En Passant

There are some eternal laws of capitalism. 

The rich will always blame the rest of us for the problems of their system. 

Wages are too high they will parrot.

We are only trying to save jobs they will lie.

The Fair Pay Commission decision to freeze Australia’s minimum wage at $14.31 an hour shows this clearly. 

About 1.3 million workers have their wages set through minimum wage adjustments.

This wage freeze is about saving jobs, thundered Ian Harper, head of the Fair Pay Commission.

Yet its own analysis – itself not to be trusted - showed that the impact of last year’s minimum age increase was at best an extra 12,000 unemployed.

Last month 20,000 people lost their jobs.  It wasn’t ‘high’ wages or even minimum wages that caused that.

Increasing unemployment in Australia is a result of the global financial crisis in the United States and its spread like swine flu into productive areas of the world economy.  It is in fact a crisis of profitability.

The Commission argued that it was low paid workers who were most likely to be laid off during recessions.

The figures don’t appear to bear this out.  Here’s what John Buchanan from the Workplace Research Centre at Sydney University told Kerry O’Brien on the 7:30 Report recently:

There’s a slow burn going on. There’s absolutely no doubt that things are worse. We have over 200,000 more unemployed people than we used to have. For the first time compared to a 12-month period we have fewer jobs, actual people in work than we had 12 months ago. So the noose is slowly tightening, that’s the way I characterise it.

120,000 jobs have disappeared over the last 12 months. Buchanan again:

We have broken this down by industry and there’s been a loss of 77,000 jobs in manufacturing in 12 months. There’s been a loss of 50,000 full-time jobs for professional engineers, scientists and managers. Now amongst that latter group there’s been a growth in part-time work of 30,000 offsetting it. If you like, it’s the core of the so-called innovation economy bearing the brunt of the crisis.

But the unemployment figure per se doesn’t tell the whole story.  Here’s what John says:

The Bureau of Statistics has world-class data on this point. They make the simple argument that if you link together the unemployment rate and part timers who want more hours of work, the unemployment rate jumps from around 5.5 per cent to 12, 13 per cent underutilised labour. And that gives you a truer picture of what is going on.

We looked at numbers on this today and we found that there’s the equivalent of 200,000 full-time jobs disappeared in hours of work. We have only seen 100,000 jobs disappear. That means short-time work is being spread across the economy to the tune of 100,000 jobs to share the work around.

Short time work – the under-utilisation of labour – is disguising the real level of unemployment in Australia.  It may well be a stepping stone to job losses in the coming months and years.

If so the Government predicts that unemployment will accelerate to over 8.5 percent or one million workers next year. 

That’s why the Rudd Labor Government may well go to an election early; that and the fact the May budget is likely to be a feast of butchery.

Let’s look a this from another angle. 

Here in Australia the minimum wage is about the equivalent of just under US $11 per hour.  In the US it varies from state to state  but is mainly in the US $6 to $7 range. (In some US states it is as low as $3.)

Unemployment in the US is about to hit ten percent.  Last month over 400000 American workers lost their jobs.

Their lower wages haven’t saved them. That’s because wages aren’t the problem.  Maybe the profit system itself is.
Indeed I wonder if ‘high wage’ developed economies are dealing better with the recession than low wage developed countries?

That is not to adopt keynesianism and the aggregate demand argument, but to perhaps argue that higher wages slow down the capital accumulation process and so slow the impact of the tendency of the rate of profit to fall.

Of course this ignores structural adjustments such as productive capital (or some sections of it) possibly moving to China, the level of productivity of workers in various countries, the ability to further drive down living standards, the degree of integration into the world economy of national economies and the like, and just what are high wage as compared to low wage countries.

Nevertheless radical underconsumptionism might be one response among some sections of the working class to explain the crisis.

While the problem appears to me to be in the field of production, in particular over-production, the solution within the context of capitalist society is similar or at least connects at one point – higher real wages for workers and in the present conditions that can only come about through industrial action.