Category: Industry & Sector Policies

  • The future of transportation work: Technology, work organization, and the quality of jobs

    The future of transportation work: Technology, work organization, and the quality of jobs

    by Jim Stanford and Matt Grudnoff

    Workers in all parts of the economy are confronting twin threats from accelerating changes in technology and automation, and the ongoing shift toward more precarious and irregular forms of work — including “gigs” on digital platforms.  The transportation sector is widely acknowledged to be one of the most susceptible to both of these trends.  The Centre for Future Work has published a major new research report on these trends, and how sector stakeholders can best prepare for the coming changes.

    The report was commissioned by TWUSUPER (the main industry superannuation fund in Australia’s transportation sector).  It describes the current size and economic importance of the transportation industry, and provides a detailed profile of its existing workforce.  In then considers twin drivers of change buffeting the industry: changes in technology, and changes in work organisation and employment relationships.  The report stresses the importance of distinguishing between these factors, lest observers accept a misplaced sense of “technological determinism” regarding the evolution of work and jobs.  The report concludes that the erosion of job quality and stability associated with the growth of non-standard work poses a greater challenge to quality transportation jobs, than the much-hyped advent of driverless vehicles and other technological breakthroughs.

    The report concludes with several key recommendations for transportation stakeholders to assist in preparing for these changes, and managing them so as to maximise their benefits and minimise their costs.  These include:

    1. Facilitating Mobility: There will be significant new work associated with the advent of new transportation technologies. An obvious response is to assist existing workers to fill new positions by providing notice, support, and access to training and adjustment programs. Financial support from employers and governments will be necessary. Training and adjustment programs need to take account of the advanced age of many transportation workers, and tailor offerings to fit needs of older workers with less formal qualifications.
    2. Establishing Benchmarks for Skills and Qualifications: New technology-intensive jobs will require a wide-ranging suite of new skills – including design, programming, operation, data management, and more. Specific requirements and qualifications for those skills must be formalized and regulated. Sector stakeholders should work closely with existing bodies (such as Australian Industry Standards, TAFEs, and others) to specify and catalogue requirements for new jobs. Transferable certifications will assist workers and employers to identify and acquire needed skill sets, and develop a ready supply of qualified, flexible workers. Strengthening high-quality apprenticeships is also critical.
    3. Facilitating Decent Retirement: The advanced age of many transportation workers is an advantage in a time of transition. Downsizing or restructuring can be managed in part by facilitating exit by workers not interested or able to undertake retraining and adjustment. Bridging benefits and early retirement incentives, with government support, ease the transition, and avoid involuntary job losses that would otherwise occur.
    4. Negotiating Technological Change: Adaptation is more successful when all parties have a genuine say in how it is implemented and managed. Transportation stakeholders must commit to information sharing, consultation, and negotiation over technological change. Workers and their unions should be notified of plans for new technologies. Discussions should occur regarding timing, scope, and effects of new investments. Opportunities should be provided for early input from workers regarding how change will be managed; collective bargaining should include the terms of technology and its application.
    5. Building Consensus: Sector needs a multi-partite, sector-wide approach to analysing challenges and developing inclusive sector-wide responses. Undertake social dialogue among industry participants to maximise benefits of change, reduce costs – and share both costs and benefits fairly. Multi-partite forums (engaging business, workers and their unions, government, regulators, training institutions, financial institutions, and others) will help build relationships among stakeholders, identify future needs, and imagine and implement initiatives to facilitate necessary investments and adjustments.
    6. Protecting Standards and Benefits: Changes in work organisation and employment relationships are changing transportation jobs and challenging traditional standards of security, entitlements, and compensation. The use of non-standard employment forms (like contractors and labour hire) imposes unsustainable consequences on workers who are denied stable, decent opportunity. Traditional standards and entitlements should apply to all transportation workers, including in non-standard, independent, or “gig” situations. Regulatory benchmarks and corporate accountability should apply across the supply chain.



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  • Manufacturing: A Moment of Opportunity

    Manufacturing: A Moment of Opportunity

    by Jim Stanford and Tom Swann

    In conjunction with the National Manufacturing Summit, titled “From Opportunity to Action,” at Parliament House in Canberra on June 21, 2017, the Centre for Future Work has released a new research paper on the opportunities to sustain and expand manufacturing jobs in Australia.

    Our new report, Manufacturing: A Moment of Opportunity, by Jim Stanford and Tom Swann, challenges the general tone of pessimism which accompanies many discussions about manufacturing in Australia.  Manufacturing has survived a brutal decade of global and domestic challenges.  It’s still here, it’s still one of Australia’s largest employers, and it still makes a disproportionate and strategic contribution to overall national prosperity.  Even more interesting, there are some intriguing signs that manufacturing might be turning a corner.

    The paper also presents new public opinion research showing that Australians continue to express strong support for manufacturing and its role in the economy.  Australians consistently underestimate the size and performance of manufacturing — perhaps influenced by the negative tone of much reporting of the sector.  But they deeply value its importance as a source of good jobs, exports, and national prosperity.  And they will support — by margins of five-to-one — targeted policies to help manufacturing succeed here.



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  • The Economic, Fiscal, and Social Importance of Aluminium Manufacturing in Portland, Victoria

    The Economic, Fiscal, and Social Importance of Aluminium Manufacturing in Portland, Victoria

    by Jim Stanford

    The unit price of aluminium is more than 50 times greater than the unit price of bauxite.  Yet Australia is growing its presence at the lower-value end of this industry – while perversely shrinking its presence in an industry whose output sells for 50 times as much.  In recent years, Australia’s downstream capabilities in aluminium manufacturing (including alumina refining, smelting, and secondary fabrication and manufacturing) have been substantially deindustrialised, even as exports of raw or barely-processed resources grow. Australia is shipping billions of dollars in value-added, and many thousands of jobs, to other countries.  This would get worse, if further manufacturing facilities — such as the smelter in Portland — are permanently closed.

    This report, prepared by the Centre for Future Work for the Australian Workers’ Union, describes the perverse evolution of Australia’s role in global aluminium production in recent years, including the growth of raw extraction, the decline of value-added activity, and the resulting shrinkage in net income and employment in the industry.  It also estimates the impact of the potential closure of another threatened smelter, in Portland, Victoria, on overall employment, output, exports, incomes, and government tax revenues.  The loss of another major manufacturing facility would be a significant blow, at a time when the failure of the previous extraction-dominated model of economic development has become abundantly clear.



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  • Beyond Belief: Construction Labour and the Cost of Housing in Australia

    Beyond Belief: Construction Labour and the Cost of Housing in Australia

    by Jim Stanford

    Remember when Prime Minister Turnbull and Immigration Minister Dutton blamed unionized construction workers for the high cost of housing in Australia? The idea that workers (not property speculators or bankers) are to blame for the property bubble is pretty far-fetched — in fact, it sparked a viral storm on social media, using the #blameunions hashtag.

    We’ve looked in detail at the empirical data regarding the relationship (or lack thereof) between unions, construction wages, and housing prices.  The results are surprising…

    A new research paper from the Centre for Future Work has found that:

    • Average earnings in the construction industry have grown more slowly than the Australian average over the last five years.
    • Real wage increases in construction have been slower than real productivity growth, with the effect that real unit labour costs in construction have declined.
    • Construction labour accounts for only 17-22 percent of the total costs of new building.
    • Construction costs, in turn, account for less than half the market value of residential property.
    • Construction labour costs correspond to less than 10 percent of housing prices (and even less than that in Australia’s biggest cities).
    • Construction workers receive far less income from the housing sector than land-owners, property investors, and banks.
    • Construction labour accounts for about the same proportion of a house purchase as real estate commissions and stamp duty.
    • Homes in Australia are becoming unaffordable even for the workers who build them: on average, a construction worker would need to spend 9.2 years of their pre-tax earnings to purchase a median home (25 percent more than just four years ago).

    The paper recommends that if government genuinely wants to make housing more affordable, it should turn its attention to the real causes of soaring housing prices: by cooling off property speculation, more carefully regulating the banking sector, and reforming property-related taxes.



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  • Auto Shutdown Will Deliver Another Economic Blow

    Auto Shutdown Will Deliver Another Economic Blow

    by Jim Stanford

    We’ve known for over two years that this day was coming.  But that won’t ease its economic and social pain.  The shutdown of Australia’s mass motor vehicle assembly industry is now upon us.  Ford’s assembly plant in Broadmeadows, Victoria, was the first to go dark: the final Aussie-made Ford has already rolled off the assembly line.  Remaining workers are preparing the factory’s final shutdown.  Holden’s assembly plant in Elizabeth, SA, and Toyota’s Altona factory (also in Victoria), are scheduled to close next year; both have already begun phasing down production.  Engine plants operated by Ford and Holden will also close.

    This briefing note reviews the direct and indirect economic consequences of the closures, which will extend far beyond the plants being shuttered.  After all, motor vehicle manufacturing purchases $8 billion in inputs from 100 different economic sectors in Australia — and most of those are services.  Ultimate job losses will be many times larger than the direct jobs eliminated at Ford, Holden, and Toyota.

    The briefing note also addresses the damaging effect of Australia’s lopsided trade agreements have played in hastening the industry’s end.  In particular, the implementation of 5 free trade deals with major auto-producing nations (the U.S., Thailand, South Korea, Japan, and China) over the past decade provided global automakers with a free ticket for selling their products in Australia, without necessarily producing anything here.  The FTAs have had no positive impact on Australian vehicle exports, and resulted in a forty-to-one imbalance in automotive trade flows.

    In addition to taking action to ameliorate the economic and social hardship that will be experienced in automotive regions over the coming months, government must also learn the lessons of this failed strategy — before other industries here experience a similar fate.



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  • Penny Wise and Pound Foolish

    The state government of New South Wales recently awarded a contract for the purchase of 512 new intercity passenger rail cars to a consortium that will manufacture the equipment in South Korea.  The contract is worth $2.3 billion, including an unspecified sum to cover maintenance of the double-decker cars over an initial 15-year period.  The government chose to import the cars from Korea instead of purchasing made-in-Australia products, claiming this was the “cheapest” option.  However, major government purchases have important indirect effects on many economic, social, and fiscal variables: including GDP, employment, incomes, exports, and even government revenues.  A comprehensive cost-benefit analysis must take those broader impacts into consideration; governments should make decisions that maximize the overall social net benefit of procurement, not simply minimize the up-front purchase cost to government.

    This paper reviews the economic importance of the railway equipment manufacturing sector in Australia, and describes its broad economic benefits: supporting 5000 direct jobs, and many more than that in supply industries and downstream consumer industries.  And it provides an illustrative simulation to show that offshoring this new contract could deprive the government sector of a cumulative total of $455 million in forgone revenue — as a result of lower GDP, employment, and incomes.  That is considerably more than any supposed “cost penalty” to government incurred as a result of manufacturing the equipment in Australia.  Worse yet, the NSW decision undermines attempts to coordinate and schedule upcoming railway rolling stock purchases from various governments across Australia, in order to maximize the economic benefits from future transit investments.



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  • Manufacturing (Still) Matters

    Manufacturing (Still) Matters

    by Jim Stanford

    The problems in Australia’s manufacturing sector are well-known, and many Australians have concluded that the decline in manufacturing is inevitable and universal: that high-wage countries like Australia must accept the loss of manufacturing as an economic reality.  But international statistics disprove this pessimism.  Worldwide, manufacturing is growing, not shrinking, including in many advanced high-wage countries. 

    Australians are purchasing more manufactured products, not less.  Manufacturing is not an “old” industry: it is in fact the most innovation-intensive sector of the entire economy, generating better-than-average productivity growth, good jobs, and exports.  Most importantly, manufacturing possesses several key structural features that make it vital to the economic success of any economy – including Australia’s.  This study documents the damaging decline of Australian manufacturing, a decline that has accelerated in recent years.  It explains the unique features of manufacturing (including innovation-intensity, productivity, income-generating capacity, export-orientation, and complex supply chains) that endow it with a national economic importance.  It shows that Australia has done much worse than other high-wage countries (even smaller more remote ones) at maintaining manufacturing: in fact, manufacturing employment is now smaller as a share of total employment in Australia than in any other advanced country (even Luxembourg!). 

    The paper lists ten key policy levers that have been invoked in other countries to support manufacturing – and which could play a positive role here, too, so long as government gives the sector the attention and priority it needs to succeed.  The paper concludes with public opinion research showing that Australians agree, by very large majorities, that manufacturing is crucial to the national economy, supports good jobs and high living standards, and should be a national priority for policy-makers.



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