Earlier in the week, Pollytics blog reported an Essential Research poll finding that most people believe that Tony Abbott would bring back WorkChoices. Labor has been dusting off its old anti-WorkChoices rhetoric to take political advantage of this.
But will the same scare campaign work twice?
Though many WorkChoices policies persisted well into the Rudd government’s first term – indeed some aspects of their re-regulated IR system didn’t start until last month – the stories of workers being ripped off by bastard bosses using WorkChoices over the last couple of years have been hard to find, certainly much harder than the anti-WorkChoices ACTU advertising before Howard’s defeat would have led us to believe.
Indeed, the WorkChoices era in the Australian labour market was remarkably good. Unemployment sank to 30 year lows before the GFC hit. Despite claims that bosses would use their new powers to ‘unfairly’ sack workers, involuntary job losses dropped to very low levels.
Even after the GFC hit, the still primarily WorkChoices governed labour market put in an exceptionally good performance. The GFC was the ‘fairest’ economic downturn we have ever seen, with instead of big increases in unemployment the shock of reduced income was widely absorbed in lower real wage outcomes and shorter hours. These are much easier to recover from than a job loss.
In retrospect, WorkChoices looks rather better than it did to many people at the time.
We are also now comparing WorkChoices not with vague notions of ‘fairness’, but the specific ‘Fair Work’ system. Fair Work has already done what WorkChoices never did: force employers to sack workers. We can expect a steady stream of stories of undesirable consequences as the old IR Club comes back to try to impose its view of the labour market on the economy.
On the other hand, there is strong and persistent public opinion in this country that weak workers should be protected by the IR system. Despite the overall negative reaction to WorkChoices, most people did not think that it would personally have a negative effect on them. Opposition was primarily driven by concern for others.
The trick for the Coalition in tackling industrial relations will be to minimise the perception that it will be ‘unfair’ to workers who are in a vulnerable position. It is however a difficult trick to pull off, since as last time the status quo – however unjustifiable (such as some penalty rate regimes) – will be defined as the benchmark of ‘fairness’. Small, evolutionary changes without tackling all issues at once are likely to be the best way to approach this.
Labor will still spin every change as WorkChoices II, and it will have some effect. But given their own IR problems, the clearly exaggerated problems with WorkChoices I, and a smallish Coalition target I doubt it will be the issue it once was.
Andrew Norton 
One of the arguments I have heard is that WorkChoices led to a relative decline in wages in some industries (specifically hospitality) while mining, for example, used WorkChoices to increase productivity. So there was a combination of cost cutting (in those industries that might favor Labor) and productivity improvement in those areas that might not favor Labor. I don’t know if this story is correct, but it is something that someone could have a look at.
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I’m probably grossly oversimplifying things but I suspect most people will just assume that the Fair Work laws are objectively fair because they’re labelled as such and referred to as such and therefore any changes to them must therefore be ‘unfair.’ I think if the Liberal Party had named WorkChoices ‘Fair Work’ they would have been easier to defend.
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Sinc – Sounds plausible, given that employers would have tried to reduce penalty rates in hospitality.
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How much inefficiency, in any, does the current ‘Fair Work’ laws impose in the labour market? Given you can only take on so many unpopular issues, is this really the best bang for its buck the Liberal Party could get in economic reform? It seems unlikely.
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The truth of the matter; there really isn’t much difference between work choice and fair work. If someone thinks there is I would really like to see the list.
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Robert, the labour market is the most distorted major market in Australia. In the financial and product markets, while there are plenty of exceptions, subject to laws against restrictive and misleading trade practices and product safety, voluntary exchanges are on the whole allowed to proceed. However, the general inability of two parties to agree on their employment relationship without external intervention imposes enormous costs on the economy and society as a whole. Trivial stories about school kids not being able to strike a bargain with a newsagent or hardware store to work a few hours after school are just the tip of the iceberg. The difficulty of changing inefficient work practices and getting rid of unproductive workers is too difficult for most employers to deal with, so most accept lower profitability and hire fewer people, close down or not bother starting a business in the first place. A huge amount of human potential is lost in the process.
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Actually, I think a scare campaign will work quite fine if they push it hard enough — probably better than before the GFC. It’s not like either Barnaby or Joe Hockey are going to be especially good at defending these things.
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I guess it will be interesting to see if the next election is fought over two scare campaigns — the Libs telling people an ETS will end life as we know it and Labor using workchoices to tell people they will all lose their jobs except those that work 60 hours a week.
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I would like to see a line chart – hours lost due to industrial unrest (strike days). I haven’t see one for a few years, but I bet a new one would be trending down, then labour’s new laws came in and up she goes.
Look, I genuinely think that this is an issue that will take time to play out and for people to see the negative effects of Labour’s IR policies. It will take time for the new laws to take affect, new contracts to be re-negotiated, unions to flex muscles etc.
In this respect, negative signs are already emerging. Bosses laying off teenagers for shorter shifts, unions bullying the miners etc. However, these negative movements are likely to be somewhat offset, no masked, by the economic recovery and the retirment of baby boomers.
So while I would welcome ‘back to the future’ deregulation laws, I would strongly advise the Coalition to back-off and be a bit reactionary. Let people see the damage of Labour’s policies, at most only mention that you would make some changes at the edges (governments have to demonstrate some intention of continual improvement and credibility), but strongly deviate from any wholesale changes. Moreover, I would focus on labour weaknesses (debt), get these issues sorted first when in power, and then later down the track focus on IR.
So in short, first get in power, then worry about IR, then smash those union thugs!
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If anything I think it will work better the 2nd time around. Abbott isn’t quite so reassuring a figure as Howard, and the lingering post-GFC nervousness will reduce people’s willingness to gamble with unemployment.
What is in Abbott’s favour however is that he can try and re-name/re-define the policy, the unions are less engaged, and that it’s easier to sell a change than defend the actions of people under your policy (As Rudd and Gillard are now finding with their IR policy)
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It seems like the best measure of labor market distortion is the level of systematic unemployment a set of IR laws generates. Because we are being buffeted by business cycle unemployment it’s hard to get a good measure of what impact the latest IR laws have had on employment. Under WorkChoices though, when we were near full employment, the unemployment rate dropped by under half a percent if I remember correctly. I’m not sure how much that sort of change is worth fighting for, especially given the public will likely demand (perhaps justifiably) it be offset by other forms of distortive redistribution to low income earners.
Another issue would be reduce productivity growth due to reduced experimentation with hiring and firing, but I’m not sure how we would measure that given the naturally extreme variability of productivity growth.
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Five more posts, 5 more bits of rhetoric, what are the actual differences?
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Robert – Unemployment dropped .9% between March 2006 and April 2008, when it started to slightly increase again. But another test is the employment to population ratio, which went up 1.4%.
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Charles – I am not an IR expert, but here’s some:
* no worker earning less than $108K can opt out of an award (though awards can allow some flexibility)
* changes must pass better off overall rather no disadvantage test
* no immunity from unfair dismissal claims
* increased rights of union entry to workplaces
Much of the devil is in the award detail rather than the 700 pages of legislation, eg the rules forcing employers to sack short shift employeres.
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I am a little sceptical that the polling results can be read as concern for others. This would make IR a very unusual area of public policy. If you read the pressure for labour market regulation as a concern to protect the position of incumbents then, while they may not think their current situation is problematic, people think in terms of what situation they might find themselves in and present that as concern for others.
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Michael -I think there is a strong pattern of self-interest being a insufficient explanation for public opinion, and for politics being instead an expressive realm for the large number of people who have no particular personal stake in the issues. Indeed, your ‘moral vanity’ critique of the middle-class left is a good example of this.
Most people said that WorkChoices would not negatively affect them because that was a sound judgment – most people earn what they do under the conditions they do not because of government rules but because that is what the market is paying. Someone in that situation is very unlikely to fall down to the minimum wage and the chances of being sacked ‘unfairly’ are very small (during WorkChoices very low numbers of people were sacked for any reason, let alone ‘unfairly).
For employees with good jobs and prospects, opposing WorkChoices was cheap (if misplaced) empathy with the weak.
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Thanks Andrew, if we could get a 1.4% boost to employment that would indeed be very nice.
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Andrew, see what you think of this: http://onlineopinion.com.au/view.asp?article=10081
I published it the other day.
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Corin – While I think Labor would be mad to ditch the unions completely (all that money and manpower), you are right that they are better off without Dean Mighell.
One comment you made reminded me of a situation many years ago, after I had been trying to get my head around the rules of the ‘industrial relations club’ era IR system, when I asked a labour market economist how small business managed under such a system.
“Oh, they ignore it” was the response – possibly a slight exaggeration, but recognition that if workers believe they are being treated fairly many workplaces will manage to operate effectively beneath the union/government radar.
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I largely agree on both points. The 50/50 base though is a narrow group of people. Whilst the Lib campaign of 70% union officials was a stupid negative one there was some truth in it. I do think that both major parties are far too narrow ….
I think IR can be a vote winner for both sides … the centre ground is where the votes are and neither side really sits in it …
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A WorkChoices scare campaign will compound perceptions both of the Coalition’s abrogation of economic responsibility and that Labor managed the GFC well. It will be a strong supporting factor (one’s tenure in one’s job is a good concrete image of the abstract idea of The Economy), which will prove fatal to Coalition chances at this election.
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Andrew:
It won’t work this time around. Everyone knows Labor will just be putting forward a scare campaign anyway. Federal labor is starting to remind people too much of their state labor governments and they don’t want two levels of incompetence.
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I don’t think the Coalition can avoid some IR reform – they have to mobilise their base, and their small business base is a major victim of an interventionist IR system.
And if they are going to pay a political penalty anyway, they may as well get the associated advantages among those who want to the IR regulatory burden eased.
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Disagree A-Nort,
Coalition is much better placed to play a dead bat. All coalition supporters know that the libs would implement IR reform if given half a chance – and will mobilise accordingly. Abbott not banging his chest about IR does not have the same connotations as a US republican keeping quiet on abortion. On the other side, IR is a risk for Abbott. Thus, there is little to gain and much to lose. So what we will see is Rudd trying to bait Abbott. Abbot may or may not bring attention to IR issues recently emerging (strike issues, unions in the mining sector, teenagers put out of work by clunky award regulations). However, Abbott will not put forward any hard IR policies – maybe some fringe changes at best. This of course, is not to say he wouldn’t enact any significant changes once in power.
Also, unmentioned is the elephant in the room that is the ageing population. With the boomers retiring, wages should increase and unemployment should fall naturally. This should provide a conducive environment for IR changes in the next few years.
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Still not going to vote Liberal. He was hedging his bets on the death penalty last I checked, and it’s not just women that find his recent comments about ironing and what not polarising. Turnbull was their best bet to appeal to young people, if not for the constant destabilisation efforts under his leadership (and his own ineptitude in the Grech affair). If Abbott wants to pander to the shrinking pre-boomer vote good on him.
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Interesting that people find essentially symbolic issues so compelling.
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