Workers share of Gross Domestic Product drops to 50%

March 7, 2022
The profit share of GDP has been rising while wages stagnate. Photo: Tiger Lily/Pexels

The share of the money value workers produce with our labour — calculated as gross domestic product (GDP) — was just 50% in the June quarter of last year. The last time it was this low was June 1960. The share has been below 55% since June 2002.

By contrast, the profit share of GDP has been steadily rising. It reached a historic high of almost 30% in the June quarter of last year.

Working peoples’ highest share of GDP was 62% in June 1975, and the profit share was 17%. Since then, nearly $6.5 trillion (in current dollar terms) has been transferred from wages to profit.

The long history of the decline of workers’ share of GDP since the 1970s correlates with betrayals by the Australian Labor Party — in particular during the Accord years in the 1980s when unions made a deal with bosses and the government to sacrifice rights to organise collectively supposedly in return for a “social wage” of welfare and health services.

Demoralised workers started abandoning their unions as the Business Council of Australia (BCA) pushed for enterprise bargaining — bargaining on the basis of a company and not the whole industry. This weakened workers’ and union power to be able to get a better deal.

This paved the way for the anti-union John Howard government to be elected in 1996. It further challenged union power, including on the wharves in the Patricks dispute, the WorkChoices industrial laws and the introduction of individual worker contracts.

A union fight-back led to the Kevin Rudd Labor government being elected in 2007. It amended the Howard-era industrial laws to give workers back their individual rights however it hung onto the restrictions on unions’ ability to organise on the job.

Since the Coalition returned to power federally in 2013, it has introduced, or amended, laws to limit unions’ ability to protect workers, including allowing employers to transform their workplace employment rules such as declaring a worker to be “casual”.

No protection under Labor

This history suggests that Labor governments are no protection from the regular crises of the global capitalist economy, and conservative Coalition governments are bent on curbing the ability of working people and unions to fight for better living standards.

Wage growth since 2006 was just above 4%, until the Global Financial Crisis (GFC) of 2008, when it fell to just under 3%, before rebounding to between 3.9% and 3.5%.

However, from 2012, it began a long slide to 2% by 2016, and hovered just above that until 2020. It fell almost to 1% as a result of the economic crisis brought on by the COVID-19 pandemic.

In the first lockdown in 2020, GDP fell by 7% in the June quarter. It clawed that back with rises in economic growth of 3.6% and 3.2% in the September and December quarters. That faltered though in the March 2021 quarter, with a 1.9% rise and only 0.7% growth in the last June quarter as lockdowns were reimposed in the eastern states.

In the year ending June 2021, increases in the cost of living measured by the Australian Bureau of Statistics (ABS) outstripped wages, resulting in a 2.1% fall in real wages.

Wages and salaries and employers’ contributions to superannuation and workers’ compensation premiums fell 2.3% in the June 2020 quarter, slightly rebounded by 2.3% in the September 2020 quarter, faltering back to 1.4% growth in the December 2020 quarter, 1.5% in the March 2021 quarter and then fell back to 1.3% in the June 2021 quarter.

During the 2020 lockdown, masses of workers were being thrown out of work, or put on lower hours, being made casual or being forced to find casual work, or taking whatever JobKeeper money their bosses felt like handing over. As has been revealed, many bosses pocketed the lot, which tipped the GDP scales to artificially inflate the profit share and depress the labour share proportionally.

Worse, many workers were forced to eke out an existence on JobSeeker payments from Centrelink. Employers used the lockdowns to not only lay off workers, but make workers casual, or give them reduced hours. Quite a few have had to try to find multiple casual jobs to make ends meet while still not being on wages they relied on.

The proportion of secondary jobs as a total of all jobs in all industries rose in trend terms from 6% in September 1994, to 6.6% in September 2020 (peaking at 7.2%, or 1,025,000 jobs, in actual terms, after the 2020 lockdown).

What recovery has taken place since the 2020 lockdown has overwhelmingly been in insecure employment.

Of the total jobs created between May 2020 and February last year, 59.1% were in part time work and 40.9% were full-time. Over the same period, of waged jobs created 58.2% were casual and 41.8% were permanent; in new self-employed work, 79.9% was insecure and only 20.1% was secure.

Trends worsen

The federal government under Scott Morrison has exacerbated and entrenched these trends. Its Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 allows an employee to be treated as a casual by their employer.

The ACTU report, Insecure Work in Australia, stated that the recovery from the 2020 COVID-19 lockdown was dominated by “very insecure jobs” and that almost 60% of net new jobs created since the worst period of the pandemic have been casual jobs, almost two-thirds being part time.

Casual employment grew by more than 400,000 between May and November 2020, averaging 2,200 new casual jobs a day. This was by far the biggest, fastest casual employment expansion in Australia’s history.

The surge in casual work for women has widened the gender pay gap: 62% of the new casual jobs have been filled by women. The majority of low-paid workers in insecure work and facing financial insecurity are women.

The report said that millions are living pay cheque to pay cheque, with new ABS data revealing that 1.5 million workers cannot raise $2000 in a week for something important and 570,000 cannot raise $500. Millions are one unexpected bill away from financial disaster.

The report characterised the industrial relations bargaining system as being at the “extreme end in terms of its level of decentralisation”. Most OECD countries have a “more moderate mix of coordination and decentralisation”.

It stated that, as of last April, just 11% of private sector workers were covered by a current enterprise agreement and that “Australia’s highly decentralised enterprise-level bargaining system is failing to extend bargaining rights to the majority of workers”.

“Decades of neoliberal economic restructuring have increased inequality, removed key workplace protections, eroded workers’ bargaining power, and led to a dramatic rise in the incidence of precarious and insecure work, underemployment, wage theft, and wage stagnation,” the report said.

The ACTU has called for a national target to halve the proportion of insecure jobs by the end of 2030. It wants workers to be able to bargain collectively for better workplace standards.

“Workers need to be able to bargain with the host business in labour hire; with franchisors; with lead businesses in supply chains; and across industries,” the ACTU said.

“Industry bargaining is a necessity for resolving worker bargaining imbalances created by increased contracting out, labour hire, insecure working conditions, decentralised working and attacks on unions that create barriers for union power in the workplace.”

The report also called for changes to labour laws as a result of the “devastating impact of the COVID-19 pandemic” on workers.

It said that to be a “functional system of collective bargaining” that goes beyond the enterprise that employs workers is not just a matter of economic power, it is “a vital mechanism to ensure workers have control over the safety of their work”.

For industry bargaining to be successful the ACTU said it must:

  • be universal — it must meet the needs of workers who have fallen through the gaps in the current system;
  • be accessible — all workers, including labour hire and contractors, must be able to benefit; and
  • give workers a real voice — restore their power to determine their living standards.

To achieve these goals, however, will require organising workers and their allies on a scale seen in the workers’ campaign in the 2000s against WorkChoices.

We can get a glimpse of what such a campaign might look like in the current “Striketober” phenomenon in the United States, where not only organised workers in unions took on giant corporations, but casualised workers left their employers because the demand for their labour in a recovering economy is encouraging them to find a better employer with better conditions.

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