far worse than the official unemployment estimate (currently around 700,000).
    • Recent disagreements between Treasury and the Reserve Bank of Australia over the precise level of the NAIRU (the former say it is 5%, the latter say it might be 4.5%) ignore the growing evidence that the core concept is invalid and unsupported by empirical evidence.
    • Numerical estimates of the NAIRU have been wildly inconsistent over time. This is partly because of a process called “hysteresis”: whereby the existence of even temporary or cyclical unemployment can create long-term barriers to employment that seem to inhibit subsequent job-creation. If policy-makers believe in an elevated NAIRU, and act to ensure that unemployment stays at or above that level, then it becomes a self-fulfilling prophecy – and economic performance is undermined for decades.
    • Monetary and fiscal policy should be shifted to aim to steadily reduce unemployment as low as, rather than targeting a certain minimum assumed NAIRU.
    • The economic benefits of reducing unemployment are enormous. Every one-percentage point reduction in unemployment results in 134,000 new jobs, $10 billion in additional output, and billions of dollars in additional fiscal revenue for governments.
    • There is an enormous contradiction between a macroeconomic policy that deliberately maintains unemployment, and a social policy that blames the failures of unemployed people (such as a supposed lack of “work ethic”) for their own hardship.
    • The long-term freeze in Newstart benefits (which have not changed in real terms since 199) should be abandoned, and benefit levels increased substantially. Since chronic unemployment is the outcome of deliberate policy, the least society can do is fairly compensate those who have been hurt by this policy.

    Australia’s continuing record-low wage growth, and sluggish economic performance, make the need for a change in policy direction all the more urgent. Even within the constraints of the NAIRU policy, the RBA and the government have failed to meet their own stated objectives: for example, inflation has languished well below the official 2.5% target for over 5 consecutive years. It is time for a fundamental rethink of macroeconomic policy, which should be focused on restoring genuine full employment as the top priority.



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  • Young Workers are “Shock Troops” of Precarious Labour Market

    Young Workers are “Shock Troops” of Precarious Labour Market

    by Jim Stanford

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    Dr. Jim Stanford, Director of the Centre for Future Work, appeared before the National Youth Commission on 31 October in Sydney to discuss the challenges facing young workers in Australia’s labour market.

    The National Youth Commission into Youth Employment and Transitions has been holding an inquiry in communities across Australia to document the situation of young workers, who are experiencing much lower rates of employment and income than other workers.

    Stanford’s submission argued that young workers are like the “shock troops” of the precarious labour market: the ones sent in first to confront an especially dangerous situation. The rise of precarious work in all its forms – part-time work, casual jobs, labour hire, temporary positions, marginal self-employment, and digitally mediated ‘gigs’ – now dominates youth employment patterns. And that situation will not automatically disappear as young workers get older and gain experience. Rather, evidence suggests that without policy measures to stabilise and improve jobs, this will be a permanent shift that gradually affects most workers. Already, less than half of employed Australians are working in a ‘traditional’ full-time permanent wages jobs with normal entitlements (like paid holidays, sick leave, and superannuation). For young workers, that ratio is less than one in five.

    Stanford argued for targeted measures to stimulate more youth hiring into stable positions, an ambitious effort to rebuild vocational education in Australia and strengthen pipelines to post-education jobs, and a broader commitment to full-employment macroeconomic policy.


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    Presentation slides

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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Collective Bargaining “Reform”

    Unions & Collective Bargaining

    Collective Bargaining “Reform”

    What Does Business Want? And What Would Actually Fix the System?
    by Alison Pennington

    Author

    Alison Pennington

    Senior Economist

    Media release



    Business Council of Australia Research Confirms Centre for Future Work Research

    Coalition leaders hardly mentioned industrial relations topics during the recent federal election campaign, but now that the party is back in power, an aggressive and wide-ranging agenda for changing Australia’s labour laws has been quickly assembled—with the enthusiastic backing of business lobbyists.

    In a new report, Centre for Future Work Senior Economist Alison Pennington has compiled the various proposals advanced by employers, and shows that together they would constitute a thorough reorientation of Australia’s collective bargaining system. The end result would be a situation (very similar to the Work Choices regime of the late 2000s) whereby employers have unilateral power to determine terms and conditions, wages can be locked in for very long periods of time (contrary to employer’s calls for greater “flexibility”), and the scope for true workplace negotiations is compressed.

    Main findings of the report include:

    • The share of private sector workers covered by enterprise agreements (EAs) has now been halved since 2013, to only 11%.
    • This decline reflects three simultaneous negative trends: declining agreement renewals, sharp decline in new agreements being negotiated, and high rates of agreement termination.
    • Only 917 new private sector EAs were negotiated in 2018 (down on 7,623 in 2009).
    • The changes to industrial relations rules now being proposed by business broadly signal a return to the Work Choices pattern of unilateral employer wage-setting power in enterprise agreements.
    • The changes to enterprise bargaining proposed by business lobbyists include: weakening or removing the Better Off Overall Test; weakening scrutiny of non-union EAs; diminishing the scope of matters employees may negotiate with their employers; and blocking bargaining altogether through introduction of “whole of life” greenfields agreements.
    • Based on the experience of the Work Choices era, when similar measures were in place, we can expect a resurgence of non-union EAs if those proposals are accepted.
    • It is possible that EA coverage might increase, but on the basis of non-union EAs that are motivated primarily by the desire of employers to evade minimum conditions in Awards (a perverse strategy that would be facilitated by the elimination of the BOOT test and watering down of EA scrutiny & approval processes).
    • In short, employers are aiming for a collective “bargaining” system that has little room for actual bargaining – it would instead be characterised by employers with increasing power to unilaterally set the terms and conditions of work.
    • The growth in non-union EAs would come at the expense of both genuine collective bargaining and Award coverage, and would produce a decline in average wage increases for EA-covered workers (since wage increases in non-union EAs are consistently lower than for EAs negotiated with union involvement).
    • Simulations project a slowdown in average wage growth across all private sector EAs of at least 0.4 percentage points. That is just the direct effect of the changing make-up of EAs (with more lower-wage non-union deals); the indirect effect (weakening unions’ ability to negotiate better wages in their EAs) would be even worse.

    The loss of wages resulting from that slowdown slowdown in (already-weak) wage growth could cost an average private sector EA-covered worker over $2000 in lost income over just the first three years.

    PLEASE NOTE: This posted version of the paper corrects a previous error arising from a data coding problem which resulted in an inaccurate allocation of newly approved enterprise agreements between new and renewal agreements.



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  • The Future of Work for Australian Graduates

    Education & Training, Young Workers

    The Future of Work for Australian Graduates

    The Changing Landscape of University Employment Transitions in Australia
    by Alison Pennington and Jim Stanford

    Authors

    Alison Pennington

    Senior Economist

    Jim Stanford

    Media release



    University-to-Job Pathways Key to Boosting Graduate Employment Outcomes

    The Centre for Future Work has released a major new report documenting the new challenges faced by Australian university graduates in finding jobs that are stable, rewarding, and utilise their newly-developed skills. The report was prepared in conjunction with Graduate Careers Australia.

    The world of work is being transformed by a complex and interdependent set of forces – including technology, changes in workplace organisation and employment relationships, environmental and demographic challenges, and more. No group of workers will confront the reality of constant change more directly than young workers. As new entrants to the labour market, they cannot count on the protection of previous structures or practices to insulate them from coming changes. They immediately face the challenges of an increasingly precarious job market – one in which less than half of all employed Australians now fill a traditional “standard” job (full-time, permanent, paid work offering normal entitlements like paid leave and superannuation).

    Holding a university degree is still a vital and valuable asset for young workers entering this challenging and unstable milieu for the first time. Individuals with university degrees are more likely to be employed, to have more stable jobs, and to be paid more. But despite this relative advantage enjoyed by university graduates, employment conditions have become much more challenging even for graduates. Rates of graduate employment in full-time work are down significantly over the past decade, and there is evidence of a growing mismatch and underutilisation of university graduates in positions that do not fully or even partly utilise their hard-won knowledge and skills. At the same time, employer complaints about supposed skills shortages and the dearth of “job-ready” graduates are as loud as ever; the report documents that those complaints need to be interpreted with considerable scepticism.

    Australia’s higher education system could do a much better job at anticipating the needs for highly-skilled workers in the future, evolving their program offerings in light of those needs, and then assisting students as they traverse their university educations and find meaningful, relevant work.

    This comprehensive new report from the Centre for Future Work, developed in conjunction with Graduate Careers Australia (an association that has worked to gather data and make recommendations regarding university graduate employment issues) provides an overview of the prospects and challenges faced by future university graduates. The report confirms that university education makes a vital, essential, and valuable contribution to Australians’ prosperity: both at an individual level for those who have attained higher education, and at the macroeconomic and social level. But it catalogues gaps and failures in crucial education-to-jobs transitions, considers the most likely factors contributing to those gaps and failures (while dispensing with some commonly-cited but unconvincing myths and stereotypes), and makes several concrete recommendations for policy change and innovation.

    Key findings of the report include:

    • Employment outcomes for university graduates have deteriorated notably since the GFC. Full-time work placements have deteriorated (from 85% in 2008 to 73% in 2018, measured by full-time employment 4 months after graduation). Many graduates report being underemployed: both quantitatively (working fewer hours than they want) and qualitatively (in jobs that do not fully or even partially use their hard-won expensive skills), and insecure work has become a big problem for graduates (like for others in the labour market).
    • Employers continue to complain about pressing “skills shortages” hampering their growth opportunities. But careful empirical data suggests this claim is questionable. Reported skills shortages in most occupations have in fact eased considerably since the GFC.
    • Another stereotype not backed up by hard data is the common assumption that STEM and technical skills are in the most short supply, and that STEM graduates will have the best employment outcomes. For example, math grads have one of the worst full-time employment placement rates of any discipline. Employers report they especially seek applicants with verbal, social, problem-solving, and communication skills.
    • Vocational degrees (tied to specific occupations, often regulated – like health care, engineering or teaching) have the best employment placement rates.
    • Therefore, the solution to graduate employment challenges must include better strategies for directly linking degrees to jobs: for example, through paid placements, occupational licensing, and accreditation.
    • Australia’s system for planning skills / higher education / job placement functions is fragmented, and often contradictory. We could learn a lot from other countries (especially in Europe) which have taken a more hands-on and direct approach to forecasting future skill requirements, planning higher education offerings accordingly, and channeling graduates directly into relevant career opportunities.
    • The report makes 9 specific recommendations to improve university-to-work transitions for future graduates, including establishing a national higher education planning capacity, and creating a timely and high-quality labour force information system.
    • An overarching recommendation in the report is a call for a new social compact for universities as major actors in Australia’s skills system. This includes increased public funding for universities attached to requirements for national policy coordination among universities, expanded employment-to-jobs programming, and stronger mechanisms connecting public research to the development of an innovation-intensive, high-value export-oriented industry policy.

    Download the full report, The Future of Work for Australian Graduates: The Changing Landscape of University-Employment Transitions in Australia, by Alison Pennington and Dr. Jim Stanford. There is also a 12-page summary report available for download. The report was commissioned by Graduate Careers Australia.



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  • Messing With Success

    Public Sector, Procurement & Privatisation, Wages & Entitlements

    Messing With Success

    Victoria’s Puzzling Turn to Austerity
    by Troy Henderson and Jim Stanford

    Authors

    Troy Henderson

    Jim Stanford

    The Centre for Future Work has released new research estimating the negative impacts on wages and spending power of the Victoria government’s proposed 2% cap on wage increases for the state’s large public sector workforce.

    In recent years, Victoria’s economy has consistently been the strongest in Australia: with the most new jobs, the fastest growth in wages, and the biggest expansion in output. The state government has been both a key cause of that growth, and a major beneficiary of it. New expenditures on expanded public services and infrastructure have been crucial engines of the state’s growth. In turn, that strong growth generated huge fiscal dividends for the state government, through a robust, diversified and growing revenue base.

    Given this positive history, it seems inexplicable that the state government would now mimic tools of fiscal austerity that have been implemented, with negative and unintended consequences, in other Australian jurisdictions. The government has imposed a stringent cap on public sector wage increases: 2% per year over the coming four-year period. That cap falls well below relevant benchmarks: including growth rates for state GDP, state revenues, overall state wage growth, and Reserve Bank targets for both wage and price inflation. It also falls far below what the state’s elected representatives will receive in their own wage increase this year – including, in particular, the Premier and Treasurer, who have been awarded an 11.8% salary increase.

    The wage cap would artificially suppress total state public sector compensation by over $3 billion over the coming four years – compared to normal compensation patterns. It would short-circuit a badly-needed recovery in wage growth that is just taking hold in Victoria’s broader labour market. It would damage consumer spending, exert a chilling impact on private sector wage settlements, and do particular damage to regional communities which depend especially strongly on public sector jobs and incomes. The negative spillover effects of this unnecessary cap would extend throughout Victoria’s economy, totalling far more than the direct $2 billion hit to wages.

    The wage cap would be exacerbated by a secondary, equally puzzling austerity measure announced in the state’s 2019-20 budget: an increase in the so-called “efficiency dividend,” to take effect form 2020-21, that would impose an effective and homogeneous budget cut on departments and programs. This expanded “efficiency dividend” is justified as a tool for eliciting greater efficiency in service delivery; in practice it amounts to a mindless, across-the-board cut in expenditures, service delivery, and potentially employment.

    There is no fiscal problem that justifies either of these austere measures. The state government is not experiencing a deficit; it plans to generate consistent annual operating surpluses over the next four years. Its total revenues will continue to grow strongly. Financial analysts and debt rating agencies are unanimous that the state’s net debt and interest payments are fully manageable, and the government’s net worth remains strongly positive.

    In sum, the Victoria state government enjoys a healthy and enviable fiscal position; there is no fiscal argument at all for the imposition of these unnecessary forms of fiscal austerity. The government’s flirtation with austerity, despite the proven success (both economic and political) of its previous, more expansive approach, is puzzling and concerning. And it will undermine the positive economic success which explains why Victoria currently leads Australia in employment, growth, and incomes.

    The state government in Victoria faces no fiscal challenges that could justify either of these forays into the realm of austerity. The paper concludes with five key recommendations:

    1. The state government should abandon the imposition of a wage cap on state public sector workers.
    2. Instead, the state government should enter into normal negotiation of enterprise agreements in all broader public sector enterprises and agencies. The state’s fiscal outlook is obviously a relevant and important factor in those negotiations, but it does not justify the imposition of direct wage controls.
    3. The state government should abandon the proposed increase in the annual “efficiency dividend,” which has proven to be a blunt and ineffective budgetary strategy.
    4. Instead, the state should undertake an open-ended program review of departments and agencies. The goal of this review should be enhancing genuine efficiency – defined as improving the effectiveness and quality of public service delivery – rather than attempting to attain a target budget cut.
    5. Finally, the state should commit to no forced redundancies during the course of that program review. Any identified redeployments (motivated genuinely by improving service and better allocating existing resources) should be attained through relocation, retraining, and voluntary severance.

    Please read the Centre’s full report, Messing With Success: Victoria’s Puzzling Turn to Austerity, by Troy Henderson and Dr. Jim Stanford. The report was commissioned by CPSU Victoria.



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  • Five Contrarian Insights on the Future of Work

    Five Contrarian Insights on the Future of Work

    by Jim Stanford

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    In this comprehensive but readable commentary, our Director Jim Stanford challenges five stereotypical claims that are often advanced in debates over the future of work.

    1. Work is not disappearing; it can’t.
    2. Technology is not accelerating.
    3. “Gigs” aren’t even new.
    4. Technology is often more about relationships than productivity.
    5. Skills are not a magic bullet.

    The commentary was prepared for the My Labour, Our Future conference held last month in Montreal, Canada to mark the 100th Anniversary of the founding of the International Labour Organization. We thank the organizers and the Atkinson Foundation for permission to repost the paper.


    Related documents



    Full paper

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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Job Opportunity: Research Economist

    Job Opportunity: Research Economist

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    The Centre for Future Work invites applications for an economist to join our research team in labour market research and policy analysis. The position may be at a junior or senior level, and the successful candidate may work from our offices in either Sydney or Canberra.

    The successful candidate will offer:

    • A graduate degree in economics or a closely related discipline.
    • Knowledge of and experience with a wide range of labour issues, preferably including: labour market statistics and trends; characteristics and determinants of employment; industrial relations and collective bargaining; wage determination and inequality; gender, racial, and demographic aspects of labour markets; the impact of technology on employment; macroeconomic policy and labour markets; and others.
    • Demonstrated ability to write to deadline for professional and popular audiences in a credible, succinct, and accessible manner.
    • Strong quantitative skills, including ability to access statistical data, analyse it (including familiarity with statistical tools), and report it in a variety of textual, tabular and graphical formats.
    • Confident communication skills, including ability to speak to public audiences, classrooms, and the media.
    • Ability to work collegially with other members of a research team.
    • Commitment to a progressive vision of work and fairness, including the goals of equality, participation, collective representation and trade unionism.

    Responsibilities of the position will include:

    • Research and completion of several project-length research papers, briefing notes, and shorter commentary articles per year on a range of topics related to labour markets and labour market policy.
    • Ongoing monitoring and analysis of labour market data and information.
    • Helping to maintain relevant websites and databases.
    • Public speaking, presentations, lectures and courses, media interviews, and related communication and educational activities.
    • Minimal office and administrative functions.

    Ability to undertake occasional out-of-town travel (including overnight travel) is essential, as is ability to successfully work in a self-managed and autonomous manner.

    The position will be offered on a one-year term-limited basis, with possibility for renewal. Salary will be commensurate with qualifications and experience.

    Applications are especially invited from women, indigenous persons, other racial and linguistic communities, people with disabilities, and other marginalised communities.

    Please forward applications (including contact information, qualifications, experience, two samples of written work, and names and contact details for two references) in confidence to cfwjob@tai.org.au. Please cite “Economist Job Application” in the subject field of your message; supporting documents should be attached in pdf format. Receipt of applications will be acknowledged by e-mail. Only candidates selected for an interview will then be contacted; no phone calls please.

    Applications must be received by 5:00 pm AEDT on Wednesday 9 October, and interviews will be conducted in Sydney on Wednesday 23 October 2019.

    The Centre for Future Work is an initiative of the Australia Institute, Australia’s leading progressive research institution. Thank you for your interest in the Centre for Future Work.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have