Australia’s surprisingly secure workers, part 5

The ACTU made much of their claim that WorkChoices reduced job security, as part of their fight against weakened “unfair” dismissal laws. But it is surprisingly hard to find evidence that the legal arrangements surrounding employment security have any significant effect on either subjective job security (how highly people rate their chances of keeping their job) or objective job security (the actual rate of retrenchment).

The ABS labour mobility survey, released yesterday and covering the 12 months to February 2008 (ie, all under WorkChoices dismissal law), reinforces this point. Were there mass sackings as employers unfairly took advantage of additional rights to do so? To the contrary, the proportion of people who left their last job involuntarily through redundancy, dismissal or lack of work fell to 1.8% of all people who held a job in that 12 months, certainly the lowest since 1990, and quite probably the lowest ever recorded.* (I don’t have the 1980s surveys, but this is better than the 2.7% in 1972, at the tail end of the long post-war boom).

The job loser rate – including people whose jobs were temporary or seasonal, or had to leave because of injury or ill health as well as those who were sacked or retrenched – was on 5.4%, also the lowest in 20 years, if not more.

The next labour mobility survey, scheduled for 2010, will almost certainly show sackings on their way back up, even as Labor partly restores “workers’ rights”. These numbers are driven by fundamental economic and financial considerations, and nothing unions or governments can do will have more than a marginal, and probably temporary, effect.

* This figure understates the number of actual jobs lost this way, because the question asks about the last job. People who have many jobs in a year could have been sacked from one of them, but not from their last job, and so not appear in this statistic. However, it is unlikely that the number in this category is large, or that it would affect these results as measuring the trend of overall retrenchments.

4 Responses to “Australia’s surprisingly secure workers, part 5

  • 1
    Simon
    October 29th, 2008 09:29

    Maybe job security was the catch cry for some in their opposition to WorkChoices, but I think the more important reasons for opposing it were (and are) the conditions of employment.

    Using job security (with involuntary redundancies as the proxy) as a measure to evaluate the overall impact of the WorkChoices laws on employees seems far too simplistic. Of course I don’t think you were really trying to do that – just wanted to make that point.

  • 2
    In Melbourne
    October 29th, 2008 20:55

    We took the opportunity to sack 2 people under the new laws – as soon as they came in. It’s hard to say whether it was unfair – they were clearly underperforming, but not underperforming enough to go through the pain of getting rid of them under the old system. But then we took 4 people on in their place. Is this fair? I don’t know.

  • 3
    Andrew Norton
    October 29th, 2008 21:24

    Outside the public sector, most bad workers will eventually be sacked – the effect of WorkChoices was probably more to speed up the process than to greatly change the total number.

  • 4
    John Humphreys
    October 30th, 2008 02:19

    Interesting stats. Pity the economic interventionists don’t seem to find this sort of information.