In my morning mailbox, this piece from Chris White, offered as a guest post. I’ve only got time to copy and paste, so I’ll leave it to readers to discuss.
I should mention in advance that my rules regarding civil discussion apply especially to guest posts. Feel free to agree or disagree, but people who are rude to my guests will be asked to leave.
Watching the National Press Club’s debate between Joe Hockey and Julia Gillard, I was once again struck by the Government’s big lie about the so-called ‘job destroying unfair dismissal laws’.
I remember Minister Peter Reith’s answer years ago when he first put this spin in a press release.
I asked, how could this be? SA had the first unfair dismissal laws operating for many years without hearing from employers about such a notion.
He gave this amazing reply.
” Of course, when a worker who is unfairly dismissed, this adds to unemployment. My press secretary Ian Hanke reversed what happens. Let’s say it creates jobs.
Hanke made it up ” he said proudly.
But how could that be? I persisted.
“Look, its all about politics. We’ll just assert abolishing these unfair dismissal laws creates jobs” and laughed. He thought this was a great joke and as Hanke is very clever.
There is no research or evidence that an IR system allowing sacking at will and abolishing the right of an individual to go to a reinstatement hearing to test unfairness creates jobs.
But over the years, political business people parroted the line that they would not hire, unless unfair dismissal laws were removed. With Howard and his business mates repeating this mantra constantly, it has had some political impact.
Hanke also stressed with Reith/Andrews/Abbott (and Hockey?) to keep saying, when in trouble, “more jobs, better pay.” Reith even had a Bill with this name!
ian hanke is also well know in political circles as a Liberal “black ops” man. He used to shave his head during the election campaign up until the votes were in!
The sad but predictable state of the standard of our IR debate.
The same can be said about Hockey’s other political “spin”. Working families can see through this.
Like workers’ have experience of not having any power when individually bargaining with corporations and understand AWA bargaining;
Or Hockey’s so-called new ‘”fairness” test. Research released last week says ‘The fairness test is insufficient to prevent employers using WorkChoices to erode the conditions of employees in a weak bargaining position; university report Agreement-making under Work Choices: The impact of the legal framework on bargaining practices and outcomes, by Carolyn Sutherland Monash University Work and Employment Rights Research Centre;
Or the union “bosses” spin, just not believed as shown in the polls and so on and so on.
Julia Gillard’s point that WorkChoices slammed through Parliament has no democratic legitimacy is telling, as were her points in reply. A majority wants WorkChoices abolished.
However, it is not positive for workers and their unions that Julia Gillard again promised (with a joke about taking her mother hostage) to retain parts of WorkChoices that go against the International Labor Organisation’s minimum standards on workers’ collective bargaining rights and freedom of association. Such reasonable IR minimums
were cited in Kevin Rudd’s excellent speeches in 2005 attacking WorkChoices, as did ALP MPs. But now it seems that the ILO will have to remind an ALP government
of their obligation under international labour jurisprudence to comply. These include:
Such as retaining restrictive right of entry;
Making pattern bargaining industrial action unlawful (the only OECD country that does so);
Like the complex restrictions on protected action (see ‘What limits the right to strike?’ http://larvatusprodeo.net/2007/05/21/guest-post-by-chris-white-what-limits-the-right-to-strike/);
Like the repressive Building and Construction Act that the ALP quite rightly earlier condemned as removing the civil rights of workers and removing the human right to withdraw labour and was criticised by the ILO on many of the details (my paper “The Perth 107” http://www.aierights.com.au and the film “Constructing Fear” http://www.constructingfear.com.au).
But this is Australian politics 2007.
Chris White
Canberra Labour Law Researcher
John Quiggin 
Chris White obviously doesn’t let the facts get in the way of a good story.
Let’s just look at unfair dismissals.
There is an exceedingly large amount of research showing unfair dismissal laws (or employment protection laws – EPL) increase unemployment, particularly amongst the most disadvantaged sections of the community.
I’ll present some of this evidence below.
A separate argument is what has happened to the Australian labour market since WorkChoices – the growth rate of employment has increased quite dramatically, almost all coming from the non-mining industries, with only 5 percent of employment growth in mining. One would normally expect employment growth to slow as we near full employment.
Anyway, to the empirical studies showing unfair dismissal laws reduce employment. I’ve only included just a small sample of the vast number of studies.
Acemoglu & Angrist (2001) “Consequences of employment protection? The case of the Americans with Disabilities Act� Journal of Political Economy 109(5) Oct 2001 found that legislation that made it harder to dismiss disabled workers in the US lead to a “sharp drop� in the employment of people with disability.
J Heckman & C Pagés (2000) “The Cost of Job Security Regulation: Evidence from Latin American Labor Markets,� NBER Working Paper 7773 found that EPL has a significant negative effect on overall employment rates. The effect of EPL on employment of prime-age men is smaller than the overall effect, while the effect on youth employment is larger than the overall effect.
O Blanchard & P Portugal (2001) “What hides behind an unemployment rate – comparing Portuguese & US labor marketsâ€? American Economic Review Volume 91 No 1 compared US and Portuguese labour markets and found that the tighter employment protection in Portugal increases unemployment duration, reduces wellbeing and reduces output in that country.
Nickell, Nunziata & Ochel (2005) “Unemployment in the OECD since the 1960s. What do we know?� Economic Journal Vol 115 No 500 found that employment protection legislation increased the persistence of unemployment.
Zientara (2006) Employment Protection Legislation and the Growth of the Service Sector in the European Union� Economic Affairs 26(4), pp46-52 finds that strict employment protection rules are significantly correlated with higher unemployment, higher unemployment of females and lower employment in the services sector.
The OECD Employment Outlook for 2006 found that EPL reduces dynamic efficiency, reduce employment prospects for the most disadvantaged job seekers (young workers, women and the long-term unemployed), prolong the adverse effects of economic shocks, hinder job creation and trap some workers in precarious jobs with little training or income security (pages 96, 100, 186).
The 2004 OECD Employment Outlook: found “stringent EPL may be an impediment to the adoption of new technologies and innovation where innovation-driven labour adjustments have to be accommodated through worker turnover� (page 80); Stronger EPL was associated with lower levels of overall employment (Chart 2.5); EPL has a greater adverse effect on youth and women (table 2.4); and employees may feel less secure if EPL is stricter (chart 2.8).
For workers the election will be but a first step in getting wrongs righted. Even if the government loses but retains a majority in the senate they are very likely to refuse to change any legislation.
Union and worker bashing is a sport that the coalition love. The election won’t stop that happening.
m.p. There is not much I can conclude from the articles you have mentioned.
For example, the US never developed the rather sophisticated idea of a central wage fixing system, as we used to have in Australia. Hence there is no data which would allow comparative studies within the USA and the US has no comparative history to that of Australia. There is no evidence I know of which convinces me that people in the USA are in any meaningful way better of than people in Australia.
I continue to be surprised why the benefits of a central market for financial securities over private trades (OCM) is promoted but the parallel to the labour market is ignored. Any suggestions?
Ernestine,
Care to enlarge on that last paragraph?
Andrew, I hope to be given credit for resisting the temptation of writing my last paragraph in a larger type face. The threat is on politics. So I am not sure whether this is the right place to expand. In brief, I am suggesting that a labour market with individually negotiated AWAs is akin to individually negotiated trades (including initial offers) in financial securities where individual shareholders can sack the board of directors and CEOs without restrictions. I am not suggesting that every aspect of the previous central wage fixing system is to be restored. I am saying this old system captured an element of the notion of ‘a market’ which is now lost. Similarly, I am not saying that shareholders have enough power at present. Hope this will do.
I can only state my own (very much non-empirical) experience of the previous unfair dismissal laws:
Shakedown of employers.
In the event of the return of such laws, I will do as I did before, attempt to reduce my exposure to extortion by:
1. Using only casual staff.
2. Keeping staff numbers as low as possible.
3. Hiring only for a short term (possibly renewable) contract period.
4. Zealous use of any probationary period, erring strongly on the side of caution and dismissing prior to any threshold staff who have exhibited the slightest sign of becoming a “problem hire”.
5. Working fewer staff longer & harder, (eg, no cleaners, so the workday is extended a half hour while the regular staff do the cleaning)
Based upon my past experience, I will NEVER hire a “permenant” while there are unfair dismissal laws. Absolutely no negotiation, casuals only, & turn most of them over at the end of their contract period.
Aren’t you lucky, steve at the pub!
You are in a business that can run with low-skilled, interchangeable, disposable employees and you can crush the filthy swine whenever you like. Oh happy happy joy joy.
i’m only a newbie, maybe you can help me out: in my view, any contract should be invalid if the conditions are not met, or one party is coerced into entering.
i can’t conceive of any moral justification for compelling someone to pay another for unsatisfactory work, and the payor must be the judge.
how can it be otherwise?
al loomis, perhaps you might wish to become an advisor to Telstra’s shareholders.
STAP is not unique, many councils hire workers through labour hire agencies, they are wary of having to pay entilements to underperformers.
I only hire those who can give me a GST invoice, you initially pay a little more but it is so much easier than going through all the rigmarole of Super, workcover, group certificates etc.
Ernestine Gross – most of the studies I cited are for a number of countries, not just the US.
The fact that Australia used to have centralised wage fixing is fairly irrelevant to labour market policy right now. What is important is the policies today.
The law on unfair dismissal was no more than a requirement for an employee to be afforded natural justice. That is, if work performance was below par, the employer (or in most cases, manager/supervisor) had to inform the employee that this was so and also what the required performance level was. If performance continued at an inadequate level, the employee could be dismissed. How this is unreasonable escapes me, but it does suggest the real motive for abolition.
In the world of theory, employers are in the game for one reason only: profit. In the real world their motivations are more complex. Among those motivations is the power over others they enjoy in the workplace. The fewer fetters on this power, the more they like it. Consider opposition to the abolition of slavery, for example. If the slave owners were to be believed, their servile workforces were the beneficiaries of good paternalistic welfare – it was in the interests of the owner to maintain his (sic) property in good condition, after all. Moving to a paid or sharecropping workforce was in their view a bad thing for the freed slaves, who now had to fend for themselves – providing their own nutrition and medical care. Of course, in this analogy the real motivations of the slave owners are obvious: the power of life and death over other human beings.
While milk bar capitalists wouldn’t like to conced the point, in reality they view slavery as an arcadian ideal of what the employment relationship should be. The reality of the employee as a citizen, a member of a family, and as a human being needs to be utterly surrendered to the whims and wants of the employer. Ideally, employees, like slaves, should be legally merely factors of production while surreptitiously acting as props for the gratification of the employer’s desires.
Abolition of unfair dismissal provisions facilitates subversion of other employee legal rights, such as the right not to be discriminated against on racial or s*xual grounds, or the right not to be s*xually harassed. This is not an unfortunate by-product, but is in fact a primary, albeit unstated (and indeed vigorously denied) goal of the abolition advocates. They must just tingle all over at the thought of all that untrammelled power.
Because the real motivations here are unrelated to the accumulation of profits, corporate capital is cool about abolishing unfair dismissal provisions. That is why larger employers remain subject to them, and why they aren’t agitating to join their milk bar-operating confreres.
Hal9000 you can have all the theories you like for why employers don’t like unfair dismissal rules, but the empirical evidence speaks for itself – UFD rules create unemployment, particularly for the most disadvantaged, and this is surely a disaster and trumps any hypothetical reasons you may put forward.
In addition, I point to evidence that I cited showing that employers don’t feel less secure in employment in countries with less strict UFD rules.
I think the reality is very few people who are unfairly dismissed take any action – they have no job and have to get another one without a reference from previous employer, mostly it’s one word against another and if there are witnesses, they won’t want to get involved and maybe lose their job too. Taking action definitely makes them someone most employers don’t want to take on irrespective of the merits of their case. The right to take action through the courts is a right only those with very clear evidence on their side would want to take up unless they have lot’s of money and can afford to lose it. Or else be very, very angry over it all, because being unfairly dismissed can have devastating consequences beyond the loss of that one job.
Taking away unfair dismissal laws is just restating the obvious – employees really don’t have any redress for it.
mp – you fail to deal with one main point. From an employees viewpoint is a job which is low paid and unsafe – ie slavery, serfdom, working poor etc worth it? Full employment is not the full story.
Actually Alan, it is my staff who are lucky.
They can idle, steal, turn up late (or not at all), be rude to customers, show disrespect for my business, with no downside, as they only have to sneer “I’ll go you for unfair dismissal”.
It is the good staff who have to carry these people, have to work alongside them and pick up the pieces. The best they can do is intimidate them into quitting, as they know I am unable to dismiss.
THAT is the reality of the recently scrapped unfair dismissal laws. A shakedown of small business by unions.
The cost of defending an unfair dismissal claim is about $20,000 if the claim fails, and considerably more if the claim succeeds.
The Industrial Relations Tribunal which heard the cases was a kangaroo court, stacked against employers.
Unions as a matter of course took on (for no fee) unfair dismissal cases, and preyed on the reality that smaller businesses were unable to stand of cost of a defending even the most ridiculous claim.
Disgusting.
Contrary to Ken’s claim, almost anybody could claim unfair dismissal and tie up for months all the resources and attention of the small business operator.
Disgusting.
m.p.
Yes, I understand that your references to not pertain exclusively to the USA.
Jill’ Rush’s point is crucial even though she might have arrived at it via a different avenue than the one I follow.
Since you prefer to rely on empirical evidence, may I ask you for evidence that the misery of many people in the Philippines is largely due to unfair dismissal laws and the unemployment during the Great Depression is due, at least substantially, to unfair dismissal laws in the USA at the time.
If this is too difficult, perhaps evidence of the existence of unfair dismissal laws in the Phillippines and in the USA during the Great Depression would be a helpful step.
SATP, I still think most people who feel they’ve been unfairly dismissed do not take any action and the tables are stacked against them. How many is hard to determine given it’s only the one’s that do that get noticed and counted.
“They can idle, steal, turn up late (or not at all), be rude to customers, show disrespect for my business, with no downside, as they only have to sneer “I’ll go you for unfair dismissalâ€?. – I doubt very much that this is in any way typical – except where poor management is entrenched. I don’t know anyone who behaves that way, have never known anyone who has taken any unfair dismissal action, whether legitimate or (as you seem to be suggesting is the norm) bogus.
Ken, with all due respect to you, it seems that the realities of human nature elude you.
My tale of “unfair dismissal” is very typical of the experience of small businesses.
What I describe differs little from the disrespect the same persons show to centrelink, family services, their landlord, their neighbors, taxi drivers, checkout chicks, shopkeepers, teachers, police etc.
Their employer (resented even more than usual for forcing them to *ugh* work) at best is unlikely to be treated any better than they treat all others.
SATP, as usual, claims to be the authentic voice of Australian small business.
As usual, my own experience as a small business owner, are pretty much diametrically opposed to his.
Ian Gould, my experience as a small business owner is that I have made a go of it.
From you writings, it is very easy to believe your experience is the diametric opposite of mine.
SATP, join Qld’s union for employers – sorry, Commerce Queensland. One of the benefits is legal advice and support re unfair dismissal claims. All it costs is your membership fee, which is probably only a few hundred a year.
I can’t respond directly to your suggestion that the Qld industrial tribunal is a kangaroo court, but I can tell you that for nearly the past 10 years the WA Industrial Relations Commission has had as its deputy president a former CCIWA deputy director of whom someone once said “he’s to the right of everyone…” (I used to work there many moons ago.)
Youie, I am perhaps part way there, I am a long term member of both the QHA and the HMAA. Commerce Qld I know nothing about, & doubt they could help me anywhere near as well as my industry associations can. (Even though they are possibly the most expensive outfits one could possibly belong to).
It has been my experience that the “support” of these organisations is zero help when it comes to bogus unfair dismissal claims.
By the way, while they do offer advice & help to members on IR matters, such help & advice is not included in the membership fee, though it is less costly (not by much) than a CBD law firm.
IR is of course a minor part of the services provided by industry associations. There are many more matters of interest to me, and affecting my business in the pub trade than IR.
Ernestine Gross – It is a rediculous proposition to argue that unfair dismissal rules are the only thing that affects welfare. I never argued that.
The best studies hold everything else constant (or at least as much as possible), hence the studies I cited in #1.
Jill Rush – I point to evidence that workers in economies with UFD rules feel less secure in work, my post #1.
Youie et al – FYI, Commerce Queensland strongly opposes the reintroduction of UFD rules. Not sure how this fits in to your theories.