Last week on ABC’s Four Corners, Matthew Carney produced a program entitled “Steel city hammered again by recession”.

It was about the unemployment pain of people in regional Australia being hit by the current recession. It showed double-digit unemployment rates in many parts of the country. It focused on the industrial complex of Port Kembla in order to gauge economic activity – but there was none. Bluescope, Australia’s largest producer of steel, wasn’t shipping any. Worldwide demand has slumped and the workers are being laid off. One, a man named Gary, had worked hard all his life. He had never been on the dole, and at the age of 54 he was about to lose his house. But the real cost of unemployment was the erosion of pride and self-esteem – the destruction of the human spirit.

The boom bypassed Wollongong so there is little reserve to call on. This recession is going to add more to the ranks of the unemployed. In the 1980s the steel industry lost about half of its workforce and the Wollongong area never really recovered from those massive job losses.

The local economy just cannot generate the jobs. Youth unemployment is a staggering 40 per cent – one of the highest rates in Australia. One million Australians are expected to be out of work by the end of this year. If Swine flu was spreading across Australia, crippling and devastating a million individuals and families, a national emergency would be declared. Instead we seem to be resigned to accepting this social disaster.

Since the 1970s, unemployment has risen in bounds with each economic downturn much more rapidly than it falls in the recovery which follows. In 1996, there were more than 750,000 people still without a job, even after four years of economic recovery. Almost as many people again were under-employed. That is, part-timers who would prefer more hours of paid work and who could not find it, or people who have given up looking for a job.

These days the current recession has increased unemployment, has cut overtime, closed a large number of small businesses (I have been counting the numbers of shops, offices in my areas that close each month. Shopping malls and strip shops are suffering the most.) Work is less secure, and more demanding. Almost one in every four jobs is casual – a 50% increase on the proportion a decade ago. Those with full-time jobs are working longer hours. Every week, almost half of all full-time employees work overtime and more than a third of this is unpaid. Almost 60% of employees feel they have to work harder now than 12 months ago.

As a result our nation is divided into the haves and the have nots, largely depending on whether people have work or not. Currently one in nine Australians lives in poverty, including more than 630,000 children. More than 1.15 million families have no adult employed. The salary gap between the working poor and rich is increasing.

We are also faced with a shrinking work life. Fewer men work until traditional retirement age. In 1966, some 90% of 55-to 59-year-old men were employed, and 80% of 60-to 65-year-olds. By 1992 this had dropped to 67% and 41% respectively. Now there are five million people over the age of 45 years with 53% retired even though we have abolished a compulsory retirement age. Two out of three men retire before reaching 65 years, half because of ill-health and 16% because their jobs have been abolished. Unemployment for men over 45 years of age is the main reason for retirement and the rate of such retirements has doubled in the last three years.

At the other end of the age scale, there has also been a collapse of the teenage full-time job market. But the proportion of married women in the workforce has risen by about 60% in the past 25 years. Getting a job these days is more difficult. A person unemployed for less than three months has more than twice the chance of finding a job than the person unemployed for between one and two years, and four times the chance of someone unemployed for two years or more.

Lateral Thinking: after a life time spent in helping people find work through running programs in employment education, skill enhancement and job placement which have resulted in hundreds of thousands of people being placed into full time real jobs, I am convinced we need some lateral thinking applied to the issue of unemployment in times of recession.

Today’s business climate, as defined by future thinkers such as Charles Handy, William Bridges, Stephen Covey and Peter Senge, is different. Today we view organisations as something different from machines. We view them as communities of people, information and talent. With the arrival of the information age, the ease of remote communication, the move towards at-home work, and the remarkable mobility of executives who spend lots of time in travel, we may be starting to see the emergence of “virtual organisations”.

How do you manage people you can’t see because they are working at home? How, in a much flatter organisation, do you manage vast numbers of people with whom you can only have minimal regular contact? How do you manage an organisation whose products and services change rapidly to meet the increasingly demanding standards of consumers, all of whom want an individual product or service to be delivered rather than a mass-produced one? How do you lead an organisation where jobs, in the traditional sense, no longer exist?

Rather, people do things in organisations in projects, exercising their knowledge and talent for specific projects and moving on to the next one. These were the issues I faced when responsible for the employment, financing and deployment of 4,600 staff.

The old idea of “the job” which was needed to handle a pile of work is no longer relevant in the information age where the work is not physical but knowledge based. Moreover you don’t need to be in the same place at the same time to do the same job.

More than one in ten Australians in the paid workforce (nearly one million people are employed at home), and another 21% put in some hours at home, either in their main job or in a second job.

The capitalist free enterprise system has done wonders for world prosperity. It has raised living standards, produced great technological advances, improved quality of life and made it possible for governments to provide social programmes and community services. But it has also produced massive unemployment which has been voted as the issue of greatest concern to the Australian public.

This is the ugly face of capitalism. There is something fundamentally wrong with a system which says everything is OK, so long as people are making good incomes and companies are making good profit to delight shareholders. We stopped producing goods and imported what we need and made our profits by shuffling money with greater and greater risk which eventually leads to crashes, company failures and high unemployment. The consequences are poverty, crime, sickness, family breakdown, suicide and anti-social behaviour. Economic growth does not solve the problem.

Because growth that will solve unemployment lies in labour-intensive businesses which we have moved off-shore. Our cost structure makes them non-competitive. Our annual leave, annual leave loading, long service leave, Superannuation Guarantee Levy, training levy, plus payroll tax, sales tax, land tax, wholesale tax – all necessary to provide our free health, free education, welfare, crime prevention etc., make the load (as compared with overseas operations) too heavy to bear. Governments must lift some of the tax burden off employers.

Australian manufacturing has made great progress in recent years. Manufacturing exports have grown by about 20% a year for the last 6 years. How? By increasing production with fewer workers. Greater efficiency while leading to great profitability also means less employment. The aim was to become internationally competitive. The result? Look at some interesting figures to tell what has happened. The number of man-hours to produce a batch of Dulux paint has been reduced from 120 to 40. The Coal industry exports are up 2.67 times with the same workforce. The Electricity industry output is up 34% with 17% fewer staff. The Port Kembla coal loader loaded 75% more with 45% fewer staff. It is the same story with Telstra, BHP Biliton, the banks, the AMP, the airlines, coastal shipping and government enterprises. Our farmers have become the most efficient by tonnes produced compared with any country in the world. These are beautiful figures for companies, for industries and for the country; but ugly figures for the unemployed.

Now is the time for all Governments to invest in infrastructure that will produce economic benefit by producing goods. The stimulus packages of Kevin Rudd only serve to encourage people to spend on unnecessary consumer items, mostly made overseas to whence all profits return, or else the dollars are simply banked by prudent people. Result? No production and therefore no jobs.

The Governments’ policy is aimed at encouraging high-tech, internationally competitive, low-labour content industries in Australia, and for labour-intensive industries to move offshore. These are the reasons why economic growth will not solve the unemployment problem. Economic growth on this basis will only increase unemployment!

Over the last 20 years economic growth outpaced population growth to create one and a quarter million more jobs than there were workers available. But productivity gains eliminated two and a quarter million jobs. Thus economic growth plus productivity gains caused us to have a shortage of 1 million jobs i.e. 1 million unemployed.

Looking to the future – if the stress on international competitiveness causes productivity to rise by 1% a year more than in the past 20 years – a not unreasonable assumption in the light of the figures I have quoted – unemployment in the year 2012 will be 2 million.

This requires new ideas on work practises. Can something be done about it? I believe there can. But the answer is not job-training schemes for jobs that don’t exist, or staying at school longer, or making social welfare recipients do community service. These don’t tackle the problem. They only make the figures look better.

Obviously if there is not enough work to employ everybody, we will have unemployment unless the available work is spread around through shorter hours, job sharing, or more part-time work. Last year, despite the recession, full-time workers worked 2.2 hours per week more than 10 years ago. This alone accounted for 386,000 of our unemployed, and cost $3 billion annually in unemployment benefits. Had they worked 2.2 hours less there would have been no unemployment problem.

It seems odd that when we have an economic boom we simply solve the problem by working overtime. Yet if we have a recession, we sack. I am a believer in “Overtime for booms, undertime for recessions”. This spreads the burden over all workers, rather than making a 2-class society – employed and unemployed.

In a society which says married women have a right to work, youth have a right to work, immigrants have a right to work, men have a right to work without a retiring age, there is no other fair solution than to spread the available work around.

Unless such a novel, anti-unemployment policy is adopted, the spectre of unemployment with all its evils will continue to haunt us. However, work-spreading will not be achieved in a free-enterprise economy unless financial incentives are provided which make it worthwhile for employers to spread the work around. This is where the tax system can be used as a tool of social policy.

There are many possibilities. A company’s tax rate could be reduced progressively as its undertime per employee increases. Or the company tax rate may be made to vary with the average hours worked per employee. Plus enterprise agreements to allow lower pay rates, if necessary, to cut costs in a recession.

This is a long term incentive which would need to be supplemented with a more immediate proposal, such as paying the employer (by deduction from PAYE instalments) for 6 months (say) the unemployment benefit at the single rate, in respect of all employees he employs who are now receiving unemployment benefits, and provided the employer’s number of PAYE employees increases by this number or more.

As a result the tax cost to government would be more than covered by the saving in unemployment benefits and the extra income tax. Working undertime in a recession would be encouraged rather than sackings. The unemployed would have a special value to all employers and would have a chance to show their worth. New firms could get established, and established firms expanded, at low cost.

Something can be done about unemployment, but it involves some lateral thinking. Some leadership is needed and would be greatly welcomed.

The nation’s unemployment rate is the single most potent generator of family poverty. Unemployment is killing people. In the past I have started training programs for thousands of people in typing, word processing, computer skills, spreadsheets, restaurant service, furniture removals, furniture manufacture, pharmaceutical packaging, industrial cleaning, garden landscaping, tyre fitting, fashion sewing, carpet laying, printing and so on. To complement this, I was also responsible for starting English language and literacy courses, Job Clubs, and 40 plus Employment Programs for older unemployed people. The aim was to get the long-term unemployed back into jobs.

Now is the same. We don’t want more band-aids. We want more jobs!

Rev The Hon. Dr Gordon Moyes, A.C., M.L.C.

Tuesday, 5th May, 2009, 3:20 pm | Editorials