Rudd defends bosses' profits, not jobs

By Doug Lorimer

The Rudd Labor government claims that saving workers’ jobs from the impact of the deepening global economic recession is its top priority. However, its April 2 announcement halving the number of not-for-profit job placement contractors across Australia, forcing up to 2000 workers employed by these job agencies to join their “clients” on the dole queues, demonstrates that the government’s real aim is to defend bosses’ profits. The announcement was part of a “streamlining” of the $4 billion out-sourced employment service set up by the Howard Coalition government in 1998.

Similarly, the Rudd government’s economic stimulus packages, worth $52 billion so far, are aimed at protecting the earnings and profits of capitalist businesses, rather than saving workers’ jobs. This is completely consistent with Rudd’s self-proclaimed mission statement, made in the February edition of The Monthly, “to save capitalism from itself”.

The first stimulus package, announced last October, provided $8.7 billion in pre-Christmas cash payments to pensioners and other low-income earners, with the aim of boosting Christmas retail spending. Retail sales had slumped by 1.6% in September, leading retailers to fear a “horror” Christmas.

Marg Osmond, CEO of the Australian National Retailers Association, which represents the country’s biggest retail chains such as Woolworths and Coles, welcomed the package, saying, “Shoppers planning to cut back this Christmas may change their intentions, knowing that relief is in the pipeline”. There certainly was relief for the big retailers. Woolworths, for example, reported that its total sales for the 27 weeks to January 4 were $26.1 billion compared with $23.9 billion in the first half of 2008.

On March 31, Osmond said the government’s pre-Christmas cash handouts had boosted retail sales by $1.3 billion over December and January. However, retail sales fell by 2% in February, according to figures released by the Australian Bureau of Statistics that same day. This was the largest contraction in retail sales in nine years. “It seems low consumer confidence and rising anxiety about dwindling job security swamped any lingering boost from the cash handouts”, said Stephen Walters, the JPMorgan Chase bank’s chief Australian economist.

With the retail sector accounting for around 23% of Australia’s GDP and about 15% of all jobs, this slump in retail sales indicates that the first stimulus package has failed to counter the economy’s slide into recession. During the last quarter of 2008, GDP contracted by 0.5%. “Right now, our preliminary estimate is for a contraction in GDP of 0.4%” in the first quarter of 2009, Besa Deda, chief economist at St George bank, told Reuters on April 1. A recession is officially recognised as two consecutive quarters of negative GDP growth.

Despite Rudd’s claim when he announced the first stimulus package that it would “create 75,000 jobs”, the official unemployment rate hit 5.2% in February, up from 4.5% in December and 4.8% in January. According to ABS figures released on March 12, more than 100,000 full-time jobs were eliminated in previous six months, with more than half that number disappearing in February. The overall jobless number for February — 590,500 — would have been higher except that the loss of full-time jobs in February was matched by a rise in part-time jobs, as companies put workers on shorter working hours, with commensurate reductions in pay.

In the latest such move, General Motors-Holden’s announced on April 3 that it would halve production at its Elizabeth plant in Adelaide because of falling car sales. The plant’s 3150 workers will be divided into two production teams working a five-day week on a one week on, one week off basis. GMH has hinted that workers’ pay will be the same as what they now receive for the current “down day” arrangement, under which the company pays half their wage on the days they are not working. One worker told the Adelaide Advertiser that he expected to be $150-200 a week worse off. Another said the company was “basically forcing us out of work”. GMH has refused to offer any redundancy packages to workers who quit.

In early February, Rudd announced another economic stimulus package, of $42 billion. This will be delivered in two stages — a further round of cash handouts, totaling $11 billion, will be made this month. The second stage will be rolled out in financial year 2009-10 ($15.7 billion) and 2010-11 ($9.8 billion), the main components of which are $14 billion in contracts to capitalist businesses to upgrade school facilities, $3 billion to install home insulation and $6 billion to construct 20,000 new homes.

At the time of its announcement, Rudd claimed it would “save 90,000 jobs”. However, the announcement of the second stimulus package was accompanied by a Treasury estimate that unemployment would reach 7% by June 2010. However, this estimate is now regarded by nearly all business economists as wildly optimistic, who now expect the official unemployment rate to reach 7% by the end of this year. Economists at Goldman Sachs and JPMorgan Chase predicted late last year that the number of officially unemployed workers in Australia would double to 1 million — 9% of the labour force — by the end of 2010.

In a report issued on March 31, the Paris-based Organisation of Economic Cooperation and Development, of which Australia is a member, expects GDP in its 30 member-countries to contract this year by an average of 4.3%. The OECD expects world trade to contract by 13.2% this year, with exports by Australia’s biggest trading partners in Asia already declining at an annual rate of 30% over the past two quarters. It expects unemployment in the OECD countries to average 9.9% next year, with many countries recording much higher numbers

On April 2, ABC Radio National’s World Today program reported that a survey of 6000 Australian employers by the Hudson staff recruitment company found that 18% of them plan to lay off staff over the next few months. Hudson’s chief executive for Australia and New Zealand, Mark Steyn, said, “we are predicting unemployment to be somewhere between seven-and-a-half and nine-and-a-half per cent by the end of the year”.

Job advertisements fell for the 11th consecutive month in March, according to the ANZ Bank survey, released on April 5, with the total decline approaching that of the 1991-92 recession, when the unemployment rate peaked at 10.9%. “In the 1990s, the 70% decline in newspaper job ads occurred over a period of 35 months while the 61% decline experienced so far this time has occurred over 16 months”, economist Warren Hogan said.