ECONOMICS: by Colin TeeseNews Weekly
'Efficiency' blinds policy makers' judgment
, March 8, 2003
Ross Gittins in a recent column in The Age was keen to argue with a quote from the British Prime Minister to the effect that nine out of ten new jobs will require degree level skills.
Gittins contested Tony Blair's proposition on the basis of a recent study coming out of Flinders University. That research demonstrated that over the past 15 years (1986-2001) the profile of jobs has changed.
No doubt it has. Indeed there probably has never been a period since the beginning of the industrial revolution when it hasn't. That is not the question, however. The real issue is whether Gittins has got the right interpretation on the figures. And, further, whether he has understood what Tony Blair was really saying.
Let us first look at the figures. 1.8 million new jobs have been created. About a million in what Gittins says were "the highest skilled occupations: managers, professionals and associate professionals".Jobs created
Of course, it cannot be denied that new jobs have been created - perhaps of questionable durability - for the appropriately skilled: and this is obviously and particularly so in the finance industry.
Other factors, more difficult to identify, may also be at work which could help explain the apparent sharp increase in job opportunities for the well-skilled. It is certainly possible that with a tighter labour market (a fact which is hardly contestable) employers are at liberty to redefine what constitutes a highly skilled job.
In the history of labour relations there are plenty of examples, when the opportunity presents itself, of employers demanding higher professional skill than the job really warrants.
And, just as an aside, can we be certain - as the study seems to suggest - that all so-called highly skilled jobs are "permanent"? We certainly know that not to be so in the finance industry where any number of professionals and semi-professionals are employed on a contract or casual basis.
As to whether any of this seriously undermines Tony Blair's contention is another issue.
If Blair meant to refer to worthwhile jobs, as I imagine he did, then surely his point is valid. Gittins does not think so when he reminds us that as well as the one million new jobs for the highly skilled, 700,000 have been created for the low-skilled workers - all in the services sector. And all, including the 200,000 for shop assistants, most probably part-time at extremely low wage rates per hour.
And, so far as family breadwinners are concerned, none at wages necessary to support a family.
In many cases these part-time workers may not even be self-supporting.
No doubt some will insist that this category of workers may be essential in the provision of the kind of labour needed to make certain industries "more efficient". It is, however, also the case that outside the formal definitions of State and Commonwealth labour departments, they are, for all practical purposes, unemployed.
But those are not the only interesting and disturbing points of the study. We are further informed that there has been almost no growth (and with a growing population that means a decline in real terms) in jobs requiring post-school training short of university skills.Categories
It should be noted that this category of jobs includes not only workers with advanced clerical skills, but also, importantly, skilled tradesmen. For this latter category to have kept their traditional share of the labour market their numbers should have increased by 300,000: in fact they declined by 13,000. Something of the same can probably be said for the higher skilled category of clerical workers.
The reasons for this change in the profile of employment are to be explained by the drive for so-called efficiency. The author of the study concedes as much, though he goes no further than to assert that proposition.
But much more can and should be said. What, for example, do we mean by "efficiency"?
True a business can cut costs by shedding labour, but in the end is this really efficiency? Is it, in fact, any different than juggling the definitions of unemployment to conceal the real numbers of unemployed? Is it not part of an attempt to create yet another illusion?
And, is it not also true that the two activities do nothing for real efficiency; all they do is transfer "inefficiencies" from one part of the economy to another.
In simple economic terms, taking workers out of self-sustaining employment in the name of narrowly defined efficiency, and placing them on welfare harms the overall economy. Employed workers pay taxes and buy the output of factories and farms. To the extent the unemployed consume - which obviously will be less than the well paid and reliably employed worker, especially one supporting a family - their consumption is in part or whole supported by the taxpayer.
But there is much more to all this than mere economics. The important point this study tells us is that the present employment profile is effectively destroying the prosperous lower middle class. And, at least since the beginning of the 20th Century, this group has provided the backbone for society.
As their prosperity and job security improved - sustained by better public health and education - so they have provided support for the idea of and for the ideals of community and family life. It is they, in the right nurturing circumstances, who have had the children necessary to provide the continuity for our societies.Irony
It is one of the crowning ironies of Australia's policy making environment that the Coalition parties, which have traditionally placed the greatest emphasis on family life and the importance of community ideals, have so enthusiastically embraced just those economic values which undermine them.
There is another irony, and it is related to our government's attitude to international trade. Much, if not all, of our anger at the barriers to our agricultural exports is directed at the European Union, though the US and Japan are other targets.
The real reason these barriers exist has to do with the fact that these countries in different ways, and for different reasons, do not accept the idea that their farmers should be driven from their farms by other farmers who may be able to produce more cheaply.
In the case of Europe specifically, they have never been persuaded of the sense of subjecting their farmers to the rigours of international competition if the outcome of that would be to drive their farmers out of agriculture and onto the city unemployment queues. Better, and no more expensive, to keep them farming. And, especially so at this time, when the EU is on the verge of enlarging its membership to include yet more agricultural producing countries.
Perhaps it is because of our own narrow definition of "efficiency" that we are unable to see the sense of this reasoning, and, likewise, why we harbour inflated expectations of what we can hope to achieve from trade negotiations.