Labour flexibility key to saving jobs

AS AUSTRALIA haemorrhages jobs in the manufacturing and service sectors, business figures say a more flexible labour market could be key to riding out the storm.

AS AUSTRALIA haemorrhages jobs in the manufacturing and service sectors, business figures say a more flexible labour market could be key to riding out the storm.

Toyota was the latest company to announce job losses, forcing 350 staff at its Altona plant in Victoria to take redundancies.

The managing director of the Australian Foundation Investment Company, Ross Barker, said productivity could be improved by greater flexibility in the labour market.

Its pretty clear in recent years theres been a decline of productivity growth, rather than a continual improvement, Mr Barker said.

That doesnt augur well further down the track when the terms of trade [arent as favourable].

Peter Burn, the director of public policy at the Australian Industry Group, said manufacturers were under an unusual degree of pressure due to the high Australian dollar and were looking to reduce hours rather than lay people off.

The HSBC chief economist, Paul Bloxham, said manufacturing had been in cyclical decline in Australia since the 1950s. Its not possible for Australia, with our high cost base and wages, to compete with countries in Asia, he said.

The minimum wage in Australia is $15.51 per hour, not including compulsory 9 per cent superannuation, compared with the equivalent of $9 in Britain and $7 in the US. In Tokyo, once considered one of the most expensive labour markets, the minium wage is $10.16.

The high dollar has inflated these differences but Australian workers remain among the most expensive to employ in the western world.

Steven Wojtkiw, the chief economist at the Victorian Employers Chamber of Commerce and Industry, said high penalty rates had hurt the tourism and retail sectors which rely on an adaptable workforce.

But Nixon Apple, an economics adviser with the Australian Manufacturing Workers Union, said returning to WorkChoices-style labour laws would backfire. Instead, he said, productivity would be buoyed by more research and development into clean technology, which was a game changer for manufacturing here.

Mr Apple said in the decade to 1996 manufacturing research and development grew by more than 10 per cent a year. Since 1996 it has grown by less than 2 per cent. Over a decade, thats the difference between night and day. If it happens again in the next decade then you can pretty much come close to kissing manufacturing goodbye.

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