Page 1546 - Week 06 - Tuesday, 18 May 1993
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There are four factors, in my view, that are making unemployment an impossible problem to solve by using the economists' fiscal and monetary solutions: The move to an economy open to the world; technology; the participation rate in the work force; and the quality of products. Let us take them one at a time. If we are to have a high standard of living we must take part in the world economy, where countries and enterprises specialise in manufacturing products and, through the process of competition and volume of production, reduce the price to the consumers. As enterprises compete, they must reduce the cost to be able to offer inexpensive goods. A recent trend is to reduce the number of middle and senior managers in the enterprise. Reducing layers of management usually has little effect on the shop floor, where the productive work is done, but greatly reduces costs. The euphemism "rightsizing" actually means fewer positions. Unemployment increases, especially in the older established firms, where traditional practices have built layers of middle level managers over past decades. Making the choice to stay in business in the face of relentless international competition means ruthless culling of people who are not necessary to meet production goals. Unemployment increases.
Secondly, technology is rapidly displacing people, and Mr Kaine's comments bore that out. When I was a boy in Melbourne, for example, I can remember the farms of the 1950s. I can remember horse-drawn implements and kerosene lamps. My friends would find employment pumping petrol, and as bank tellers, typists, shop assistants and production workers. These days, huge tractors farm large paddocks, and we pump our own petrol, extract what few savings we have from an ATM, use a PC based word processor to type our own letters, shop at supermarkets, and supervise robots to make goods. Technology increases unemployment, or it may. My mother stayed at home and looked after dad and the kids - the kids were not ours, because I was an only child, but the kids of other people. Girlfriends, as some of us remember, worked until they married, resigned, and stayed at home to look after their husbands and children. I asked a friend's two daughters the other day whether they would leave the work force to care for husband and children. I received a very curt "get real" message. With improvements in social equity, more women and disadvantaged people enter the work force, competing for available work. This trend will be encouraged by changing attitudes to child-care and recent improvements to child-care allowances. While the trend to full and equal participation should be applauded, the inevitable outcome from the increased participation rate is that unemployment will increase.
Quality may seem to be a strange factor to bring to the unemployment debate, but I can remember thinking that you had received good value for money if a car lasted 80,000 miles, or 130,000 kilometres, without overhaul. There was a huge industry of mechanics and firms such as Repco supplying this market. Paints peeled and flaked in a few years; washing machines, if they were there, rusted out. These days, consumers scream if their car fails below 200,000 kilometres, paint is expected to last a decade, and washing machines have stainless steel or plastic tubs. The net result is longer lasting goods and a much diminished service industry. The improving quality, therefore, also increases unemployment. The trends are there: Increased international competitiveness, technology expanding, participation rates rising, quality improving. The result is unemployment rates that rise faster than any growing economy can produce new jobs.
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