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John Hyde, The Australian, November 22, 1996, p. 15.

If we are really serious about reducing unemployment, we must go further with labour reforms

Even without allowing for discouraged workers and the fiddles that keep people without real jobs out of the statistics for the officially unemployed, official unemployment exceeds 8 per cent and youth unemployment is far higher.

Where, then, are the jobs? Our son, who is typical of other farmers, crops twice the area for four times the gross yield that we achieved by employing less than half the hired labour and incurring machinery costs that frighten me. During seeding and harvest, also typically, he works about an 18-hour day. Our builder-renovator mostly works alone and his subbies often do.

There are 10 small businesses in town, but only one employs someone other than family. How long since anyone has seen “youth wanted” in a shop window or listened to a 16-year-old boast of the indispensable services he renders his employer?

How long since you contemplated offering someone a few days work to help him on his way and tidy up the place a bit? The paperwork alone kills that useful practice. I have lost count of the times I have been told by tradesmen that apprentices are too expensive and too much hassle.

Unless the Houses of Representatives Standing Committee on the Causes of Unemployment addresses the reluctance to employ, it should be seen as a smokescreen hiding the failure of both sides of politics to undertake meaningful labour market reform.

It would be dishonest not to acknowledge that there is more to employment than a shortage of jobs. It should not, for instance, be necessary to recruit from New Zealand for seasonal jobs in the West Australian wheat belt. Nevertheless, it is also the case that many small businesses are not expanding or are incurring considerable expense in the form of interest and depreciation merely to avoid employing.

Potential employers are scared. Take an admittedly extreme unemployment nightmare. A West Australian farmer was prosecuted by a government agency on the grounds that he had not adequately supervised an employee who was killed. Safe workplaces are obviously desirable, but potential employers are led by the episode to say “there but for the grace of God go I” and to raise the level of profit that they are prepared to forego in order to avoid similar risks. Ironically, another farmer was soon to discover that being accident-prone does not constitute a sufficient ground for dismissal.

The tendency of Parliament and courts, irrespective of the wishes of the parties involved, to load responsibility for health and safety on to employers is subject to that law of unintended consequences that plagues all regulation.

Most obviously, it is usually safer to work with a buddy, but the law discourages employing one. Bob Day of Homestead Homes, in evidence before the committee, identified another unintended consequence. He tendered a graph showing that the proportion of all suicides among 20 to 24 year-old males and the proportion of all unemployment among the same age group had risen in lock-step from 1968 to 1990.

While correlation does not necessarily identify the cause of a phenomenon such as suicide, it is strong circumstantial evidence when the assumption of cause and effect accords with commonsense and is supported by anecdote.

As Day observed, “employment is nature’s physician”. It may be, therefore, that inappropriate health and safety obligations cost more lives than they save. They are certainly the cause of much unhappiness.

Occupational health and safety is, moreover, only one area of government intervention making mutually beneficial employment too difficult. Anyone contemplating taking on an employee is required by law to concern himself with sexual harrassment and discrimination, either to or by his employees; pay as you go taxation; and, if he is a big enough employer, with equal opportunity legislation and payroll tax.

The unknowably complex regulations that set out to prevent the exploitation of employee by employer by regulating the employment agreement are, however, the greatest barrier to employment. Of course, much of this excessive regulation is disobeyed. To abide by it is impossible, but the necessity of going outside the law further adds to the risk, and hence cost, of employing.


The other night, as I was somewhat ineffectually struggling with a tarpaulin in the rain, it struck me that the farmhand who, well after his day’s work, was pulling on the next rope was, in terms of the rules governing hours in employment, about as exploited as anyone was likely to be.

Nevertheless, he seemed about as cheerful as the rain and the dark would allow. Moreover, he was a volunteer then, and during the daytime, night time, ordinary time, overtime or any time. That is, he can quit at will. To the extent that another employer’s costs are increased by government regulation, his opportunity to move on is restricted and it suits us to stay ahead of what others can offer even though we, too, are limited by imposed costs of doubtful worth.

Such an experienced and competent hand will always find work, if at much lower remuneration than in a deregulated market. Unemployment is caused, however, when the same rules are applied to the inexperienced and incompetent.

When building industry apprentices received about 15 per cent of the adult wage and add on costs were few, apprenticeship was common and those apprentices are today’s builders and tradesmen. But when a first-year apprentice plumber costs $301 per week and a second-year apprentice $420, the equivalent lads are unemployed. With the opportunity to acquire skills goes the expectation of the stable sufficient income to raise a family.

When John Howard promised that no one would be made worse off by his labour market reform, he denied Australians the rapid improvement in employment enjoyed by New Zealanders. When Peter Reith struck a deal with Cheryl Kernot to preserve the monopoly power of trade unions, he went far towards preventing improvement even in the long term.

I know it is easy for a former politician to talk tough, but wasn’t labour market reform the issue on which to risk a double dissolution?