With the Howard government focusing on industrial relations reform, it’s important to be well-informed about what’s going on in the labour market. Last time I posted on this topic, a number of commentators suggested that I had missed some important recent developments. In particular, regular commenter Derrida Derider supplied me with some useful stats that support this, so I need to begin with a revised assessment.
During the 1990s, I argued consistently, and I think correctly, that measured gains in productivity were being driven by increased intensity in the pace of work, longer working hours and a labour market that marginalised those unwilling or unable to put in long and intense hours, notably including older workers.
It now seems clear that most of these trends levelled out in the late 1990s, and went into reverse after 2000
Ross Gittins pointed this out in relation to working hours a couple of years ago and a graph suppled to me by DD shows the same for the employment-population ratio for men aged 55-64 (the trend rate for women was rising steadily, reflecting the first cohort of women for whom the expectation that married women should not work was not a relevant constraint).
And, as I never tire of pointing out, the period of above-average productivity gains ended around 2000. Since then, gains in multi-factor productivity have been at, or below, the long-term average.
Another area where I relied on casual observation and conventional wisdom is that of contracting. I accepted claims that an increasing proportion of workers were now employed as (often only nominally) independent contractors and that the proportion of wage earners was declining. DD points me to ABS 6291.0.55.001, Table 08, which shows no such trend for the period since 1984 (or any subeperiod) If anything there has been a slight increase in the proportion of employees, matched by a decline in employers and the disappearance of contributing family workers.
My take on all of this is not very original. Slumps shift the balance of power from workers to employers. Other things equal, long expansions shift power the other way. Even in the US, where ordinary workers have been losing ground for decades, the last few years of the boom of the 1990s saw increases in real wages across the board.
But “other things equal” is important. Now that the Howard government can do what it likes in IR, employers will be given the whip hand, and many will be keen to use it, particularly if the housing and commodities booms subside. More on all this from Tim Dunlop, Daily Flute, Alex White and WSACaucus