Ross Gittins gets the word out on an issue that I’ve been hammering for years, and that’s recently been discussed on this blog: the spurious nature of measured productivity gains that arise when the pace and intensity of work is increased. He also refers to John Buchanan of ACIRRT, the source of some excellent work on this topic over the years.
8 thoughts on “Another good piece from Gittins”
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John Quiggin 
On this one I concur with Gittins, and certainly with the work of Buchanan, and also Richard Hall, Barbara Pocock and others. I think casualisation is one of the two most alarming developments under Howard’s reign, along with empty property speculation.
I haven’t seen anyone comment on this before, but casualisation also boosts the GDP by introducing another layer of transactions, being the payments to generally useless middleman labour hire firms and recruiters. In fact, one aspect of casualisation that is not well studied or recognised is the role of the recruiting and labour hire industry and their lobby groups as drivers of that change. Recruiting is a multi-billion dollar industry now, and yet it produces nothing.
Also, JQ, I presume you would be aware of the concept of the Genuine Progress Indicator as an alternative to GDP for measurement? My favourite quote on this subject is the one by JF Kennedy, where he pointed out that GDP includes the cost of extra ambulances to respond to road fatalities, extra prisons, extra locks for our doors and so on.
I think the problem isn’t so much that the productivity measure is spurious as that using it loosely is spurious. Ross Gittins appears to recognise that what counts is what is being measured, i.e. to be making this distinction implicitly. However, by calling the measure itself spurious, as opposed to misused, JQ is himself using the terminolgy loosely!
BTW I am trying out a new browser, Arachne, so I’d be interested to know if that is leaving any traces visible to others on these postings.
PM. I think what JQ means is that using GDP as a measure of productivity is innacurate. I don’t see a problem with his statement.
I know perfectly well what he meant – I was just pointing out that he was himself using the tools of the trade loosely (though not quite so improperly, since in this context he was conveying the correct sense anyway). But it’s still an irony.
Following up on Tony’s comment, an alternative to the GPI is the Index of Economic Well-being, developed by some Canadians. In addition to the general index, they have a separate Index of Labour Market Well-being, which addresses some of the measurement issues Gittins raises.
The latter is composed of various subindices, including a ‘measure of the overall degree of employment protection provided by legislation’. It doesn’t seem to try and incorporate any direct measure of casualisation, but it’s worth a look. Interestingly, the main reason Australia scores badly is that we have the highest risk of poverty in old age.
Tony Healy’s negative views on labour hire “middlemen” ignore the possiblilty that separating the employer function from the entrepreneur function may lead to them both being done better. Particularly in an economy increasingly composed of small firms, being an employer can consume excessive amounts of time. Employers have a lot to do: recruit, train, insure, comply with awards and regulations, pay super, discipline, terminate. Lots of small employers don’t want to do all that; it’s not where they make any money. A labour hire middleman can do most of it for them as part of an employment “package”. This can be good for everybody.
Of course, there is room for abuse – such as the infamous “body hire” strategy used on the waterfront in 1997. But this shouldn’t lead us to dismiss the whole idea.
Gordon, there is a possibility that it could be a useful separation of roles but, for the benefits to occur, we would need to ensure there was no abuse of power relationships. At the moment there are no safeguards, no disclosure and no accountability, and the labour hire industry actively fights against any such oversight.
It does this because the situation is rorted to a phenomenal extent, to the benefit of employers and labour hire firms, but the detriment of workers, professionals and ultimately Australia. It is one of several disgraces of the Howard government that it has at least acquiesced in these arrangements, or more probably encouraged them. Australia has some of the worst arrangements and rorts in the world.
More to follow at a later stage.