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An economy without people

By Ken Wolff

Last week I suggested that modern economic theory has lost sight of people but the reality is now becoming that many segments of the economy require fewer people to undertake the work and that has serious implications not just for the people losing their jobs but for the broader economy.

The loss of jobs is not new. In Australia since the 1970s there has been an ongoing loss of un-skilled jobs, particularly for males. In 2006 Sue Richardson, with the National Institute of Labour Studies at Flinders University, wrote in Unemployment in Australia:

By 2001, at every age, at least 20 per cent of men with no post-school qualification were not in the labour force. These men have not withdrawn from the workforce because they have handsome alternatives that mean they do not have to work … Overwhelmingly, the reason they are not in the labour force is because they cannot find work and have given up looking.

And in 2004 Bob Gregory wrote in Between a Rock and a Hard Place: Economic Policy and the Employment Outlook for Indigenous Australians:

An exceptional feature of the Australian labour market over the last three and a half decades has been the loss of unskilled male full-time jobs. This loss has been so substantial that as a proportion of males 15‒64 years of age one full-time job in four has disappeared. Most of this job loss has fallen upon the unskilled …

At the same time there were skills shortages. In September 2004 the Australian Industry Group reported a shortfall of between 18,000 and 21,000 in the manufacturing sector for skilled tradespersons.

And a shift in the make-up of the workforce was already occurring. In 2006, the then Department of Employment and Workplace Relations (DEWR) reported that between 2001 and 2006, 78% of new jobs were created in the four most highly skilled occupational groups: Professionals (17.4% growth), Associate Professionals (18.3% growth), Managers and Administrators (28%) and Tradespersons (10%) but job growth for Labourers had been only 0.6% in that five-year period.

Skills shortages continue. In February this year the Department of Employment published its list of occupations in which there were shortages during 2015. Twenty-five occupations were experiencing national shortages, including higher level occupations like surveyors, optometrists and audiologists. The list included trades such as motor mechanics and automotive electricians, bricklayers, glaziers, roof tilers as well as wall and floor tilers, air conditioning and refrigeration mechanics, chefs, hairdressers and cabinet makers.

The department also released its jobs outlook, Australian Jobs 2016. Overall employment was projected to grow by 8.3% over the next five years which appears to be little more than matching population growth. Six industries were expected to grow by more than ten per cent: Accommodation and Food Services (12.0%); Arts and Recreation Services (10.8%); Education and Training (13.0%); Health Care and Social Assistance (16.4% and it is also the largest industry by employment numbers); Professional, Scientific and Technical Services (14.8%); and Rental, Hiring and Real Estate Services (11.9%). Employment in Mining will decline (‒14.1%) as will Manufacturing (‒5.3%) and Agriculture, Forestry and Fishing (‒3.1%).

When it comes down to occupations ‘Professionals’ provided 41% of new jobs from 2010 to 2015 and employment is expected to grow by 14.5% to the end of 2020. Seventy-four percent of professionals hold a university degree. Professionals are also more likely than other workers to work full-time.

In that period of five years up to 2015 ‘community and personal service workers’ provided the second highest proportion of new jobs, 22% (they also make up about 10% of all employment). Their employment has grown by 16.3% since 2010 and is expected to grow by another 19% in the next five years. Nineteen percent hold a university qualification and 42% a VET Certificate III or higher but 55% are employed part-time. It includes child, aged and disability carers, waiters and bar attendants and baristas.

Technicians and trades work provided 11% of new jobs up to 2015 and employment grew by 5.2% in that time and is projected to grow 5.5% in the next five years. Most of these workers are employed full-time and 62% have a VET Certificate III or higher.

Among the lower-skilled occupations there were, late in 2015, 1.7 million clerical and administrative workers, 1.1 million sales workers, 1.1 million labourers and 740,000 machinery operators and drivers which is still about 40% of the Australian workforce. Their projected growth to the end of 2020 is 1.6%, 9.3%, ‒1.3% and 1.0% respectively. The groups include receptionists and office managers, checkout operators, real estate agents, truck drivers, forklift drivers, delivery drivers, cleaners, kitchenhands and packers, as well as labourers.

The more rapid projected expansion of highly qualified occupations appears consistent with the experience in America identified in 2013. But in America there had also been a loss of middle-ranking jobs, largely due to the automation of routine tasks, not only for manual labour (classified as routine manual work) but by the computerisation of office, sales and administrative work (classified as routine cognitive work). There had been an increase in the number of jobs for non-routine work, both cognitive and manual. The former (non-routine cognitive) requires higher levels of education and generally commands higher wages, but the latter (non-routine manual) involves work such as cleaning, food services, security services, home help, and so on. This is leading to a polarisation of the workforce in America, with more high-paid jobs, more low-paid jobs, and fewer in the middle.

The basic problem with those projections is that they are based on what has already occurred and do not take full account of the increasing pace of technological change nor the areas into which it might move in the coming decades (and the Australian projections are short-term, only for five years).

In January this year CSIRO (and Data 61) released “Tomorrow’s Digitally Enabled Workforce” in which it found that up to 44% of current Australian jobs were under threat of being replaced by robotics and other computerisation. It found that, as yet, there was no evidence of the ‘hollowing out of the middle’ in Australia but it did find:

… Australian men, particularly single men with less education, are becoming increasingly likely to drop out of the labour force. … Despite strong jobs growth in the service sector, it appears that for a growing number of men the labour market has little to offer unless they re-train.

That reflects the earlier findings of Sue Richardson and Bob Gregory. But it also found that in the future there will be a greater need for individuals to create their own jobs and even a need for higher skill sets to access entry-level positions. So a new flexible education will be required. Similarly, workplaces will need to be more flexible (which can also lead to greater casualisation and use of contract workers). Some changes, however, may lead to greater disparity in regional areas, particularly for older workers: past experience suggests that displaced older workers in regional areas do not relocate to find work but, if forced to, will relocate to cheaper housing in the same location. So new approaches to unemployment and transition to work will be required.

The difficulty with the emphasis on education and higher skills is that has already been happening in America but simply creating an oversupply. It was found that highly educated workers were being pushed down the employment ladder into lesser-skilled positions, pushing the low-skilled further down or out of the workforce altogether.

The CSIRO report did not go into the detail of individual jobs but its estimate of jobs at risk was based on a model used by Oxford University researchers who did a study of the US labour market: The Future of Employment: How susceptible are jobs to computerisation? That report found that 47% of US jobs are at high risk of computerisation. Given the work currently being undertaken on driverless cars, it is foreseen that in the next decade or two driverless trucks will become the standard form for movement of goods and many truck drivers will become redundant. Some have suggested that on major inter-state routes driverless trucks should actually have their own lane. So governments will also need to respond to those changes.

In Australia, Rio Tinto is already automating its Pilbara iron ore mines with driverless trucks and automated charge drilling and setting machines, and is also hoping to have driverless trains to deliver the ore to port (tests have been conducted but recent software glitches have delayed implementation). That is an example of even some skilled work being automated but the huge driverless trucks do require the worksite being ‘landscaped’ to suit.

As more data becomes available and can be stored, office and administrative support positions will be affected and further encroachment into manufacturing will take place. Even aspects of the construction industry could be affected as robotic prefabrication of parts takes place in factories, requiring fewer workers for the actual construction and even circumstances where robots can piece the prefabricated parts together on-site (as has already occurred in Japan).

The availability of ‘big data’ is important in expanding the reach of computerisation. For example, an American oncology centre is using computers to provide chronic care and cancer treatment diagnostics. This could be done because data from 600,000 medical evidence reports, 1.5 million patient records and clinical trials, and 2 million pages from medical journals were able to be stored and used for ‘benchmarking and pattern recognition purposes’. Examining such a vast amount of data would be impossible for a human but not a computer (if it is programmed correctly). As more ‘big data’ becomes available computers will expand their reach.

The report into the US workforce also found that automation will move into non-routine manual work in sales and services. A simple example is the increasing availability of robotic vacuum cleaners capable of replacing at least one task of a hired cleaner: how many other tasks will follow? This follows the historical pattern of technological change, namely breaking down apparently ‘skilled’ jobs into smaller unskilled components — the move from the traditional skilled ‘carriage builders’ approach to early car manufacture to Henry Ford’s production line manned mostly by unskilled workers. If this prediction proves correct, the growth in low-skilled service jobs that has been occurring in the US will actually begin to reverse during the next couple of decades.

This does not mean that all jobs in these areas will be lost but a significant proportion will be.

Jobs least affected will be those requiring creativity and social skills:

… generalist occupations requiring knowledge of human heuristics, and specialist occupations involving the development of novel ideas and artefacts, are the least susceptible to computerisation.

Others have since suggested that even some creative work can be done by computers: already there are computers capable of creating musical scores (no doubt based on ‘big data’). If that continues into the future, and AI becomes a reality, there will be almost no job that is not at risk.

This new world is giving rise to what is known as ‘the gig economy’. This means that, like a band of musicians, people will work ‘gigs’ for which they must search.

A study released in January this year by The Aspen Institute in the US found 45 million Americans (22% of adults) were working in the gig economy providing ride sharing, accommodation, food delivery and other platform-based services. For 14 million it was their main source of income and just over half, 23 million, were young, aged 18‒34.

However, most workers (72 percent) believe companies should be doing more to provide benefits, and more than two-thirds worry that as independent contractors and not employees, they don’t have a financial safety net.

Anecdotal evidence from participants suggests that many, but not all, see such ‘work’ as extra income to meet bills and so on, or as income in periods between mainstream permanent work. Or they are working many jobs to achieve a reasonable income and that can create problems — such as lack of sleep. Some examples:

I keep busy but I have to constantly juggle different gigs every day … What scares me most is that I have no guarantees, no steady pay, no stability. Everything could end overnight, so I can never make long-term plans. [young woman in Turin]

In the short term, this way of working works, but there is a long-term downside. It’s very difficult to build a future, to save for a downpayment on a house, say, or to save for [a] college fund, on a full-time Uber driver salary or even if you combine multiple freelance services. [Uber driver in Los Angeles]

I definitely advocate this way of working, but it’s not for the faint-hearted — if you’re working three or four jobs in a day, you need to be very disciplined and have a keen sense of priority. You have to be a bit of a workaholic: finding the balance and boundaries to fit everything in can be a bit of a juggle. And obviously not having paid time off is a downside. [Airbnb host, charity worker and interior designer]

Some professionals can do better in the gig economy as the internet (and specific sites) allow them access to a much wider range of clients in a much wider range of locations. For some, whose work can be done over the internet, the location of the client no longer matters and, therefore, having access to a larger number of potential clients is an advantage. Conversely, the sites involved also permit potential clients to more closely match the skills of their selected professional to the work required.

Companies will rely less on full-time employees and will hire on a task or project basis. This will apply across many job categories, not just professionals. Companies will be able to hire the specific skills required for a single task, so the work could range from a few hours to a few days. People will be able to specialise and offer their skills to many clients. But this will also spread the problems described by people currently working in the gig economy.

Such an approach is already moving down the employment ladder to very mundane tasks, and to ‘micro-tasks’ such as tagging images, extracting keywords, checking address data, which sometimes may be no more than a few minutes work for each ‘job’. These are termed human intelligence tasks (HIT):

At the time of writing [August 2015] there were about 300,000 HITs on offer on AMT [Amazon Mechanical Turk]. An average Turker (as they are referred to by AMT) can expect to earn US$2 to US$5 per hour on a good day but there’s no guarantee in terms of regular work availability.

Not all of these jobs will remain. Uber, for example, is already investing in and preparing for driverless vehicles. And computers can already undertake some of the minor tasks currently available. Whether people can be prepared in time for the new jobs that may emerge, or there will simply be massive unemployment, will be the big question.

All of the above may prove to be wrong as we do not have a very good record predicting the future — some things change less than we foresee while we seem to completely miss other significant changes. In the 1960s some popular magazines were predicting that by the early 2000s we would have flying cars, or at least hover cars. I also recall a television program from that time, specifically looking at future change, that predicted we would be required to work only ten hours per week in the new millennium to maintain our lifestyle.

Cars have changed, being more luxurious and incorporating many more safety features than in the 1960s but they still have wheels and still require roads. And, in Australia prior to the GFC, individual work hours were increasing, not decreasing. Our lifestyle has changed: the average new house is now twice the size it was (as is the cost); more homes incorporate central heating and/or air conditioning; televisions have grown both larger and smaller and few households are now satisfied with only one. But the biggest change that few, if any, predicted was the explosion in digital technology; the rise of computers, the internet and the information age; and now the portable devices that allow us to access that information at any time and almost any place.

So do we have the rise of robotics and ‘the gig economy’ right? We cannot say with certainty. But to the extent that they are already happening we do need to plan for them and consider their ramifications both for people and the economy as a whole because so much work will no longer require people, or require them for only short durations. We may not get it quite right but we cannot ignore it.

Next week I will consider Modern Monetary Theory (MMT) and what it may offer to meet the challenges of the new economy.

What do you think?

How far can robotics and computerisation go in reducing the need for humans? Is there a limit?

Will unions themselves become redundant if more and more people do not have work or enter (or are forced into) ‘the gig economy’?

This article was originally published on The Political Sword

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32 comments

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  1. Jennifer Meyer-Smith

    There are limits on what the gig economy can do. As stated in the article, areas of endeavour that require creative thinking and interpersonal skills should be relatively safe; and if there are any threats to such areas, there should be strident legislative protections to prevent any such infringement.

  2. jimhaz

    “Australian men, particularly single men with less education, are becoming increasingly likely to drop out of the labour force”

    This will cause a lot of expensive social issues.

    I think society will become increasingly mentally and physically ill – and that’s where jobs growth will be.

    Good article though. Deserves more consideration than I can give at present.

  3. diannaart

    How far can robotics and computerisation go in reducing the need for humans? Is there a limit?

    Limitless, already robots are being tailored for personal services such as nurse or companion.

    Will unions themselves become redundant if more and more people do not have work or enter (or are forced into) ‘the gig economy’?

    Unions declining membership will continue as more automation means less people (see above) – unions may need to recreate themselves as advocates of people rather than types of jobs, for example tenants, chronically ill, families, part-time workers.

  4. Ken Wolff

    thanks for your comments. Some interesting points made.

    Jennifer Meyer-Smith: I wish I was as confident as you. Robotics will encroach into areas we currently think require social skills. As Diannaart points out, robots are already being developed to provide personal services. And more people will be forced into the gig economy as companies decided it is more efficient (cheaper) to hire workers only as they are required. Already some economists and businesses are calling this the ‘on-demand’ economy which clearly reflects how they see it but it will only result in insecure and precarious employment.

    jimhaz: You are right that there will be many social implications and it is some of the service industries (health and social support) that may continue to grow (if we can keep robots out of them!). One big problem is that with fewer workers the productivity benefits of robotics and computerisation will not be shared but further concentrated in the hands of company owners, shareholders and CEOs – or, in other words, increasing inequality above what we are already seeing.

    diannaart: The US report on computerisation that I referred to found that there will be some technological/engineering plateaus that may hold back robotics for a while but as those hurdles are overcome (perhaps going further into the future, beyond two decades) then, yes, the capacity of robotics is almost limitless.

    I hope that unions can adjust. I did read an article a while back about at least one union in Australia already considering its role (it may have been the AWU but don’t hold me to that). It was talking about what it called the ‘ten minute job’ and that unions may have to focus on providing a broad range of services to members, such as helping to apply for unemployment or other welfare, even providing child-care assistance and to do it over a person’s life, not just when they are in work. It will be interesting to see if they can adapt but also of interest that they already considering it when, obviously, our government isn’t.

  5. Glenn K

    as someone who has worked in IT sales for the past 28 years, the acceleration of digital technology has been reducing jobs for the past 20+ years, though the past 5 years has been more extreme. This will only continue, and will continue to marginalise more of the workforce. We are in the age of “consumption economics” – this will destroy many industries and careers.
    I have a greater concern which seems to get little coverage. Think Uber, think AirBnB, think Bitcoin. All three of these new “technologies” can be seen for giving more people an opportunity to make extra money, or to bring competition to an existing industry for the benefit of consumers. There is truth in some of this, however…… the key concern with these “new” industries is that they disempower governments and effectively overrule government legislation. They take away the power of government to regulate for the benefit of it’s citizens.

    There is nothing unique about Uber from a technology point of view. Nothing. What is unique about Uber is that it has successfully challenged the government’s power to regulate and monitor the taxi industry. This is not new technology – don’t get confused. However THIS IS challenging government regulation. Our government’s response has been piss weak. They rolled over and died. Now it looks like the VIC government may carry the cost of compensation for taxi licenses losing their value. It is a transfer of wealth from government, the pubic domain, and the existing taxi industry to the elite few of Uber shareholders and founders. The “value” came from overruling government legislation regulating the taxi industry.

    These new technologies are not that new. What is new is the business model that challenges government regulation and through the “global” nature of their business model, effectively try to sit outside of local law. And our lawmakers fail miserably in their response. Comprehensively fail.

    The gig economy is not that different. As governments make it easier for businesses to employ casuals and contractors without also legislating for comparable protections to permanent employees, then casual employment increases at the expense of permanent employees. It is not rocket science.

    The advances in digital technology are amazing. What is frightening is the emergence of new business models which seek to exploit and destroy a government’s ability to regulate for its people and its economy. Bitcoin potentially represents a massive threat to any sovereign currency issuing government. Who really wins with the emergence of Uber? And why must it sit outside of the Government’s ability to regulate and set standards for the hire car industry?

  6. Trev

    Buckminster Fuller said it best:
    “We should do away with the absolutely specious notion that everybody has to earn a living.

    It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian Darwinian theory he must justify his right to exist.”

  7. Jennifer Meyer-Smith

    Great post, Glenn K.

    All the more reason for strong, resolute government that does not allow corporations to sit just outside their regulatory regimes or if they do, they then face the stringent legal consequences.

    Also, more reason to make strong legislature that protects people from casualisation and limited contracts, which in turn keeps over-reaching corporations at bay and government not under siege.

  8. diannaart

    It will be interesting to see if they(unions) can adapt but also of interest that they already considering it when, obviously, our government isn’t.

    I haven’t heard of unions looking towards a more holistic approach – this is hopeful, for not only will the (usual) minorities be dispossessed by new technology but also the majority of us. It was only just a start that uneducated males should be the first to be replaced. Our governments can be laid-off.

    Glenn K also points out the sinister advantages of Bitcoin, the Uber-services and more, the power will reside within those who control the technology.

    Can we expect a greater degree of philanthropy or compassion than at present?

  9. Freethinker

    Great article, regarding the unions they will be in decline not because the new technology, robotics, etc but because people have and continuing to mortgaged their freedom with large loans and other lines of credit.
    In countries where they still have their freedom the union movement still strong.
    Having said that the new way of people to fight is by showing their power in large protests.
    There are big movements in USA, Canada and other countries where people just stop consuming non essential things and living a life with little overheads. This will cause problems to governments when large part of the population do not pay large sums of taxes.
    I believe that a “barefoot revolution” will come very popular in years to come when people realize that their lost of their quality of life it is to high with the present life style and society demands.

  10. Ken Wolff

    More great comments.

    GlenK: You are right that another aspect of this wholesale change is that of ‘deregulation’. It is, of course, something the neoliberals have been pushing for years and I have seen that referred to as the ‘capitalisation’ of democracy: as governments have less and less control over the economy, there becomes no point in voting for them because they cannot really control anything. One’s influence in this new ‘democracy’ is determined by your wealth and role in the economy. As I mentioned in my earlier comment, the gig economy is already being referred to as the ‘on-demand’ economy reflecting where businesses are heading. As long as governments follow the neoliberal economic logic and bow to ‘the market’, that will simply be allowed to continue.

    Trev: We may not have to earn a living but there has to be some way of spreading the economic benefits throughout society. Otherwise the rich get richer and those displaced by robotics or working gigs miss out.

    Diannaart: I wish I could find that earlier article and provide a link for you but despite some searching I have been unable to find it again.

    Freethinker: I will come back to your point in the fourth article in this series. The neoliberal emphasis on debt creates the situation where governments in debt sell off public assets and where workers mortgaged to the hilt and in debt on credit cards are not game to demand better wages or conditions, or strike to support their claims. Your comment about overseas protest movements does offer some hope.

  11. king1394

    The gig economy may work out OK for some but I suspect it works a lot better for employers who don’t want to keep people on over quiet times, then those they employ. The growth of labour hire companies which specialise in slotting people in for the shortfalls speaks to this.

    Tradespeople in areas like construction have to move from site to site, finishing up and signing on again, with few nowadays being employed securely by a building company. The tendency has been to coerce tradies to register themselves as sole traders with an ABN and use them as sub-contractors. If they keep going back to employment with the same company this is illegal, but a quick scan of job ads will show plenty that call for the applicant to have his/her own ABN (and vehicles, tools, insurances as well)

    CentreLink rules make it very difficult for many in the gig economy. To quote: As a Newstart Allowance customer, you can earn up to $104 per fortnight before tax before your payment is affected. Income above $104 and up to $254 per fortnight reduces your fortnightly payment by 50 cents in the dollar. Income above $254 per fortnight reduces your payment by 60 cents in the dollar. When you get some work, as well as paying normal taxes,and the costs of working such as fares , you may also lose quite a lot of your payment. While this may seem fair, the effect is that you may work for 30 hours at $20 per hour, and only see your overall income improve by about $200. No one else in our society pays tax at this rate. If it is just one week’s work here and there, a job seeker may become reluctant to take on work for which they only receive an extra $6 per hour. The system could allow people to work for a period of time before clawing back its payments. (This is where so much of the so-called CentreLink fraud hides, as there is a strong temptation for the worker not to admit to his/her one-off extra payment – and plenty of employers who know that they can pay less than minimum wage cash-in-hand because the recipient is on benefits.

    As regards those people who are too minimally skilled to work, it is well past time that the job search agencies were obliged to improve their clients’ employability. I would suggest that making sure everyone has a Construction White Card, a First Aid Certificate and a Driver’s License would be a minimum set of aims; then, depending on the talents and interests of the job seeker they could be assisted to get RSA/RCG and Food Handling (Hospitality), Certificate III qualifications for many industries such as Aged (Individual) Care, Horticulture, or a range of licenses such as Fork Lift, Chemical Handling, Strangely, as things stand currently, these Job Search Agencies are very reluctant to pay for courses, and often ignorant of what is available.

    Regarding Unions, they fail to find, assist and support people in this hidden job world. Their membership fees would be beyond the means of most who live from one short-term job to another. Unions failed to pay attention to the needs of casual and part time workers, and now they see membership declines, because they are still geared to representing full-time wage earners in established situations.

  12. Jennifer Meyer-Smith

    Beautifully stated king1394,

    how the present system, unashamedly exploits workers and sometimes workers. Thanks for stating how unemployed people can ONLY earn a measly $104 per week before having anything subtracted.

    We all expect the LNP Degenerates to exploit such very vulnerable people, hence that’s why we hate their guts.

    But, when Labor has NOT made ANY attempt to change this exploitative system that gladly takes from struggling unemployed and under-employed Aussies, who actually want to work, a sour taste penetrates one’s mouth.

    INCREASE the amount per week allowed to be earnt without Newstart loss to $416 and thereafter only incremental loss.

    Get real Dinosaur Duopoly!

  13. Bultaco Metralla

    The gig economy is not new. Have a read of “The Ragged-Trousered Philanthropists”. Nothing has changed, the gig economy has its roots in the slave economy.

  14. Andreas Bimba

    Japan not only has very low unemployment but businesses often can’t find workers. Japan is a place of intense automation. What is different to Australia is fiscal policy (Abe dropped the ball a bit though) that stimulates economic growth, low levels of wealth stratification that enhances consumption demand, social inclusion and support, job security and loyalty, superb industrial and economic development policy primarily by the Ministry of Economy, Trade and Industry – METI and less tax evasion and tax concessions for the wealthy.

    http://www.meti.go.jp/english/

    The Modern Monetary Theory economists have proven we can easily have near to zero involuntary unemployment and underemployment through fiscal stimulus, good economic development policy, good social policy and a job guarantee scheme. Professor Bill Mitchell has written many articles on Australian and world unemployment and underemployment and in my opinion the case has been won, just follow his advise – problem solved. Automation is not the source of unemployment, neo-liberalism and its disgraceful enforcers, the Liberal Party of Australia and the National Party of Australia are responsible. The ALP are not much better in this vital area.

    Here’s a recent contribution, but there are far more on Bill Mitchell’s blog:

    OECD youth report – not a job in sight – Groupthink reigns supreme

  15. king1394

    Thanks for your comment Jennifer. Please notice, the measly $104 is per FORTNIGHT! (CentreLink thinks in fortnights). $72 per week, or three hours work before the 50c in the dollar kicks in on the Gross payment received. No need to ask why a person on the Newstart seems reluctant to take any work that comes by, it just messes up their payment.

    This is what is meant by ‘the Poverty Trap’

    I like your suggestion about increasing the amount that may be earned before the benefit starts reducing. Another way could be to allow some time period before cutting benefits. This would help people who take on a very short time job, or one-off job now and again (such as Census collector)

  16. Jennifer Meyer-Smith

    king1394,

    agree and I apologise for my silly oversight. Of course it is; the added disgrace is that $104 applies to any earnings per fortnight. What planet do these dinosaurs, who lay such ridiculous caps, come from?

  17. Jennifer Meyer-Smith

    Hear, hear Andreas.

  18. Ken Wolff

    Freethinker: thanks for those links. When I have a bit more time, I will follow them up.

    king1394: thank you for your comment. While current UB rates (and income caps) are scandalous, a major issue that will arise as the gig economy expands is how do we even define employment and unemployment? The 37 hour week may no longer be the norm. People forced out of work by computerisation may try to make some money in the gig economy — will they be considered unemployed or employed? There will be many issues to consider and I will raise a few in the fourth article in this series.

    Bultaco Metralla: You are right that there have always been some workers who have worked ‘gigs’ but that looks set to expand exponentially in the new economy.

    Andreas: I think (recall) that Japan has been in recession (negative economic growth) for many years which is why it has been working so hard to stimulate its economy. But leaving that aside, I do agree with your point and will be discussing MMT in the next article in this series.

  19. townsvilleblog

    My apology Ken, it looked to be an excellent article, however my concentration is not good, I did not read all of it but one thing may be worth noting that is that Morgan Research found July 2016 unemployment to be 10.5% govt number 5.7%. It seems as though we the general public are being constantly lied to by this federal tory government?

  20. king1394

    Ken and townsville – current unemployment statistics (as you may already know) are based on an International standard that seems designed to minimise the figures as much as possible. There is no consideration of whether people are actually able to earn enough to live on. The criteria is that you are only counted as unemployed if you actively looked for work over the previous four weeks, but you had no hours at all of work. You are employed if you worked for just one hour. If you are not paid a living wage, that does not matter: for example, you are not unemployed if you help out on the family farm, or if you are on-call, but did not get called in.

    People working in the gig economy would not be counted as unemployed, instead joining the ranks of the under-employed IMO

  21. Harquebus

    Robots do not pay income tax and do not spend money in shops. What economy? They will produce more for an already oversupplied market in which fewer people will be able to afford the products that they produce.
    Then there will be the small matter of debt.

    The main problem with full or high automation is shortages of key resources or components. Just one will halt the system.

    “If robots are going to steal human jobs and otherwise disrupt society, they should at the very least pay taxes.”
    http://money.cnn.com/2016/06/22/technology/europe-robots-taxes-jobs/

  22. Ken Wolff

    townsville and king1394

    The issue of how we define ’employment’ will be important. I must admit I had overlooked the concept of the ‘under-employed’ and may have to adjust my last article in this series.

    Harquebus

    Precisely!!! What the businesses pursuing robotics and computerisation don’t seem to realise is that they are contributing to a shrinking consumer base which will also have implications for the survival of businesses.

  23. Jennifer Meyer-Smith

    Exactly H.

  24. diannaart

    Of course, when robots become self-aware they will want the means to purchase diamond chips, solid gold state audio, all the desirables an android can only dream of… and expect a fair wage for hours worked… they will need to form unions as living in cardboard boxes does not protect circuits from the elements… and how does an android afford a decent upgrade? they must keep up you know.

  25. king1394

    Harquebus points out the injustice of our system which has allowed the introduction of machines that replace people as workers, without having to take responsibility for the ongoing needs of the people replaced. One day we may again see that it is important to provide all the people with gainful employment. The Luddites were quite right in their recognition that machines would displace / alienate people from both the satisfactions of work and the system of remuneration for work. The idea of a general wage for all (a fair amount, not a minimal amount) is one way to allow industry to continue its use of machinery for production. Unemployment should be seen as another business externality.

    Or else we need to find jobs for all in areas where the capitalist system fails – lets have more library workers, environment workers, aged care and disability workers, arts and culture workers … and pay them appropriately. Start with paying all the volunteers who carry out huge amounts of work running charity shops, and sporting groups, and teaching English / Literacy

  26. king1394

    Back to ‘Blade Runner; – the original title of the Philip K Dick story is: ‘Do Androids dream of Electric Sheep?’

  27. helvityni

    king1394, I totally agree with your second paragraph; sadly I do not see it happening in Oz. I’m afraid more and more areas will fall for hardworking volunteers, they’ll see no monetary rewards in a hurry.

  28. diannaart

    king1934

    OK… I admit to borrowing just a little… the words just happened, man.

  29. Jennifer Meyer-Smith

    I 100% agree with king1394 @ 11.50am

  30. Andreas Bimba

    Ken Wolff @ September 15, 2016 at 9:44 am

    The case for good industrial and commercial development policy and moderate trade protection.

    Further to the example that I mentioned before of Japan. Due to a long period of low interest monetary policy Japan had an extreme property and share investment bubble that eventually burst, had many stagnating businesses producing minimal profits, suffered badly from the GFC that reduced worldwide demand for their exports and at times has partly also gone down the stupid neoliberal – monetarist – austerity path and unsurprisingly all of this kept them in recession for two decades. Only in more recent times has Prime Minister Abe and the Bank of Japan returned to implementing some fiscal stimulus and reducing levels of trade protection with nations with similar labour costs like the US and Australia without adopting across the board totally free trade with lower wage and high tech. competitors such as Korea and China. Australia’s approach is worse than Japan’s as we have stupidly chosen to go totally free trade with everyone, which goes well beyond pressuring local businesses to become more efficient but is instead resulting in widespread bankruptcies or downsizing. The promise of improved market access for local exporters is also in most cases illusory as competitors like China regularly impose secondary trade barriers if any significant market success looks likely to be attained.

    Apart from the early post war Labor – Chifley period when Australia had very good economic development policy, Japan has had far better industrial/commercial development policy than Australia. The Japanese Ministry of Economy, Trade and Industry – METI, government – private sector partnership approach which builds industries and new areas of capability, along with fiscal stimulus for nearly all the post WW2 period has been extremely successful despite the last two decades of recession.

    For the internationally tradable manufactured goods and services sector, the Japanese generally ‘play to win’ and our neoliberal Conservative and Labor governments generally ‘play to lose’ as this suits the needs of our real national leadership, the corporate ruling elite in the mining, finance, property speculation and bulk rural commodity export sectors, that actually want us to import more manufactured goods which drives the dollar lower from where it would otherwise be and thus provides more economic space and profitability for the mining, energy, finance and rural export sectors. This is despite over the past few decades, the net loss of hundreds of thousands of relatively well paid and secure jobs, the permanent loss of entire industry sectors for example tyre manufacture, white goods manufacture and very soon car manufacturing and also the substantial degradation of our capacity to generate new advanced value adding businesses as the supply chains will no longer be present, a loss of a technology, R&D and innovation rich economic sector and a very substantial degradation of our national ability to support military production in the event of a major conflict.

    Most nations developed their manufacturing industries over decades behind tariff walls and when these industries were established, tariffs were lowered to moderate levels to enable some international competition which further improved productivity, design and product quality. Why was it considered good policy about 20 years ago to build the one billion dollar Toyota Altona car manufacturing plant with moderate 15% tariffs being in place yet now the mandated policy is zero trade protection, and a reluctance to provide the alternative of a regular government grants? The closure of this plant has been enforced even though it has been continuously modernised over that period? Why do so many of us now think any level of tariffs are unacceptable?

    Moderate tariffs make it possible for highly automated Australian manufacturers that have higher labour and government imposed taxation and regulatory costs to compete for the local market with low wage cost and high technology capable competitors such as those from Thailand, Korea and China in established large markets such as new vehicles and white goods. An additional moderate subsidy would then suffice to profitably achieve substantial exports. The cost of tariffs and subsidies would be far less than the total economic benefit provided by such manufacturing industries. More dynamic and innovative businesses such as medical device manufacturers or pharmaceuticals may be able to survive without trade protection but most manufacturing businesses in most established areas realistically cannot no matter how well they innovate.

    For example a tariff wall of 15% would enable the survival of our car manufacturing industry and would also ‘make the case’ for substantial new investment so as to locally manufacture a much higher percentage of the current quite substantial one million unit per annum Australian new car market and also for the essential transition to renewable energy powered vehicles such as battery electric, plug-in hybrid and renewable fuel source vehicles such as hydrogen fuel cell vehicles and bio-diesel or bio-ethanol powered more conventional internal combustion engine vehicles. The appropriate government regulatory environment is an essential part to the successful transition to a clean energy and sustainable economy. We could all benefit from some long forgotten optimism instead of our current destructive defeatist mindset.

    Highly automated factories still employ many people in planning, design, construction, equipment manufacture/supply/support, parts and materials manufacture, transport, programming, maintenance and in ongoing upgrades. Many areas such as the final stages of vehicle assembly are difficult to automate cost effectively and substantial numbers of production workers are still required. The whole supply chain needs to be considered, not just the final manufacturing operation.

    In an information age where one’s location is now much less important, many professions such as engineering, architecture, accounting, computer programming, IT support, customer support, marketing, journalism, education, scientific research and general medicine for example, could face substantial competition from lower cost competitors living in the developing world. In this new era of more across the board, international competition that will cut heavily into the middle class job market, the tradable goods sector may offer the advantage of simply being better able to evade overwhelming international competition through the relatively easy to enforce method of applying moderate tariffs. Tariffs also provide governments with revenue and in the case of imported cars act as a minor disincentive to car use which is environmentally beneficial.

    One of the most important powers a national government has is controlling access to the national consumer market. In such a highly competitive and ‘cheating’ era of world trade this power must be used more effectively to sustain and build our economy, to provide rewarding employment, provide good access to a wide range of imported and locally produced goods and services for Australian consumers and to maximise the overall benefit for Australia’s citizens.

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