NUMMI - or what General Motors learnt from Toyota and then took too long to implement

This American Life had an interesting two part audio series on the General Motors Fremont plant in California. This was General Motor's worst plant. Then as part of a joint venture with Toyota the work force was sent to Japan to learn how to make Toyota cars. The plant turned around so much that in the end the cars they were making exceeded the quality of Japanese cars.

NUMMI

NUMII (2015 update)

Media treatment of industrial action

In A Different Strike Story Victoria Rollison compares how the media reported and framed a strike by Fairfax journalists and strikes by employees of other organisation.

When reporting on industrial action the media usually frames the unions as being the villains and the customers and employees the victims.

By contrast:

So, how are the journalists framed in the story? Are they villains for disrupting newspaper consumers? Nope. Are they framed as villains for disrupting the profit-making venture they work for and for hurting the company’s capacity to keep other staff employed, thereby threatening more job losses? Nope. They are framed as the victims. The victims of the job cuts. The victims of terrible business decisions. The victims of a workplace dispute which has led them, unhappily, to have to strike to have their (incidentally, already very powerful) voices heard. And better than that – they are also framed as the heroes, for standing up for their rights, for not letting the company get away with doing something wrong, for, yes, you guessed it, showing the brave, respected characteristic of solidarity.

Higher minimum wages may be better for the economy

In Australian business gets a good deal from the minimum wage Damian Oliver and John Buchanan show why the minimum wage can be good for business.

These are precisely the factors that the Fair Work Commission takes into account each year in its minimum wage case and they are the reasons why the latest increase is entirely justifiable on economic as well as social grounds. Far from being ashamed or embarrassed by our wage rates, Australians should be proud of our minimum wage and the institution we as a nation have nurtured for over a century.

There's been no wages blowout, but maybe a coming wages collapse

Greg Jericho in I'd wager our earnings aren't too high observes that not only haven't we had a wages blowout over the last decade, what we should really be concerned about is a decline in real wages and an increase in inequality over the next decade.

Could higher unemployment be helping corporate profits?

Paul Krugman in The Fear Economy writes:

The economic recovery has, as I said, been weak and inadequate, but all the burden of that weakness is being borne by workers. Corporate profits plunged during the financial crisis, but quickly bounced back, and they continued to soar. Indeed, at this point, after-tax profits are more than 60 percent higher than they were in 2007, before the recession began. We don’t know how much of this profit surge can be explained by the fear factor — the ability to squeeze workers who know that they have no place to go. But it must be at least part of the explanation. In fact, it’s possible (although by no means certain) that corporate interests are actually doing better in a somewhat depressed economy than they would if we had full employment.

What’s more, I don’t think it’s too much of a stretch to suggest that this reality helps explain why our political system has turned its backs on the unemployed. No, I don’t believe that there’s a secret cabal of C.E.O.’s plotting to keep the economy weak. But I do think that a major reason why reducing unemployment isn’t a political priority is that the economy may be lousy for workers, but corporate America is doing just fine. 

And

Weak labor markets are a main reason workers are losing ground, and the excessive power of corporations and the wealthy is a main reason we aren’t doing anything about jobs.

Too many Americans currently live in a climate of economic fear. There are many steps that we can take to end that state of affairs, but the most important is to put jobs back on the agenda.

Sexual inequality in the workplace

Jessica Irvine in Canberra's sex wars are underpinned by real sexual inequality in Aussie workplaces exposes some dreadful statistics highlighting discrimination in the work place:

5 : The number of female chief executives of Australia's top 200 companies listed on the stock exchange, or 2.5 per cent.

14.6 : Percentage of women on ASX 200 boards.

55 : Number of ASX 200 companies without a single woman on their board.

29 : Percentage of women in Parliament.

37 : Female members of the House of Representatives, out of 150 members.

29 : Female members of the Senate, out of 76 members.

$19.50 : Entry-level zookeeper hourly pay.

$15.90 : Entry-level personal carer or support worker hourly pay for providing care to our elderly on award wage.

17.5 : The percentage gender pay gap today between male and female full-time earnings, up from 15.9 per cent in 1994.

Australia's flexible labour market

Ross Gittins explains why Australia needs, and has, a "flexible labour market":

IF YOU listen to business, we still have big problems with the labour market. John Howard deregulated it, but then Julia Gillard reregulated it, and now we can't do a thing with it.

The business people are right to this extent: with an economy under so many pressures for change - the rise of the emerging market economies and the resources boom it has produced, the digital revolution, the return of the prudent consumer, and more - we do need a labour market that's ''flexible''.

But what exactly does flexibility mean? Well, not what some bad employers think: unilateral freedom to change their staff's working arrangements without recompense or consultation. That's one-sided flexibility.

No, what flexibility should mean is the ability of the labour market to adjust to shocks that hit the economy without generating excessive inflation or unemployment. There is some, but it doesn't linger for years. Another word for it is ''resilience'', the ability to take a punch, then bounce back. So how are we doing there? A lot better than business would have you believe.

Australia's wage breakout...

... isn't happening, at least according to the facts (readers of The Australian and the Australian Financial Review are advised to check out Grog's Gamut's excellent post on the subject - as usual it also has graphs).

Calls for legal right to flexible hours for carers

Mischa Schubert in Legal right to flexible hours wins backing writes about moves to allow parents and carers greater rights to flexible work hours. She writes:

But employer advocates are strongly resisting the idea, saying the current unenforceable right to ask for flexibility — which only applies to the parents of children who are disabled or preschool — goes far enough. And some carer advocates who welcome the move have voiced fears it could result in businesses being more reluctant to hire carers, a notion disputed by workplace academics.

She also notes that:

An inquiry into the draft legislation has heard evidence from workplace law experts that stronger laws for carers are working well in Germany, the Netherlands and Britain.

But the Australian Industry Group said business was under enough pressure at the moment, and that most already tried to accommodate their workers. It testified that if workers could appeal to an industrial umpire when they were refused a request for flexible hours, it would stoke adversarial tension.

"It changes the notion and the intent; instead of it being an open dialogue, it turns into an us-versus-them situation, which sometimes can be problematic," Ai Group workplace relations adviser Genevieve Vaccaro told the hearing.

So, when business groups call for greater flexibility it sounds as if they just mean greater flexibility for the employer, not the employee.

Oh, and I note the perennial argument of now not being the right time (in this case "business was under enough pressure at the moment"). If we any credence to this argument we'll never get anything done. Business should always be under pressure in a competitive environment (and how outside the ranks of our corporate executives doesn't want a competitive environment).

Comparing US and Australian jobs data

Stephen Koukoulas in A Striking Contrast: Australian and US Jobs Data compares jobs data from the USA and Australia:

In the latest data released Friday, the US labour force was 154.707 million people and of those, were 8.2% or 12.673 million people were unemployed.  The workforce participation rate was 63.8%.

Australia has a labour force of 12.076 million people, the unemployment rate is 5.2% or 632,000 people and the workforce participation rate is 65.2%.

He notes that:

If the US had Australia’s participation and unemployment rates; there would be an extra 3.47 million people in the labour force: the number of people unemployed would be 4.45 million people lower and the level of employment would be around 7.9 million people higher.

He goes on:

There are many issues that fall out from this contrast.  Here are a few.

Most importantly is the importance of economic growth.  Keep growing the economy and employment will remain resilient.  The stimulus during the GFC in Australia worked a treat, it kept the economy growing and supported employment.

Also important is a smashing of the notion of the benefits of US style labour market flexibility.  To be sure, the US labour market has more flexibility than in Australia,  much more, but look at the cost.  Flexibility to sack people and cut wages delivers flexibility to default on mortgages, to stop spending and to undermine productivity.  There is also a paper in the offing for those wanting to look at the “dreadfully inefficient, high cost” German workforce and compare it with the US at the moment.

A few more interesting links on the economy

In All hail mighty Aussie dollar, as it's here to stay Ross Gittins looks at why the Australian dollar is likely to remain high, and the benefits it brings us.

Stephen Koukoulas wrotes of Terry McCrann's Glowing Endorsement of the Gillard Government.

Peter Martin in Stimulus programs work. We need them ready - Access reports that Chris Richardson of Deloitte Access to ignore talk back radio and not be afraid to stimulate the economy if the European debt crisis causes a GFC mark II. To quote from the article:

“Australia’s fiscal stimulus last time was a striking success,” he writes. “It simply wasn't seen as that in the court of public opinion. That gap between reality and perception threatens a poor reaction by the punters if a new stimulus is needed in 2012.”

Access says its central scenario is that Europe's leaders “muddle through in a way that doesn’t stop Europe having a recession, but does avoid a deep recession and bank failures.”

But it says the risk is “almost as high” that Europe could ‘blow’ sparking bank busts and a new global financial crisis.

If that happens Australia should abandon its commitment to a small budget surplus in 2012-13 and instead embrace a “huge” budget deficit.

“We should be willing to do what worked last time,” he told The Age. “We shouldn’t let talkback radio decide what worked and what did not.”

The cash handouts worked very well... The school building programs worked less well, but not for the reason many people think.

“The problem wasn’t waste. The real waste occurs in a recession when people lose their jobs. Someone who is out of work for two years might not ever return to the workforce. That’s waste. The problem with the Building the Education Revolution program was it took too long. It was stimulating the economy beyond the point it was needed. Speed is essential.”

I would also argue that the great thing about the cash handouts was the speed they could be given. It's why I think cash handouts were a much more effective stimulus measure than tax cuts would have been. Peter Martin also quotes Chris Richardson as saying:

“First home owner programs are the crack cocaine of fiscal stimulus. They usually work a treat. But they make young couples spend too much on their first home, making their lives miserable down the track.”

This is something I would agree with. I think first home owner grants, especially on existing housing stock, only lead to an inflated property sector.

Stephen Koukoulas in February - Bash-A-Bank Month is reporting that if the Reserve Bank doesn't reduce interest rates next month then the banks will probably need to increase rates because of higher funding costs. If the Reserve does drop official rates the banks are unlikely to pass on the full cut. He argues that the Reserve is well aware of this and will likely reduce rates for this very reason.

Stephen Koukoulas is also reporting that Inflation is a Dead Duck.

In George Calombaris – would you like penalty rates with that? Matt Cowgill puts the blow torch to George Calomabris' claims that Sunday penalty rates are making it uneconomical to open his restaurants on a Sunday.

Graeme Orr and industrial action

Associate Professor Graeme Orr has written Whatever you might have heard, industrial action is in decline. Here's an excerpt:

Industrial action in Australia is rare, by both historical and developed world standards. Take the last financial year. 166,000 working days were lost to industrial action, whether strikes by employees or lockouts by employers.

Is that a lot or a little? Let's picture it in absolute terms. Imagine sitting outside a factory gate for a whole year. In an employed workforce of over 9.5 million, last year’s level of action equates to seeing just one employee in every 57 emerge, for just one day of the year, to miss work. Industrial action in Australia remains near record lows. To picture it in historically relative terms, consider the graph below, which I compiled from Australian Bureau of Statistics figures.

Fair Work Act may assist employers implement structural change

Paul Barry in Gillard's IR test: first Qantas, now the nurses union writes that the Fair Work Act might be tougher on unions than many people think.

According to Ron McCallum, Professor of Industrial Law at Sydney University, "Fair Work Australia will not arbitrate over how you should run your business."

This makes compulsory arbitration an attractive outcome for employers—so attractive that Qantas was prepared to lock out its workforce and ground its entire fleet to ensure it got there. "The reason why Qantas shut down the airline," says McCallum, "was that Joyce's advisers at Freehills would have told him that arbitration would bring an end to the industrial action but would not stop the strategy to shift jobs offshore."

The article then looks at how the Baillieu Government may be trying to "goad" the nurses into industrial action so it can seek compulsory arbitration and so get through cost cutting measures that would not be achievable through negotiation.

Industrial Relations Regulation

In Shouting slogans will not further Fair Work debate Ross Gittins looks at whether industrial relations is more or less regulated since the change from Work Choices to the Fair Work Act. He also discusses the balance between worker and employees. Here's a sample:

Here's the point: the labour market has always been highly regulated. It remained highly regulated under Work Choices and it's still highly regulated under Fair Work. It's always likely to stay highly regulated for a simple reason: unlike all other markets, the labour market deals with human beings rather than the exchange of inanimate objects.

As a matter of politics, common humanity and common sense, the treatment of people in the labour market will always be carefully regulated. We are, after all, running the economy for the benefit of people.

What changes from time to time is not so much the degree of regulation as the objectives of that regulation. There's a fundamental imbalance of bargaining power between an individual worker and even the smallest employer.

So the main issue the regulation deals with is what should be done about that imbalance. The usual answer - the world over - is to permit workers to bargain collectively.

The right to manage

One of the frequent comments made after the recent Qantas dispute was that employers manage an enterprise, not employees. I think this is bullshit and I had hoped this sort of ideology had disappeared over the last decade.

Everyone who works for a company is an employee. Companies, or more specifically their management, who take the view that it's the role of management to manage and employees to do as they're told are probably not going to maximise returns to their shareholders. Organisations work best when there's a cooperative approach, not a culture of mistrust.

George Megalogenis makes the comment in That stale old 70s IR debate again that:

Herein lies the rub of globalisation. If Australia wants to remain on the right side of history, labour and capital have to continue to co-operate as they did during the GFC.

Edit 21/11: Ross Gittens notes that Change is worker's only certainty and looks at how structural change generally makes us all better off. However, such changes may be quite disruptive to some people:

The trouble with structural change, of course, is that the benefits go to the customers - new products, wider choice, lower prices - while all the problems go to the people working in the disrupted industries.

He then looks at Qantas. Qantas is being forced by the market to undertake radical changes. However, the costs of these changes are being resisted by it's employees:

Half the trouble at Qantas is the employees' failure to recognise how the game has changed for their company, robbing them of their former bargaining power. The other half is the arrogance of management in their resort to ''managerial prerogative'', in their failure to explain and debate the new realities with their staff.

It's painfully clear management-employee relations within Qantas are utterly poisonous. The blame for that should be shared equally. The fate of Qantas is important in its own right, but it's more important as a case study in how big, unionised companies cope with structural change.