Home > Economics - General, Oz Politics > Workchoices in one sentence

Workchoices in one sentence

April 24th, 2007

In comments on a Fred Argy post about Workchoices and measures of economic freedom, Sinclair Davidson compares “the social democrat notion where workers have a right to work and employers the duty to employ” with “the more sensible notion of workers have the duty to work and employers the right to employ”. This is about as neat a summary of the contrast between social democratic and neoliberal views of the employment relationship as I’ve seen.

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  1. Tom N.
    April 24th, 2007 at 10:51 | #1

    So John, what is your position? Do you believe that the owners of capital have a duty to employ people?

  2. April 24th, 2007 at 11:02 | #2

    We can see the result of the first option in France and Germany – and, a while ago, in Australia – unemployment over 10%. I would modify the second one to being “the more sensible notion of workers have the ability to choose to work and employers the ability to choose to employâ€?.
    There is not “right” to work or “right” to employ. If I were an employer I would have the ability to choose to employ or not to employ a person who also has the ability to choose to work or not to work. This would be the truly liberal position.

  3. April 24th, 2007 at 11:02 | #3

    We can see the result of the first option in France and Germany – and, a while ago, in Australia – unemployment over 10%. I would modify the second one to being “the more sensible notion of workers have the ability to choose to work and employers the ability to choose to employâ€?.
    There is not “right” to work or “right” to employ. If I were an employer I would have the ability to choose to employ or not to employ a person who also has the ability to choose to work or not to work. This would be (IMHO) the truly liberal position.

  4. April 24th, 2007 at 11:03 | #4

    Oops – thought I had canned the first version.

  5. Dylwah
    April 24th, 2007 at 13:35 | #5

    “the more sensible notion of workers have the duty to work and employers the right to employ�.
    If employers employ because they have the right to, then they also have the right to close their businesses, withdraw their capital and give it all to the Lost Dogs Home etc, but I have a sneaking suspicion that if any captain of industry exercised that right then their kids would have them declared insane (I’m sure that there is a proper phrase to be used here) and take over.

    Surely the “employers right to employ� is also dependent on playing by the national set of rules, paying your taxes, doing your paperwork, not running an illegal drug distribution syndicate. Pretty limited “right� then.

    If we are going to operate under this framework of right to employ and duty to work, then things could get quite ludicrous. Ie workers have the duty to allow themselves to be thrown on the scrapheap when technological change puts them out of work. Some workers have a duty to develop positions as scapegoats for instance; slack off and maintain public and humiliating displays of drunkenness and drug abuse to act as hedonism deterrents or answering back once too often and becoming unemployable to remind those lucky enough to have a job to keep their mouth shut. Also the workers have a duty to double up as consumers to maintain the employer’s profits. Then there is the procreation to produce the next generation of workers. Then there is the participation in the national festivals of war, consumption and the boot. Unfortunately this kind of multi-skilling is not rewarded in the average AWA.

    The neoliberal’s might like this “sensible notion� but it looks like one step away from legitimizing employers chucking a dummy spit and taking their bat and ball and going (to their new) home, and I don’t know of any instance of a capital flight benefiting anyone other than a few bankers.

  6. April 24th, 2007 at 15:30 | #6

    There is much that one could say about Workchoices, and little of it would be flattering
    Even the HR Nicholls society expressed the opinion that the legislation was ‘Stalinist’, in so far as it ceded control to the Federal government in a rather centralised fashion. I’m not sure that neoliberalism is the only relevant reference here: rather, I think we have a very interventionist government, trying to manufacture the economy and industrial conditions that it wants. On this, and several other issues, the Howard regime is strictly not conservative, at least, not in any traditional sense.

    It is difficult to see how this legislation is anything other than an attack on workers and unions. It is glib and disingenuous to purport that virtually abolishing unfair dismissal laws is going to enhance ‘flexibility’ in the workplace. And on the topic of ‘flexibility’, many commentators forget to point out that AWA’s existed before Workchoices, and gave workers and bosses all of the flexibility they needed to negotiate a non-Award contract. The big difference was the ‘no-disadvantage’ test which was formerly applied to AWA’s, which at least offered some checks and balances.
    I can’t see these laws providing a single benefit to workers, that is, to most of Australia. Unemployment was low before the laws, so Workchoices has had little to do with that statistic. As I have said, there was plenty of flexibility under previous legislation. All we have with Workchoices is a divide-and-conquer approach to labour, intended to further atomise and commodify working people.

  7. jdannan
    April 24th, 2007 at 19:33 | #7

    FWIW the Japanese constitution declares work both a right and an obligation, which has traditionally been interpreted as implying continuity of employment. However this is being systematically undermined by a shift to short-term contracts, eg by my employer which has abolished all tenure for all scientists. I don’t believe this system is sustainable when other employers have not adopted this system…it is all done in the name of mimicking the West, I don’t think they realise yet that the EU made it illegal several years ago.

  8. gordon
    April 24th, 2007 at 19:34 | #8

    Referring to the link at Club Troppo, I find that Prof. Davidson’s throwaway line originates in his statement that Australia scores badly on the World Economic Forum’s rating of “the impact labour regulations have on business”. If the business about “…workers have the duty to work and employers the right to employ” were implemented, Prof. Davidson thinks our ranking would improve. Prof. Davidson notes that Australia has a higher ranking on an OECD scale (not specified), but he dismisses that ranking because it “reflects the social democrat notion…”.

    So Prof. Davidson thinks that a beauty pageant conducted by the WEF is more worth entering than one conducted by the OECD, because the OECD one is social democratic. What does that make the WEF one? Neoliberal, according to Prof. Quiggin. So the whole rigmarole boils down to the startling revelation that Prof. Davidson is a neoliberal. No discussion of why a WEF ranking is better than an OECD one. Move on, folks, nothing to see here.

    This is the case with a lot of these beauty contests conducted by means of ranking countries according to various criteria. We have had the Washington Consensus, the Augmented Washington Consensus, the two outfits mentioned by Davidson, and a fair number of others. They amount to little more than the formulation of the prejudices of their originators. One Mark Engler, writing here, has a few interesting things to say about them.

    Playing with words like “rights” and “duties” may make for popularity at a dinner party, but it isn’t economics and it’s about as useful as Paul Wolfowitz’ views on corruption.

  9. jquiggin
    April 24th, 2007 at 20:16 | #9

    Responding to various questions, I think employers have a duty to deal fairly with employees, and governments have a duty to pursue full employment as a central policy objective. I take the reverse position espoused by Sinclair Davidson to mean that governments have an obligation to intervene in the interests of employers, for example by restricting or prohibiting strikes and boycotts. I don’t think a neutral “genuinely liberal” position can be defined, but I’m not particularly concerned about this.

  10. jstrocch
    April 24th, 2007 at 20:34 | #10

    jquiggin Says: April 24th, 2007 at 8:16 pm

    I don’t think a neutral “genuinely liberal� position can be defined, but I’m not particularly concerned about this.

    What about”A fair days pay for a fair days work.” Pithier than the free-market or social-democratic versions. And somewhat closer to the “neutral genuinely liberal position”.

  11. rog
    April 24th, 2007 at 21:16 | #11

    “A fair days pay for a fair days workâ€? is probably the best and fairest policy you could adopt – for both worker and employer.

  12. mugwump
    April 24th, 2007 at 21:19 | #12

    “genuinely liberal position”: a free exchange between consenting adults with full information.

  13. Jill Rush
    April 24th, 2007 at 22:52 | #13

    The Workchoices legislation does seem to fit the definition that the worker has a duty and the employer has rights. This is not a philosphical position but a legal one. At its most extreme it leads to slavery or serfdom where workers have only duties and employers have all the rights. There are many workers in the world who have no rights and are exploited by their bosses who have no duty except to keep the worker alive whilst all the rights to exploit labour are protected through the government.

    Whilst the Workchoices legislation is not quite this extreme the insecurity in working households, faced with losing not only their weekends, but the sweetener of penalty rates, shows that the right to be compensated for losing family time is gone. Many other previous rights have also been stripped away including the right to common action to strengthen most bargaining positions. It is not a free market situation as role of the third party of the government is missing from the neat aphorism which explains belief systems but avoids the actual rights given to employers through legislation.

  14. observa
    April 25th, 2007 at 11:23 | #14

    Workchoices is largely about restoring balance in the right to dismiss. This simple outcome, which has enormous benefits for those whom exclusionary and collusive trade practice has already dismissed somewhat permanently, has necessarily been couched in historical legalese and jargon, so as not to unduly frighten horses and small children used to these things. The success of that particular approach is everywhere to be seen.

    Workers have always had unfettered rights to dismiss their boss, fairly or unfairly as the case may be, with no thought as to the immediate impact on the enterprise or fellow coworkers, usually to gain better remuneration or job satisfaction(intrinsic remuneration) elsewhere. Of course workers have been dismissing their bosses in such huge numbers in this way for as long as we can all remember, but such reciprocal rights employers could only dream of, even though exercising such rights would be a pitiful drop in the great dismissal ocean. Apparently they can’t even dismiss highly paid middle managers on $100,000 pa to save a loss making business, according to the usual human rights experts. No, they must quietly do an Ansett or an HIH and consider middle manager’s immediate feelings. Of course if you have lots of new capital, you needn’t worry about all this legalese and jargon and one way rights of old capital. You simply invest it in new labour in China and sell the results to the same old labour. Apparently that’s the more sensitive and flexible management approach nowadays to the unpleasantries of unfair dismissals.

  15. Fred Argy
    April 25th, 2007 at 11:38 | #15

    The problem with Sinclair Davidson’s formulation is that it is so general that it is useless and not really worth debating.

    Of course, employers have a “right to employ” and, of course, once a worker is employed, he or she has a “duty” to live up to the terms of his employment contract. But the real issue is, as John points out, the role of government in setting the legal framework for such contracts.

    Sinclair’s broad formulation is consistent with a free for all by employers but it also consistent with a set of worker protection rules which ensure fair and equal bargaining, freedom of association in the workplace, a reasonable minimum wage, regulatory protection of working conditions and so on. It is also consistent with governments investing heavily in human capital to improve the employability, skill endowment and earning power of disadvantaged workers.

  16. Sinclair Davidson
    April 25th, 2007 at 14:11 | #16

    I am inclined to agree with Fred. As John says this is a (very) broad statement setting out a difference between social democrats and neoliberal views. To turn it into a critique of Workchoices (for good or bad) would require an additional view on appropriate government intervention in the labour market.

  17. melanie
    April 25th, 2007 at 20:22 | #17

    jstrocch, What about â€?A fair days pay for a fair days work.â€? A good principle, but whom will you appoint to decide what is ‘fair’?

    observa, Workchoices is largely about restoring balance in the right to dismiss. Really? From another perspective it seems that what it’s really all about is eliminating public holidays.

  18. oscarq1955
    April 25th, 2007 at 22:40 | #18

    all things involve rights and obligations. governments exist to set the right balance. ” work choices” is very much about
    shifting the balance in favor of employers massively. remember capitalism needs people to have jobs to make
    the system work

  19. BilB
    April 26th, 2007 at 06:40 | #19

    Neither of the 2 offered slogans represent a proper understanding of our social relationship. There is an interdependence between worker and employer that is best recognised in the Japanese concept. Businesses need customers, customers need income, customers become workers to gain income, businesses become employers to service customers, workers have families and expand the number of customers (families require stability), businesses take on more workers……and/or…….more businesses appear, competition between businesses places pressure on prices, lower prices put pressure on wages. Businesses and workers are co dependent and have an equal obligation to each other. With every right comes an equal obligation. Neither party is exempt from either rights or obligations, with the exception that either party has the right to cease. If workers have the right to work then they have the equal right to not work, in the aboriginal way of thinking…go walkabout. Equally businesses have the right to cease or change their operation. There is a third party in all of this which is introduced by increased complexity as the system/community grows and stabilises, and that is the roll of the state. Services of the state are beneficial to both business and worker, creating a new codependence making the more complete system a three way social implied contract of equal rights and obligations. I prefer the very small business model where each worker is also a business it is much easier and more dynamic.

    The whole picture becomes distorted when imbalances such as greed and external sourcing become dominant elements in the process. But that is a whole other discussion which requires an expanded model to evaluate.

  20. KYC
    April 27th, 2007 at 08:25 | #20

    It doesn’t seem helpful to talk about “rights” and “duties” when it comes to dealing with human capital. If I may put my post-modernist hat on, isn’t that all just blatant power play? Surely, the issue is how to maximise the value of both physical and human capital. I expect that, happily, there should be a lot governments could do at an institutional level to facilitate management’s capacity to maximise the value of the firm’s physical and human capital. The difficulty arises when there is a trade off between the values of physical and human capital. We see this conflict within physical capital as well (e.g., debt vs equity). There is no right or wrong answer (as far as I can tell) on how to resolve this conflict when capital employed by the firm is heterogeneous.

  21. crocodile
    April 29th, 2007 at 15:55 | #21

    “Workers have always had unfettered rights to dismiss their boss, fairly or unfairly as the case may be, with no thought as to the immediate impact on the enterprise or fellow coworkers, usually to gain better remuneration or job satisfaction(intrinsic remuneration) elsewhere. Of course workers have been dismissing their bosses in such huge numbers in this way for as long as we can all remember, but such reciprocal rights employers could only dream of, even though exercising such rights would be a pitiful drop in the great dismissal ocean”

    This is true. However it is worth remembering that prior to unfair dismissal legislation, the ALP had substantially reduced the company tax rate from a crippling 46 cents in the dollar to close to where it is today. Add to this the obvious advantage to incorporation where shareholders assets are in general safely out of the reach of the companies creditors. The workers may feel that this is a good enough concession. Many may ask the question, if a true level playing field is desired then let’s put the shareholders assets up for grabs should the company become insolvent.

  22. May 1st, 2007 at 08:48 | #22

    Crocodile – anybody who decides to be a creditor to a PTY LTD entity knows the terms regarding shareholders assets. And any worker who wishes to incorporate generally can.

    The social democrat view of an employers duty to employ (as articulated by Sinclair) reminds me of the social democrat view that consumers have a duty to consume and if they don’t then the government should appropriate their income and consume for them. In a free society nobody should have a duty to produce anything or to consume anything at all. The compulsion for production stems ultimately from the desires and needs of the producer whether they own the factory, toil within the factory or grow vegtables in the back garden.

  23. crocodile
    May 1st, 2007 at 21:37 | #23

    Terje, of course most of anyone who trades with a corporation understands the terms. That’s just the point. Some may still argue that this “tips the scales” by the same amount that worker dismisses boss does ( doesn’t mean that’s my personal view though ).

    Sure anyone can incorporate if they want to. However, if it is simply to work for the one entity simply to make use of limited liability they would be caught by the provisions set out in the alienation of personal services income and taxed as if they were simply an employee anyway.

    Just a note but maybe if Rudd really thought about things he could have easily done a deal with the business unions and offered a conciliatory tax cut in return for his proposals.

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