By Michael Rafferty
The term "training wage" is a misnomer. We should call it what it really is. It is a below-award youth wage — a pay cut for all young people entering the work force, and potentially also for all young people already in the work force, simply on the basis of their age. It is also no exaggeration to expect that all unemployed people, regardless of age, will be affected by the "training wage". In fact, Simon Crean has already said as much.
The youth wage is not going to result in more skilled jobs for young people. It won't do anything to solve the unemployment problem. It is about something much more basic and obscene.
The government has itself made clear that the youth wage will in no way fix unemployment. Its own forecasts concede that unemployment will not fall much below 10% before the end of the decade.
The basic problem is a lack of jobs, not that workers are being paid too much, or don't have the right skills.
This is not just an Australian problem. Across the major industrial countries, in the United States, Canada and Western Europe, there are around 30 million people out of work. Unemployment on this scale is now a permanent feature of our society.
The official argument goes that there must be a reason that so many young people are unemployed. One reason is that they are paid too much. The other is that they need specific skills that they don't have when they finish school. If young people take a pay cut, then employers can "afford" to employ them and give them more training.
Because employers will earn more profits from these workers, they will have more money to invest and can then employ even more young workers. This beautiful upward spiral will lead us to full employment and a land of rich and rewarding work.
Many young people will think that a pay cut is worth the price to get into paid work, or to get relevant training. And no doubt some more young people will be employed if they are prepared to work at below-award rates. That is precisely how young people are being asked to respond.
A youth wage will not fix unemployment. Large scale unemployment is not going to go away. The white paper has accepted this as a fact of life and has been trying to work out ways of being seen to do things about it. A youth wage seems to be one of the main proposals.
A youth wage won't result in better training. There is an old saying that if you pay peanuts, you get monkeys. With lower wages, employers will actually have less, not more, need to improve productivity. They can get higher profits just by paying workers less, without needing to improve their "human capital".
It is no coincidence that the current recovery from the recession has had record low levels of investment in plant and equipment.
A training wage will mean that jobs will have fewer skills. The sorts of jobs that will be part of any training wage will be low skilled and continue to need either a subsidy or low pay. And the longer a training wage exists, the more skills will come out of those jobs.
Sharing misery
So if this youth wage won't fix unemployment, and won't even result in more skilled jobs, what will it do?
One thing that's going on here is the government's attempt to redistribute unemployment across the work force. The government is seeking to find ways of shifting the burden of unemployment from sections of the work force where it is concentrated — the young and long-term unemployed — to other sectors where it is less concentrated.
Just in case you think this idea of sharing out the misery is motivated by genuine concern for young unemployed, one of the members of the committee that proposed the youth wage has said that the real reason for recycling unemployment is to make sure the unemployed exert more pressure on those in work. It's about using the unemployed to keep those in work docile, and prevent them from pushing for better wages and conditions.
Because young people are a large component of the unemployed and are poorly organised, the government hopes that they can be forced to accept pay cuts that others might not, and that the threat of that can then be used as a general weapon against all workers.
It is hoped that it will divide workers not just between employed and unemployed, but also between those receiving youth pay and those on adult pay.
Trickle down
This proposal fits hand in glove into the wages strategy of the last 10 years. That strategy has been to cut wages and to reduce the living standards for all the work force. It has already resulted in the most dramatic shift in national income from wages and salaries to profits in the last 50 years. The youth wage and rest of the white paper are really about more of the same.
It is the same disastrous logic as the Accord — the trickle-down economics that says that if we let the rich get richer, some of it will eventually trickle down to the rest of society. We have 10 years' experience that this is totally flawed. Profits have gone through the roof, but nothing has trickled down.
Our society is based on profits, and in such a society, a government is successful if it can help increase them. So a youth wage may not fix unemployment, or boost skills, but it will boost profits. That is why the youth wage is so attractive to the government.
What needs to be made clear is that opposition is about opposing pay cuts for everyone. When you reduce the price of the lower-paid sections of the work force, it affects all other wage earners, because their wages are based on, and related to, the wages of lowest paid.
All workers should be vitally interested in the opposition to these proposals, which are another pay cut to a section of the work force. The young are being targeted only because they are the least powerful and least organised section.