Recession and the rise of insecure work

September 29, 2020
Photo: United Workers Union / Facebook

The COVID-19 pandemic has led to a greater focus on insecure work, including casualisation, contracting-out and other forms of employment characteristic of the “gig economy”.

While unions and the Australian Council of Trade Unions (ACTU) have sought to campaign for greater work rights (including guaranteed sick pay), employer groups and the federal government have used the COVID-19 pandemic to further erode working conditions, supposedly to raise “productivity”.

A key tool to slow the spread of COVID-19 has been to request, or insist, that people work from home where possible.

Health researchers say that this has led to a growing inequity in the distribution of COVID-19 cases: infections are increasingly concentrated in suburbs where low-paid, insecure workers live, such as the north and west of Melbourne and the south-west and west of Sydney.

“Outer areas of Melbourne have had more COVID-19 cases in the second wave and this might be associated with job types and education levels,” the ABC argued on July 30. “Residents living in inner areas of Melbourne are more likely to hold tertiary qualifications needed for occupations more suited to working from home.”

In Sydney, insecure work is more concentrated in the west and south-western suburbs. NSW Health data indicates that testing rates for COVID-19 have plummeted in the south-west, despite concerns that the virus is still circulating there. Testing rates were only slightly better in Sydney’s western suburbs.

“The capacity to take time off work can be quite tricky … these are the things we need to think about when we think about how to make it easier for people to do the right thing,” Mt Druitt doctor Kean-Seng Lim told the ABC on  August 29.

Insecure work

In 2018, 40% of the work force was in insecure work. Work insecurity transfers the economic risk associated with a downturn from bosses to workers, according to Australia's insecure work crisis: Fixing it for the future, published that year by the ACTU.

“If Australia is hit by a global financial crisis or domestic demand diminishes, it is labour, not capital, that absorbs most of the pain,” it said.

Economic data released since the beginning of the pandemic bears out this concern.

In the three months to June, Australian Bureau of Statistics (ABS) data showed that overall wage growth (at only 0.2%) was the slowest recorded since data was first collected in September 1997, leading to the lowest annual rise in wages (1.8%) on record.

Meanwhile, losses in income have most heavily affected insecure workers: 68% of casual workers, who had been in their current job for less than 12 months, have lost shifts, according to the ACTU. These workers are not eligible for JobKeeper payments.

Insecure work nothing new

The restructure of the Australian economy, started by the Bob Hawke Labor government in 1983, changed the composition of the workforce.

Permanent, skilled jobs in manufacturing, public utilities (gas, water and electricity) and communications fell, in absolute numbers, by more than 100,000 in the 10 years to 1993, despite long-term growth in the economy over that period.

The last time the Australian economy fell into recession — two consecutive quarters of negative growth — was in 1990. Officially, the economy began growing again by mid 1991. However, unemployment continued to rise, peaking at about 11% in 1992.

While unemployment began to fall later in the 1990s, the jobs tenure rapidly became less secure.

“Casual employment increased by 68 per cent in the 1990s. Permanent jobs increased by only 5.3 per cent over the same period, but the number of full-time permanent jobs actually fell by about one per cent,” reported the 2004 Senate inquiry into Poverty and Financial Hardship. “By August 2002, 27.3 per cent of all wage and salary earner jobs were casual and 66 per cent of these were part-time.”

The growth of insecure work led to the rise of the “working poor”.

In 2000, for instance, 15% of “poor” households relied exclusively, or mainly, on wages, according to the 2004 inquiry. This was a major shift from the 1970s, it noted, when holding a job ensured a comfortable standard of living.

Worse for the young

The plight of insecure workers was delivered an additional blow by the Global Financial Crisis (GFC) in 2008. Job prospects and wage outcomes for young people have seriously declined since then.

The likelihood of securing permanent, well-paid work is particularly low for young people, according to the Productivity Commission report Climbing the jobs ladder slower: Young people in a weak labour market, published in July.

But rather than leading to a large increase in unemployment, the decline in the labour market after the GFC has resulted in “slow wage rate growth and in job seekers finding part-time work or work in less attractive firms or occupations”.

While unemployment did not increase markedly for young people in the 10 years from 2008–2018, employment outcomes for younger workers were nevertheless poorer.

According to the commission’s report, “Workers aged 20-34 experienced nearly zero wage rate growth from 2008 to 2018, in part because of lower starting wages”.

Structural changes in the workforce have also impacted younger workers more harshly over those years. “[T]he recovery appears to be driven by an increase in part-time employment. Full-time employment of people aged 20-34 fell between 2008 and 2014 and did not recover to 2008 levels,” the report stated.

This situation has been made worse by the onset of the pandemic.

Already in a precarious position prior to the pandemic, the unemployment rate among younger workers has increased disproportionately this year, according to the commission, risking significant “scarring” for a generation of younger workers who will struggle to regain lost income/job security.

Pandemic subsidies cut

Two weeks before the October 6 budget, when the government will announce its longer-term response to the pandemic recession, it cut the JobSeeker supplement from $550 to $250 a fortnight.

The cut risks throwing up to 2 million unemployed workers into poverty according to the Australian Council of Social Service (ACOSS), which has called on the government to extend the supplement at its former rate.

The government has also cut the JobKeeper wage subsidy. From September 28, the supplement for full-time workers was cut from $1500 to $1200 a fortnight. For part-time workers, the cut is even larger — from $1500 to just $750 a fortnight.

The government is also insisting that firms re-register for JobKeeper, meaning that some will lose access to the support payment altogether. The expected result will be a spike in business closures and an increase in unemployment.

The Reserve Bank of Australia has made clear its preference for the government to continue to borrow to fund increased stimulus for the economy. Its only a caveat, according to Michael Pascoe in the July 22 New Daily, is that the government spends enough to increase economic growth to a higher rate than the very-low interest rate it pays on the debt.

The government’s decision to scale back JobKeeper and JobSeeker payments cannot therefore be explained away as good economic management.

In fact, the cuts to JobSeeker and JobKeeper appear to be more of a political than an economic decision.

The Sydney Morning Herald reported a number of Coalition backbenchers complaining that welfare payments were discouraging workers from applying for low-wage jobs. “The anecdotal evidence is when those measures came in, the inquiries from Australians [for low-paid agricultural jobs] disappeared,” Liberal MP Julian Leeser said on September 8.

Leeser’s comments were supported by the Australian Industry Group (Ai Group), which claimed the JobSeeker payment deterred some people from looking for work.

With cheap labour in the form of backpackers, or temporary migrants from the Pacific, evaporating after the pandemic forced border closures, Coalition MPs and their business supporters fear they may have to increase wages and conditions to attract workers. This would severely dent their ability to profit.

Better, rather, to drive down welfare to force more local workers to accept lower wages in preference to living in poverty.

Tax cuts for the wealthy

Rather than making payments to low-paid workers and the unemployed, who will spend and therefore boost the economy and help generate more jobs, the Coalition intends to bring forward tax cuts for the wealthy.

“Income tax cuts will set off an inequality grenade,” Alison Pennington, Senior Economist at the Centre for Future Work said on Twitter on September 3.

“High income earners with jobs and housing assets will expand savings. Meanwhile millions denied income supports, [will be] forced to exhaust savings to access JobSeeker and raid super accounts.

“[A] consumer-led recovery is economic fantasy and LNP's political distraction,” Pennington continued. “Only an ambitious, large-scale, sustained public investment program can reconstruct the economy and get people back into jobs.”

Falling unemployment?

Official unemployment fell from 7.5% in July to 6.8% in August. However, this was due to a big increase in the number of sole traders rather than an increase in businesses hiring employees.

While unemployment nationally fell by about 44,000, “Sole traders, who do not employ any staff, increased by more than 50,000,” according to the September 17 SMH. “Many of these sole traders work in the gig economy.”

To put it another way, the modest fall in unemployment has come at the expense of an increase in insecure work.

Casualisation, part-time work and contracting-out (including the rise in sole traders) increased markedly in the wake of the 1990 recession. The Coalition government wants to ensure that the COVID-19 recession follows the same path.

Insecure work reduces working people’s economic strength. Insecure workers are more isolated, less organised and less well paid. This increase in insecure work is no accident. Innis Wilcox, Chief Executive Officer of the Ai Group of employers, described the strategy as “increased, but balanced flexibility provisions”.

The fact is that the rise in insecure work is a result of the class struggle.

The economic interests of working people and their bosses do not align: their “increased flexibility” is our growing insecurity.

More than that, the bosses are always looking for opportunities to extend their dominance, and recessions move the balance of economic power in their favour.

While the government’s favourite refrain is “we’re all in this together”, history shows that we’re not.

Working people need to redouble our efforts to campaign for secure work outcomes, or the future is bleak.

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