10% unemployed — a 'market' triumph

Wednesday, October 16, 1991

By Peter Boyle

MELBOURNE — One never knows what to expect in the city these days. The other day I saw a young woman running through the lunchtime crowd, shouting: "Give me a dollar! Somebody give me a dollar, or I'll sing!" As she weaved her way through startled people, she collected a few dollar coins. It certainly was a change from the less sophisticated "Can you spare a few cents for a train fare/bite to eat" routine, but it marks an increase in begging in the streets as the official national unemployment rate slipped past the 10% mark for the first time since the 1982-83 recession.

The national figure (a conservative estimate by the Australian Bureau of Statistics) is 10.2%. But in Victoria it is 10.9%, in South Australia 10.5%, in Western Australia 11% and in Tasmania 11.4%. Even in NSW, the state which was supposed to be in best economic shape, the rate rose to 9.8% as 23,000 jobs were lost in September. Canberra, where the politicians have a consensus on not creating jobs, enjoys "only" 6.2% unemployment.

What has happened to the recovery that has been "around the corner" for the last six months? Apparently, it is still around the corner — if you believe the polls of the expectations of businesses.

The National Australia Bank says businesses are planning to boost capital spending in the next 12 months. Dun and Bradstreet's survey of 100 manufacturing, retail and wholesale firms shows that 15% more firms expect an upturn than expect a further decline in business.

But this "optimism index" survey also found that a majority of firms expected to continue cutting back their payrolls over the next quarter.

The federal government expects unemployment to keep rising even if a patchy and uneven recovery begins at the end of this year. And the International Monetary Fund, meeting in Bangkok, predicted a sluggish performance for the Australian economy in 1992, but declined to predict unemployment levels.

The "market" has decreed high unemployment for Australia, even after a recovery from this recession. It seems that we are headed for another special kind of economic boom. The last one coincided with falling wages and the next one promises to make "normal" a higher rate of unemployment than the last time round.

Business and governments seem to have accepted this. From the point of view of employers, high unemployment drive wages lower. The Hawke government sees this as proof that its policy of "restructuring" is working: less competitive industries are closing down, government departments and enterprises are slashing jobs, and the "market" is allocating resources to those who deserve them best. Or that is the story we are expected to believe as Christopher Skase suffers his bankruptcy in a luxurious Spanish villa.

Nevertheless, pressure is mounting on the Hawke Labor government. Victorian Premier Joan Kirner demands a national job strategy from 's cutting thousands of public service and teaching jobs). She warned that high unemployment would remain for at least another year and would top 11% once this year's school leavers join the dole queues.

Prime Minister Bob Hawke's response was to promise to look at cutting business taxes further and at fast tracking a number of major projects which would have high environmental costs and create few jobs.

Even conservative economists acknowledge that there is a big structural component to rising unemployment — the logical outcome of destroying internationally uncompetitive manufacturing industries, slashing public services and increasing productivity at the expense of jobs. Pumping more money into the pockets of business (whether through tax cuts or interest rate cuts) would not necessarily create many more jobs.

So what are the alternatives? Simply bear unemployment at a level that is close to 30% among youth and in many outer suburban areas?

The relatively mild demands from within the ALP, the trade unions and the welfare lobbies have been to "prime the pump" in one way or another, to bring back Keynesianism. But if jobs are being done away with as a consequence of increasing productivity and the use of more labour-saving machinery, then the choices are either to wear high unemployment or to share the work around.

Demands for a shorter working week with no loss of pay were raised by the union movement in the 1930s depression (an ACTU pamphlet in 1932 called for a 30-hour week) and in the early 1980s (the metalworkers' 35-hour week campaign). But today this demand is ruled out of court by our new, "sophisticated" trade union officialdom because it won't be acceptable to business.

The fact that a shorter working week is unacceptable to business does not mean that it isn't a rational solution to the problem of structural unemployment — it simply means that the "market" is demanding irrational "solutions": permanent and growing unemployment.

Another component of a rational response to rising unemployment is for governments to create jobs through public spending on projects such as public transport, housing, environmental rehabilitation, clean production in industry, alternative energy, child-care, education and health.

For a start, any government serious about cutting greenhouse emissions would be boosting public transport. But the Victorian government, for one, has brought in cuts to service and fare increases which, by its own estimates, will reduce already declining public transport usage by another 6%!

Job creation by governments will cost money, and there is none around, say the experts. But a handful of millionaires had no problem borrowing billions of dollars for a giant gambling game over the last few years, so why can't governments do the same and spend it on socially useful work?

Then there is military spending that could be cut — especially the warships that were supposed to fight the Cold War that is now over.

Further, taxes on big business and top income earners have been falling under the Hawke regime. Shouldn't they be lifted to fund jobs and services for the majority? But the markets won't wear such policies, we are told. Perhaps it's time to defy the forces that hide behind the faceless "market".

Issue