Week 12 Blog: Work, People and Globalisation- Towards a new social contract for Australia

Work, People and Globalisation: Towards a new social contract for Australia

There has been much discussion in employment relations around the world as to the adoption of neoliberal practices and the ‘opening up’ of economies to the pressures of globalisation and international interconnectedness.  The adoption of neoliberalism, in Australia in particular, has seen the privatisation of the public sector and the removal of protections for employees from corporate multinationals. An article written by Russell Lansbury (2004) calls for a restoration of the social contract at work and the improvement of particular protections for employees that he refers to as the three pillars. The social contract at work is defined as:

“The mutual expectations and obligations that employers, employees and society at large has for work and employment relationships… it is a set of norms that holds us all accountable for adding value at work and providing work that is a productive, meaningful life experience” (Kochan 1999, as cited in Lansbury 2004, p. 109).

The three pillars Lansbury (2004) identifies have all been undermined in recent years by the government’s adoption of neoliberal agendas. Lansbury describes these three pillars of the new social contract as a major requirement for Australia for the future prosperity of the nation.

                  1. Access to employment

This is in regards to all people who are able and willing to seek work. More specifically it suggests a commitment to full employment and a significant reduction in the unemployment rate. It ultimately reflects an unemployment rate of zero, however with the rise in levels of precarious employment in Australia it also includes employees who are under-employed and not able to get enough work to live adequately. Under privatisation, employers have met increases in labour demand with increasing workload of existing employees, rather than creating new jobs.

                 2. Entitlement of citizens to education and training

The importance of this pillar is ultimately to do with both ensuring employees effectively perform at work and also that workers will be able to adapt to changing technology and economic pressures. Lansbury highlights that Australia is not keeping up with the level and quality of training that other ‘advanced industrialised economies’ provide. The rise of precarious and temporary casual work has been a large contributing factor as employers outsource labour and are stagnant in contributing financially to training.

             3. Economic security in retirement

Historically retirement incomes have been boosted by the superannuation guarantee contribution, which in essence aimed to address the issues caused by the aged pension sitting at just 25% of average weekly earnings. The issue arises again because of the increase in precarious and casual work caused primarily by the neoliberal agenda of the state. An increasing number of groups fair poorly in obtaining economic security for retirement, including the unemployed, low income earners, and people in casual work.

The article is quite well written in that it looks at how employment relations in Australia have changed over the last few decades. In particular he depicts how the direction Australia is heading in is strongly resemblant of American employment relations, who have a very strong neoliberal agenda. In this he effectively highlights the three main areas that the Australian government and employment relations institutions will have to address in the near future so that we are able to create a dual-system with equal features of protectionism and neoliberalism. He does this effectively through justifying the three pillars incredibly well, as well as providing future direction for both research into the issue and for these employment relation’s institutions to consider. If Australia wants to prosper in the economic benefits that globalisation can provide, we must be able to look after our own local employees and citizens, and if we don’t we will be heading backwards as a society.

REFERENCE

Lansbury, R 2004, ‘Work, People and Globalisation: Towards a new social contract for Australia’, The journal of Industrial Relations, vol. 46, no. 1, p. 102-115

Week 10 Blog: US Manufacturing Industry Pushes India for Free Trade

An article that I have found interesting in respects to the trade relationship between India and the US was published in the Economic Times this month. It is titled “US manufacturing industry pushes India for free trade” and it draws light on the ‘brick’ (manufacturing) side of the so called ‘brick and click’ paradigm. It is well known that a lot of the companies that have recently outsourced to India have been ‘click’ companies in that they are associated with the telemarketing and IT industries attracted by English-speaking, educated and cheap workers. With India’s emerging economy becoming the next target on the radars of large MNCs it is important to look at how a free trade agreement will affect employment relations in the manufacturing industry as well as the IT industry.

With Narendra Modi being elected as the new Prime Minister of India, US manufacturers have been provided with the opportunity to effectively work towards establishing a free trade agreement, which will ultimately create a ‘level playing field’ for foreign companies looking to invest in India. This is being packaged by advertising that it will result in significant boosts to economic growth and prosperity in both countries, as well as evening the balance of the trade relationship which has largely been in the US’s favour.

If we seek to understand the potential impact that a free trade agreement could have on employment relations in India it may be beneficial to look towards the North American Free Trade Agreement (NAFTA) and the outcomes that Mexico has been experienced since its introduction. Some areas that NAFTA has had positive effects in are as follows:

-       Trade among NAFTA countries has more than tripled

-       Job growth in NAFTA countries has been strong

-       The North American Agreement on Labour Cooperation (NAALC) has;

o   Improved working conditions and living standards

o   Protects, enhances & enforces basic workers rights

o   Raised public profile of major labour rights issues

-       NAFTA countries maintain their own independence and legal frameworks

In comparing a potential free trade agreement between the US and India with that of the NAFTA we can see that if it is implemented correctly the benefits to both countries, and the world economy as a whole, will be extremely significant.  It is important to note that, although there are a vast number of benefits resulting from the NAFTA, there is still a large degree of exploitation taking place in regards to workers rights. I believe that the growing support, in the form of new social movements and fair-trade for example, is the tool that will need to be used in order to influence any free trade agreement in the direction of improving and enforcing workers rights in India from the top-down. It may be the case also where there is an opportunity to cut costs of production through the removal of barriers to trade rather than through the continuing degradation of Indian workers rights.

REFERENCES

Economic Times 2014, US Manufacturing Industry Pushes India for Free Trade. Available from: <http://articles.economictimes.indiatimes.com/2014-09-10/news/53770373_1_linda-dempsey-facilitation-bilateral-trade-and-investment>. [1^st October 2014]

Week 8 Blog: Shunto and the Shackles of Competitiveness

This article is written by Charles Weathers of the Osaka City University and discusses the Japanese employment system with regards to the concept of Shunto and how the union movement, in more recent times, is taking certain approaches in attempt to revive this concept that was said to have died in 2002. Shunto reflects one of the pillars of the Japanese employment relations system and is concerned with linking wage raises for low-end earners to those of the workers employed by large firms and in essence promoting social equity. Historically Shunto helped unions maintain a voice in economic decision-making, however it completely broke down in 2002 when unions were restricted so severely that they ceased to even include wage increases in worker demands. Weathers outlines six new approaches that unions are taking in order revive the Shunto system.

   1.     Seeking ‘wage improvement’ instead of traditional wage raises

-    This sees unions incorporating a wide range of matters into bargaining, including raising standards for young workers, correcting wage curves for older workers, improving entry wages, improving wage equality and increasing allowances for overtime work.

-    This approach is intended to respond not only to the difficulty experienced in obtaining significant wage increase, but to also to respond to existing performance differentials and the increased use of performance-based pay schemes.

   2.    Demanding policies to support work-life balance

-      Japan has in recent decades been experiencing a very low birth rate, which is becoming a very significant problem as the majority of the population head towards retirement. The features of the current system fuel this problem as long working hours make it practically impossible for women who are raising children to pursue careers and it also is regarded as a major cause of workplace inequality. Unions are demanding family-friendly personnel policies and the enhancement of childcare support.

   3.    Shift influence from export-oriented to domestic demand-oriented sectors

-       Japans strong economic growth has been driven primarily by exports and not by household spending. With strong GDP and low inflation there is still minimal wage growth. The Prime Minister made the statement “I want the people also to feel the results of this economic prosperity” and urged businesses to be more generous towards employee wages.

   4.   Strengthening the bargaining leverage of small-firm unions

-    This approach is aimed at once again closing the wage-and-benefit differential evident in different sized firms. This has traditionally been a distinctive feature of the Japanese employment system. During the high growth period this differential shrank substantially because SMEs were forced to raise wages so that they could compete with larger firms for good workers. By giving more leverage to the unions representing these SMEs the aim is to close the differential permanently.

   5.   Strengthening the representation of non-regular workers

-    Non-regular workers, or peripheral workers, have been viewed as buffers protecting the company as well as the full-time employees. Unions need to organise this group of workers so that they can attempt to re-establish their union voice. This is also an important approach as there is well-documented public concern regarding the growing ranks of the working poor.

   6.   Introducing a new wage setting approach

-       A new approach to wage setting has been suggested, one that is designed to establish wage demands on an occupational basis. An Approach like this will ultimately reduce the importance of tenure and formal education, both of which have been historic features of the Japanese system. It also supports other approaches by helping to reduce differentials between firm sizes and between regular and non-regular workers. The proposed standardization of wages for jobs is beneficial in that is facilitates job switching, and enhances flexibility for both employees and employers.

The article provides a really great insight into the changing role of the union movement in Japan over the last few decades. It very effectively described the historical context of Japans employment relations system and how specific event and processes essentially shutdown union voice almost completely. Overall it provides a well-written, chronological story of Japanese unionism and very descriptively outlines how unions have overcome the extreme pressures and utilised strong economic growth to re-establish themselves as a more prominent voice in the Japanese system. By outlining the six non-wage approaches that unions are currently successfully using provides a useful insight into alternative method, which other countries employment relations systems can possibly learn from.

REFERENCE

Weathers, C 2008, ‘Shunto and the Shackles of Competitiveness’, Labor History, vol. 49, no. 2, p. 177-197.