In this piece placed on Quadrant, I have a slightly different take than most other people on the sensible side of the IR debate regarding the Toyota and building industry union interfaces (including the PM as well as David Flint and Peter Smith).
The central issues are clearly about the union movement seeking to control industries, creating influence for the future politicians in their hierarchy and the reinforcing synergistic ties with the ALP itself and the judicial and other appointments they make to bolster their influence and reward their associates. The outcome of the union influence clearly adversely impacts the productivity of the economy by raising costs. It is also correct to point out that, loss of revenues aside, the union hierarchy is indifferent to the workers they represent losing their jobs as a result of the excessive remuneration and conditions.
However, the union members are not hapless flotsam being mercilessly and cruelly exploited. The union/political/legal Mafiosi have created entry monopolies into the construction, motor vehicle and some other industries whereby the union membership is a necessary prerequisite to getting and holding a job in the sector. This prevention of competition allows wages and conditions to be demanded that are well in excess of the market rates, a matter that the ACCC has refused to address, preferring instead to confine itself to attacking confected business monopolies.
Some of the resultant rents from preventing competition in the labour supply are creamed off by the union hierarchy and hence their political supporters who receive campaign donations. But much, in fact most, judging by evidence of pay packets goes to the “decent” unionists themselves.
The unionists concerned probably earn 50 per cent more than they would if the union monopoly were to go. They are not stupid and realise this is far more than their next best employment opportunity. Hence we see a demonstrable loyalty of union members to the union hierarchy.
We are now finding in the car industry that the game is ending. The excessive costs required by unions have left the plants vulnerable to overseas competition. The union hierarchy saw no advantage to itself in allowing market rates of remuneration and still less in non-union shops, hence its members are now being discarded as cannon fodder. Maintaining the excessive wages and union income stream created by monopolistic supply of labour is difficult for tradeable goods industries, like car assembly, that face of competition overseas firms which are beyond the control of the Australian monopolist Mafiosi. It would be impossible without massive government assistance.
The absence of overseas competition has made it easier to control the construction sector’s labour supply. To release the productivity locked up in this sector will involve smashing the monopoly the unions have gained. That process had commenced with the industry watchdog, the Australian Building and Construction Commission, under John Lloyd, which Julia Gillard destroyed in recognition that it was choking off the funding and political recruitment the ALP needs for its present business model. For this reason the ALP and its partners will fight with great intensity to retain the monopoly privileges of the unions.