Current Issue #488

Modern Times: How can we ensure workers’ security in a flexible economy?

Modern Times: How can we ensure workers’ security in a flexible economy?

Change may be life’s one great constant, but the pace of economic change is now so fast that people are being flung from the treadmill. Others are grimly holding on, scared that they will soon land on the heap of discarded workers.

A program that provides security for workers and flexibility for employers would contribute to economic growth and prosperity and promote social security and wellbeing. Such a policy would be worthy of modern Labor.

Some maintain that this collateral damage can serve our long-term collective interests. In a speech made to the Business Council of Australia this November, Prime Minister Malcolm Turnbull asserted that the “need to undertake reforms that will deliver long-term gains for all Australians, which may create winners and losers in the near term, isn’t keenly felt in many parts of Australian society”. But he argued that “fairness does not mean examining each decision in isolation, looking at a narrow set of winners and losers”.

Such sentiments ignore the real effect of each redundancy. They ignore the trauma felt by ‘losers’ as part of deregulated markets and the free flow of trade and investment; the feeling of perpetual insecurity and hopeless that denies the opportunity to nourish dreams of a better future. This keenly felt economic insecurity makes protectionism more attractive. Instead, we need to imagine an alternative policy; a policy that looks after human interests, as well as economic ones. A policy in which both workers and business can adjust to rapid change.

In 2009, it was reported that the ACTU had been discussing a “radical” new unemployment insurance scheme with the incumbent Labor government. This insurance against redundancies has been tried elsewhere, but ultimately it was not pursued. It appears that in these modern imes only ultra-conservatives have the courage to adopt radical positions and the fight to give them life. Trump has shown that dumb courage alone is sometimes enough to win in politics – imagine if a genuinely egalitarian economic platform was unleashed on an insecure electorate wanting something a little more from their leaders?

Some Nordic and western European countries have for decades been using a system known as ‘flexicurity’ – a portmanteaux of ‘flexibility’ and ‘security’. Flexicurity offers both labour market flexibility to businesses and income security for workers. The unemployment benefits are the sum of social security payments as well as released payments from the unemployment insurance. The requirement that non-actively employed workers move instantly into a retraining scheme would render it a perfectly modern policy that could be strategically applied across contracting sectors, or to struggling geographic locations.

For a flexicurity model to be effective in Australia, government would need to work closely with business, trade unions and education providers to deliver a sophisticated retraining scheme. When recently redundant workers scan the employment horizon and find no safe landing in sight, their solace would be temporary. Retraining – and reskilling – is key.

A flexicurity model in Australia would need to identify the most appropriate skills required for an individual to acquire work in an expanding sector. The success of the model would therefore depend on coordination across sectors philosophically disinclined to work together. Such cooperation has been achieved in societies with greater wealth equality, like Japan and those of Scandinavia.

It is in our collective interest because it will help ease the insecurity of those at the front lines of a highly competitive workforce in a rapidly changing economy. When the insecurities of the economically disadvantaged fester, common fears find refuge in imagined enemies or in a yearning for more simple times. This is a lesson recently taught to us by America.


Get the latest from The Adelaide Review in your inbox

Get the latest from The Adelaide Review in your inbox