The politics of 'empowerment'

The other beneficial effect of downward pressure on minimum wages is an expected move from award wages to more enterprise level arrangements, thereby ensuring individual workers can raise their before-tax take-home pay as well as receive beneficial tax credits.

In response, unions will be required to more actively engage with enterprise level arrangements and, with this in mind, unions will require access rights to workplaces on reasonable request.

Despite the “empowering” effect of tax transfers and labour-market flexibility, Australia also requires an investment program in skills to deliver the kind of productivity and social mobility that we expect.

Fred Argy argues (pdf file 60KB): “While we have invested heavily in our people in the past … we are not doing enough on three other policy fronts: work incentives, workplace choice for everyone and social investment”.

Active investment in skills can provide school-leavers with better outcomes as well as degrees, skills and trades for  unemployed and underemployed people.

Argy adds that reducing underlying structural inequalities is the key and not income inequality per se: advocating a policy move from passive welfare to active social investment in people.

Turning to the politics of “empowerment”: who is leading this overall centre-ground narrative, providing this option?

John Howard has promoted economic freedoms in the labour market. Yet he has not married it with incentives and tax relief for those on lower wages; nor better training programs for those most affected by his changes.

Howard has promoted tax-cuts up the scale at the expense of reducing EMTRs further down the scale. This should now be addressed by tax-transfer policies.

Howard’s industrial relations changes are also punitive to workplace representation. His policies are not inclined to improve employee productivity and long-term social mobility for unskilled and underemployed people. Howard has failed his economic test with this under-investment.

Kim Beazley has promoted union bargaining and a view that downward wage pressure on minimum wages is against the national interest. Beazley has also failed his economic test. The academic consensus is clear: high minimum wage levels and EMTRs have reduced workforce participation and this needs to be addressed in an incomes policy that aligns wages, tax and social benefits to deliver growth for all Australians and better outcomes for low income Australians in particular.

An “empowering” economic model must consider some or all of the following: