Labour, capital and the ACTU’s reconstruction plan

Submitted by Janet on 19 October, 2020 - 2:13 Author: Janet Burstall

A review of Australian Unions. Australia’s economic reconstruction after COVID-19: a national jobs plan, and five ways to get started.

This is a proposal for unions to call on the government to “lead a historic effort to rebuild our economy and our communities … by engaging all stakeholders, focusing on the core goal of creating decent work, and injecting unprecedented financial resources in the real economy”.

It appears to be a well-reasoned and costed approach to dealing with union concerns about recession and consequent unemployment. It envisages a “consensus among economic stakeholders”. It needs a government committed to uniting and labour and capital to back a plan of mutual self-interest, or national interest. It refers directly back to post WWII reconstruction, where it sees such an approach worked. It ignores the last time that unions tried to revive a similar approach, in the Accords of the 1980s and 1990s, with disastrous consequences.

It is as if the last 3-4 decades of decline in fortunes for both the working class and the labour movement have been the product solely of misguided governments (both Coalition and Labor), when actually business leaders have been the drivers behind the decline. What would make either major party take up this plan? And why would employers now agree to a “consensus” other than to further cut labour costs, undermine incomes and increase work intensity?

Because, according to the authors, not only labour, but also capital needs a post-pandemic economic reconstruction. “Private spending is crippled by shocked confidence, lost incomes, and deep uncertainty about what lies ahead. The private sector has neither the resources nor the capacity to act cohesively that are required to start and lead the long process of reconstruction. Only government possesses the economic and financial resources, the staying power, and the capacity and authority to plan at a national level, to get the macroeconomic ball rolling again. Without government leadership, and massive and sustained injections of resources and spending power, the economy will inevitably slip into prolonged stagnation – or worse.”

Incentives to capital

Despite identifying the incapacities of the private sector, this plan is centred on proposals to devote public resources to providing incentives to the private sector. Each of the “five measures [that] would pave the way for the broader national reconstruction that will be required in coming years” begins with assuming the need for private capital to invest, rather than with establishing the problems and issues for workers / consumers and the environment, that are crying out to be addressed.

The five measures focus on allocation of government funding via grants, subsidies etc, to stimulate or partner with capital investment, in order to create “decent jobs”, particularly manufacturing and construction jobs, with one strand for early childhood education and care. [See Five measures summarised below.]

Needs denied

While recession intensifies poverty for working class people, growth and profitability do not necessarily result in the meeting of needs. It is true that periods of high growth have often been more favourable for the working class to win concessions than periods of decline and slow growth. But those concessions still had to be won, they were never handed over because employers or the state chose to be benevolent.

Government attempts to create growth by providing incentives to capital, do not necessarily at all produce high growth. Often they just produce crony capitalism.

Even in the so-called “golden age” after WWII, France, Japan, and South Korea all had large measures of government-organised incentives for private capital. France even had “five year plans”. But in France between 1958 and 1968 that produced increased inequality and the working-class anger which exploded in 1968. Only after that explosion – against the government which had organised the incentives for private capital – did the working class improve its position. To this day, the left in France (unlike most other countries) campaigns explicitly and upfront against state aid to private industry.

In Japan there was a rise in wages, but with industrial conditions which led to death by overwork (karoshi) becoming widespread and eventually officially recognised as a common workplace issue. It’s only since the slowing down of Japan’s growth (and more by political pressure than by trade-union action there) that some mitigation has been won.

In South Korea, there was very rapid growth with very long and intense working hours under unsafe conditions and, until the growth of the independent unions in the 1980s and 1990s, low pay.

Things were better in Australia not because the government gave more aid to employers (it didn’t) but because the labour movement was stronger (until the Accord). We need a stronger labour movement, and that won’t be achieved by pushing government to help private employers.

Even in the “golden era” of the 3 decades after WWII, and increasingly since the 1980s, capitalism has always has some form of reserve army of labour or surplus population who live with some form of deprivation, and whose needs cannot be met through employment. At the same time, with the exception of a very brief period under the Whitlam government, income support policy has been based on depriving and degrading people who are short of work, so that they will be a ready source of cheap labour. Capital cannot be managed via incentives into providing employment that meets the needs of all households. Neither the level of capital investment, nor the industries in which capital invests, account for the existence of low wages, job insecurity, unemployment, poverty and deprivation, even if all these may be even worse in a recession. The recent example of JobKeeper is enough to cast doubt on government incentives to employers, with rorting, non-payment to workers, and companies using the revenue to pay dividends.

A problem with growth in conventional macroeconomic terms, is that it is growth only in value, the value of production, not necessarily growth in well being, or even access to material goods and services. They are linked, but not equivalent. The surplus of that value that accumulates to capital, is what makes the total value of capital grow, and expectation of that is what attracts investment. Investment is indifferent to people’s needs that are not backed by money, and it is indifferent to environmental damage, and indifferent to waste of people’s lives and nature.

Employers and politicians invert consciousness of need for livelihoods into need for jobs (employment by capital, a relationship with an employer) to have money to buy what we need and want. Capital separates people from being able to decide what is socially needed, and what work we are collectively willing to do to produce it, and how we will interact sustainably with nature in the process. Yet it is capital that needs the employment relationship in order to make profits and grow. Whilst an immediate reshaping of work for need, in place of need for work is not on the cards, understanding the difference points in a different direction than this ACTU document.

Direct demands against capital

The labour movement can make universal and direct demands of both governments (of whichever party) and capital, for the provision of what people in their diversity need to have decent livelihoods. These include incomes, homes, utilities, recreation, education, care, services and free time. Immediately this means reversing privatisations, expanding public ownership and thus public sector employment, as well as guaranteeing living incomes for everyone.

If labour movement leaders were to start from the position of identifying what people need, how it can be produced, and how that can be distributed according to need, we would have a beginning point for building a powerful labour movement, that could liberate itself from conservative arguments about jobs and growth, and that could wholeheartedly join the movement for climate action. It would also be a much better starting point for workers to plan what work needs to be done, than identifying ways to subsidise private commercial investors.

Australian workers need to hear some clear political principles from union leaders. The rights to organise, strike and act in solidarity are essential. Public provision of our essential services and social care can be made accountable to us. We need a democratised economy with a plan to care for people and planet, without any more fantasies of doing this in partnership with capital, rather with awareness that a system based on profitability is the problem, and we have to stand up to capital, rather than seek to partner with it.

Conclusion

The ACTU document stands for improving profitability for commercial industry, and relying on a government to oversee this whilst hoping for acceptance of unprecedented protections to workers wages and conditions without any industrial pressure. It is not a basis for unionists to organise around, in either public or private sectors, for improved wages and conditions, or increased control over their work, or for the union rights they need to win improvements. Rather it is a danger to workers’ industrial rights and collective solidarity, because workers would be pressured to make concessions in order to ensure the viability of the publicly subsidised investment plans. As a direct result of that tension, it would inhibit rather than develop self-organised struggles to win needs. This is a union plan that can’t mention the war – the class war.

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Five measures summarised

#1: Early Childhood Education and Care Strategy. The government would “consult with all relevant stakeholders in the sector and develop a fully-fledged plan for permanently free childcare.” This would create jobs in construction, and early childhood education and care, as well as addressing “the long standing underpayment of the (mostly female) workforce … through increased funding targeted at delivering wages at a level consistent with the attainment of pay equity”. This is the only nod to the changes that have occurred in women’s labour since the post World War 2 reconstruction.

#2: Training for Reconstruction. Increase funding to vocational education, programs to support apprenticeships including wage subsidies, and “Commonwealth and state governments would commit that a minimum of 70% of all government vocational education funding is directed to TAFE, as the core anchor of vocational training in Australia.”

#3: Rediscover Australia. A program of subsidies, grants and eligibility for income support applying to the arts and tourism, that “would equal an estimated $3 billion over 12 months, and would support the preservation of an estimated 350,000 jobs in accommodation, inter-regional domestic transportation, tourism and creative industries.”

#4: National Reconstruction Investment Plan. The main plank is that average government allocation to capital spending should be lifted from 4-5% of GDP to 6.5% of GDP annually for a decade. The types of projects that would qualify “include transportation, community and public housing, other urban infrastructure, cultural and public service facilities, forest and fire management investments to better prepare for future fire seasons, and renewable energy assets and efficiency upgrades.” The commonwealth should go 50-50 with state led projects. Australian superannuation funds would be sought as principal investors, with benchmarks for Australian made inputs and “ambitious community benefit targets” that are defined in terms of job creation with “75,000 direct jobs in construction, and over 100,000 additional indirect jobs in supply and consumer industries.”

#5: Sustainable Manufacturing Strategy. The rationale is “the critical need to preserve a well-rounded domestic manufacturing capability.” Vulnerability to supply chain disruption is one reason given for “revitalisation of Australian manufacturing.” Others are “diversifying our international trade, spurring more research and innovation, enhancing our sovereignty and national security, and creating tens of thousands of decent manufacturing jobs.” The mechanisms of the SMS are government procurement, zero interest loans for investors in renewable energy for manufacturing, accelerated depreciation bonuses for manufacturers to convert to renewable energy, co-investment in the national electricity grid, infrastructure for increasing renewable energy, and sustainable manufacturing in exchange for government equity in private operations, grants for r&d in sustainable manufacturing and renewable energy. This could lead to “$12 billion in new capital spending over three years, representing a 30% increase in annual investment in Australian manufacturing. That would support some 15,000 person-years of construction work, and underpin the creation of an estimated 100,000 new manufacturing jobs.”

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