The Fight for Full Employment

By Hugh Stretton

Two centuries ago, technical progress, the Napoleonic wars and other causes, were driving agrarian and industrial revolutions in Britain. When town and country workers used their lawful right to negotiate their changing terms of employment collectively, the government got parliament to abolish that right. Workers responded with riots and protest meetings. As a bargaining device some of them tried sabotaging their employers’ property. That was inspired, they said, by a (probably mythical) leader called Ned Ludd. Hence ‘Luddite’: perversely, a defence of free association has given the language a word for resisting progress. This article will suggest that we may soon have further use for its original meaning.

Party politics has famous mixtures of conflict and accord. If opposing parties both support prevailing policies, how can they compete for office? For thirty years or more from 1939 both sides of the Australian parliament not only said (as most politicians do) that they favoured full employment they actually achieved and maintained it. With that accord, how could they compete for office? In the 1949 election Bob Menzies warned that a vote for Ben Chifley was a vote for communist dictatorship. Some of Chifley’s wilder colleagues warned the workers that Menzies would have them back down the capitalist coal mines without lifts or oxygen. Menzies won, and appointed Nugget Coombs – Labor’s hero, economic strategist and national Director of Post-War Reconstruction – to command economic policy through sixteen more years of steady growth, and of the full employment which they both judged to be well worth its regrettable costs in inflation.

Forty years on, anyone who wants full employment is damned by Liberal and Labor leaders alike as a Luddite likely to wreck the bipartisan innovations that have trebled our productivity since Menzies’day: the great liberation of business from government by the neoliberal strategy of privatisation, smaller government, lower tax, freer enterprise and trade and exchange.

Full employment would now be harder to achieve. Technical progress has reduced the numbers needed to produce the industrial goods that we want. Spending has shifted to labor-intensive services, many of them provided by individuals or small businesses difficult to regulate. But the policy revolution has compounded the trouble. For thirty years now, real unemployment has run up and down between three and six times its previous level. The increase is measured by government agencies but rarely acknowledged by politicians who pretend that the number judged by Centrelink to be entitled to the dole is the whole number unemployed. Last year the Australian Bureau of Statistics reported nearly twice that number as ‘marginally attached to the workforce’, willing to work if the jobs were there. Distrust the ABS count? In 2003 an independent three-year study for the Reserve Bank found more than 800,000 willing workers unemployed to add to the 660,000 entitled to the dole.

In 2003 an independent three-year study for the Reserve Bank found more than 800,000 willing workers unemployed to add to the 660,000 entitled to the dole.

To count as unemployed you must show Centrelink or its Job Network agents ten signed job rejections per fortnight – that’s 260 a year – and convince them that you don’t have any of a number of other sources of income. Most of the jobseekers are willing and able to work. But applying for many jobs they know they won’t get, and some of their relations with Centrelink, can be deeply upsetting to them and their families. It drives some to drink and despair, to petty crime if they don’t qualify for the dole and sometimes if they do, or to dogged endurance and care for their families. Their experience is exposed to others’ understanding as never before by Mark Peel in The Lowest Rung: Voices of Australian poverty (2004) which draws on thousands of hours of conversation with unemployed people and their kin.

Sensible opponents of the current bipartisan strategy acknowledge three sources of its political success. The continuing improvement of the rich countries’ technical means of production has allowed economic growth to a level at which three quarters or so of Australians have the material conditions for happy life if they’re personally capable of it. Despite the weakening of our industrial award and arbitration system, the minimum wage has kept up with a mix of growth and inflation while the poorest quarter or so of United States workers have fallen steadily further behind through the last 30 years. And most of our losers have been not badly served by the welfare services of the ‘third way’. The United States spend about 50 per cent more per head than we do on health services, but from other effects of their ruthless economic policies they still have worse health than we do.

So if you don’t know any unemployed people personally, or mind our increasing inequality as long as the poorest have enough, and forget the ageing of much of our public infrastructure and the generational injustice of our rising house prices – and so on, I needn’t preach to the converted – our economic record can look good enough to justify bipartisan support for its principles, and a shift of focus from the strategy itself to the competence of its management. Its benefits are expensively advertised. Its Left critics are derided as figures of fun. While no electable party is offering any better economic strategy, electors can’t help endorsing the one we’ve got, so it can claim national support. And plenty of the electors, like plenty of the intellectuals and politicians and business leaders who have shaped the strategy, believe in it. Not necessarily as faultless, but as a reasonable resolution of our conflicting interests and values, and judgment of possibilities.

While no electable party is offering any better economic strategy, electors can’t help endorsing the one we’ve got,

That policy accord leaves the parties to compete on other grounds. Which has the best leaders? Who can we trust not to tell lies? Not to jack up taxes or interest rates or inflation? Not to mismanage our economic strategy or its global relations?

Some one-time Labor ministers, now retired from parliament, speak unhappily of a change in the recruitment of politicians that has coincided with the shift from questions of policy to questions of leadership and management .Most Labor candidates used to be people who had earned their livings in other trades. They may also have done time as officers of trade unions, professional associations, charities. Together they knew a lot about life and work outside politics, including the citizens’ hopes and fears and expectations of government. That was then. Now, in a Weekly Guardian review of the Labor Party, ‘its candidates are incestuously drawn from the party bureaucracy.’ The party has been their working life. Winning seats and gaining office for its candidates has rightly been their mission. Policy was the business of the politicians. Of course the politicians wanted office, often greedily – but public purposes were at least among their working purposes.

Some of those old warriors insist that the change of purpose is profound. The conviction that they’re in politics to improve the justice and equity of Australian life, so they should develop policies and seek office by means compatible with that purpose, has given way to the conviction that because winning office is a condition of any other achievement, nothing must get in the way of it. Sixty or 70 per cent of the voters are doing all right, and most of them are assumed to be self-interested and easily frightened by talk of higher tax or interest rates or inflation. That understanding of ‘middle Australia’ is contradicted by almost all polls that have asked people if they would pay more tax for better public health or education, or other necessities for people poorer than themselves. But the Labor Party attack has shifted decisively to questions of management, or (increasingly) of personal character. Never mind the government’s policies, just attack its leaders as liars and incompetent.

Critics of the strategy get some space on the opinion pages and occasionally the feature pages of the national press, but rarely in its editorials. Professional journals of political economy, Left magazines like this one, academic authors of critical books from the University Presses, and critical talk on the ABC, aren’t even dangerous any more. As many Labor as Liberal voices deride them as dismal latte intellectuals, chardonnay socialists, the dying Left talking to itself.

So what hope is there for our million and a half unemployed and as many again of their suffering dependants? For lone mums devoting their time and minimal welfare income to bringing up young children? All now identified as pampered idlers, the cause of their own poverty, needing only a welfare cut to drive them back to work?

So what hope is there for our million and a half unemployed and as many again of their suffering dependants?

The best hope – though a frail and perhaps a frightening one – may be that a triumphant Right with command of both Houses will be tempted to go too far. Keep in mind the four new directions to which the government is already committed. Imagine how initial success might encourage some further development of each of them:

Exclude union officers from all places of employment. (Next, perhaps, get rid of unions?)

Ban any other collective bargaining by employees (and perhaps by contract workers?).

Repeal unfair dismissal rules for employers of less than twenty people. (In due course extend the blessing to bigger firms?)

And from The Australian, five days before Christmas 2004: ‘The complex array of welfare payments could be streamlined with a single working-age benefit, under a renewed push by the Howard government to encourage the jobless, disabled pensioners and single parents to go back to work. Outlining a new “work first, welfare second” reform push to tackle tax and welfare disincentives and boost workplace participation, Workplace Relations Minister Kevin Anderson has also hinted at further childcare assistance to middle-income mothers returning to work. The plan could include stripping general child-care entitlements from the unemployed and low-income single mothers, who can currently secure up to four days of taxpayer-funded child-care at a nominal rate, and re-directing support to mothers in the paid workforce. “There are 2.7 million working age Australians currently on welfare payments” Mr. Andrews told The Australian. “The current system is confusing, and there are disincentives in the system which mean that even if people want to work, they are not provided with the incentive. . . . If we want to maintain our economic prosperity, we must boost productivity. And there’s an ethical element to this, which is to assist people who want to work”.’

Ethics? Most of the unemployed get less welfare income if they return to work. But single mums are to get less welfare while they’re unemployed and more if they’re out earning.

But credit opponents with good intentions. The neo-liberal program has so far failed to achieve its own aim of limiting real unemployment to its ‘natural’ rate. So it has not achieved the full rate of economic growth or the flexible capacity to respond to continuing technical and global change that our technical and global conditions would actually allow. Neo-liberal believers can expect the new four-point program to perfect the economy by freeing it to do its potential best for all parties. Greedy non-believers may welcome it for discreditable reasons, but they’re not the leaders, or the voters, whom argument or experience might persuade to change their minds. Argument hasn’t so far moved enough of either the believers or the profiteers. Might some historical experience help?

A Little History

King George III inherited an agricultural England whose peasant households also spun and wove most of its imported cotton and home-grown wool. An Elizabethan statute, and some later law, required local magistrates to regulate their pay and hours. Parishes cared for their poor. But the industries were presently transformed, re-located, and their labor economised by Hargreaves’ spinning jenny, Arkwright’s water frame, Crompton’s mule and Watt’s steam engine. Napoleon’s wars blocked some imported food. Merchants raised its prices. Some parishes urged their unemployed to seek work or welfare in other parishes. Some unemployed asked their magistrates for protection to which they were entitled by statute and common law. Machine workers joined in bargaining for better pay, hours and safety in the new ‘satanic mills’.

There was sympathy, including in parliament, for the sufferers. But it didn’t prevail. Workers’ unions had been banned in the textile and metalworking industries in 1749. By the end of the century informal associations were petitioning Parliament to restore their old rights. Parliament responded with Combination Acts. They restrained both masters and men, but were rarely applied to the masters. Organized resistance – mass meetings, strikes, petitions, some machine-wrecking – intensified in 1811–12.

Parliament responded with tougher Combination Acts. In 1813 it repealed the Elizabethan right of magistrates to fix wages and regulate apprenticeships. In historian Halevy’s words ‘it was a triumph by no means making for social peace. The workmen, deprived first of their right of association and then of their legal right of state protection, were driven to the formation of secret societies, to conspiracy, and to riot. It is true that the Luddite disturbances had subsided, and that employers and men alike took part in the rising of 1815; but two years were not to elapse before a renewal of Luddite outrages. Never before had the existence of workmen’s associations in England been so precarious; never had their character been so revolutionary.’

Ten years later the repressive legislation was repealed. Seven more, and a Liberal Prime Minister forced the King of England to force the House of Lords to pass the radical reform of Parliament that began Britain’s progress to democracy. To match that response to our coming repression we will need different politicians than represent most of us now. Candidates could begin by memorizing the Reserve Bank’s estimate of the true number unemployed, and reading Mark Peel’s The Lowest Rung: Voices of Australian Poverty.

*Emeritus Professor Hugh Stretton is currently a visiting research fellow, University of Adelaide. He was educated at Melbourne, Oxford and Princeton Universities. He taught modern history but has written chiefly about town planning, housing policies, and social scientists’ ways of explaining complicated historical processes. While teaching at Adelaide University he also spent 17 years as Deputy Chair of the South Australian Housing Trust. His last book was Economics: A new introduction (1999) and his next, Australia Fair, due this year, is about our national economic strategy.

Australian Options is 10 Years Old

This issue marks 10 years of Australian Options. In our first issue June 1995 the main article was written by Hugh Stretton on Policy Changes For Real Job Creation’. We are delighted that he has agreed to contribute again to this anniversary issue.