Home > Economic policy > Job cuts and wage cuts

Job cuts and wage cuts

August 2nd, 2012

I was on Steve Austin’s radio program today, talking about my critique of Campbell Newman’s claim that Queensland was on the verge of the kind of debt crisis we have seen in Greece and Spain. At the end, Steve threw me a question I hadn’t prepared for, about a couple of claims made by Newman in the last day or so. These were

* Job cuts would not be needed if the unions would agree to a wage freeze
* Every 0.1 per cent wage increase implies the loss of 800 jobs.

Newman didn’t spell out his reasoning, but it seems clear that he is assuming a fixed fund available to pay wages. Given this assumption, any increase in wages implies a proportionately equal reduction in employment. So, we can easily check his arithmetic, starting from an estimate supplied by his own office that Queensland currently has just under 200 000 (full-time equivalent) public servants (using the term in the broad sense to cover teachers, firefighters and so on, in addition to administrative workers).

Looking at the second claim first, 0.1 per cent of 200 000 is 200, so Newman appears to be out by a factor of four here, or maybe a little less if part-time employees are taken into account. The first claim is a little harder to assess, but the announced cut of 20000 jobs amounts to 10 per cent of the existing total, so an offsetting wage freeze would need to hold wages constant over a period during which they would otherwise increase by 10 per cent. That would at least 2-3 years, assuming steadily increasing real wages, more like 4 years relative to an outocme that maintained the value of real wages. In practice, it’s very rare to sustain a comprehensive wage freeze for so long. Good staff start leaving and are hard to replace, morale is poor and so on. Then again, the alternative offered by the government isn’t doing much for staff retention or morale.

The big problem, as I said last time, is that long-term problems are being addressed with short-term panic responses. Although he is happily ditching promises made to public sector workers, Newman cites vague language about the ‘cost of living’ to rule out any re-examination of tax poloicy, even though most of QUeenland’s low tax effort reflects concessions to business rather than households.

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  1. Troy Prideaux
    August 6th, 2012 at 11:51 | #1

    To my (I admit naive) understanding, we do have an issue with the growth rate of alcohol consumption in this country, but it’s not the pubs we should be pointing any fingers at, it’s the supermarket duopoly.

  2. rog
    August 6th, 2012 at 12:11 | #2

    @Steve at the Pub “I won’t say that is a stupid line to take..”

    Just as well as it is your line, not mine.

    Your assessment of intellect would challenge the wisdom of self regulation.

  3. August 6th, 2012 at 12:28 | #3

    Ah… rog resorts to ad hominem attacks…. instead of listing some sane compliance issues.

    That’s conceding the point to me. ;-)

  4. Julie Thomas
    August 6th, 2012 at 16:46 | #4

    Steve everybody has to deal with compliance issues; health and safety laws are a real pain in the arse for anyone who tries to do ‘work’ in a university. There are even ethics committees which mean that we can’t just do anything we want to people who participate in experiments.

    Life is a struggle; who told you it was meant to be easy?

    It’s a good thing that we humans have to do things that we don’t want to do; or are you over all that character building stuff? That’s for kids eh? You have enough character already? I thought so.

    My very unintellectual – ha can’t even spell it – and unprofessional advice to you is that you could think of these imposts on your freedom and your right to make a living, as a challenge rather than seeing them as a personal affront?

    Have you heard how the young people say “Build a bridge’?

  5. Troy Prideaux
    August 6th, 2012 at 17:00 | #5

    Julie Thomas :
    Steve everybody has to deal with compliance issues; health and safety laws are a real pain in the arse for anyone who tries to do ‘work’ in a university. There are even ethics committees which mean that we can’t just do anything we want to people who participate in experiments.
    Life is a struggle; who told you it was meant to be easy?

    Just as well you’re not building rockets for a crust! Then you’d be very familiar with Newton’s 3rd law of advancement – for every action, there’s an equal and opposite bureaucratic regulation :P

  6. rog
    August 6th, 2012 at 17:43 | #6

    As SATP has been reluctant to detail the compliance that he has issues with it would be safe to assume that he needs a compliance manager.

    My experience with compliance is that for the most part it is productive ie compliance is cost effective if you are willing to comply. When GST was introduced BAS and other compliance sorted out those who did not run a proper up to date accounting system. I took it as an opportunity to increase the quality of management.

  7. August 6th, 2012 at 19:21 | #7

    @rog

    it’s like when the Nazis made everyone comply with the regulations re Jews

    It really helped everybody improve their HR skills

    yes indeed herr rog – compliance is always productive

    p

  8. August 6th, 2012 at 19:48 | #8

    @ Peak oil poet. You’ve nailed it re compliance regulations.

  9. August 6th, 2012 at 19:51 | #9

    @ Julie Thomas, you write like someone who has never had to pay their own way in life. (There are plenty of those around).
    Compliance is for “building a bridge & getting over”? It is merely an “interesting” exercise plonked into your workaday?

    You haven’t ever experience pointless regulation. Try this: If every regulation you had to comply with, & the time spent complying with it, was deducted from your income.
    If you got anything wrong, or made a mistake, you lose a week’s pay.

    If you’ve an imagination, this may give you some idea what it is like for businesses.

  10. rog
    August 6th, 2012 at 20:06 | #10

    @The Peak Oil Poet Godwin alert

  11. August 6th, 2012 at 21:08 | #11

    @rog

    “Godwin’s law itself can be abused as a distraction, diversion or even as censorship, fallaciously miscasting an opponent’s argument as hyperbole when the comparisons made by the argument are actually appropriate

    wikipedia

    p

  12. rog
    August 7th, 2012 at 03:43 | #12

    @The Peak Oil Poet What’s your point POPs – that you have mastered cut and paste?

  13. Freelander
    August 7th, 2012 at 05:30 | #13

    Seems a valid point.

  14. Julie Thomas
    August 7th, 2012 at 07:19 | #14

    Steve it depends what you mean by ‘pay your own way’ don’t it?

    Money type wealth is the only thing you value in life?

    More free advice from a drop-out academic psychologist; your compliance problems are due to your personality problems. It’s all connected Steve, the hippies and Spinoza who wrote about the unity of mind with the whole of nature, were right.

    I can’t believe you are such a grumpy old man clinging to the past – Joh and the moonlight state was the high point of your life, your golden age?

  15. Julie Thomas
    August 7th, 2012 at 08:01 | #15

    Steve, Do you have live music at your pub? If so check out this man,

    http://www.andycollins.com/

    he’s a Cairns based musician and a long time friend of mine.

    He will be able to tell you if I have ‘paid my way’, although his wife would be a better source of insight into why people like me find your views personally threatening and very scary.

  16. Freelander
    August 7th, 2012 at 08:19 | #16

    Good points. Included amongst the self-employed category, those small business people, are, as you suggest, a certain grumpy type of non-conformist non-compliers. These types are basically unemployable due to there unwillingness to comply with others. Needless to say they are bad employers and their lack of business acumen means they struggle; they do not enjoy the best return on capital.
    Unsurprisingly to their mind the source of their problems is not within themselves, but is due to big government, unfair competition or some such.

  17. Julie Thomas
    August 7th, 2012 at 09:11 | #17

    Freelander I agree; my father was always starting up businesses because he couldn’t work for anyone. He had ‘bi-polar disorder’ – note I think diagnosis in psych is just a phase we are goinng through – and he was so functional when he was on his ‘up’ time but when he went into a downer and became totally useless and even worse than useless, a burden that my mother with no family support had to cope with and also to wind up the business or whatever scheme he had on the go at the time.

    Steve takes things personally – isn’t that sposed to be a female trait? – so I better say right now that I am in no way suggesting that Steve is in any way similar to my failure of a father. Steve is obviously very successful man with lots of ability and has worked hard and smart, and is certainly to be admired in the way he runs his pubs and has such respect from lots of people on both sides of the political fence.

    Now to talk about the general theme that some types of people like to behave in certain ways; and then there are types of upbringing. You also got to look at those. Apparently one class of people bring up their children to be honest and look after each other; poor kids have to ‘share’; it isn’t a ‘choice – fkn ‘choice’ – I’m reach for a drink when I hear that word. But the other class of people bring up their kids to be ‘empowered’ to look after themselves etc etc.

    So in this society where we value individualism over community, where we value that false ideology that all people can freely choose and be masters of their destiny, we get circumstances in which a certain type of ‘personality’ can have an upbringing that is extraordinarily individual – eg Gina – and so has nfi about the ‘others’.

    But you are too hard on them Freelander, you judge them too severely – I think – but then as we all know I know nothing about running a pub. I have to say that some of the ‘characters’ I have worked for were worth every minute of listening to and pretending to admire their superior understanding of the world. I valued them for their ‘style’ their wit and probably because they were mostly decent people on a personal level.

  18. Troy Prideaux
    August 7th, 2012 at 10:05 | #18

    @Julie Thomas
    I agree. What we have to be mindful of is at the end of the day, a healthy “anything” relies on balance. We definitely need regulations, laws and compliance to enjoy a high standard of living, but they have to strike the right balance as to be not too burdensome or too lax. Of course it’s often (or even always) a subjective call as to what the right balance is.

  19. Nick
    August 7th, 2012 at 10:46 | #19

    Compliance requirements for a pub:

    - Ph numbers of business owners/company directors
    - Ph numbers of police, fire, local government
    - Copy of liquor license with opening hours, restrictions, security requirements, how many tables permitted on street etc
    - Copies of liquor licensing signs (no alcohol to minors, fine amounts etc)
    - Copies of staff RSA certificates, signed, dated, logs of when due to be updated
    - Copies of individual security licenses, subject to regular police computer checks
    - Copy of own procedures for service of alcohol (no drink specials, dollar pots or promotions etc) – all staff and security required to read, cite, sign and date every three months
    - Health and Safety, Fire Plan, first aid kits, records of electrical work etc.
    - Security camera policies, maintenance log of security cameras

    It’s seriously not that much work and all pretty much common sense, rather than anything resembling a nazi state. Are they effective? In the end, you’re still letting in and serving liquor to intoxicated people. They can’t force an irresponsible pub to do it responsibly. But any pub who can’t meet those basic requirements deserves to be fined and/or shut down. The joints on King St have for days at a time for not meeting security staff requirements. Good. That’s what you get for hiring ex-crims. Steve, you probably serve food and have a whole other list of restaurant type regulations to meet as well? How many employees do you have out of interest? I mentioned to my partner you hire a compliance officer…’lazy @unt’ she smirked ;)

  20. Freelander
    August 7th, 2012 at 11:05 | #20

    Compliance regulation can be useful for someone new to a particular type of business because they tell them those basic things that they need to do, but could easily overlook.

  21. Ikonoclast
    August 7th, 2012 at 12:37 | #21

    @Steve at the Pub

    Steve at the Pub, I am not a religious zealot. Though I might be a bit of an agnostic existentialist zealot. :) I find the religious types of the kind you mention hard to tolerate too. I feel my two proudest theological “moments” occurred as follows. They involved visiting Seventh Day Adventists preaching door to door. We all know the type.

    1. Approach 1 – Drown them out with noise.

    I was fitting window security bars on my old house. They came right up to the open, low sill windows where I was working from the inside. Then began preaching to me non-stop and would not leave when I politely said I was busy and needed to keep working. After asking twice, nicely, I simply ignored them, took up my very noisy old electric drill and kept drilling. They soon left.

    2. Approach 2 – Demonstrate Superior Biblical Knowledge

    I was, at one time, quite knowledgable in biblical matters for a layperson. As a then militant atheist, I studied the Bible to debunk Bible-Bashers. The SDAs bearded me at the side gate to my house and began talking about evil and Old Nick. I simply said the “Good Bearded Man in Heaven” is actually responsible for all good and all evil, it says so plainly in the Bible. Then I said, check Isaiah Chapter X Verse Y. I used to know that one off by heart. They duly checked it in the Bibles in their hands, were duly flummoxed and left forthwith.

    * * *

    As per another critic of my costs post; yes indeed the method of calculating economic and social costs of alcohol needs to be carefully designed and in an unbiased way one would hope. Does Prof. J.Q. or other any other economist blogger here know of an or the arguably most objective and unbiased report analysing this? I would be interested to know.

  22. rog
    August 7th, 2012 at 20:15 | #22

    @Nick You could include simple items like the checking availability and functionality of fire systems.

    Evidently SATP and others resent having to undertake compliance yet are able to maintain criticism of those that fail to comply with their own expectations.

  23. August 9th, 2012 at 09:11 | #23

    Gosh, I didn’t realise the extent of ignorance among the population (regarding the compliance burden) Rather shocking actually.

    Iko: Your anti-grog comments are straight out of the handbook of some hand-clapping church. It is understandable that some many reasonably confuse you for a religious zealot. You have much in common with that beast!

    Nick: If you’re of such low character that you make comments revealing your “partner” to be an brainless ill-mannered bint, then you deserve the slattern.

  24. August 9th, 2012 at 15:18 | #24

    @Steve at the Pub

    my old dad used to say

    if you hang about in places infested by snakes and funnel webs

    don’t complain about their behaviour

    pop

  25. August 9th, 2012 at 17:11 | #25

    @ Pea Coil Poet: “Touche”

  26. Nick
    August 9th, 2012 at 17:43 | #26

    Thanks for that, Steve. I was having a joke, and so was she. Mainly I think she found it funny I thought I could tell a pub manager (anyone for that matter) that their job is easy…I just wanted to see what the shoe looked like on the other foot. In any case, you’re still a whinger.

    Ikonoclast, I hope it didn’t come across as if was having a go at you personally. That wasn’t my intention. I’ve been enjoying reading your posts…I wasn’t trying to align you with that report or its authors. FWIW, re the chess allusions in the Sandpit, a rook doesn’t exert pressure on less squares when it’s further from the centre, it’s something bishops and knights suffer from. Interesting maybe to consider why that is.

  27. Nick
    August 9th, 2012 at 17:50 | #27

    As far as structures and models and their bodily counterparts go, a pub (even more so a club) is usually understood to represent the womb. It works ontologically on so many levels…not the least, watch a grown man cry and squeal when you kick him out in the middle of the night – “Let me back in!”

  28. August 9th, 2012 at 18:20 | #28

    & you’re still a “hundred yard hero” Nick. How shall I put this….? Nobody, would call me a whinger from within hitting distance. There is a reason for that. (Something for you to reflect upon!)

    But you’re focusing only upon one part of a pub. As I’ve posted before, 3% of my business is public bar trade. (Actually times have changed since I wrote that, it is currently about 5%). Given the aggravation that comes with it, I could well do without bar trade.

    The change of political wind has certainly been noted by regulatory officials. Pretty much from the date of the great LNP victory in Qld, the regulatory tin gods have pulled their head in. Even they, in their hubristic ivory tower, are aware they were going waaaay too far in their persecution of pubs. Most of those who were put in within the last couple of years, purely to persecute the liquor industry, are very very aware that their chances of keeping their job now depends upon those very people (pub staff & publicans) who only a few months ago they were treating like a traffic cop who has just pulled over a speeding ferrari.

    It feels good to be treated like an adult. It has been more than 10 years since that happened. For that reason alone, I’m hoping that the ALP is never again elected to office.

  29. Nick
    August 9th, 2012 at 19:59 | #29

    Oh, I would Steve. I wouldn’t care how touchy you are about the subject. Was there another reason?

    If we can both get past our version of the ‘hundred yard hero’ act though, yes I was interested in what the rest of your business is, and which regulations cause you so much grief.

    It seems it’s mainly the people. Fair enough. Fresh out of uni can be especially annoying, though police are often worse. Yes, a Baillieu government in Victoria has meant much the same thing, no I wouldn’t ever vote for him because of it.

  30. Nick
    August 9th, 2012 at 20:14 | #30

    “a Baillieu government in Victoria has meant much the same thing”

    I should add…mainly in relation to live music and security requirements, not much else though…

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