Neither Protectionism nor Unionism will hit stagnant wages for six - The Centre for Independent Studies
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Neither Protectionism nor Unionism will hit stagnant wages for six

CRICKET AUSTRALIAThe cricketers united can never be defeated (the Champions Trophy notwithstanding). Perhaps the most interesting thing in the dispute between Cricket Australia and the players represented by their union — the Australian Cricketers’ Association — is how much it resembles the feted IR battles of decades past.

The cricketers withholding their labour, the bosses locking them out, threats of dire consequences on all sides — every bit out which is played out in the public eye. You can almost hear the strains of Solidarity Forever in the background.

But in truth, far from emboldening the union movement, any success by the ACA is more likely to demonstrate just why private sector union membership in Australia has fallen below 10%. The economy has moved on, global trade cannot be corralled or controlled like a suburban factory once could.

While cricket competes with other sports for sponsors and viewers, as a product Australian cricket is unique. An Ashes series cannot be copied or replicated in Mumbai, the Australian team cannot be outsourced to China.

Australian cricketers may in fact be irreplaceable: a point former Australian cricketer Ian Redpath rather forcibly made in a previous iteration of this debate. This provides an enormous amount of leverage to the cricketers.

Decades ago, through a combination of protectionism and unionism, many industries enjoyed a similar privileged position. Very few do so now. Union heavies may have once been able to physically prevent ‘scabs’ from breaking the strike but we can no longer stop consumers from buying cheaper electronics from Asia, or luxury automobiles from Europe.

In this environment, individual workers are far more likely to be indispensable to particular businesses than groups of workers are to an industry.

It is hardly surprising that the areas where unions remain the most prevalent are those where the workers have extra leverage, cannot be easily replaced or substituted, or hold a privileged position in society. Public sector unions, especially emergency services, are good examples, as are union-like gatekeeper organisations such as the Australian Medical Association.

In other words, unionism has remained most active where it is the most effective. Elsewhere it has declined.

However, changing economic conditions are not the only factor in this equation. It has been some time since industrial relations has been conducted primarily by large scale industrial action. Much of what would once have been the subject of strike action is now resolved via regulation.

Those fighting for better pay and conditions figured out they didn’t have to take on each business one at a time, they could get them all if they coded their requirements into law.

Several consequences flowed from this change in focus. From the perspective of unions, one perhaps unintended result was that it was not as important to have organisers in a host of individual workplaces. At the same time global trade and automation made unions less effective, they also became less important.

Another was that business faced increasing compliance costs — ones that could be alleviated in part by reaching agreement with the union. This in turn created an additional competitive advantage for large businesses over small. This is one reason why deregulation is hard to achieve in practice: regulation sometimes functions as a barrier to entry for new players, reducing competition.

But not all IR laws were passed by those aligned with the union movement. Strike busters were replaced by Senate busters, as some on the right sought to use the law to end the union movement altogether. That these attempts have been far less damaging than the attrition of time is instructive.

Some have suggested the decline of the union movement should be arrested via legislative intervention or through government funding of certain union activities. Even if such provocative actions were politically possible, it is unlikely to help. The same forces tearing down protected industries are reducing union membership.

As the dispute between Cricket Australia and the ACA is not just about pay but also the status and prospects of the workers, so too are we seeing political fallout from economic change. Stagnant wage growth is a real problem. In the US and the UK in particular, it has led to the rise of populist politicians and movements, as well as contributing to the general political and economic uncertainty in each country.

However the solution is not to reach for the tools of the past, either protectionism or union control. The changes wrought in our society are too profound, and beneficial, to undo. Politicians need to face the fact that the future of work will not resemble the past and start to adapt.

Simon Cowan is Research Manager at the Centre for Independent Studies