Workers and young people paying for Australia’s economic slump

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Now into its third year, the Global Financial Crisis (GFC) shows no sign of abating. In fact the World Bank recently revised an already gloomy forecast downwards. It now predicts a 2.9% contraction in the global economy and a 10% reduction in planet-wide trade in 2009. The news is not much better for 2010, either, with growth expected to return, but only at the rate of 2%. The Rudd government is borrowing some $500 million every three days, and plans to spend the money on propping up the economy. Rudd’s “stimulus package” may have some effect on slowing the rate of economic decline, but inevitably, this country and its workforce will feel the pain of the worldwide slowdown

Hidden unemployment. It was a surprise to everyone that the April jobless figures actually went down. It looked like the government’s largesse was working, or was it a seasonal anomaly? May’s figures revealed that it was an aberration. The unemployment rate rose to 5.7% that month, meaning that 27,200 more people were looking for work. Yet that still was a surprisingly small increase.

Here’s the news: for the first time, the Australian Bureau of Statistics publicly released data it’s collected for years. It’s called the “labour force underutilisation rate,” and it stands at a massive 13.4%, or 1,445,000 people. The number of full-time jobs decreased by 26,200 in May, while the number of part-time jobs climbed 24,500. Or to put it another way, nearly 25,000 people were sacked from part of their job. Stimulus or no stimulus, the working people of this country are paying for the losses from the GFC.

Conscripting the young. On April 30, 2009 the Council of Australian Governments (COAG) released another one of those government announcements with an Orwellian title — a title that is the opposite of the policy it headlines. Like WorkChoices, or Forward with Fairness. This one’s called Compact with Young Australians.

According to the ALP website, the Compact has three principles: First, any one under the age of 17 must be earning or learning: that is, they must be in full-time school, training or work. Second, a person under the age of 20 and not working will be provided with a training place with a year 12 or equivalent Vocational Education and Training qualification. Thirdly, people under the age of 25 and not working are guaranteed a training place. Sounds OK, doesn’t it: A nice cosy agreement with the government about the right of young people to a job? But there’s the inevitable big stick. If you don’t take part in Rudd’s scheme, you’ll starve, because it’s now a condition of receiving the already paltry Youth Allowance.

And, in a chilling extension of the Northern Territory Intervention policy towards school attendance and welfare payments, the government decrees “this same condition must be met if the parents of young people in the same circumstances wish to receive Family Tax Benefit Part A. If young people or their parents want to receive government benefits, the quid pro quo is that the young person is working or earning a year 12 equivalent qualification.”

In effect, every young person and their parents are corralled into whatever the government deems is suitable training, regardless of personal choice, or disability, or remote location, or, for that matter, availability of suitable training institutions. Where is the money for trainers and teachers in a country where there’s a chronic shortage of both? It’s not there, because this is yet another government welfare bashing exercise. It’s not about getting young people jobs, it’s about cutting as many people off benefits as possible.

If the government were genuine, there would be an appropriate training agreement with a guaranteed job at the end of it — a national apprenticeship scheme, binding on the government. And people attending compulsory training should be paid as employees and given a living wage.

Stealing our lives. The GFC means a gaping hole in tax revenue over the next few years. To pay for this, Rudd and his finance ministers have not taken the knife to business. No, there’s a much easier target — the working conditions of ordinary Australians. Uniquely among advanced capitalist countries, the government has raised the age at which we can claim the Age Pension, to 67. Many people have been garrisoned into personal superannuation, and so the effect won’t be uniform. However many workers in low-paid, casual jobs, particularly women, have so little super that they need a part-pension at least. Now they will be forced into working in those same casual jobs for two extra years.

Even those with super will have to rethink their retirement plans, because the change affects everyone below the age of 51. Moreover, government supporters quickly raised a call for the superannuation “preservation age” to be raised to 67, but the near certainty of defeat at the next election, not to mention mass protests on the streets, led Treasurer Wayne Swan to put the policy back in the bottom drawer — for now.

Robbing the poor to pay the rich. The rise in the pension age is a bonanza for Australian capitalism. To understand why, it’s necessary to look at a centrepiece of the capitalist economy, called by Marxists the “rate of surplus value.” Where does profit come from? It comes from the fact that we are not paid the full value of our labour. Take a worker in a factory. To make ends meet, and put some money in the bank, assume the person needs to take home $800 a week. That’s a gross wage of around $1,100, including tax. The worker adds $1,100 of value to the developer’s building, but only takes 19 hours.

The worker should then be in a position to say, “I’ve done my fair share, give me my take-home pay and I’ll see you next week.” But the boss says, “We have a contract. You’re here for 38 hours. Get back to work!” So it’s 19 hours for free. That extra $1,100 dollars, less income tax, is profit. Out of that sum, the boss pays overhead costs, but generally has a good amount left over for the shareholders — and a fat executive salary! Let’s see how much Rudd’s policy makes for capitalism and the treasury. The average adult weekly wage stands at around $1,230 — after tax that’s $860. According to the 2006 Census, 160,000 people were aged 65. Using that figure, multiplied by 104 weeks and $1,200, that’s a staggering $14.3 billion extra raw profits and $6.1 billion in income taxes.

It’s a massive, permanent transfer of the country’s wealth from wages to profits and one of the ways Rudd is making us pay for the capitalist’s mess.

Conscripting young people to cut welfare and making us all work longer are outrageous attacks on living standards. Here are the alternatives: free universal, housing, healthcare and education for all. Fully-funded, quality public services and a living wage for all. Reduce working hours and the retirement age to make room in the workforce for all who want a job.

How to pay for all this? Increase company taxes and get rid of tax concessions for big business. Capitalism should pay for the welfare of those who create its profits. And clean up its own mess!

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