The " Capitalist " Economy !

The Australian economy has weathered good times and bad.  The aim of the union movement has been to gain better pay for its members by " collective bargaining ".  This is very effective when demand for goods is strong and the union can deliver greater productivity in exchange for a fatter pay packet.  The usual outcome is an " enterprise agreement " hammered out between the union and the employer that covers both wages and conditions.

Unfortunately, this delivers mixed results. Aggressive unions in key industries have managed to negotiate very favourable pay and conditions for their members, often by using the strike weapon to force the decisions they seek, but weaker unions have not had this same success.  There are many industrial segments where pay is low.  Usually this is where the work is unskilled and the employer can replace numbers that leave from a vast unemployment pool.

In recent decades the strength of the union movement has been declining.  In the past, many industries were referred to as a " closed shop ".  The union had the power to insist that all that worked there join the union.  That is now illegal and the numbers in unions in Australia has withered away sharply.   We still have some very militant unions, but they are clustered in a small number of important industries.

The Australian economy entered a new cycle with the recession that started in 2008.  We came out of that better than most other world countries with much less employment loss, but wages have remained flat despite a huge jump in housing costs and increases for essentials such as gas and electricity.  Pressure is building to increase the minimum wage to fifteen dollars an hour.

One of the tenets of the Capitalist system in place in Australia is that employers have the right to make goods by engaging labour at whatever price is dictated by demand and availability.  The government maintains a degree of control by the establishment of the Fair Work Commission which ensures that pay meets standards of national accountability and working conditions remain within guidelines.  The Fair Work Commission is the umpire which sets the supposedly level playing field between boss and worker.

Now a new eventuality is intruding into that arrangement.  Unilever is a giant world company that owns Streets Ice Cream, one of our national brands.   Over the years the union covering Streets workers have negotiated award conditions which are contained within an " enterprise agreement " currently in place.   Under this, output has not been interrupted by strikes and employment and output has been stable - and harmonious.   Many of the work conditions in place were negotiated before the 2008 downturn.

Now Unilever is demanding that this enterprise agreement be terminated - and that working conditions at Streets Ice Cream revert to the award safety net.  If that happens, it is estimated that the pay for those working in the ice cream factory will be cut by forty six percent.

This is " Capitalism " in its ultimate form.  It seems that Unilever thinks it is paying its workers more than it needs to get the same work done and that there is a sufficient unemployment pool to replace them if they object  and leave.   Of course their workers have bought homes and established lifestyles commensurate with the pay levels they have been earning in what they considered " permanent " jobs.  It is unlikely that they could replicate those same pay and working conditions in the present employment malaise.

There are rumblings that moves to terminate similar enterprise agreements are being heard in other industries where production facilities here are owned by a world wide behemoth with little interest in its workers lives and every intent on improving its bottom line.

A lot depends on how the Fair Work Commission reacts and whether this sends workers fleeing to join unions for their protection.  If this pay cut comes into effect many will face the prospect of home loss if they can not pay mortgages and it could lead to a drop in pay and conditions across employment generally.   It certainly throws the spotlight on the capitalist system that has always been the basis of Australian employment.