Australia’s dependence on mining and services industries will shape the recession. The Global Financial Crisis already increased our dependence on mining and resources exports. Now, stimulus efforts abroad will further strengthen demand for commodities. But it would be mistaken to assume that this will lead to a commodities-led recovery.
As in other “postindustrial” societies, free trade policies have ravaged Australian manufacturing, leaving us highly dependent on imports. When borders close and global production stutters, a country that cannot make what it needs is far more vulnerable.
Unemployment is expected to hit at least 15 percent, the highest rate since 1932. Hospitality, arts, entertainment, tourism, and transport are the hardest hit. Already, long lines have formed outside Centrelink offices, as the system is overwhelmed by people applying for unemployment benefits. Before the crisis, the number of people unemployed or who had given up looking for nonexistent jobs numbered 1.8 million. If the predictions are accurate, their ranks will swell to above 3 million.
The first tranche of Prime Minister Scott Morrison’s economic package ensured benefits flowed to business. Now, according to analysis carried out by the Centre for Future Work, 70 percent of the second announcement will go directly to business, mostly to keep credit and business lending flowing.
Only 30 percent will go to workers through much-needed increases to social security payments. For workers still on the employer’s books, Morrison has offered a weak “wage subsidy” that is really a tax diversion payment to business. This means there are no stipulations to prevent layoffs on handouts to business. Employers can feasibly take the subsidy and fire workers after pocketing the benefit. Low-wage workers will be most at risk.
Unions are calling on Morrison to provide a stronger wage subsidy of at least 80 percent of a workers’ income to keep workers in jobs — matching Boris Johnson’s announcement — and two weeks paid special leave for all workers dealing with sickness or income disruptions due to COVID-19.
This is just the tip of the iceberg. Already, the impending economic collapse has scrapped decades of free-market fundamentalism. Calls for drastic emergency measures are almost universal. The problem is, however, in the hands of the bosses and the Coalition, these measures may well hurt workers and result in an even more unequal economy.
Bosses Line up Early Against Workers
Wage theft, especially in hospitality, the finance sector, and retail, was endemic before this crisis, costing workers billions. Now, as retail workers cop abuse while keeping supermarkets stocked, the big retailers are calling for wage freezes and a block to the minimum wage increase scheduled to deliver slight relief for millions.
There’s a pattern here. Agribusiness and supermarkets have consistently mistreated and underpaid the workers who produce and distribute our food for years. Nearly all the 100,000 workers in agriculture are temporary migrant laborers, working on a casual basis in often deplorable, hyper-exploited conditions.
Workers at the bottom of the agribusiness supply chain, which is rife with contracting, have seen millions stolen from them on the assumption that they’re invisible. Now, agricultural companies see the pandemic solely as a threat to their cheap labor gravy train. Instead of improving conditions to attract newly unemployed workers, they are warning of imminent “labor shortages.”
Most concerning of all, it is likely that the far-reaching anti-worker agenda promoted by powerful business lobbies, like the Business Council of Australia, the Australian Industry Group, and the Australian Mines and Metals Association, will intensify.
What they demand is nothing short of dictatorial power to unilaterally determine the terms and conditions of jobs. After years of co-option and class collaboration, business now sees an opportunity to bring back Work Choices. They want to be able to lock wages for very long periods of time in capital-intensive industries like mining. They want to obliterate unions by introducing draconian restrictions and expanding nonunion collective agreements in which bosses can present a deal to workers over the heads of their representatives, with no requirement to bargain and no right to strike.
Businesses that pocket billions when times are good invariably cry poor when the going gets tough, begging for public bailouts on the pretext of saving jobs. Government is usually in on the con. Morrison’s first major economic intervention gave billions to businesses, with no requirements on how — or even if — they spend it. $715 million went to airlines. Qantas (led by one of Australia’s highest-paid CEOs, Alan Joyce) gave its part back to shareholders while firing 20,000 people — an incredible two-thirds of its workforce.
If this sounds like a grossly unjust and ruinous way for society to respond to a collective crisis that’s because it is. Unless we reorganize society to limit private control over economics and politics, government-initiated recovery efforts will almost always be siphoned away from workers. The worse the crisis, the more urgent this task becomes.
Nationalization Can Be a Poison Chalice
COVID-19 is expanding the horizon for state-led economic intervention at a blistering pace. The idea of nationalizing failing businesses and even industries — until recently the exclusive domain of socialists — is now discussed by the Right. For this very reason, the Left must be vigilant and critical.
Nationalization is not progressive in itself. In the neoliberal era, it has most often been used to socialize the losses of failed private actors holding critical assets, services, and infrastructure. Companies have an interest in nationalization right now because they assume that they’ll meet few barriers to retaking control and ownership once the dust settles.
Worse, nationalization can be seriously dangerous when undertaken by anti-worker governments. For instance, Thatcher nationalized the coal mines to reduce subsidies and suffocate her most militant opponents in the labor movement.
Even if public administrations were willing to pursue nationalization, they may not have the capacity to run newly acquired industries. Decades of neoliberal small-government policies have reduced public administrations to shells of their postwar former capacity. Many specialists with experience managing large state acquisitions are either dead or have fled. They were replaced by thousands of corrupt handshakes between senior public servants and the “Big Four” consultancies; they have no incentive to requisition assets, let alone the skill or desire to coordinate them in the interests of the many.
The only guaranteed pathway to pro-worker nationalization is to build union strength and density in key industries, as part of a strategic plan that connects workers’ interests across industry and with society as a whole.
Morrison knows this. So there is a serious danger he will use the cover of crisis and “strong and stable government” to pass his so-called Ensuring Integrity Bill. This law would allow government to de-register unions, appoint their own administrators, and seize unions’ resources. It would all but eliminate any possibility of nationalizations working in our favor.
The Left must proceed with caution. Calls to nationalize everything are useless unless accompanied by serious efforts to put workers and their unions first.
Rich business profits and the fiscal capacities of government mean that it is entirely possible to reform the economy on workers’ terms. But for this to happen, investment decisions must be open to scrutiny and challenge by workers. In turn, this means we need to expand rank-and-file organization and regenerate union structures. This is how we can build workers’ power to a point where we can exert democratic control over the direction of the economy.
Collective Bargaining or Bust
Unions, collective-bargaining laws, and collective agreements are our bread and butter. The only way to challenge the logic of profit is for workers to exert their collective power over production. This isn’t just true on a macro level. Greater control in the workplace both strengthens and is strengthened by collective bargaining. This makes contestation with capital possible. It even raises the possibility that workers can take over and run businesses themselves, should bosses decide they’re unprofitable.
Collective agreements are the fruit of historic battles — but they’re only strong where organization holds firm. Strong agreements better prepare us for battle by securing membership and rights to organize. During crisis they can prevent the wholesale exit of employers because all employers can be held to an agreement simultaneously.
But collective-agreement coverage and union density are at record lows now. Millions of insecure workers are very weakly tethered to employers who wield nearly unchecked power. The tools that once gave the workers’ movement the power to push back against job losses or attacks are badly corroded and, at times, destroyed.
None of the billions that government is now funneling into businesses and the welfare system changes this. In fact, the package will be explicitly designed to ensure that the fundamental power imbalances in our economy remain.
That is why it’s so important to build a sectoral-bargaining system that allows workers to negotiate with multiple employers in a sector at once. This is how we can fight neoliberal strategies that fragment operations, like franchising and contracting out jobs. They have ripped minimum protections from underneath millions of workers not by direct confrontation, but by outflanking, by making more jobs more insecure. With the stroke of a pen, one workplace can become one dozen.
The highly decentralized, enterprise-level system not only fails to extend bargaining rights to the majority of workers, it is a barrier to the large-scale cross-industry and sector coordination that is desperately needed to address the crisis.
The only way we can match this is by fighting for a new institutional mechanism that re-aggregates all workers (permanent and insecure alike) in a sector or industry and gives them the power to demand fixed wages for the same jobs, better protections, and more control over how work is performed. Workers should decide on the size and shape of those bargaining units. As the United Workers Union, which organizes across the whole food supply chain from farm to warehouse to restaurant has shown, it’s possible to build this now.
Sectoral bargaining systems — which feature in Nordic countries, where collective agreements cover upwards of 90 percent of workers, and where union strength is not far behind — would open up a world of radical organizing potential here. For example, this could add muscle to calls for a sorely needed wage guarantee.
If You Don’t Fight, You Lose
We are heading into a period of profound and scarring economic shock. But it would be wrong to imagine the pandemic will wipe the slate clean. Long after being lowered into the grave, neoliberalism will continue to frame government responses to this crisis. This is true even in the context of large public investment in health, education, and infrastructure to lead our reconstruction.
This, along with the climate crisis, will open a space to reorganize the global economy, from what we produce, to where and how we do it. The question of who profits from production will also open.
But in order to ensure that the coming changes are for the better, unions and left forces must build the power we need to plan for new ways of coordinating and leading our economy. Without this, as the history of the 1930s shows, state intervention may very well lead to far worse crises and far greater defeats for the workers’ movement.