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Federal

Nov 2, 2011

Delegitimising unions in the great game of labour v capital

As voters become more estranged from corporations and economic reform, neither labour nor capital is responding effectively to the sentiment.

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It may not look it, but there are strong links between the Occupy protests here and overseas, and more formal political debate and public discourse, which naturally has been dominated by the Qantas dispute. And not just in the vague sense that both deal with the economy, or capitalism, or markets.

Let’s be clear about the long-term business agenda in Australia regarding industrial relations. It’s an agenda aimed not at improving productivity — as I and others have incessantly showed, the last round of IR reform led to a drop in labour productivity — but a more self-interested one aimed at reducing labour costs and neutering unions.

Business is quite tolerant of trade unions, as long as they do nothing that inconveniences business or increases labour costs. They can even be a useful form of alternative pressure on governments when industries set about rent-seeking. Neutered unions are quite acceptable. Real ones, that aggressively represent the interests of their members, aren’t. And ones that actually take industrial action, in particular, are regarded as outright enemies of business.

This is the ultimate thrust of IR reform — to pathologise industrial action, however legal, however justified. The point is to frame the right to withhold labour as an illegitimate form of economic vandalism, no matter what the circumstances.

Thus the incessant business complaint that the Fair Work Australia framework is too “pro-union” because it allows unions to take industrial action once a number of legal hurdles have been cleared. And the logic of Qantas’s actions on the weekend was to break free of the normal industrial dispute provisions under which it was operating, in which unions could continue to take wholly legal industrial action which (as Fair Work Australia found on Sunday night) did not pose a significant threat to Qantas.

This is business’s particular self-interested contribution to the liberal economic reform project. The IR component of that project, starting in 1993 with the Keating government’s provisions for enterprise bargaining and accelerating in 1996-97 with Peter Reith’s reforms to deliver individual contracts, was to remove the impediments of a centralised bargaining system from a modern, open economy, allowing enterprises to respond to competition more flexibly.

Coupled with globalisation, deregulation and corporate tax cuts, the reform project has delivered a huge increase in the corporate sector’s share of national income — at the expense of labour, as this graph from the Australian Council of Trade Unions shows:

The wage share of national income in Australia has only recently come off historic lows. But on this we’re no different from the United States or the United Kingdom, where wage share has also dropped over the last three decades to historic lows of around 50%.

Australian business clearly doesn’t believe the wage share has fallen low enough. That’s what drives its agenda to go further and undermine collective bargaining, a key part of which is the right to withhold labour, something businesses have been trying to do since the time of the Combination Acts in the early nineteenth century. Australia remains, for its corporate leaders, a “high wage” economy that struggles to compete internationally. For globally-mobile capital, there’s always a lower-wage country somewhere else to move to.

That same global market, however, has been the justification for a massive increase in executive remuneration, which as Prof David Peetz has shown, accelerated in the 1980s but then really took in the late 1990s.

Now, you can look at this from a union perspective and rail about income inequality and overpowerful corporations, or from a corporate perspective and point out that it’s the logic of a global market. And that market is currently delivering strong employment growth and growing income to Australians. But either way, it is driving the growing anti-corporate sentiment in the community, the opposition to further economic reform and the desire to reverse some reforms like privatisation. The Occupy protests are only the most vocal point of this deep and wide community sentiment that corporations get all the benefits of the economic system while the community gets all of the costs.

Where unions have failed is to tap into this sentiment. Capitalism operates most effectively by atomising the individual, by ensuring that an individual’s primary relationships are one-to-one relationships with producers as a consumer, and with employers, as a worker. Traditional systems that establish links cutting across these one-to-one relationships — unions, churches, political parties — have all been in decline in recent decades. Now the internet threatens to establish a different set of relationships and communities at odds with capitalism. But unions still retain some of the power that they once had to disrupt capitalist relationships, which is why business wants to neuter them.

The challenge for unions is to find a way to effectively channel those community concerns. Some of the more politically effective unions, like the Australian Workers Union, would argue that that is exactly what they’ve done through outcomes like the recent steel industry package. They also face an often hostile media environment that reinforces the illegitimacy of industrial action.

Alternatively, the challenge for business is to find a way to address those concerns themselves, to stop the community seeing them as a problem, the beneficiaries of a rigged capitalist game. Continuing to reflexively wage industrial relations wars wouldn’t seem to be the best start in doing that.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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135 comments

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135 thoughts on “Delegitimising unions in the great game of labour v capital

  1. Michael

    Chaz is on the juice again!

  2. stan chaz

    This country used to work The people had work. The system worked. It was far, far, from perfect – but at least we all had some share in the struggles AND the rewards. But somewhere along the way, we lost our way. Because now we have an economy and a political system that works only for the rich. We need to get back to what it should be, and what it can be.  Occupy Wall Street is no longer just  a place called  Zuccotti Park —  Zuccotti Park is everywhere. You can try to pen us in, you can beat us and arrest us, you can mace and tear-gas us , and you can try to “permit” us to death….but you can’t kill an idea.  You can’t keep down people’s hopes and dreams for a better life…..a life with dignity and freedom….for us, for our kids. More power to Occupy Wall Street, as it spreads worldwide  – because  OWS is us, and for us, and by us. With OWS we have found our voice, and it demands fairness and justice. This land IS our land! And we want it back! We want our lives back! We want our future back!

  3. Socratease

    WHY DOESN’T CRIKEY DO SOMETHING ABOUT THIS?

    Perhaps they’re having union meeting. 🙂

  4. A. N. Onymus

    Crikey, Crikey, Crikey,
    Moderator, Moderator, Moderator,

    When everything is in bold font, how does one indicate emphasis? By the use of ALL CAPS perhaps?

    WHY DOESN’T CRIKEY DO SOMETHING ABOUT THIS?

  5. Jimmy

    “It still doesn’t change the short-term trend, because the trend has been consistently upwards since 1997.Even if you do something dramatic like put in .34, .33, .31, .31 for 1990-94, it still doesn’t change the positive trend for the last 15 years.” Yes the trend is still positive but a lot flatter and less significant. What happened around 1997 that might impact the short term trend? Howard taking office?

    “Congratulations on completely missing the point.” So what is the point? Surely you are not trying to say that women who have had babies and received a parental leave payment become unemployable?

    “I am merely observing there has clearly been a problem brewing for the last 10-15 years, with an increasing trend of inequality.” We have a very slight trend yes but what do you want done about it? My point is that the slight upward trend will be reversed by reforms already taking place.

    “Further, I’m quite mystified with your insistence there is – and has been – nothing to be concerned about, given your obvious disdain for the politics that caused it, and support of policies aimed at increasing income equality” I suppose I am trying to convey that a slight backwards movement over a period which coincided with one of the most conservative govt’s of recent times ans still leaves us in a position that in envied around the world is not something to tkae to the streets about. In many respects the people saw this happening back in 2007 and changed the govt. Since then we have had increased spending in Education and health, increase in pensions and now we will get the MRRT and the carbon tax. The issue is already being addressed, we are not in the same boat as the US.

    Also you referred to an almost certain defeat for the ALP at the next election, don’t be too sure, there are some green shoots starting to appear for the govt and Abbott has many many policy holes, if the Carbon tax is allowed to run for a year or so without the sky falling in his one weapon will be blunted.

  6. drsmithy

    It’s not the missing years that are important, it’s the starting point of your trend line, have a look at it, it’s starting below 0.302 which isn’t the case, the trend for the 15 years from 1991 to 2004 would not be as great as your trend line predicts.

    It still doesn’t change the short-term trend, because the trend has been consistently upwards since 1997.

    Even if you do something dramatic like put in .34, .33, .31, .31 for 1990-94, it still doesn’t change the positive trend for the last 15 years.

    How so, the GFC related number is higher, the rich don’t get effected by financial downturns as much as the poor.

    My bad, I was looking at the 09/10 number.

    Though I do think you are grossly overestimating the impact of the GFC in such a short timeframe, especially here in Australia where the effects were relatively mild (our pain is still to come).

    I am saying let’s not look at the short term becasue it isn’t significant (as you agree) let’s look and plan for the long term?

    My comment about the significance of the trend was its magnitude, not its implications. The implications are significant, and stem from the consistency of the uptrend.

    You need short-term policies to effect long-term change, so being cognizant of what’s going on in the short term is important.

    Increasing the tax free threshold, increasing SGC, increasing pensions, increasing FTB what unintended consequences could these possibly have?

    The whole point is we don’t know until they’ve been implemented. That’s the problem with economics.

    So getting six months of paid maternity leave will set them up for life? It’s not as if the unemployment rate is so high they won’t be able to find a job if they want one.

    Congratulations on completely missing the point.

    And you would prefer to look backwards and say look at how bad things are rather than look forward and suggest ways of fixing a problem because of possible unitended consequences?

    Uh, no, that’s not even a vaguely accurate summary of anything I’ve said.

    I am merely observing there has clearly been a problem brewing for the last 10-15 years, with an increasing trend of inequality.

    Further, I’m quite mystified with your insistence there is – and has been – nothing to be concerned about, given your obvious disdain for the politics that caused it, and support of policies aimed at increasing income equality.

  7. Jimmy

    “Look, even if you throw in some 0.29 for the missing years of 1998, 2000, 2001 and 2004, it *still* doesn’t have a major impact on the trend.” It’s not the missing years that are important, it’s the starting point of your trend line, have a look at it, it’s starting below 0.302 which isn’t the case, the trend for the 15 years from 1991 to 2004 would not be as great as your trend line predicts.

    “Uh, you do understand the GFC related impact is dragging the trend _down_, right ?” How so, the GFC related number is higher, the rich don’t get effected by financial downturns as much as the poor.

    “Many years (5-10+) of improving numbers will be needed to flatten and reverse the short term trend.” I am saying let’s not look at the short term becasue it isn’t significant (as you agree) let’s look and plan for the long term?

    “Yes. That’s because their actual impact is unknown. It is not at all inconceivable that these policies may have unintended consequences that make the situation worse.” Increasing the tax free threshold, increasing SGC, increasing pensions, increasing FTB what unintended consequences could these possibly have?

    “For example: paid maternity leave may result in an increase in women who _never_ rejoin the workforce” So getting six months of paid maternity leave will set them up for life? It’s not as if the unemployment rate is so high they won’t be able to find a job if they want one.

    And you would prefer to look backwards and say look at how bad things are rather than look forward and suggest ways of fixing a problem because of possible unitended consequences?

    “Given Labor’s shift to the right in a vain attempt to win over Liberal voters, capitulation to big business (eg: the mining lobby), and looming defeat at the next election, it’s a 50/50 bet at best.”

    Is the proposed MRRT better than what we have now? Is the carbon tax (which won’t be repealed) better than we have now? Is Labor still further left than Howard? The answer to all these is yes.

  8. drsmithy

    The whole point is that the the trend isn’t for the full 15 years, it goes down then goes up and then goes back down to almost where it start for the first 10,

    Look, even if you throw in some 0.29 for the missing years of 1998, 2000, 2001 and 2004, it *still* doesn’t have a major impact on the trend.

    then we don’t have data for a year, it goes up significantly, then we have the GFC which skews the data.

    Uh, you do understand the GFC related impact is dragging the trend _down_, right ?

    Assuming pre 1994 figures are lower than they are.

    The pre-1994 figures aren’t relevant when looking at the trend of the last 15 years. Any more than the post-1994 figures would be if you were comparing from 1980 to 1995.

    The point you continue to ignore is the impact of the Carbon Tax and MRRT and related legislation plus things like paid parental leave, pension increases and changes to FTB and youth allowance this govt has brought in will have on the future of this “trend”.

    Yes. That’s because their actual impact is unknown. It is not at all inconceivable that these policies may have unintended consequences that make the situation worse.

    For example: paid maternity leave may result in an increase in women who _never_ rejoin the workforce, which would meaningfully lower overall household incomes for middle and low-income earners and increase the Gini coefficient.

    Given the insignificant incline it is not hard to imagine disappearing and even the 30 year trend to continue.

    Many years (5-10+) of improving numbers will be needed to flatten and reverse the short term trend.

    I’m not disagreeing that it could improve. My point is that it has been steadily and consistently getting worse since the mid-90s and that fact should not be ignored or dismissed as you are suggesting.

    With the Howard govt wasting it and taking this country further to the right. This situation now having changed can you expect the “trend” to continue?
    Given Labor’s shift to the right in a vain attempt to win over Liberal voters, capitulation to big business (eg: the mining lobby), and looming defeat at the next election, it’s a 50/50 bet at best.

  9. Jimmy

    Clarity – “It is not a measure of whether everyone is well-off or above a certain standard of living but simply whether they are “equal”.” As evidenced by the CIA figures regarding Egypt Yemen and Tunisia.

    Dr Smithy – “15 years is not a blip. It’s nearly a whole generation.” The whole point is that the the trend isn’t for the full 15 years, it goes down then goes up and then goes back down to almost where it start for the first 10, then we don’t have data for a year, it goes up significantly, then we have the GFC which skews the data.

    ” did it both with and without the highest numbers. The trend is still quite clear.” Assuming pre 1994 figures are lower than they are.

    The point you continue to ignore is the impact of the Carbon Tax and MRRT and related legislation plus things like paid parental leave, pension increases and changes to FTB and youth allowance this govt has brought in will have on the future of this “trend”. Given the insignificant incline it is not hard to imagine disappearing and even the 30 year trend to continue.

    “it was happening during what was supposed to be an economic boom.” With the Howard govt wasting it and taking this country further to the right. This situation now having changed can you expect the “trend” to continue?

  10. drsmithy

    I understood the point but it still doesn’t necessarily mean that those people are living in “poverty” based on either objective or global standards.

    They may well be of course but it won’t be because this test says so.

    Of course not. It’s a guideline, not a mathematical certainty, and I don’t think anyone has suggested otherwise.

    What the guidelines is saying, is that *usually*, when incomes are less than half the median, the people affected will be living in poverty (ie: a significantly lower quality of life) compared to the rest of society.

    Obviously with small or unusual sample groups, this can produce odd results. It needs to be applied across a representative sample of a whole society to be meaningful.

    Of course, none of this (or the discussion about GINI trends) means that your views on increasing inequality are wrong. In fact I would probably agree with you based on both empirical observation and the fact that this is a fairly obvious outcome in a globalized world.

    It doesn’t need to be, is the point. It’s not written in stone. We can bring the bottom up rather than take the middle down.

    Of course DrSmithy you have just highlighted one of the absurdities of the GINI coefficient. It is not a measure of whether everyone is well-off or above a certain standard of living but simply whether they are “equal”.

    The mind boggles as to why a metric that is meant to offer a metric of inequality, should be considered “absurd” because that’s what it does.

    Do you think screwdrivers are “absurd” because you can’t paint a wall with them ?

  11. drsmithy

    Your trend lines assume pre 1994 figures are much lower than they actually are which exaggerates the trend (put in a 1990 figure of 0.3 and see what happens to you trend),

    It flattens it, as expected.

    The fact remains that no matter what you do with the earlier numbers, the short term trend (10-15 years) is upwards, and this is something to be concerned about, especially since it was happening during what was supposed to be an economic boom. The medium-term trend (say, 30 years) is still (just) downwards, but the consistent positive slope for the last 15 years is rapidly flattening it out.

    15 years is not a blip. It’s nearly a whole generation.

    you also use the highest non GFC figure as a norm rather than out outlier which to me further exaggerates the trend.

    I did it both with and without the highest numbers. The trend is still quite clear.

    It’s also questionable whether the high 2007 figure really is an outlier in an absolute sense, without having a 2006 figure to compare against, especially in the context of the 2009 figure being lower than it would “otherwise” be thanks to the GFC. It stands out with the data as given, but if 2006’s figure was, say, 0.325, it wouldn’t be anywhere near as dramatic to see .336 in 2007.

    You yourself have said “The overall trend from 1994 to 2010 is clearly, if not significantly, upward” Clarity and I are saying a “not significant” trend requires more data to prove it is more than a statistical anomaly.

    Which raises the questions of a) how long must it go on before you don’t consider it a “statistical anomaly” ?

  12. ClarityProvider

    Of course DrSmithy you have just highlighted one of the absurdities of the GINI coefficient. It is not a measure of whether everyone is well-off or above a certain standard of living but simply whether they are “equal”.

  13. Jimmy

    Dr Smithy – Your trend lines assume pre 1994 figures are much lower than they actually are which exaggerates the trend (put in a 1990 figure of 0.3 and see what happens to you trend), you also use the highest non GFC figure as a norm rather than out outlier which to me further exaggerates the trend.
    Clarity makes the point that “like all statistics there will be issues over data comparability, collection, sampling etc” which is evidenced by the CIA having a downwards trend and a 2001 report by Saunders having different figures again, I think the OECD figures Rodger refers to are different again.
    You yourself have said “The overall trend from 1994 to 2010 is clearly, if not significantly, upward” Clarity and I are saying a “not significant” trend requires more data to prove it is more than a statistical anomaly.

    But all this talk of stats is missing the point what are the causes and what actions can be taken to ensure a future rise doesn’t happen, to me the legislation this govt has enacted and will enact in the near future will provide a better spread of wealth which should more than counter the minor upward trend

  14. ClarityProvider

    DrSmithy

    I understood the point but it still doesn’t necessarily mean that those people are living in “poverty” based on either objective or global standards.

    They may well be of course but it won’t be because this test says so.

    Of course, none of this (or the discussion about GINI trends) means that your views on increasing inequality are wrong. In fact I would probably agree with you based on both empirical observation and the fact that this is a fairly obvious outcome in a globalized world.

  15. drsmithy

    This Gini coefficient you are all talking about will always have, by definition, people “below the poverty line”

    No it won’t. The Gini coefficient is a measure of equality of wealth distribution and has nothing to do with the poverty line. In a hypothetical situation where it was 0 (ie: “perfect equality”), everyone would earn the same (and no-one would be below the poverty line since everyone would be earning exactly the median).

    Here’s another element for you. Growing economies have higher Gini Coefficients.

    Common, but not implicit.

  16. David Hand

    This Gini coefficient you are all talking about will always have, by definition, people “below the poverty line” So all the wrist slashing that must be going on is based on a flawed measurement.

    Here’s another element for you. Growing economies have higher Gini Coefficients.

  17. Lady White Peace

    Well whatever Dr S… you may be right but statistics are not as telling as some might think..
    Regarding the taxi fare and some people paying a lot more than $100 it still doesn’ t make sense. What if those people who are paying as much as my cab fare home, paid a reasonable amount, and they, our pilots could get a reasonable salary?? Take into account that it takes a pilot over 100 flying hours and around $150.000 to obtain the minimum hours… before s/he can get a job in an airline; whereas a cab driver – well I could drive one better than a lot of cabbies and besides, they don’t
    own the cab it is owned by companies.

    If instead of budget airlines, who still make heaps of profit, by cost cutting which translates to – CUTTING SALARIES & BENEFITS to STAFF!! They focussed on reasonable fares and reasonable salaries and benefits to their staff, without whom.. they would not have an airline! Perhaps this would be more in line with what is right and enables a dignified life, which is what we expect to have in Australia.

    I am so over the corps having it their own way or the highway. RIght now in Paris( actually it’s in Cannes ) we have the G20 and all the “leaders” have gathered to talk economy…… and how many of the general public are aware that this Conference is funded by the Corporations and so “our” leaders listen to the facts, figures,statistics, computations etc etc of the Corporations, get dizzy trying to pretend they understand what they are hearing….decide on some new policies that adversely affect the middle and lower classes…. and come back home feeling important, when all they have done accomplished is to have the wool pulled over their eyes, by those who really rule the world right now!

  18. drsmithy

    Qantas is an brand which is (was) second to none.

    As someone who has done a lot of flying, QANTAS has never been “second to none”. Certainly amongst the best, but never at the top.

    Heck, they’ve only just gotten a genuine lie-flat business-class seat in the last few years, when other airlines (eg: BA) have had them for the better part of a decade. Their economy class has never been any better (nor worse, though) than other airlines like BA or Singapore Air.

    Probably the only thing QANTAS does best is its current Premium Economy class. Though with that said, it’s also priced higher than the others as well.

    Another thing to consider WHY DO WE THINK THAT WE SHOULD PAY $100 FOR A FLIGHT, WHEN TO GET A TAXI FROM SYDNE AIRPORT TO MY HOME COSTS ME $ 70. Can anyone clarify that ridiculous state of affairs for me?

    The main reason is because a plane carries hundreds of people (many whom will be paying a lot more than $100) and its operating costs are spread across dozens of other planes doing the same thing. A taxi (typically) carries two to four people and has to break even on its own.

  19. drsmithy

    Given your “dormites” have both shelter and a feed I would not classify them as living in poverty based on the international benchmark in our example and would suggest that they should consider themselves extremely fortunate given the living situation of their trading partners.

    You’ve completely missed the point, which is to give a benchmark of what can be considered poverty within an economy.

    Comparing between two economies is an _entirely_ different ballgame.

    To further prove how silly this whole “relative poverty” concept is, let’s now assume that the “top 1%” of DR decide that they would like to base themselves on an island located in Haiti.

    Your statistical test would now say that the “dormites” are no longer “living in poverty” despite no change in their living standards whatsoever.

    Again you’ve ignored the fact that this works mathematically, but wouldn’t happen in the real world.

    Large wealth gaps are bad news across the board. They’re indicative of an inefficient economy, they’re socially disruptive, and they’re morally wrong. The reason we use a relative measure of poverty is because using an absolute one will give rise to situations where vast wealth gaps exist, but there is no “poverty” because people are able to eke out a bare survival.

  20. Lady White Peace

    In reply to ClarityProvider regrading qantas remaining a “premium” local service relying on tradition and Ozzie Ozzie etc to keep customers.
    May I say that your perspective has not clarified anything only given your opinion and what your perception of clarity is.
    Qantas is an brand which is (was) second to none. It relied on it’s amazing safety record, (yes that safety record was even mentioned in an American movie) which btw, inspired thousands of yanks to use it in preference to United when they came to Sydney for the Olympics in 2000.
    May I also say that the top earning airlines of today are Etihad and Emirates and …. the reason is that they do not
    repeat do not , lower their standards, in fact have raised them. They do not pay miserable salaries to Captains and Flight crew, in fact pay double what Qantas does…. and guess what? they are making a fortune by maintaining a “premium service” It may shock you to know that there are many who travel extensively and don’t appreciate being cramped and uncomfortable for hours and prefer business class. And QF was second to none in this area….UNTIL the big day dawned when it was decided to flog Qantas ….. but the sale “collapsed” to the relief of many Australians who actually want to see their Flying Kangaroo fly to every city in the world. There is such a thing as loyalty and sentiment it’s not all about money you see.

    However the strategy that has been in place since the “collapse of the proposed sale of QF” has been to increase the amount of money that QF has given to Jetstar so that Jetstar can be the ” star: and QF being slowly shut down. Do your research Dr Smithy and find out what orders have been made and other interesting items that have been going on behind the scene. SO Alan Joyce used to be the CEO of Jetstar…. they implemented horrific deals for Aussie Pilots
    1) Cut in salary 2) no decent meals on flights… just a sandwich 3) rest period to be taken sitting in Yclass cabin with
    passengers and other demeaning and demoralising regulations. The latest insult is the payment of Pilots in NZealand $$$’s … one really wonders how low can it go. But then, Alan Joyce began his career at Ryan Air, and that is the lowest of the lowest of the cheap and nasty budget airlines in Europe.

    Another thing to consider WHY DO WE THINK THAT WE SHOULD PAY $100 FOR A FLIGHT, WHEN TO GET A TAXI FROM SYDNE AIRPORT TO MY HOME COSTS ME $ 70. Can anyone clarify that ridiculous state of affairs for me?

    Btw, in replying to your comments I cut and pasted your post and inadvertently reposted your comment…apologies.

  21. ClarityProvider

    DrSmithy

    I only said that, like every statistical analysis, you have to ask the question as to how reliable the underlying data is (and clearly stated that I had no particular axe to grind with this data).

    I think you missed the definitional point. GINI is a measure of a particular body’s interpretation of “inequality” over a particular period rather than a measure of trends/movements in “inequality” per se.

  22. ClarityProvider

    DrSmithy

    To flesh out your example, lets call your hypothetical country Dominican Republic (DR) and lets situate it next to a country called Haiti. To better reflect the situation we are talking about lets assume the two countries have free trade.

    In Haiti 1% of the people also live like kings but the other 99% range from those that have no shelter, high risk of violence or disease and don’t know where there next meal is coming from to those that have basic shelter, high risk of violence or disease and still don’t know where there next meal is coming from.

    Given your “dormites” have both shelter and a feed I would not classify them as living in poverty based on the international benchmark in our example and would suggest that they should consider themselves extremely fortunate given the living situation of their trading partners. Your “dormites” have better living standards than almost half the population of our theoretical planet and have both shelter and food.

    To further prove how silly this whole “relative poverty” concept is, let’s now assume that the “top 1%” of DR decide that they would like to base themselves on an island located in Haiti.

    Your statistical test would now say that the “dormites” are no longer “living in poverty” despite no change in their living standards whatsoever.

    And of course if the “ex-DR top 1%” help out some locals on their Haitian island (say giving them food every second night) then your test would again say that the island residents are no longer “living in poverty” since they are better off than the almost 98% of Haitians who don’t know where any of their meals are coming from.

    I’m sure I could keep going (billionaires dining on caviar off the stomach of a supermodel lounging on the front of their yacht “living in poverty” whilst the fed slaves in the country next door “live large”) but hopefully by now you get the point!

  23. drsmithy

    Given there is no precise definition as to what constitutes “inequality” then the GINI can only ever be a measure of a particular interpretation of inequality. Further (although admittedly without having done any research) like all statistics there will be issues over data comparability, collection, sampling etc that make year on year comparisons somewhat fraught with danger.

    So it’s possible there could maybe be some sort of vague problem, but you don’t have any specific complaints ?

    Anyway, as I said, you are welcome to personally draw the conclusion that there is a trend.

    Whether or not the trend exists is not in question. It clearly does, though the exact magnitude is perhaps debateable. It _may_ change in the coming years (though that is unlikely), but the trend for the last ~15 years is unquestionably upwards.

    I personally wouldn’t draw any conclusions without further investigation. The numbers are just too close absent the GFC affected period.

    Rubbish. The only number that could reasonably be ignored due to the GFC is the 08/09 one, which is actually acting to bring the trend down. Without it, the slope is significantly steeper.

  24. ClarityProvider

    I hate to break it to you Jenny but most businesses are run on the basis of self-interest (of the owner). The self-interest being to deliver what the customer wants and be able to make a living doing it.

    Obviously many businesses also make an effort to contribute to their communities (driven by self-interest?) but this generally doesn’t extend to providing above market wages and conditions unless the employer is in a luxurious position and not exposed to cut-throat competition (neither of which applies to Qantas).

    On the question of “common social good” this is a concept very much in the eye of the beholder. I doubt Joyce bowing to the unions would be considered in the common social good of the communities of Qantas shareholders, Asian aircraft engineers or passengers reliant on air transport who end up with higher ticket prices.

  25. Jenny Haines

    We have a society that celebrates the individual. The younger generations have insight into the problems of the workforce but when I talk to them about how the gains that unions have made over the last 100 years were achieved by collective action, I get blank stares. They have no idea how to organise collective action. Mind you this is after years of union inactivity, the collapse of cohesion on the left of centre of politics and the confusion over what the goals of left of centre politics now are. I note some of the sarcasm above from bloggers that union activity and organisation is so baby boomer generation! I find it fascinating that many in the younger generations are so communal in their social life, but try to get them to be collective about an industrial question and they run a mile. It is interesting to see the the blatant unfairness of the system now is encouraging the current rounds of industrial action – the executives get pay rises while the workers take the burden of company restructruring to save the company but in some ways this industrial action is still about self interest and not about some common social goals or some common social good.

  26. ClarityProvider

    In answer to your previous question (about the “question”).

    Given there is no precise definition as to what constitutes “inequality” then the GINI can only ever be a measure of a particular interpretation of inequality. Further (although admittedly without having done any research) like all statistics there will be issues over data comparability, collection, sampling etc that make year on year comparisons somewhat fraught with danger.

    Anyway, as I said, you are welcome to personally draw the conclusion that there is a trend. Certainly the GINI does rise by about 1% in the decade from mid-90s to mid-00s and there is a clear rise around the GFC.

    I personally wouldn’t draw any conclusions without further investigation. The numbers are just too close absent the GFC affected period.

  27. drsmithy

    Surely poverty has to be determined by the resources and services available to you rather than either a monetary or relative basis?

    So in your opinion a society where 99% of the population lived in giant dorm rooms and ate at soup kitchens while 1% lived like kings, wouldn’t have a poverty problem ?

    Poverty is measured on a relative basis because we, as a society, want to raise _everyone’s_ standard of living as high as possible. Not raise a small handful of society’s standard of living astronomically while the rest scrape by barely surviving.

  28. ClarityProvider

    DrSmithy

    Surely poverty has to be determined by the resources and services available to you rather than either a monetary or relative basis?

    Anyone with housing, food, education and health services available to them is indeed “living large” compared to many sub-saharan Africans!

  29. drsmithy

    Also, having now actually gotten Excel out rather than just using my Mk.1 eyeball, it looks like a figure of 0.32-0.325 for 2010/11 would be more in line with the trend (yes, even with the two high values removed).

    I would not be surprised to see a higher figure than that appear in reality, however.

  30. drsmithy

    Not at all, remove the GFC effected year as anamolies and a couple of years of around 0.3 and the tend disappears

    “See, there’s no upward trend at all if you take out all the high numbers.”

    Just… Wow. Talk about cherry picking.

    This is what the trend looks like using all the data.

    This is what it looks like if you take out the two highest numbers.

    This is what it looks like if you take out the two lowest numbers as well (ie: be as generous as possible).

    If you can’t see a clear and consistent positive trend there, there’s nothing I can do to help.

    Just for the hell of it, this is what a 0.002/yr decline for the next ten years looks like.

  31. Rodger

    Whatever the trend, the OECD ranks Australia number 9 on its list of Countries With The Worst Income Inequality.

    See; http://www.huffingtonpost.com/2011/05/23/10-countries-with-worst-income-inequality_n_865869.html#s278236&title=9_Australia

    And it states; Between the mid-1980s and late 2000s, the average Gini coefficient for OECD countries rose annually by an average of 0.3 percent, and now sits at 0.31.

  32. Jimmy

    “The point is more that the trend is both clear and consistent. It would take either 10-15 years of steadily, slightly reducing numbers, or a couple of years of dramatically smaller numbers to reverse.” Not at all, remove the GFC effected year as anamolies and a couple of years of around 0.3 and the tend disappears

  33. drsmithy

    Relative poverty is a ridiculous concept.

    On the contrary, it is the only one that matters.

    *Absolute* poverty is the ridiculous concept. After all, you could be living large in sub-saharan Africa on $10/day, but barely able to feed yourself on the same amount in France.

  34. drsmithy

    The conversation seems to have stalled on the somewhat subjective point of whether a slight move over a short time frame can be called a “societal trend”. It really probably comes down to personal perspective and the amount of statistical rigor you want to apply.

    The point is more that the trend is both clear and consistent. It would take either 10-15 years of steadily, slightly reducing numbers, or a couple of years of dramatically smaller numbers to reverse.

    There is also the question of how accurate/reliable the underlying statistics are and how representative they are of “inequality”.

    Which question is that ?

    Personally, I am still gobsmacked by this ridiculous “international poverty line” statistic.

    Which part of it are you having trouble with ?

    One thing that occurred to me after my last post is that, if you accept it is a useful benchmark, then one way to alleviate poverty would be to reduce median income.

    Mathematically, yes. You do realise that’s not something that can happen in isolation though, right ?

    Poverty is a relative measure. It’s relative to the economy and society the parties are acting within. That’s why you could be really poor (homeless, barely able to afford food) in somewhere like, say, Luxembourg, but filthy rich in somewhere like, say, Afghanistan.

  35. Jimmy

    “The 05/06 number is 0.314. The nearby numbers to this are 0.310 (-0.004) in 1999 and 0.309 (-0.005) in 2002.” and when we are talking about a previous range of .018 a further 0.005 is a significant disparity. At best it would be at the very top of the trend.

    Excluding the GFC years the trend would be from .302 in 94/95 to a max 0.31 in 2008/09 which I would call insignificant and requiring a larger sample to prove.

  36. ClarityProvider

    Jimmy

    I agree. My point exactly.

    Relative poverty is a ridiculous concept.

  37. drsmithy

    From 94/95 to 05/06 there is nothing even close to the 05/06 figure, it only becomes part of the trend line if you include the higher GFC figures?

    The 05/06 number is 0.314. The nearby numbers to this are 0.310 (-0.004) in 1999 and 0.309 (-0.005) in 2002.

    The jump from 2005’s 0.314 to 2007’s 0.336 (+0.26) and 2009’s 0.328 (+0.14) are substantially larger.

    It’s been over a decade since I did any formal statistics, so I can’t actually do the calculations any more. But just from graphing the values, it’s clear that the 05/06 number is within the trend, whereas the 07/08 and 09/10 are not.

    This is regardless of whether or not you include the 07/08 and/or 09/10 numbers.

  38. Jimmy

    Fredex – I will acknowledge that according to the ABS data the GINI coefficient has got worse, I will acknowledge that unemployment and underemployment are now both worse than just before the GFC and I will acknowledge that according to the odd measure of the poverty line there are more people below it in 2006 than in 2004 (however what that is 5 year later who knows).

    However none of these figures are even remotely bad (or even “not good”) and the ones we do know about are worse as a result of the GFC not underlying issues with lack of union power of evil corporations as was the topic under discussion.

    I would also like for you to acknowledge that current legislation being put through parliament combined with prior legislation like change to youth allowance and FTB plus the paid maternity leave will all improve the spread of wealth issue. Plus could you acknowledge that before we get to spenging more stiumulous money (I was in favour of both previous stimulus packages) we could use moentary policy (or at least wait to see the results of this weeks rate cuts).

    Plus could you acknowledge that since the GFC savings rates have increased dramatically in this country that provides an extra buffer for the economy we didn’t have prior to the GFC.

    Plus could you also acknowledge that the effects of the GFC aside the GINI “trend” is statistically irrelevant.

  39. fredex

    Jimmy [and other]

    This discussion started when I pointed out that your claim that the Oz gini coefficient was improving :
    you wrote:”“Also as I posted earlier our Gini coefficient is actually improving i n the last 20 years ……”
    was in fact , as measured by the ABS, actually incorrect.It is not improving. It has got worse.
    I have given you the numbers.

    Please acknowledge such.

    Secondly I gave you a figure for increasing poverty and between us we hacve ACOSS saying [correctly] the figure was about 9% in 2004 and NATSEM [do you know who they are?] saying a tad under 12% 2 years later
    Thats a worry. Or should be. Even if poverty is worse in India or the US or somewhere else we should not be happy about increasing povert here.

    The 2 sets of figures [poverty rate and inequality] are related.
    Its not a coincidence both are increasing.
    As for the current poverty rate, the NATSEM figure was the last time it was worked out [in 2009], less than 2 years ago, thats a normal delay for hindsight.

    What is it likely to be now and the future?
    Dunno.

    An indicator, a strongly related factor, is unemployment rates. Note the plural.
    We usually only see one rate cited.

    In 2008, immediately pre-GFC, the UNemployment rate was 4.0%.
    The UNDER employment rate was 5.0%
    Are you familiar with the term, concept and significance of UNDERemployment?
    In ’09 unemployment [I’ll stop capitalising] was 5.8% [GFC] and it was 5.2% last year.
    Currently about the same.

    It has increased since ’08.

    Underemployment in ’09 was 7.9% [GFC] and went down to 7.2% last year and is about the same now.

    It has increased since ’08.

    Not good.

    We need the stimulus to be continued.
    But it isn’t being continued.
    Not good.

    We need to continue, actually re start, the stimulus and that means we need to increase the deficit.
    Read the last 6 words again.

    But political pressure is not going to let that happen, all the neo cons will jump up and down amplified by the media and the govt is too chicken.

    So, given that the stimulus has washed out of the system, that the international picture is not good, that our economy is best described as ‘flat’ at the moment [as the doc said above the indicators are weak at best], I’m not optimistic about the future.
    And to bring this back to QANTAS, now is not the time we need our[ex] national carrier pissing jobs off overseas, and blackmailing our government by harming our tourist economy.

    I’m off to pick up my car from the garage.
    Have a nice day.

  40. Jimmy

    Clarity Provider “The conversation seems to have stalled on the somewhat subjective point of whether a slight move over a short time frame can be called a “societal trend”. ” You live up to your name. Obviously I believe it can’t but you are right let’s move on.

    On the poverty line, My brother works 3 days a week earning about $37k and has about $250k in debt, and has 50% access to his son which would put him below the poverty line on this measure. However he he has a house he lives in, a rental property and block of land. He certainly doesn’t have much cash from week to week but I wouldn’t say he’s living in poverty.

  41. ClarityProvider

    The conversation seems to have stalled on the somewhat subjective point of whether a slight move over a short time frame can be called a “societal trend”. It really probably comes down to personal perspective and the amount of statistical rigor you want to apply.

    There is also the question of how accurate/reliable the underlying statistics are and how representative they are of “inequality”.

    Personally, I am still gobsmacked by this ridiculous “international poverty line” statistic. One thing that occurred to me after my last post is that, if you accept it is a useful benchmark, then one way to alleviate poverty would be to reduce median income.

    Perhaps that is Alan Joyce’s goal?

  42. Jimmy

    Dr Smithy – “Why are you ignoring all the numbers between those two ?” Well we had 94-5 – .302
    95-6 – .296 96-7 – .292 97-8 – .303 99-00 – .310 02-03 – .309 03-04 – .306. So we Are missing 00/01 & 01/02, we have to figures below the 94/95 figure one pretty much the same and 2 above hardly demonstrative of a trend. Graph just those figures and then tell me the trendline.

    “Why would the 05/06 figure be considered an outlier when it’s quite clearly in line with the trend ?” From 94/95 to 05/06 there is nothing even close to the 05/06 figure, it only becomes part of the trend line if you include the higher GFC figures?

    “I said a value of between .31 and .32 for 2010/11 would be consistent with the clear trendline that exists from 1994 to 2010.” That isn’t the same as “returned” to trend how?

    “4 years ? Where does that come from ?” When did they GFC start again? roughly 4 years ago?

    “China is slowing” Yes but still going at close to double digit growth.

    “America is stalled, sliding slowly backwards” Not according to the recent growth figures but I agree it is hardly going gangbusters.

    ” If you graph it out, the trendline runs from about 0.3 in 1994 to about 0.315 in 2009.” only if you include the GFC figures which are clearly not the norm.

    “We are not heading towards prosperous times.” Australia isn’t heading for economic oblivion, we have plenty of room to stimualte the ecomomy both the monetary and fiscal policy.

    Plus as you keep ignoring we have legislation that will spread the wealth coming through

  43. drsmithy

    because to get a trend to exist you need the low of 96/97 to be the norm and you need 05/06 to be the norm rather than outliers.

    No, it doesn’t. If you graph it out, the trendline runs from about 0.3 in 1994 to about 0.315 in 2009.

  44. drsmithy

    94/5 the figure was .302 by 03/04 it was .304 – hardly a trend there!

    Why are you ignoring all the numbers between those two ?

    We don’t have a 04/05 figure take out the 07/ & 08 figure and 09/10 as you suggest and you would call the 05/06 figure an outlier (especially as we don’t have an 06/07).

    Why would the 05/06 figure be considered an outlier when it’s quite clearly in line with the trend ?

    Things don’t retun to normal after a GFC immediately but if, as you suggest, we have a figure about .315 that doesn’t show we have “returned” to trend but “returning” to a trend.

    I said neither “return”, nor “returning”. I said a value of between .31 and .32 for 2010/11 would be consistent with the clear trendline that exists from 1994 to 2010.

    “With the whole world heading into a recession” as they have been for the last 4 year and we are still improving?

    4 years ? Where does that come from ?

    China is slowing. America is stalled, sliding slowly backwards. Europe is about to crash and burn. The RBA dropped interest rates yesterday. Australia is hugely economically dependent on the rest of the world and it’s all going to crap. We are not heading towards prosperous times.

  45. Jimmy

    “Why is it insufficient to identify a trend ?” because to get a trend to exist you need the low of 96/97 to be the norm and you need 05/06 to be the norm rather than outliers. The GFC ballon at the end makes 05/06 look more normal than it otherwise may be and we are missing 00/01, 01/02, 04/05 & 06/07

  46. drsmithy

    The point was simply that your data wasn’t sufficient to identify a trend.

    Why is it insufficient to identify a trend ?

  47. Jimmy

    Dr Smithy – “Again, if you throw the numbers into a scatter graph, the trend is quite clear” 94/5 the figure was .302 by 03/04 it was .304 – hardly a trend there! We don’t have a 04/05 figure take out the 07/ & 08 figure and 09/10 as you suggest and you would call the 05/06 figure an outlier (especially as we don’t have an 06/07).

    “Right in line with the trend you are insisting isn’t there.” Things don’t retun to normal after a GFC immediately but if, as you suggest, we have a figure about .315 that doesn’t show we have “returned” to trend but “returning” to a trend. “With the whole world heading into a recession” as they have been for the last 4 year and we are still improving?

    “I’m not quite sure why you think “the prospect of further decline” is “likely”.” look at the legislation in parliament currently, increase in low income threshold, pensions and family payments, increase in superannuation guarantee and small business concessions funded by miners and big polluters, doesn’t that indicate a better spread of wealth is likely?

  48. ClarityProvider

    DrSmithy

    Just to clarify point. Empirical observation would suggest that the working class etc are currently “doing it tough”. This may develop into a long term trend.

    The point was simply that your data wasn’t sufficient to identify a trend.

  49. ClarityProvider

    DrSmithy

    To add to Jimmy’s point I would want to see a move over a hell of a lot longer time frame before I would be calling a “societal trend”.

    However to get back to the point about the “international poverty line”. If “relative poverty” is to be used as the benchmark for poverty within western countries then I would argue that poverty becomes almost a mathematical certainty in a globalized world (rather than a function of capitalism, greed or any other emotionally tagged factor).

    Based on the usual rules of demand/supply, as the world becomes more globalized, and labor becomes more of a global resource, we move closer and closer to a “global wage” (without ever actually reaching it obviously).

    As a “global wage” is a function of average living standards across the globe (not relative living standards) it means that those in developed, western countries are shifted below the “relative poverty line” in that country whilst those in developing countries are shifted above it.

    So an aircraft engineer in Laos becomes a relative “rich bastard”, whilst an aircraft engineer in Sydney starts living “below the international poverty line”.

    Perhaps all we need to eliminate increasing inequality is to change the measurement standard?

  50. drsmithy

    And if the figure was something more realsitic like .31 or .315? With the prospect of further decline as I suggest is likely?

    Right in line with the trend you are insisting isn’t there.

    With the whole world heading into a recession, I’m not quite sure why you think “the prospect of further decline” is “likely”.

  51. drsmithy

    My point was the majority of that “trend” has come from the 07/08 year […]

    No, it hasn’t. Indeed, the 07/08 number could also be reasonably considered an outlier (if you were just looking at the numbers and didn’t know about the GFC).

    Again, if you throw the numbers into a scatter graph, the trend is quite clear. Even if you completely remove the 07/08 result. Heck, you can take out the 09/10 one as well and it doesn’t really change it.

    and to a lesser exent 06/07, given the improved economic conditions in the last couple of years it is hardly unexpected that the 2010/11 year would be lower than 09/10 and projecting forward legislation currently before parliament will see the figure decrease further.

    From eyeballing the dots, I expect 10/11 to come in between 0.31 and 0.32.

    Economic conditions haven’t really improved in the last year or two, unless you’re lucky enough to have been involved with the mining boom. Retail, manufacturing and (most) services have been flat, if not going backwards. On top of that there have been some serious spikes in cost of living necessities (electricity, food, shelter).

  52. Jimmy

    Dr Smithy – “How does that “trend” look if 10/11 comes in at say .299?
    Flat. But it would be a pretty unusual result. Certainly an outlier on a short-term basis.”

    And if the figure was something more realsitic like .31 or .315? With the prospect of further decline as I suggest is likely?

  53. Jimmy

    Clarity Provider -“Does that mean in a country with median disposable income of $1 million, anyone earning less than $500,000 is considered to be below the “international poverty line”?”

    That is a fair point and one which I hoped would be discussed when I posted that. How much of the “increase in poverty” is due to the increase in the median disposable income? As Fredex’s post states it’s a “measure of relative poverty”.

    Dr Smithy- “The overall trend from 1994 to 2010 is clearly, if not significantly, upwards.” My point was the majority of that “trend” has come from the 07/08 year and to a lesser exent 06/07, given the improved economic conditions in the last couple of years it is hardly unexpected that the 2010/11 year would be lower than 09/10 and projecting forward legislation currently before parliament will see the figure decrease further. An insignificant trend to me is not a trend at all.

    Fredex – “11.7 per cent of all Australians (or more than one in nine Australians) were living in poverty in 2006”” So how many now? I assumed from your post earlier we were now at 1 in 9.

  54. drsmithy

    Does that mean in a country with median disposable income of $1 million, anyone earning less than $500,000 is considered to be below the “international poverty line”?

    No, that means they would be considered below the poverty line in that country.

    Obviously, in another country, that level of income could be considered high (or low).

    On any reasonable objective international measurement, very few Australians would be living in poverty.
    Poverty is measured relative to the local economy and society, anything else is nonsensical.

    The “international” part is just dictating a consistent standard by which poverty can be measured in individual economies, so it can be benchmarked between them. That is to say, whatever locality you are in, the “international” standard that defines the poverty line is less than half of the median disposable income in that locality.

    How does that “trend” look if 10/11 comes in at say .299?

    Flat. But it would be a pretty unusual result. Certainly an outlier on a short-term basis.

  55. ClarityProvider

    DrSmithy

    How does that “trend” look if 10/11 comes in at say .299?

  56. ClarityProvider

    Jimmy
    Posted Thursday, 3 November 2011 at 1:58 pm

    Does that mean in a country with median disposable income of $1 million, anyone earning less than $500,000 is considered to be below the “international poverty line”?

    On any reasonable objective international measurement, very few Australians would be living in poverty.

  57. fredex

    1. The Australian Parliamentary Library wrote a report citing NATSEM research which stated:
    “Based on a measure of relative poverty that is described in detail below, 11.7 per cent of all Australians (or more than one in nine Australians) were living in poverty in 2006”

    The “measure” is described as:
    “In line with current Australian practice, the poverty line has been set at 50 per cent of median disposable household income2—with income first adjusted for household size and composition, and with all members of a household whose income falls below the poverty line deemed to be in poverty”

    It is the same measure used by ACOSS of some years prior, with whose report I am familiar.

    The number reference for the report is:
    3 April 2009, no. 27, 2008–09, ISSN 1834-9854

    2.The ABS report referred to at 1.03pm has the numbers graphed, somewhere in the report, I actually found the graph at another site and went back to the original ABS so I could get the numbers.

    Thats all from me on this subject its seems to be a real struggle to get a simple numerical trend of increasing income inequality in Australia across.

  58. drsmithy

    What trend? Between 1994 and 2004 hardly the movement what probably be described as statistically irrelevant, spike in 07-08 with the GFC as expected (given the lower incomes are always more effected by these things) with an improvement in 09-10.

    The overall trend from 1994 to 2010 is clearly, if not significantly, upwards. It might be easier to see if you graph it out.

  59. Jimmy

    Further to Fredex’s point regarding Poverty;
    “An Australian Council of Social Services report found that 9.9 per cent of Australians, or nearly 2 million people, fell below the international poverty line in 2004 — a line set at half of the country’s median disposable income for a single adult.”

  60. Rodger

    Inequality, so what?
    Increasing inequality in the distribution of income in a rich society correlates with;
    – increased mental illness
    – increased drug use
    – increased teenage pregnancy
    – decreased levels of education
    – decreased life expectancy
    – increased violence
    – increased numbers in prison
    – decreased social mobility
    This applies to rich and poor but is worse for the poor.
    (Ref. The Spirit Level. RWilkinson & KPicket. Penguin 2010)

  61. ClarityProvider

    The critical issue here for Qantas is whether they:

    (a) remain a “premium” local service relying on tradition and “Ozzie, Ozzie, Ozzie” to keep customers buying tickets. Maintenance can be 100% local and more extensive than international standards and it will survive so long as customers are willing to pay a premium for “local” (generally dud) service;

    OR

    (b) become a pan-Asia low-cost airline competing in the global marketplace on the basis of international labor and maintenance standards and conditions. Even Blind Freddy can see that this model cannot cope with the demands being made the unions.

    For those stuck in their 70s, 80s or even 90s time warps, the fact is we live in a globalized world where consumers have more information and choice then ever before.

    Qantas could cede to the demands being made by the unions but the likelihood when one takes into account the realities of the global marketplace is that this would result in their eventual demise. Presumably Qantas management have formed this view for them to take such a “high risk/brand damaging” strategy as the grounding of all flights.

    This is not a debate about executive remuneration, shareholder greed or the philosophy of capitalism but simply whether Qantas management has the right to determine the direction of their business going forward?

    Reality would suggest that union members, rather than lining up behind their masters to protect entitlements, should be thinking creatively about how they can position themselves for the brave new world of global air travel. The beauty of capitalism is that those that show creativity, enterprise and a willingness to adapt to change will be rewarded and those that fight tooth and nail to protect entitlements (ie personal “rent seeking”) will be doomed to eventual failure.

  62. Jimmy

    Fredex – “Not good is it?” One of the best in the world, even at its worst, I would descibe as better than “Not Good”. From memory Norway is the best country in the world at around 25, 30-32 is pretty good.

    “The trend is bad.” What trend? Between 1994 and 2004 hardly the movement what probably be described as statistically irrelevant, spike in 07-08 with the GFC as expected (given the lower incomes are always more effected by these things) with an improvement in 09-10.

    More importantly as I said earlier legislation to take effect next year will only further improve the situation.

  63. Max

    “What I liked about Bernard’s story was that it pulls back to examine the bigger picture.” Mel Campbell

    Aye!, the Campbells.

  64. fredex

    Jimmy

    I don’t care what Keating said.

    This is what the ABS measured as the reality of inequality, per Gini Coefficient, in Australia from 1994-5 to 2009-10, year by year [almost].
    You can check the table at ABS #6523.0 “Household Income and Income Distribution” 30 August 2011.

    94-5 – .302
    95-6 – .296
    96-7 – .292
    97-8 – .303

    99-00 – .310

    02-03 – .309
    03-04 – .306

    05-06 – .314
    07-08 – .336

    09-10 – .328

    Not good is it?
    The trend is bad.

    Over roughly the same period poverty in Australia increased to include about 1 in 9 persons, that is over 2 million Australians living in poverty, some of them employed but despite that still at the poverty level.

    Not good.

  65. Jimmy

    Paul Keating had this to say last night – “In the United States between 1990 and today, real wages have not increased, whereas in Australia real wages have increased by 36 per cent,”

  66. Jimmy

    Fredex – I am not disputing the ABS figures but it is completely possible both are correct, Let’s look at the time frame –

    1994 – Australia is just starting to come out of a recession so it isn’t surprising to see the coefficient higher than normal.
    1997/98 – Economy still improving, Howard yet to have his impact so good figure likely.
    2006 – Height of a boom – Howard middle class welfare in good swing so good figure more than likely.
    2007/08 – Height of the GFC therefore worse figure to be expected.

    Michael R james – “But it’s also a reason why we should be concerned to prevent an American-style polarisation in the distribution of income and wealth from occurring here.” Very ture but if we look at 2 pieces of legislation this govt is trying to implement, the Carbon Tax and the MRRT, booth combined will reult in lower income families becoming considerably better off through increased pensions, increasing the tax free threshold and increasing the super guarantee.

    I would therefore expect the GINI coefficient to improve going forward.

  67. discus

    as a licensed engineer of over 30 years I find it hard to believe anyone would do this as a serious threat. Engineers sign out the aircraft and can be and are held criminally responsible for errors. Doing this would not stop the aircraft flying for long, is not (on the surface) a flight safety system.Many times I have seen damaged equipment and wiring caused by accident or maliciously by passengers. Quite common actually. However, I smell a set up to justify certain actions. Joyce crowing about grounding the fleet as a safety precaution whilst telling pilots currently 10 km in the air is just so stupid it beggars belief. of course most of the mainstream media lapped it up. If you are fair dinkum about safety risks wait until they’re on the ground over night when the very few in the air on overnight flights reduces risk. Putting it on the news while aircraft were airborne was just as stupid if genuine about safety. Most qantas aircraft have ABC radio tuned on the IFE. It is purely and simply a war on organised labour.

  68. AR

    CTAR1 – to understand the early 19th century Combination Acts try “Tolpuddle Martyrs” – some of whom were transported…

  69. David Hand

    I agree with the part of Bernard’s piece regarding the obcene levels of executive remuneration paid to mostly underserving non-performing insiders. It is destructive to the social fabric of our society and smells distinctly like robbery, larceny and plain theft. All legal, of course. Hell, I would take part in an occupation myself if that was the agenda.

    Where I part company with the workers campaign is the fond memories they seem to have about the glory days of mass bargaining powerful unions setting awards with arbitration institutions effectively running businesses through binding judgements.

    The problem with Bernard’s graphs is the use of about 1980 as the starting point. This was the nadir of the keynesian social economic management that had grown since the 1930’s. Keynes was right to describe the ability of governments to stimulate economic growth through government spending and the thing worked splendidly until it had reached the extreme where the government owned everything, regulated the life out of what it didn’t own, told employers what to pay their workforce limited international trade through exchange controls, strangled economic activity through financial regulations and generally ran things, to quote David Lange, the NZ prime minister where I lived at the time, like a Gdansk shipyard.

    Most of the western economies were dragged kicking and screaming into a more traditional market driven economic environment because they had simply run out of options to socially spend their way forward.

    So when you look at the executive pay, for example, though I agree we are being robbed today by incompetent shysters, remember that in 1980, they were mostly public servants.

    Whatever you may think about the lock out, Qantas is in a fight for its life at the moment and workforce flexibility is vital for it to have a future.

    I listen to pilots droning on to us longsuffering passengers about how important it is to have Qantas pilots flying Qantas planes and ask myself why? What’s a Qantas pilot anyway? Probably someone fat and unhappy on a 50 year old restrictive EBA.

    I listen to engineers claim that engine maintenance going off-shore will increase the risk of planes falling out of the sky and I ask myself why the only decent aircraft maintenance in the world is done in Australia? Has a Singapore Airlines flight crashed recently? What skills do Australian aircraft engineers have that Asian, American or European engineers don’t have? Probably someone fat and unhappy on a 50 year old restrictive EBA.

    I put up with tired unhappy 25 year veteren cabin crew go through the motions for the 22oooth time and ask myself why aren’t there a few of those motivated, happy and friendly cabin crew like they have on Virgin? Probably someone fat and unhappy on a 50 year old restrictive EBA.

  70. Sturt

    Well, just wait a generation or less until you start funding your retirement through superannuation and you will gain an appreciation of the value of corporate profits.

    A) without retained profits the value of your accumulated savings would be that much less
    B) without reinvested dividends, the value of your accumulated savings would also be that much less
    C) without expected future earnings, the value of your retirement income will be that much less.

    But no, let’s just smash the system to spite a few of the overcompensated.

    As Paul Keating, architect of this system, would say: Nongs.

  71. TOM COOK

    i think it’ s noted that GEEWIZZ is one of these liberal party hacks most probably young liberal that by the constant union bashing thinks hee’s doing his masters a service.i don’t think there’s too many people listening i for one think his rantings are pure garbage.

  72. Lady White Peace

    Hi DavidK Newton’s yes! Thanks, I had always attributed it to Einstein. I love these blogs we learn so much from each other.

  73. margbozik

    Excellent article Bernard Keane, really appreciate your solid but easily understandable of the economic and political forces being played out.

  74. davidk

    @ lady white peace
    I agree with much of what you say. Whilst on a corporate rant I want to express my outrage at how crappy goods are sold us instead of good quality. They soon need to be replaced and we’re sold the lie that we must accept it because jobs depend on such consumerism. It is a distortion of the market because consumers can’t choose good quality which doesn’t exist and leads to more pollution and land fill. Designed obsolesence I think. By the way, that is newton’s second law, not einstein.

  75. Lady White Peace

    And Mass Protests are what we are seeing and they are about to get larger as the old problem of Labour Versus Capital continues. What both need to realise is that without each other they cannot survive! It is like a marriage to make it work it needs both parties to take responsibility and to share in the workload and in the benefits.

    For too long now Capital views itself as King, as having all the rights and all the power- however it has forgotten that it needs Labour- and has forgotten what it means to share equitably. It has grown greedier and greedier and under the pretext of ” shareholders” gouge more and more money for their already overflowing pockets, out of the mouths of the people who labour because they have families to feed. IF one looks at the reality of it… these Corporations and Qantas is now no different, are taking the food out of the mouths of the children of Australia, taking away their parents ability to provide decent education and living conditions. When viewed from this perspective I think they should be ashamed of themselves and be brought to task by stricter regulations…. for they certainly cannot be trusted to self- regulate their greed.

    As far as Alan Joyce is concerned, just look at the guy’s face, his is not the brutal, despotic CEO that he is made out to be. In many people’s opinions he is simply a ” mouthpiece” and for whom you ask??? How about the Chairman?? Yes him the guy who used to run RIO TINTO… as reported by Crikey. Now Rio Tinto is not a labour friendly corporation, in fact I would agree with others and say it is quite the opposite, who nowadays is blind enough to trust anyone connected with the elite of mining, in fact the elite of capitalism. And it is this that has finally motivated the masses to rally together and demand a change. About time too, and the Qantas Board ‘s response ie. to lock down the airline, to leave 140.000 plus people, who had paid their hard earned money to Qantas, not to mention the staff stuck all over the world, and I assume causing emotional trauma to their family; …then to my mind what Alan Joyce did should be viewed as a criminal offence. Of course it won’t be, he will get away with it and so my friends, a tsunami called Occupy Wall St is the reaction. As Einstein said for every action there is an opposite and equal reaction. For too long Corporations and not Govt’s have ruled the world (see Karven’s Book “When Corporations Rule the World 1980) and only now has the general public got wise to this. Interesting times ahead… Oh and GEEWIZZ you are either joking or a real duh duh.

  76. michael r james

    Of course the other shocking statistic about the US is that not only do the top 20% own 84% of the wealth but the bottom 20% owns 0.1% and the 4th quintile owns 0.2%; so the bottom 40% owns 0.3% ie. the square root of stuff all. It seems unlikely Australia will reach those levels but if the top quintile keeps grabbing more it has to come from somewhere.
    .
    And as Saul Eslake and American economists point out, this does not make for an efficient economy or sensible allocation of resources. Even Henry Ford knew that a century ago when he wanted his own factory workers to be able to afford to buy the cars they were making.

  77. Phillip Musumeci

    At least two countries are exporting like crazy into China – one is Australia (mainly minerals) and the other is Germany with very high value manufactured goods (including machinery for China’s growing needs in automated manufacturing). It appears to me that there is a more collaborative approach between unions and management in Germany but it would be great to see Bernard’s analysis applied to Germany.

    Regarding wages versus profit shares: investment in more automated factories would change that split so *some* of the change might indicate updated forms of manufacture etc.

  78. michael r james

    not bold

    Third and last attempt.

  79. michael r james

    Incidentally it appears to be my earlier post that threw the Comments into bold! I got my formatting messed up. I tried to fix it with this one.

    OK, it didn’t work, how about this one.

    Testing, 1,2,3….

  80. michael r james

    @JIMMY Posted Wednesday, 2 November 2011 at 4:48 pm

    Yes, I think it is Saul Eslake who gives those details. My main concern is the direction:

    [The share of household net worth owned by the richest 20 per cent of Australian households has risen from 58.6 per cent in 2003-04 to 62.2 per cent in 2009-10.
    An increasingly polarised distribution of income and wealth can have adverse consequences for economic performance. …….
    But it’s also a reason why we should be concerned to prevent an American-style polarisation in the distribution of income and wealth from occurring here.]

    So if that rate is kept up (and Alan Joyce just made a contribution to its jump.), ie. about 4% in about 6 years then in only about another 24 years it will be almost the same as the US: the top 20% will own about 80% of the wealth.
    …………………..
    Incidentally it appears to be my earlier post that threw the Comments into bold! I got my formatting messed up. I tried to fix it with this one.

  81. fredex

    In response to Jimmy above.

    There is no single body with greater credibility when it comes to the range of Australian statistics than the ABS.
    They are the primary collecting and collating body for stats in Australia.
    They are not perfect but should be the first port of call when looking at national stats for Oz.
    A highly professional body.

    The CIA does not collect etc stats for Oz.

    I have seen stats from the CIA previously.
    They are often, if not usually, inexact and misleading.
    The gods only know what their sources and methods are, presumably they collect stats from the relevant national [or intrnational] stats agencies. Such as, for Australia, the ABS.

    As shown [and linked] by the ABS, Australian incomes have become more unequal during the period ’98 to ’07.
    By about 1% per year during that period which seems to coincide with a particular government.
    Coincidence of course.

    And the mecahnism is known.
    Tax cuts at the top of the inome range.
    Increase in the % of national income received by profits and dividens, decrease in the share of national incomeby wages and salaries.
    Gootta go.

  82. davidk

    @ cpobke
    liberal economic reform project ? As I recall the only thing the libs did was sack public servants and blame the unemployed. Surely it was the opec oil shock that put the brakes on the economy at the time. The libs didn’t help with their policies then and their not doing so now.

  83. davidk

    @ Jimmy
    while the quantas dispute may not rate highly, it is indicative of the ‘business is king’ dogma that we’re force fed. The attitude that all is fair in pursuit of the mighty $ is so far removed from the reality we face it is scary. We need real political leadership but instead we get dross. If the gripes the occupy movement and environmental groups highlight aren’t addressed social media must step up to the mark and fill the void left by a compromised msm. It will be business as usual until we see mass protests.

  84. Oscar Jones

    Jimmy-I agree completly. There must be fairness on both sides and there will be good and bad bosses and likewise unionists.

    It would be an ideal world if I could operate as I wish and the rules applied only to others but that will not work

    QANTAS may have very legitimate reasons to ponder over the cost of their workforce but they must also recognise for others to afford to fly QANTAS, others must also earn enough to pay the fare.

  85. dave

    PlooBludger = PollBludger

  86. Jimmy

    Fredex – “Which doesn’t alter the fact that, according to the ABS, the Gini coefficient in Australia has worsened over the most recently measured period from’98 to ‘07.”
    Or we could say that it has improved from 1994 to 2007 from 35.2 to 33.1.

    “Perhaps you should not rely on the CIA, whose credibility, particularly with respect to Australian statistics, is well below that of the ABS.” Do you have any evidence to suggest that the CIA is unreliable in this instance, it isn’t like the figures are poles apart.

  87. dave

    [ davidk
    Posted Wednesday, 2 November 2011 at 3:24 pm | Permalink

    I don’t trust Joyce to tell the truth. ]

    Very selective quote by GeeWizz. Nice try at fitting up but you have been found out yet again.

    William did well to permanently ban you from PlooBludger.

    The article GeeWizz links also goes on to say –

    [ … federal secretary of the Licenced Aircraft Maintenance Engineers Union, Steve Purvinas, rejected the notion that the incident was sabotage.

    It was his union’s engineer members who spotted damage to an entertainment system wiring loom as it was being fitted, he said.

    “The most likely situation is that these wires were damaged during manufacturing.

    “It was actually members of ours who picked it up – and reported it,” he said.

    The wiring looms normally come preassembled, Mr Purvinas said. ]

  88. fredex

    Which doesn’t alter the fact that, according to the ABS, the Gini coefficient in Australia has worsened over the most recently measured period from’98 to ’07.

    Perhaps you should not rely on the CIA, whose credibility, particularly with respect to Australian statistics, is well below that of the ABS.

  89. Jimmy

    Fredex – I was using these figures;
    According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.

    In contrast:
    – Tunisia is ranked the 62nd most unequal country, with a Gini Coefficient of 40.
    – Yemen is ranked 76th most unequal, with a Gini Coefficient of 37.7.
    – And Egypt is ranked as the 90th most unequal country, with a Gini Coefficient of around 34.4.

    Australia’s Gini index was 35.2 (1994) and 30.5 (2006)

    At worst you could argue we have stayed roughly the same but it still ne of the best in the world.

  90. fredex

    From Jimmy above:

    “Also as I posted earlier our Gini coefficient is actually improving n the last 20 years ……”

    From the ABS below:

    Gini 1997-8 – .303

    Gini 2007-8 – .331

    Remember close to 0 is equality [good], close to 1 is inequality [bad]

    And in case the link doesn’t get through just google “ABS gini Australia”

    Edit
    Moderated
    So I re-commented without the link.

  91. fredex

    From Jimmy above:

    “Also as I posted earlier our Gini coefficient is actually improving n the last 20 years ……”

    From the ABS below:

    Gini 1997-8 – .303

    Gini 2007-8 – .331

    Remember close to 0 is equality [good], close to 1 is inequality [bad]

    http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1370.0~2010~Chapter~Household%20income%20distribution%20%285.3.2.1%29

    And in case the link doesn’t get through just google “ABS gini Australia”

  92. drsmithy

    The employer lock-out weapon ought not to be allowed in the Fair Work Act.
    The lock-out should be banned to allow some fairness and balance for emploees against the more powerful corporations in our collective bargaining system.

    So what mechanism _should_ be in the Act to counterbalance a Union’s ability to bring an entire business to a halt ?

  93. Jimmy

    Oscar Jones –
    “Business left to operate in a vacuum of it’s own-their overall desire- is the most dangerous threat this planet is facing.” I agree in general with this statement (it might be overstating a little) but the reverse is also true. One of the reasons we have had such a good period in the last 30 years is the balance we have had between the unions and business.

  94. Oscar Jones

    Business left to operate in a vacuum of it’s own-their overall desire- is the most dangerous threat this planet is facing.

    There is not one single person, including trolls like GeeWhiz in this country who could not enjoy one of the most enviable lifestyles in the world without the hard work of unions.

    Take away unions and worker’s power to negotiate with bosses equally and the ramifications are dire.

    With no security of a job or if we all become part -time workers, few people would be able to get a mortgage. That is just for starters.

    QANTAS must obey rules of conformity just as the corner shop does albeit with sensible modifications for each industry, just as laws apply to us all.

    As for the so-called attempt at sabotage : grow-up Gee Whiz. I do not believe QANTAS bosses OR workers would ever sabotage a plane they may one day fly in. Unless they were a psycopath.

    And if QANTAS was right to ground their fleet because of your claim-did they check every plane currently put back in service the following day ?. It doesn’t make sense nor do you.

  95. Jimmy

    Michael R james – Very Interesting post. One point though;
    “However the real income of the richest 1 per cent of Australian households rose by 189 per cent between 1980 and 2007 – about the same as in the US. ” The big difference to the US is the amount workers real wages have grown in the same time. In the Us they have only grown about 6% in that time, here while not 189% it is significantly more than 6%. Also as I posted earlier our Gini coefficient is actually improving n the last 20 years and is significantly higher thanthe US.

  96. david

    SonofMogh…Truthie the coward troll who trolls under different names as he gets caught out..you can safely assume his latest trolling cover is indeed Geewizz

  97. michael r james

    Excellent piece by Jessica Irvine today (below) and also look at the Saul Eslake article earlier (at bottom). These are hard headed economists not youthful “partying” Occupiers.

    [(theage.com.au/opinion/politics/top-bosses-riches-are-undeserved-20111101-1mttj.html)
    
Top bosses’ riches are undeserved Jessica Irvine November 2, 2011
Australian
    .
    CEOs say they must be remunerated so as not to be tempted away by jobs as international CEOs. But running a company is a tougher gig in the big, deeper pools of larger economies. Better to be a big fish in a small pond.
    .
    
CEOs also say they need to be compensated for the risks involved in running these very large companies. But what risk? Running a big bank in Australia is about as risky as running a large bureaucracy, and we don’t pay public servants anything like these guys get.
    .
    The membership of the top 10 companies in Australia is remarkably stable. These are not companies that fall over. In fact, the big four banks have an all but explicit guarantee they will not be allowed to fail.
.
Sitting in a CEO chair at the top of the ASX food chain is a great gig. These companies are simply not at risk of going under and their CEOs simply don’t deserve what they get.
    .
……..
    [(theage.com.au/business/why-some-incomes-are-just-gross-20111028-1mo9g.html)

    Why some incomes are just gross Saul Eslake October 29, 2011
.
    However the real income of the richest 1 per cent of Australian households rose by 189 per cent between 1980 and 2007 – about the same as in the US. ]

  98. Jimmy

    Geewizz – “Why would Qantas management sneak down and cut the wires on their own planes?” Why would an engineer cut the wires just to report them to management?

    I am not saying they did do it just that they had the same access ass any of the unions and many others. As for motivation, how about “Gee these strikes are really annoying us, maybe if we cut a couple of wires we can accuse the unions of sabotage and ground the fleet to force a suspension of the industrial action”

    Fran – I really can’t see the logic in Qantas’ strategy, they seemd to be winning the PR war prior to the weekend and now they are losing it big time.

  99. Fran Barlow

    Quite right Jimmy and as ACE said, it was all done a week before the grounding.

    This was a political stunt by QANTAS who plainly thought looking like mad-dogs would help them in negotiations.

  100. GeeWizz

    [“But assuming that it was only someone who works at the airport that still leaves a large number of people who 1) aren’t even employed by Qantas and 2) are not affiliated with the union in anayway. This includes Qantas management.”]

    Why would Qantas management sneak down and cut the wires on their own planes?

    I think we are heading into lala land country now.

  101. Observation

    With the continuous demonising of the unions in the limited news which the bulk of the population seems to consume in one line headings alone there will never be a balanced point of view circulated.

    The blatant lies put into print to skew public opinion in there preferred direction is disgusting. And there never seems to be any retraction or apology when this occurs. Isn’t there some sort of law that has these bulldust bandits fined or prosecuted?

    If the unions were to go it would be the death of any moral or fair employment contracts.

  102. ConnorJ

    [geewiz said:

    Looks like Qantas are vindicated as grounding all aircraft as a safety measure after announcing the lock-out.

    The unions are a safety and security risk.]

    From the union:

    [But the federal secretary of the Licenced Aircraft Maintenance Engineers Union, Steve Purvinas, rejected the notion that the incident was sabotage.

    It was his union’s engineer members who spotted damage to an entertainment system wiring loom as it was being fitted, he said.

    “It happened last week when some wires were found to be damaged in a wiring loom that was being fitted to a new [entertainment] system,” Mr Purvinas said.

    “The most likely situation is that these wires were damaged during manufacturing.

    “It was actually members of ours who picked it up – and reported it,” he said.

    The wiring looms normally come preassembled, Mr Purvinas said.

    “It was during the fitment of those looms that our members noticed that some wires were damaged.

    “It’s quite often that when we’re installing new wires in aircraft that looms are too short, or that pins have been put the wrong way around.

    “Any suggestion that it was sabotage from our members is clearly another attack by an airline that is leaking information to the press on purpose to take the heat off them for their actions [in grounding the airline] on the weekend,” Mr Purvinas said.

    Read more: http://www.theage.com.au/travel/travel-incidents/afp-investigates-qantas-plane-sabotage-20111102-1muxm.html#ixzz1cWNtYNky%5D

    And from QANTAS:

    [Looks like Qantas are vindicated as grounding all aircraft as a safety measure after announcing the lock-out.

    The unions are a safety and security risk.]

  103. Jimmy

    Geewizz – “I’d assume you’d need security clearance for access to the hangar so I think we can assume it was somebody who works at the airport” You are assuming the damage wasn’t done in an area accessible from the cabin.

    But assuming that it was only someone who works at the airport that still leaves a large number of people who 1) aren’t even employed by Qantas and 2) are not affiliated with the union in anayway. This includes Qantas management.

  104. Jimmy

    Davidk – I agree although it is generally the more important things they are playing the duplicitous games about.

  105. GeeWizz

    [“The problems with the 767’s entertainment wiring could have been done by anyone – just like the Alan Joyce ‘death threats’.”]

    I’d assume you’d need security clearance for access to the hangar so I think we can assume it was somebody who works at the airport.

  106. davidk

    @ jimmy you’re quite right of course but I’m sick of businesses, media and pollies playing duplicitous games while the planet burns. Surely there are more important things to worry about.

  107. Jimmy

    Geewizz – I’ll ask again, do you know who cut them? And if it was th unions why did they report the issue to Qantas?

  108. GeeWizz

    [“Wow, a single alleged incident that’s still under investigation is enough to brand unions, generally, “a safety and security risk”?”]

    Someone purposely cutting electrical wires on a passenger aircraft is something everyone should be taking seriously.

    It’s tantamount to terrorism.

    Lucky someone spotted it and it was only the inflight system wires cut, could have ended up being much much serious.

  109. davidk

    @ connorj The Left looks to the whole while the Right looks to the self. Easy really.

  110. Jimmy

    Cpobke – Great points and I completely agree.

  111. Jimmy

    Davidk – The truth is such an odd thing, I believe Joyce is telling the truth when he says he told the Govt he might have to ground the fleet, but I believe he said it in a way that put emphasis on the “might” and conveyed that it would be a long way into the future.

    I also believe that when speaking to Abbott and Hockey he might fo put more emphasis on the “ground the fleet” which gave them a more realisitic picture of his intentions.

    This allows him to say he told the govt and the opposition to to claim they didn’t know for sure and still be telling “the truth” but also lying through their teeth.

  112. cpobke

    Great discussion around the relationship between unions, business and workers/consumers. I don’t quite follow some of the supporting stats though.
    Figure 5 and the text around it appears to suggests that some kind of expropriation has taken place (robber barons impoverish workers by taking their share). However, real wages (or rather real Compensation Of Employees) have grown greatly over this period. Gross Operating Surplus has grown faster, leading to a rise in profit share. Much of these gains have also been distributed to workers through their ownership in these companies in the form of shares (i.e super).
    The article also implies that there is a ‘right’ profit share and that it is too high in Australia. This may be true, by the grounds for determining what share is appropriate is not straightforward, and interventions to change the share would influence the growth (and possibly level) of total factor returns. Few would support a higher wage share if it meant lower actual wages.
    Incidently, the share of wages was highest (and profit share lowest) in the late 1970s. Dissatisfaction with the macroeconomics performance of this period (real wage growth, inflation, unemployment) was impetus for the ‘liberal economic reform project’.

  113. ace ventura

    oh i get it. anyway, according to the age:

    “There was no operational safety risk at any stage,” the Qantas statement said.

    http://www.theage.com.au/travel/travel-incidents/afp-investigates-qantas-plane-sabotage-20111102-1muxm.html#ixzz1cWEnIuhG

    so all this “it was because of the wires. and gillard.” is really a moot point. except for the gillard part, it’s still her fault.

  114. SBH

    Neutered – so that would be why the major corporates are happy to let pope Joe run ‘Australia’s largest union’.

  115. ConnorJ

    I love that spike in business profits at around about ’08 mark, around about the time workers seemed to be taking a hit to keep business profitable during the GFC crisis. Once again workers are left to eat a big pile of shit with no real reward for their efforts.

  116. davidk

    I don’t trust Joyce to tell the truth.

  117. Jimmy

    I mean Qantas has come out and accused the unions of sabotaging the planes and forcing them to ground the whole fleet for safety reasons. If this is the case then they believe that the unions would have no trouble k*ll*ng a whole plane load of innocent people.

  118. ace ventura

    i must be a bit slow, would you care to me what you mean?

  119. Jimmy

    Ace & David – Would you really want to work for someone who believes you could commit mass murder to prove a point? Not to mention telling the media of that belief!!

  120. davidk

    It has long bewildered me why businesses which rely on staff to serve the cutomers and make profits for the company seem to go out of their way to piss said staff off. Counterproductive surely and another sign of poor mansgement skills. Weird!

  121. ace ventura

    sorry, add to that discovered one week prior to the grounding?

  122. ace ventura

    grounding a whole fleet on 3 hours notice because of apparent cut wires in an entertainment unit on one plane. rational decision making that….uh huh. i’d say that sound even worse in some respects.

  123. Maninmelbourne

    Great article.

  124. Dogs breakfast

    As others have said, troll guy, the engineers who found the cut wires would have been unionists, it’s fair to assume. At least they are represented in this by a union.

    Cut wires on an entertainment unit do not constitute a health and safety threat. Do we need to explain that to you geewhiz. I can go into some detail if you like.

    Is that the best troll feed that Qantas management can come up with? That is was justified to ground the airplanes because disgruntled staff constituted a health and safety risk?

    I have seen Health and Safety laws used in spurious circumstances before, and the unions are usually the chief protagonists, but hiding behind that fig leaf to shut down your operations requires a substantial leap of imagination.

    Good article Bernard, yes there is a connection between the occupy movement and the Qantas debacle, even if Joyce and his 71% pay rise haven’t worked it out yet.

  125. chris.white1@internode.on.net

    Bernard again makes telling points. As a former union official I not only have argued against the severe repression of the right to strike by corporations from Howard in WorkChoices and retained by Gillard in Fair Work Australia, but also I urge reviving the strike weapon here http://chriswhiteonline.org/2011/10/on-strikes-and-their-revival/

    The employer lock-out weapon ought not to be allowed in the Fair Work Act.
    The lock-out should be banned to allow some fairness and balance for emploees against the more powerful corporations in our collective bargaining system.

    

Qantas is a case study. The lockout with no notice in response to the limited and responsible protected action by the members of the three Qantas unions should in the public interest be unlawful. 

http://chriswhiteonline.org/2011/10/the-lock-out-to-go/

  126. Michael

    @Bernardo

    Man you’re unbelievable. 2011 and still fighting the revolution. Guess that’s what gives dryed up baby boomers like you some meaning to the last years of your miserable, hash riddled lives. So uncool. So passė. So predictable.
    By the way, is Crikey a union workshop? But you it’s not, Beecher is way too competent for that. So how do you negotiate your coin or are you paid by barter?

  127. Jimmy

    RT – If we look at Australia’ recent history (last 30 years or so) in IR we will see that in the late 70’s early 80’s unions probably had too much power and during the Hawke and Keating years the balance was moved more towards the middle. More recently Howard and big business tried to move the power too much towards the corporations and the unions were able to get this over turned and the power is now back towards the middle. Over this time we have had a sustained period of continuos economic growth, a sustained period of low unemployment, a sustained period of low inflation, real wages growth and an improvemtn in the GINI coefficient (that measures wealth distribution) to a point where we a among the best in the world.

    If you compare this with the US where Reagan smashed the Unions in the early 80’s and the now have about 8% representation you will see that we appear to have a good balance of union and corporate power benefitting everyone.

    Plus we need those corporations to make money to fund our super.

  128. R T

    I am new to Crikey but I am guessing that Geewizz is a troll so – enough said.

    This is an excellent piece Bernard. Thank you and I agree that the unions are not engaging well enough the ‘collective’ view and voice and thus allowing corporations to do what they do well, lobby the individual. Divided we fall and they know it!

    Ruth Townsend

  129. ace ventura

    if julia gillard didn’t cut the wires herself i bet she knows who did or even ordered it. even if thats not the case she should have done something to stop it happening in the first place just another labor stuff up!

  130. CTar1

    The problems with the 767’s entertainment wiring could have been done by anyone – just like the Alan Joyce ‘death threats’.

    What are ‘the Combination Acts’ ? (A spell check ‘problem’ on the Harvester case?)

  131. SonofMogh

    Is it just me or does Geewiz sound just like Truthie.

  132. Jimmy

    Geewizz – “Looks like Qantas are vindicated as grounding all aircraft as a safety measure after announcing the lock-out.” Do you know who cut the wires? And the cut wires were to in flight entertainment, hardly a safety risk. Also remember that it was the engineers who reported the damaged wires to Qantas.

    The one point I will make is that Australia, unlike the US still has had real wage growth over the past 30 years, in no small part due to union representation.

  133. fredex

    Excellent article Bernard.

  134. Mel Campbell

    Wow, a single alleged incident that’s still under investigation is enough to brand unions, generally, “a safety and security risk”?

    Probably better to view ‘safety’ as a canard that both sides of the dispute are attempting to harness, as clearly nobody wants planes dropping out of the sky.

    What I liked about Bernard’s story was that it pulls back to examine the bigger picture.

  135. GeeWizz

    www .smh.com.au/travel/travel-incidents/afp-investigates-qantas-plane-sabotage-20111102-1muxm.html

    [“The Australian Federal Police are looking into an act of alleged sabotage involving a Qantas plane.

    The plane was undergoing maintenance in Brisbane when the alleged incident occurred last week, before Qantas grounded its entire fleet on Saturday during an industrial dispute.

    It is understood that after engineers returned from a lunch break, they noticed several wires had been cut on an in-flight entertainment system, The West Australian reported this morning.

    Read more: http://www.smh.com.au/travel/travel-incidents/afp-investigates-qantas-plane-sabotage-20111102-1muxm.html#ixzz1cVfuQM7e
    “]

    Looks like Qantas are vindicated as grounding all aircraft as a safety measure after announcing the lock-out.

    The unions are a safety and security risk.

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