28 thoughts on “Monday Message Board

  1. What do people think of Mark Latham’s comments on the weekend? Is he on the right track chasing support from small business, sub-contractors and the self-employed? Or is it another recipe for disaster that will anger trade unionists and further muddy what Labor stands for?

  2. Latham is on the right track. It’s worth noting there’s a lot of confusion about these areas, on both sides of politics.

    Many so-called sub-contractors and “self-employed” are actually casual workers or, in labour market terminology, dependent contractors. These are issues that fall into concern about casualisation and abuse of market power by labour hire firms. The issue is further muddied by the fact that contractor has opposing meanings. In housing, it means a small employer. In IT and business services, it usually means an individual and usually means a dependent contractor or casual worker.

    The recruiting industry deliberately capitalises on this confusion. The IT recruiter lobby group has been running a campaign against the South Australian Fair Work Bill since early this year pretending it’s concerned about contractors, when it’s actually worried about losing control over contractors. Campaigns like that have successfully confused both the Howard government and Labor, with deleterious long term effects on industry.

    Fortunately both Labor and the Howard government are starting to better understand the modern workplace. Here’s the Age report of Latham’s comments.

  3. The union movement (almost an oxymoron these days) is a millstone around the neck of progressive politics. Industrial relations powers built into the Federal Constitution were briefly guarantors of an egalitarian distribution of income and wealth in Australia. (That is, after almost seventy years of structural discrimination against women). Not any more.

    The nature of work has changed radically and forever. No more are there industrial armies of semi-skilled workers on docks, sheep properties, mines and factories. And it is futile to hope that service workers and civil servants will commit themselves to the threat of militancy required to cow employers into concessions.

    Moreover, as Latham has recognised, more and more work is being outsourced. Contractors are compelled to become risk-acceptors and corporations have become adept at outsourcing that risk.

    Provisions under the Industrial Relations powers of the constitution cannot be efficiently adapted to cope with these new realities. A more creative approach for progressive political parties would be to liberalise contract law covering provision of labour and services. There are many voters who’d like to see arrogant and shonky corporations made to pay.

    The first step may be construction of pro forma labour and service contracts that favour collective bargaining by existing unions or any other duly constituted collectivity.

    It’s not going to be easy for the ALP to become a social democratic party, but it’s the way forward.

  4. Recent revelations that “DuPont covered up evidence of high levels of a toxic Teflon ingredient in the blood of people near a chemical plant” ( EWG point to a much more scary story, namely the ubiquitous presence of flourinated organic molecules in the biosphere. Since the 1960’s du Pont(from teflon) and 3M(through adhesive manufacture)have produced many tonnes of these chemicals. These chemicals are, by an order of magnitude, more presistent in the environment than any other chemical so far produced.

    Moreover toxic effects(cancer/birth defects) are seen in animal studies at the level that is already found in many chidren. N.B. the problem is not the acute toxicity which is low but the chronic toxicity which is high because the chemicals accumulate in the body)more

    The chemical industry presents a front of gee-whiz science – remember teflon was invented for the moon missions – but which hides a science dedicated to the elimination of life by the very nature of it’s sientific doctrine and it’s research agenda.

  5. What happens if the ALP support the unfair dismissal legislation? Does it mean that Mark Latham becomes a man? This Government machismo can be a bit tough to stomach and the winners are grinners thing has gone way too far. If you want to see what a truly deregulated labour market looks like, read Barbara Ehrenreich’s “Nickle & Dimed”. If that’s the brave new world, not sure I want to be in it, particularly if I’m desperate for a job.

  6. ray, I think you might have fallen victim to the considerable confusion around this issue. Latham’s reference to new characteristics of the workforce is not a change of policy at all. Contractors are casual workers. That’s the point. They are exploited by employer groups and new useless and powerful groups of middlemen, generically called the labour hire or recruiting industry.

    The contractor class of workers have actually been treated badly by both sides of politics. Labor and the union movement used to see them as having something to do with strike breaking and small employers. It is only recently that the union movement has started to see contractors (casual workers) correctly.

    The Howard government has been happy to accept the representations of lobbyists for the labour hire industry, even though the practices of the labour hire industry represent restraints of trade and other results generally inimical to liberal philosophy. Like Labor, the Howard government is starting to understand that the contractor work group is important in its own right, and is not represented by labour hire lobbyists.

    This is critically important in IT, where labour hire distorts the market, reducing incomes for desirable workers and confusing market signals.

  7. Tony,

    This question assumes there are two basic types of ‘contractors’: the exploited, dependent, casual workers you’ve been talking about, who in a decent world would be employees with full rights and entitlements; and the genuine consultants, who make their own terms, have a range of clients competing for their services, and actually prefer to be entrepreneurs than wage slaves.

    What proportion of the 844,0000 (presumably double that by now) contractors do you estimate is in each of these categories, and how big is the greay area between them? Has anyone done a survey recently?

  8. Tony, I think you’ve captured what’s going on and the stakes really well. I’ve cited you in a fairly long analysis of the contractors debate I’ve just posted at Troppo.

  9. James, there is some ABS data (Sept 2002) quoted in the post I’ve just linked to, but it’s not conclusive. It does suggest though that only a small number of contractors are professionals.

  10. James, an excerpt from my post:

    The ABS Forms of Employment series distinguishes between “Owner Managers of Incorporated Enterprises” and “Owner Managers of Unincorporated Enterprises”. The latter category is likely to be the group that we are talking about – incorporated enterprises are likely to be larger scale.

    The most recent ABS data (from September 2002) from the Forms of Employment series suggests:

    Owner managers of unincorporated enterprises represented 12% of all employed persons. Of the 1,129,400 persons in this group, 21% were in Construction, and 16% were in Agriculture, forestry and fishing. Nearly one-quarter (24%) of this group were Tradespersons and related workers, while 17% were Managers and administrators.

    Readers can draw their own conclusions, but this strongly suggests that Tony Healey is dead right. Most people described as “contractors” are not the “new middle class” of symbolic analysts and consultants, but rather the newly outsourced working class of dependent contractors.

  11. Mark, thanks for that.

    James, there is a lot of straight out fraud concerning definitions of “contractor.” This is fraud in the sense of public discussion, and also fraud in the sense of legal agreements. A lot of discussion on this subject, especially by the recruiting industry, represents casual workers as the consultants you describe, with a range of clients competing for their services. In IT, many workers even have this model of themselves. But they work at one client, are subject to the hour and dress requirements of that client, and have little freedom in their work. So they are dependent contractors.

    I might have a look at figures later on, but they’re not important. I think from memory there are about 130,000 contractors working through labour hire firm members of one lobby group. All of those would be casual workers/dependent contractors, yet the business press, HR Nicholls Society and so on refer to them as independent contractors. They’re not.

    Down at the real world level, there are firms called contract management firms that purport to be the employers of the contractors hired through labour hire or recruiter firms. So there are two levels of indirection in the employment process.

    The contract management companies have cosy arrangements with superannuation firms. For example, they enrol their workers in life insurance schemes with exagerated premiums, without first asking the workers. Sounds incredible but it’s legal. I have also heard reliable reports of serious tax and immigration fraud involving those firms too.

  12. Mark and James, I just had a read of Mark’s piece and the piece in The Australian (didn’t have time before.) That Hockey stuff looks like PR from the labour hire industry, which is starting to get really scared at the attention being turned on it. That’s a terrific line, to say that contracting is associated with 800,000 people happily working at home. And it’s all threatened by nasty unions. That’s complete rubbish.

    We should be having a formal inquiry into this whole shabby business.

  13. Tony, I thoroughly agree it’d be good to get some decent research on exactly how this sloppy category of “contractors” is composed and what’s going on.

  14. Here are the arguments the IT recruiter lobby group ITCRA uses against the South Australian Fair Work Bill. Take item 14. Their concern is that, if the labour hire firm went broke, the true employer would then have to pay the contractor. Horror.

  15. This is totally off-topic but it’s part of a school research essay and I’m looking to feed off others for tips on where to find information. The essay topic: “There are good grounds for arguing that the economy of the United States became less sound at the end of the twentieth century than it had been in 1960”. The topic is broad enough to warrant mentioning recent events of 2004, and predicting beyond that. Obviously, a mention of the twin-deficits would be in order, but if I recall correctly from memory, out of all developed nations the United States is the only nation forecasted to actually experience population growth. How important is demographics to analysing the structural soundness of the US economy?

  16. Tony, re. your interpretation – ‘if the labour hire firm went broke, the true employer would then have to pay the contractor’ – is this really what it means? If so, how can they call it ‘a bill that they have never contemplated, agreed to or budgeted for’? Unless the client and the agency conspire from the outset that the agency will go under (not a viable strategy in a repeated game), how could the employer not budget for the wages? Perhaps I need to see the proposed amendment itself to make sense of this.

    Mark, thanks to you too. I’ll read your post.

  17. Sukrit: In an abstract growth model a relatively high population growth might lower the average saving rate, but would also tend to lower the optimal capital-output ratio. These results offset each other in their effects on the current account. On the other hand, in a multi-commodiyy world, a country with faster population growth than its trading partners will widen its range of industries, which would require substantial investment in new equipment. But these would both be very gradual developments, whereas the deficit blowout has been sudden.

    Do a search on this site for ‘deficit’ for lots of discussion of the real causes.

  18. The union movement began to suffer whilst we had so many Accords under the Labour Govt. At about that point many left unions as why pay a fee for something that wasn’t needed any more. Then the Govt changed and the rules did too.

    Obstacles were put in the way of unionists recruiting others and many have accepted the employer as a well meaning person forced into practices such as outsourcing, redeployment, down sizing etc – all euphemisms of course but the language shift has been powerful.Powerful in helping to take away power.

    Many workers have tried to get power back through marketing their skills but in the world of temporary employment have been emasculated as they need to keep in the good books of the labour hire firms to get the next round of pay cheques.

    The analysis is often flawed as unemployment is down officially whereas many in the workforce have never felt more vulnerable or cowed. How many have watched in horror as active unionists are picked off in any downsizing operation?

    The insistence on AWAs by the Liberal Coalition as the way of the future where all workers are made into contractors will not help the general workforce although those at the top will no doubt pick up big bonuses as the workforce becomes easier to control.

    The right wing press regularly talks about how workers no longer need unionism as we move into contracting and new and flexible ways of working whilst ignoring the chronic poverty and insecurity that results – look at the latest news that wages are not rising although labour shortages are starting.

    Women who see a job as a way of paying the bills are getting less in proportion to other workers and will never get maternity leave in AWAs let alone equal pay for equal work – what a short lived concept that was.

    We have a national government working to limit and undermine workers’ power. Once everybody is a contractor then we will be competitive with third world economies as the workers’ are paid like the third world whilst the bosses get their reward at first world rates.

  19. James, you should not underestimate the extraordinary duplicity of the labour hire lobbyists. The reason the true employer would not have expected to be liable for wages, in the scenario that’s presented, is that the employer had a contract only with the labour hire firm and, if the labour hire firm ceases to exist, then so do any liabilities. The fact that 200 contractors might therefore miss out on their pay is treated as an irrelevant aside. This type of legerdemain pervades labour hire reasoning.

    There have in fact been cases involving these circumstances in the UK. One of the country’s large recruiters went broke, leaving hundreds of IT contractors owed up to three months pay. The directors of the recruiter simply started a new company in the same offices, bought the profitable contracts from the receivers of the old recruiter, and resumed trading. The directors suffered no penalties for the failure of their business, because they were able to inflict the losses on the contractors, who did indeed lose weeks and months of pay owed to them.

    Also, regarding my interpretation that Hockey’s home worker revolution was part of the labour hire PR skullduggery, I was staggered to find this seems to be correct. One of the new features of the South Australian Bill is reference to outworkers, typically low-paid women sewing dresses and so forth, working in their homes and getting $2 per dress or whatever it is. Because of that new reference, the labour hire industry has created the myth of the 800,000 happy independent contractors working at home.

    It’s actually a bit mind-boggling.

  20. Also, Jill raises a good point that criticism of labour hire practices by victims can be awkward because it will prevent them getting a job through a labour hire firm again. Labour hire centralises the hiring process and it becomes much easier for every labour hire firm to become aware of “trouble-makers.”

  21. In fact, when you look at labour hire objectively, it’s remarkable how much it actually compromises free market ideals rather than honours them.

  22. Sukrit writes: There are good grounds for arguing that the economy of the United States became less sound at the end of the twentieth century than it had been in 1960.

    This is a fascinating topic for an essay. The obvious place to start is by noting that in 1969, the Bank of Sweden started awarding a prize to an economist every year. This has led to an elevation of status of professional, mathematical economists and a drastic overconfidence in the scientific legitimacy of the discipline.

    The United States has increasingly relied on self-proclaimed “economic scientists.” Unfortunately, despite the fancy math, economics is not very scientific. It is not surprising that a country that has great faith in dubious theories would experience a decline.

    Bottom line: Blame it on the Bank.

  23. James, I worked out why the labour hire industry would be concerned about that provision. It would be to allow the labour hire company itself to shirk its responsibilities to pay workers. Labour hire companies use fourth party intermediaries called contract management companies to actually pay the contractors. In the event of any problems, the contract management firm, typically a single accountant in an office, can just close his business, leaving the workers (contractors) without recourse to their pay. The labour hire firm is then freed from responsibility for paying the workers and the contract management firm will resume business with a different ACN.

    The South Australian Bill specifically addresses this practice by stating that, where a chain of relationships is created between the true employer and the worker, any break in that chain will not absolve the higher party from its responsibility to pay the worker. That is the part the labour hire industry wants to kill. The fact that it wants to kill something an honest business would have no problem with describes the nature of the labour hire industry.

    I will write this up in more detail later.

  24. There is an interesting article in the SMH today examining the links between suicide and Gen X – who have led the way in working as contractors and have had less security as a result.

    It is linked back to the individual as a social isolate and lack of a community. This is of course the way that labour hire firms like it.

    A worker is placed in a workforce but remains an outsider with different work conditions, pay etc. There may or may not be support mechanisms in place – probably not as they are short term. They therefore do not have the social supports which a committed workplace provides and are never in a workplace long enough for others to gain a sense of responsibility and concern for their welfare.

    Meantime any injustice will go unspoken because of the tenuous nature of the employment and the power that the labour hire firm exercises.

    The problem with the wonderful economic solutions we are seeing is that the social consequences are vast – including a failure to form meaningful relationships with others and therefore a propensity to abuse a variety of substances in an attempt to dull the pain.

    Beyond Blue will not succeed as it will never attack these prime causes of alienation especially whilst the message of increasing prosperity is the one that is trumpeted in the press ie if someone is not experiencing this then they are freaks.

    We aren’t being taken back to the 1950s but to the 1850s where employment contracts were very much the norm and life was far more brutal in general when there were no unions.

  25. We are going to get a chance to see exactly how much damage the South Australian Fair Work Bill does to that state’s IT industry, as alleged by the labour hire lobbyists, because it is almost certain to pass. Parts have already been voted on and accepted in parliament over the past two days.

    The IT recruiter lobby group, which is the most powerful of the labour hire groups, has been alleging all the contractors are going to leave the state. Exactly why this would occur when the Bill benefits contractors has not been explained.

    Also, I notice in today’s Age yet another column that fails to understand the new Labor interest in contractors, wrongly seeing it as a continuation of the quest for “aspirationals.” It is actually interesting and alarming that such a significant part of the Australian landscape seems to have been kept out of the gaze of the opinion elite. It’s time to change that.

  26. Fantastic discussion.. an interesting edge to this debate is going to be provided by the arrival of older workers. With some assets and a heap of (sometimes acknowledgeable) experience, but not enough money in their super to survive.

    It may be that contract labour will suit us well; it may also be that we will be extremely vulnerable and prepared to work for sod all. Presumably the result will be a mix.

    1850 is probably a good datum line. Just after the chartists had been done in London, before the slow growth of reform, when that word meant the provision of collective action expressed through government. We are going to pay savagely for the last twenty years as the whole point of the society rots beneath our feet..

  27. Further to the above spam, and since you’re reworking these things judging by the Sidebars post, here’s an antispam trick I’ve just found.

    The Von Mises organisation blog has an extra entry area, with a comment asking people to enter “mises” there. Any blog spamming robot is likely to fail that simple test of comprehension and not get through. I expect the site doesn’t send any indication of failure either, though I haven’t checked that.

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