‘Buy Australian’: Can it save jobs?

Lisbeth Latham

In the year to May, manufacturing employers shed more than 68,000 jobs due to reduced demand emerging from the economic crisis, said the Australian Bureau of Statistics.

In response to declining employment in the sector, the Australian Manufacturing Workers Union (AMWU) and the Australian Workers Union (AWU) announced on July 24 the creation of a new alliance to promote Australian manufacturing — A Country That Makes Things — to promote a change in manufacturing policy.


Central to this campaign is a renewed push to encourage buying Australian-made goods. Such campaigns are not new. It poses the question of not only whether such campaigns are effective in saving jobs, but also what impact they have on positioning unions and their members to not only fight to defend jobs, but improve wages and conditions.

In a joint article in the July 24 Australiansupporting the new alliance’s formation, AWU national secretary Paul Howes, and AMWU national secretary Dave Oliver said the new approach was an attempt to return to the model of industry strategy developed during the 1983-1996 Accord between unions and the Hawke and Keating Labor governments.

Howes and Oliver said Prime Minister Kevin Rudd’s stimulus package could be enhanced in three ways:

* The creation of a comprehensive, “fair go” purchasing and procurement plan, with government infrastructure projects giving priority to Australian-made goods;

* The expansion of the AWU's New Steel Plan “to keep foundries busy supplying nation building projects”; and

* The establishment of a training grants scheme to “minimise further retrenchments and give employees the chance to upgrade their skills instead of being unemployed”.

The article acknowledged that these proposals alone were unlikely to be enough to defend manufacturing jobs, and argued it “also required a comprehensive manufacturing policy plan positioned for recovery”.

The proposals put forward by A Country That Makes Things, if adopted, would undoubtedly result in some manufacturing companies keeping production in Australia, at least in the short term.

However, because the campaign fundamentally accepts companies’ right to pursue greater profits, it is unlikely the proposals could avoid a repeat of, for example, the experience of Pacific Brands.

Following a half-year loss of $150 million (after averaging $110 million profit for the previous three years), in February the company shifted manufacturing facilities offshore, sacking 1850 staff. Management believed it would secure greater profits.

Campaigns to buy Australian manufactured goods, far from positioning workers to defend their jobs, instead disarm workers by promoting the idea that they have common interests with their bosses and encouraging them to see workers in other countries as the threat to their jobs.

Irrespective of the intention of a “Buy Australian” campaign, in reality it promotes the idea that people are not buying Australian goods, or that foreign workers might make the products cheaper. Both of these ideas can quickly lead to racist attitudes, and detract from the point that job losses are a result of bosses’ push to increase profits.

The logic of needing to make the company competitive also tends to help promote the idea that workers should make concessions in wages and conditions to make the company competitive (that is, profitable).

If workers are to combat the threat of capital flight — taking production offshore — to drive down wages and conditions, they must, with their unions, build international solidarity with other workers. They must also fight for closed companies and plants to be nationalised and brought under workers’ and community control.

Building solidarity with workers in other countries, to support their fight for better wages and conditions, can undermine attempts by employers to pit workers in different countries against each other.

Worker-managed companies, even those that are not now profitable, can shed two key costs: management pay (Pacific Brands’ management earned $15 million in salaries and bonuses), and the need to generate income beyond the cost of production, allowing them to be more competitive within the framework of the capitalist market.

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Wage rises don’t mean job losses

Lisbeth Latham

Almost immediately after the Rudd Labor government’s Fair Work Australia came into effect on July 2, the Australian and other News Ltd newspapers launched a sustained attack on the Australian Manufacturing Workers Union’s (AMWU) wage claim for the manufacturing industry.

Business associations, the government and corporate media have been running a concerted campaign for more than year to convince working people that they have to show wage restraint if they want to avoid losing their jobs.

This is part of a campaign to foist the brunt of the global economic crisis onto working people and protect the interests of big business. However, the historical lessons the Australian draws on to back up its claims do not show a necessary relationship between wage rises and job losses.

On July 2, the Australian featured front-page headlines reading: “Unions defy PM Kevin Rudd’s restraint call as New IR Era Begins” and “Lost lessons of the 100,000 `dead men'”.

These articles followed a statement by AMWU national secretary Julius Roe, reported in the July 1 Australian: “If companies are performing well, workers should get some share of those outcomes. In some cases, yes, we are achieving (6 per cent), and we will achieve that in the future.

“The fairest thing to say is where companies are performing well, we should be able to achieve real wage increases. Elsewhere, we want to at least maintain real wages. This year, it's probably around [a] 4 per cent [pay rise].”


Pattern bargaining
The articles raised fears of a return to pattern bargaining — under which unions lodge identical claims across industry and campaign for employers to provide minimum improvements in conditions by using sites of union strength to support workers in less well organised or less strategic workplaces.

It also raised the potential of a broader “wages breakout”.

The Australian quoted former head of the Metal Trades Industry Association Bert Evans, saying that the AMWU’s claim, if successful, would lead to jobs going overseas.

The articles further argued that the huge job losses in Australian manufacturing during the recession of the early 1980s were a result of the AMWU’s (then the Amalgamated Metal Workers and Shipwrights Union — AMWSU) 1981 campaign for pay rises and a 35-hour week with no loss in pay.

The Australian’s articles are part of a wider campaign to shatter the confidence of AMWU members in pursuing collective bargaining and undermine support for the AMWU. The campaign aims to build and reinforce the argument that wage rises during an economic downturn would result in job losses, and the AMWU, in pursuing its “unreasonable claim”, is threatening the livelihood of all workers.

But did the AMWSU’s 1981 wage campaign really cause the collapse in employment? And, more broadly, is there really a connection between wage levels and employment?

What happened in 1981
After its election victory in 1975, the Liberal Coalition government of Malcolm Fraser moved to “fight inflation” by, among other things, seeking to cut real wages by limiting the extent to which wages were indexed with inflation in the centralised national wage cases.

As a result, real wages fell through the late 1970s, but the government’s policy was unsuccessful in reducing inflation.

In response to falling real wages, debates began to emerge at the 1979 Australian Council of Trade Unions (ACTU) congress to move away from centralised wage fixing. At the 1981 congress, the militant pace-setter unions, led by the AMWSU, won support for a partial break from centralised wage fixing.

In July 1981, the Conciliation and Arbitration Commission abandoned wage indexation entirely as unions began to win wage increases outside of indexation.

In 1980, the AMWSU launched its campaign to “defend and extend working and living standards, workers’ rights and quality of life”. This campaign included a push for a 35-hour week with no loss in pay. The AMWSU’s claim was aimed at defending workers’ buying power and creating jobs through the reduction in the working week.

It was also motivated by the Fraser government’s predictions of a looming minerals boom. Employers and the government united to reject outright reducing ordinary working hours below 40 hours a week.

Despite this, the AMWSU led a wide-reaching campaign, which included a 48-hour strike in 1981 involving 400,000 manufacturing workers. As a result, the union won an increase of $20 a week and a 38-hour week. The agreement also allowed for a second increase of $14 in 1982, based on projected inflation for the next six months.

However, part the deal was that, in exchange for the improved conditions, the AMWSU agreed to a 12-month “no extra claims” clause, through which all future claims for increased wages or reduced hours were held back for 12 months.

One year after the AMWSU won its new agreements, the global economic downturn hit in full force, driving down demand for consumer and capital goods. This downturn had already begun to be felt in Australia before the wage campaign, but the AMWSU had been protected from it initially due to residual demand for skilled workers.

In response to the crisis, manufacturing employers started to rapidly shed jobs, and about 90,000 workers were sacked. In the face of this assault the AMWSU’s leaders abided by the “no strike” agreements and did not take industrial action to try to protect jobs.

At some shops, workers tried to secure jobs by agreeing to reduce their hours to a four-day week at four days’ wages.

While this experience would appear to support the Australian’s claim that wage rises lead to job losses, it only indicates that a wage rise occurred at about the same time as large-scale job losses during an economic downturn.

To sustain the Australian’s argument, there would need to be a consistent pattern that wage rises during recession result in job losses while wage restraint during recessions result in job creation.

No link
The pattern of wages and employment in manufacturing over the past 30 years does not indicate the direct link argued by the Australian and other supporters of a wage freeze in the current period.

Indeed, there are periods of significant job losses during the downturns of the late 1980s and early 1990s. During this period, real wages remained at best stagnant, and what wage rises were won were tied to productivity gains or loss of conditions, which limited the cost for capital for wage gains.

Moreover, if the decline in jobs was a result of wage gains and economic decline, as the economy recovers you would expect to see a significant recovery of jobs. However, such employment recovery has been more limited.

This reflects the extent to which capital has used periods of economic decline to restructure and force through increases in labour productivity at the cost of employment.

The Australian’s articles are part of a broader offensive in Australia and internationally to ensure that workers bear the brunt of the current economic crisis and to ensure bosses are in a position to reap the greatest share of the next recovery.

With this in mind, workers and unions must struggle to maintain and extend wages and conditions, and they should be supported by all working people.

This article was originally published in Green Left Weekly Issue #803

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Can wage restraint save jobs?

Lisbeth Latham

In the last month, Australian mine workers and mining communities have been rocked by layoffs and mine closures as mining companies have moved to reduce production in response to collapsing commodities prices.

In this context it is understandable and important for workers and their unions to explore solutions that will protect their communities from the devastation of closure. Two weeks ago, workers at Alcoa, who are members of the Australian Manufacturing Workers Union, decided to defer a four percent pay rise they had won in 2008 until 2010 in exchange for Alcoa not sacking workers.


This decision was made following Alcoa’s January 6 announcement that it would be shedding 15,200 jobs, or 13% of its global workforce, although no announcement had been made of job losses in Australia.

While the willingness of the workers to collectively share pay cuts is a significant display of collective solidarity, it is highly questionable that it will be effective in avoiding job losses and could result not only Alcoa workers but other workers losing more.

The Alcoa workers’ decision follows an ongoing push from the federal government, business and the media that workers should sacrifice wages now in order protect jobs.

No guarantees

While the workers are specifically offering pay cuts in exchange for no job losses, there is nothing to guarantee this is what will happen in the present circumstances: the offer to defer wage is not tied to Alcoa not proceeding with job cuts in Australia. Even if such an agreement was made, it would not guarantee that Alcoa would not conduct sackings in the future, as Alcoa would be able to blame any subsequent deterioration in the company’s financial situation for the job losses.

Previous experience shows that when companies are successful in gaining concessions (whether from workers or governments) they are quick to demand even greater concessions, with jobs ultimately being shed anyway. This should come as no surprise. Capitalism operates on a relentless drive to increase profits: if companies are able to secure an agreement that provides wage cuts under the banner of “saving jobs”, there is an incentive.

A central component of contract negotiations between the US United Auto Workers and US car manufacturers since 1978 has been the union making concessions in the wages and conditions of workers in order maintain the competitiveness of the automakers and preserve autoworker jobs. Despite ongoing promises that concessions would result in jobs being saved, employment at General Motors alone had fallen from 450,000 in 1978 to 73,000 in 2007.

In addition to the logic of concessions within a single company, workers giving up conditions at one company will encourage other companies to seek the same concessions — irrespective of whether they are in need of those concessions — in order to remain competitive.

Following the conclusion of the 1998 waterfront dispute between the Maritime Union of Australia and Patrick’s Stevedores, where the MUA agreed to a range of concessions in exchange for its members being allowed to return to work — including increased casualisation and reduction in staffing cranes — the other major Australian stevedore, P&O, moved to include the same conditions in its next enterprise agreement with the MUA.

It is also important to recognise that job losses have no direct link to either the wages that workers earn or the profits that companies make. Over the past two decades, thousands of bank workers have been made redundant across Australia during periods of high profits. In 2005, the National Australia Bank announced 2000 redundancies immediately following a quarter in which it made a record profit.

A more important factor influencing employment levels is the question of the amount of work to be performed; if this is reduced then capital will look to sack the workers that it deems to be unnecessary. Given the collapse in Alcoa’s revenue is a consequence of both declining commodity prices and declining demand, which has resulted in Alcoa moving to reduce production, Alcoa can be expected to reduce its workforce with the new levels of production that it is looking to achieve.

The only mechanism to avoid this would be to insist that working hours of workers be reduced in proportion with any reduction in production. However wages should be maintained by increasing the hourly rate by the same proportion.

Alcoa’s exact financial situation

A significant factor contributing to further threats of job losses is that company financial figures are not readily available to workers and their unions. This makes it possible for companies to manufacture a financial crisis in order to justify calls for concessions or job losses.

An important factor in Alcoa’s decision to shed workers globally was its poor performance during the December 2008 quarter, when it lost US$929 million. While this did reflect the impact of halving alumina prices between July and December, $708 million of the loss was a consequence of restructuring carried out by Alcoa.

This makes it important that unions have access to a companies’ books to have a clearer indication of their financial situation.

Who should pay?

Calls for workers to defer wage rises in order to limit job losses reflect an outlook that workers should bare the burden of the financial crisis. No such sacrifice has been made by Alcoa’s management or shareholders.

On January 23, Alcoa announced that it would pay a dividend of 17 cents per share, the same payment as had been made for the previous nine quarters. Over the same period of time, Alcoa had made profits totalling $4486 million. These massive profits should now be being used to offset the current losses being made by the company, rather than forcing workers and their communities to suffer.

Workers who sacrifice today to offset the declining incomes Alcoa and other companies are experiencing during the current downturn will not be reimbursed for their sacrifices in the future. Instead, everything given up today will have to be fought for again, as companies attempt to maintain any concessions that they are able to extract.

Unlike Alcoa, workers’ living costs are not going to be reduced during the economic downturn — indeed crucial costs of living such as rent are likely to continue to increase over the coming year. The only way workers can avoid seeing their incomes decline, and the flow-on effects to the rest of the community resulting from declining purchasing power, is for workers to continue to receive the pay rises that they have already won and that they are able to win in the coming years.

Originally published in Green Left Weekly #781

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'What do we want? Howard out!'

Lisbeth Latham

Despite heavy showers, 20,000 people joined the Unions WA-organised rally in Perth on June 30 against PM John Howard’s proposed industrial relations laws. Union contingents converged on the Perth Cultural Centre with chants of “What do we want? Howard out!”


The largest union contingents came from the Construction, Forestry, Mining and Energy Union (CFMEU), the Electrical Trades Union (ETU) and the Maritime Union of Australia (MUA). Thousands of workers from the state’s public sector joined the rally, after the state Labor government decided that public sector workers would not be docked pay if they took an extended lunch break to attend.

Rally speakers included ACTU president Sharan Burrow, Western Australian Premier Geoff Gallop and ALP federal industrial relations spokesperson Stephen Smith. The rally heard greetings from the Southern Initiative on Globalisation and Trade Union Rights conference that had been meeting in Bangkok and had led a protest at the Australian embassy to condemn the Howard government’s attacks on workers’ rights.

A series of protests across regional Western Australia began on June 27, when 3000 workers rallied in Karratha. Workers voted to follow the rally with a 24-hour strike. On June 28, 100 workers rallied in Geraldton, while 500 workers attended each of the protests held in Albany and Bunbury on June 30.

Chris Cain, secretary of the Western Australian branch of the MUA, told Green Left Weekly “The rally here in Perth was absolutely fantastic!”, noting how the “tremendous turnouts” in the regional centres “really inspired workers all around WA and here in Perth to get on board”. Cain said “the way the unions, churches, politicians, unemployed and the community came together was great”.

Unions WA secretary Dave Robinson described the rally as “a phenomenal display from the community in Western Australia”. He told Green Left Weekly that people “do not accept what John Howard is proposing for them” and that Howard has “no mandate to continue down this path”.

Jim McIlroy reports that around 20,000 workers crammed into the King George Square in Brisbane on June 30, spilling over into nearby streets. Large contingents of up to 2000 each from the ETU, the Australian Manufacturing Workers Union (AMWU), the construction union and the Transport Workers Union (TWU) marched from separate rallying points.

According to Queensland Council of Unions general secretary Grace Grace, the rally was the largest industrial mobilisation in Brisbane in a decade. A weekend of protest is being planned for July 30 and 31.

Labor Premier Peter Beattie pledged that his state government would introduce legislation to protect workers’ conditions, but conceded that the Howard government could move to override any state laws.

AMWU member Andrew Martin told Green Left Weekly that the feeder rallies held by the AMWU and ETU at Roma Street Forum were “very impressive and militant”.

“This is just the beginning. Howard doesn’t realise what he’s in for. We will fight till we win”, AMWU organiser Tracy Bradley told the rally. There were numerous calls for a national strike from the rank and file.

Susan Austin reports that at least 3000 people attended an indoor rally in Hobart’s City Hall on June 30.

Simon Cocker, secretary of Unions Tasmania, encouraged everyone to speak to their workmates and others, to complete petitions, and “work to influence the moderates and the decent conservatives to convince them that these proposals are wrong”. The mood of the rally was defiant and many people took away campaign material and pledged to organise their workplaces.

Tasmanian MUA secretary Mick Wickham told Green Left Weekly that 500 people rallied in Devonport on June 30. Members of the Australian Nursing Federation, the Health and Community Services Union, meatworkers and the MUA all walked off the job to protest.

According to Wickham, “This was a great turnout and considering a lot of people aren’t even aware yet of how these laws will affect them, it means the campaign is off to a very good start, and will grow a lot in the next month”. He said that unions in the north of Tasmania are meeting weekly to organise the campaign and are planning actions every three weeks.

More than 2000 workers protested in Darwin on June 30, reports Kathy Newnam, including a large contingent from the Bechtel Gas plant at Wickham Point. The rally heard from Unions NT’s Nadine Williams, who welcomed the protest as the “beginning of a long campaign”.

NT treasurer Sid Stirling, who joined the rally along with all members of the territory Labor government, declared that his government would “stand with every unionist in the NT and see the fight through and see it won”. He promised that employees in the NT public sector would be spared from Howard’s industrial relations changes, because “as an employer, we won’t have it”.

Stirling told the crowd that the NT government’s legislative power is limited, as territory legislation can be overruled federally, but that the government is seeking constitutional advice on “whatever laws are necessary to protect workers”.

The rally also heard about 30 contract workers at the alumina refinery on Gove peninsula who held a 24-hour stoppage after Alcan attempted to prevent them from joining the Gove rally.

James Caulfield reports that more than 500 unionists descended on the Hyatt Hotel in Canberra on June 26 for a rally outside the federal Liberal Party council meeting.

From Green Left Weekly issue #632

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ADI applies for right to discriminate

Lisbeth Latham
On August 31, Australian Defence Industries informed the Western Australian Equal Opportunity Commission that it intends to apply for an exemption from the WA Equal Opportunity Act.

If upheld, the application would allow ADI to exclude from employment workers born in any of the 20 countries that appear on a US government blacklist. It would also require all employees to wear tags indicating their country of birth.

While the changes would meet the requirements of the recently introduced US International Traffic in Arms Regulations, and allow ADI to bid for lucrative US defence contracts, it is estimated that 40% of ADI's 220 employees in Western Australia would face dismissal or transfer.

The application for exemption is being opposed by the Australian Manufacturing Workers Union, Equal Opportunity Commissioner Yvonne Henderson and UnionsWA. AMWU state secretary Jock Ferguson told Workers Online on September 3 that the proposal was a form of apartheid and was unacceptable.

According to the September 3 West Australian, ADI has already been granted an exemption by the Victorian Civil and Administrative Tribunal, in order to prevent ADI losing US contracts, and is expected to apply for exemptions in Queensland and New South Wales.

From Green Left Weekly #597.

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Police attack Joy Mining picket

Lisbeth Latham

MOSS VALE — Police forcibly removed people from a picket line at the Joy Mining heavy machinery manufacturing plant on April 27 to allow the removal of the plant's hydraulics workshop equipment. The picket was established last week by supporters of the workers who were locked out for three months on April 17 after injunctions were taken out by Joy Mining against the Australian Workers Union, Australian Manufacturing Workers Union (AMWU) and Electrical Trades Union.

Until April 27, the police had allowed the union and then the picketers to prevent vehicle access to the plant. It now appears that Joy Mining intends to shift all the machinery off site, and that the police will try to ensure this happens.

The removal of equipment from the site and reports from the AMWU that Joy Mining's parent company, Harnischfeger Industries, has filed for bankruptcy in the United States raises doubts about the workers' continued employment.

The picketers are determined to stop any further equipment being removed and are urging others to join them on the picket line on Vale Road (just off Suttor Road) in Moss Vale. For more information, contact the Wollongong Resistance Centre on (02) 4226 2010.

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