The threat of job cuts is a smokescreen
There are a lot of tricks and short cuts taken in modern discourse, with its short attention span and abundance of professional spin doctors. In particular, when discussing policy there is a certain word which is often uttered as if it was magic spells that can silence one’s detractors.
The word is “jobs”. It is increasingly favoured by politicians and rent-seeking lobby groups, but are we finally becoming too skeptical for it to work?
Whenever the debate turns to an economic issue, this word is sure to surface early on in the rhetoric for or against any proposal. It is implicit in such an argument that whichever decision creates more jobs must be the right one. Unemployment is, after all, a calamity we would hardly wish on our worst enemy. The more jobs, the better things must be for Australians and our economy.
Last week we saw a new campaign launched by some major retailers, spearheaded by billionaires Solomon Lew and Gerry Harvey. The campaign was designed to nag the government into levying GST on online sales from overseas retailers.
Failure to do so, we were told, would “ultimately cost Australians jobs in retail, manufacturing, logistics and related services.” But rather than being a sound economic argument, this is a substitute for making one, and it’s not a new tactic.
We see this card played time and again. The debate around the Resource Super Profits Tax or RSPT was replete with talk of jobs. Television ads were run with lines about “tens of thousands of jobs, not just in the mining industry.”
Radio spots in Russian and South African accents thanked “Comrade” or “President” Rudd for sending good jobs to their countries. “Less investment means less jobs,” they wrote. Little evidence was offered to support these assertions, just the idea that what’s bad for (their) business must be bad for employees.
The entertainment lobby make similar claims when agitating for tougher penalties on internet pirates. “The jobs of close to 50,000 Australians employed by the film and television industries could be threatened by piracy,” they claim. The message is clear - combating piracy will cut unemployment.
Other recent examples abound. With the Gunns pulp mill, where the supposed creation of “thousands” of jobs ought to trump environmental concerns; in immigration, where cuts to visa numbers will “cost jobs”; or even reform to the Pharmaceutical Benefits Scheme, which would “export jobs”, according to industry.
More worrying, the debate on climate change is often diverted with the fear that taking action could cost jobs.
A little analysis is warranted. Firstly, the numbers are usually exaggerated. The mining industry employs only a little over 1 per cent of the workforce, and how many of these jobs would really be threatened by a tax on only the most profitable enterprises? The movie industry claims that 50,000 jobs could be at risk, but a little digging reveals this to be the entire entertainment industry workforce, from movie producers down to video shop staff and movie theatre popcorn sellers.
How many more jobs would there really be if downloading was eliminated overnight?
Secondly, Australia’s unemployment rate, at 5.2 per cent, is extremely low by world standards. We are not in the midst of depression with thousands standing in the bread queue daily. While job creation is always an important part economic goal, at the present time it should not stand in the way of economic reform.
Finally, it is usually implied that change, or failure to change, will simply destroy jobs.
But an economic policy that disadvantages one industry will usually benefit others, or the community as a whole. A tax that reduces industry profits may well create more jobs when the proceeds are spent on infrastructure and services locally, rather than being distributed to shareholders overseas.
Money saved by consumers online will be spent on other goods and services, boosting employment in other sectors of the economy. Mass unemployment is likely to be caused by global macroeconomic conditions, not small reforms to the tax system or industry policy.
There’s a strong element of hypocrisy in these jobs campaigns, as the commitment of industry to job numbers quickly evaporates when profits are threatened. Can there be any doubt that the major retailers, today so loudly proclaiming their angst over reducing the hours of casual staff, see their employees as anything but a cost to be minimised?
If they could replace their staff with vending machines and thereby slightly increase profits, it is all but certain that they would - with a great show of reluctance - invoke their sacred duty to shareholders and start handing out pink slips. If they really cared about staff, they would strive to improve their wages and conditions, instead of combating any positive change with a warning that it will - what else? - threaten jobs.
Keeping unemployment levels low is a good thing, and so is an economy in which industry can flourish. But next time you hear somebody talking about protecting jobs, it’s worth asking yourself: Whose pay packet are they really worried about protecting?
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