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February 12th 2014 print

Alan Moran

Pity Those Toyota Workers, But Not A Lot

Union fat cats, subsidy-slinging governments and complicit judges share blame for ending auto manufacturing in Australia. But no list of guilty parties would be complete without those rank-and-file workers who let this cart of rotten apples run them out of their jobs

snoozeAustralia has allowed the development of exploitative labour monopolies comprising union leaders, their members,  Labor politicians and the judges they appoint. The conspiracy starts with one or more unions gaining monopolies over workplaces, allowing them to demand above-market wages and conditions. In the construction industry, for example, subcontractors may be obliged to pay wages that are $50k and more above market rates.  Attempting to operate on non-union terms means loss of the business, plus the penalties unions can extract in addition to the $700-$1200 a year they receive in individual membership dues.

In the case of auto-assembly outfits, average wages of some $85,000 a year compare to an underlying value of perhaps $60,000.  Additional costs are incurred by having the union organisers present on the plant and interceding with the management. These pay rates are possible only because we have created protective institutional arrangements — EBAs and Fair Work Australia for starters, not to mention police forces that have accustomed themselves to not upholding the law when unions break it, often flagrantly.

Recognising that many unionists (but no union leaders) vote for the Coalition , Tony Abbott has been at pains to distance “decent unionists” from the unions themselves.

Well that’s just politics, because surely the Prime Minister understands that his “decent” union members are also part of the conspiracy.  Few make any real effort to turf out their incumbent leaders and, quite frankly, why would they want to? Though many would be aggrieved at the union nobs spending members’ dues on prostitutes and high living, their own compensation argues against raising a stink.  The image of rank-and-file members as blameless victims is further diminished by the evidence of mass support for the union militancy. Consider the hundreds of CFMEU members regularly participating in protest marches and blockades, including a series of ugly protests in 2013 against  Grocon, a firm almost unique in standing up to that union.

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Competition is, or should be, the great eradicator of these monopoly-driven cost-boosters.

In the case of those making internationally tradeable goods, this simple truth strikes home with a vengeance.  In the car industry, the government and its institutions provided the rescue package with tariffs and other support.  However this came with the additional baggage of EBA’s that locked in and enhanced the inflated overheads and excessive costs.  Sustaining an industry like motor vehicle assembly, never ideally suited to Australia’s small market, it was all getting too expensive at some $1 billion a year in various forms of support. At the micro level, that figure represents around $50,000 per year per job.  Even Labor could not hold Ford, and Holden soon after proved another lost cause.

The decision by former ALP preselection contender and Gillard-appointed Judge Mordecai Bromberg, who rejected Toyota’s bid to have its  workforce vote on whether or not to consider a list of proposed concessions, may have been superfluous.  Although an otherwise entirely unreliable source, the World Socialist Web Site quoted an allegedly representative Toyota worker who insisted such a vote would have gone against the company regardlress. “Everybody is happy about the court decision,” the voice from the shop floor insisted, demonstrating that he was on to management’s sly tricks. “Management tries to pressure the workforce, talking about globalisation.”

Many claim that management — not just at Toyota but far more broadly — has been complicit in defrauding consumers and taxpayers by tolerating the monopolies on the supply of labour that unions have established.  Perhaps so. After all, management also responds to sticks and carrots, just like those workers who revel in their earnings while doing nothing to press for reform in their unions. Unlike unions and their members, the international automakers and domestic construction industry face keen competition, so profits are squeezed.

Firms operating in the sea of workplace monopolies need to abide by the current bent rules — go along to get along with those iniquitous union- and government-established institutional arrangements — if they are to make “normal” profits.  Any company bucking its union faces the prospect of intimidation, aggressive picketing and bogus work-safety campaigns of the sort used against Grocon.  No politician could possibly be unaware of this conspiracy.  Those on the ALP side are especially culpable since almost to a man they are products of the seething, cancerous cauldron of union corruption that elevated them to elected office.

Motor vehicle assemblers and their unions claim they deserve special assistance, even though their members are out of work because of the red ink and closures their very own militancy has caused. To quote an old gag, they are in the dock with the man murdered his parents and then begged for mercy because he was an orphan. Such arrogance speaks volumes about the general acceptance of the theft from consumers and taxpayers to which these cossetted workers have been party for so many years.

The whole union edifice stems from closed shops supported by government agencies.  The consequent market corruption has been most destructive in the building and construction industry, where demand is not subject to overseas competition, and in the motor industry, which governments have sheltered from their own competition.

Over many years, the construction unions have attempted to extend their control to the home-building industry, often with what seems like the support of the ATO.  Fortunately, independent businessmen have resisted and an efficient home-building industry has been maintained.

Institutional support for maintaining freedom of contract has been rare – the ACCC has certainly shown no interest in operating in this field.  One exception, the Australian Building & Construction Commission courageously run by John Lloyd, was destroyed by Julia Gillard, who gave her supporters among the monopoly unions free rein.

A lengthy period in office by a reformist Coalition will change this and bring Australian union arrangements into line with those of other nations.  Such developments will unlock vast productivity dividends to the benefit of all but those who are stripped of their monopoly privileges.

Alan Moran is the Director of the Deregulation Unit at the Institute of Public Affairs