A new start? Welfare changes and the labour-power shortage

A new start? Welfare changes and the labour-power shortage

An attempt to understand the changes to welfare in Australia by looking at the impact of the labour-shortage caused by the mining boom.

As some readers might be aware on 1st of January substantial changes to the single parent payment took place. The main change is that when their children turn eight parents receiving the single parent payment will be shifted to Newstart (the standard form of welfare for those considered unemployed) – this will mean both a $110 a week reduction in their payment and that they will be subject to the usual pressures, routines and requirements of jobseekers (dole diaries, endless appointments with job agencies and all that). These changes are just part of a broader transformation of how welfare works in Australia; changes that include the expansion of welfare quarantining, increased disciplinary processes applied to the unemployed and increased requirements for those on other forms of welfare, such as parenting or disability payments, to enter into the job market. There has been some considerable media attention after Families Minister Jenny Macklin answered a question saying that that she could live on the $35 a day Newstart provides and then later the transcription of this press conference changed her answer to ‘inaudible’.[ii]

It was as a participant in the Assembly for Dignity that I started thinking about these changes and first started formulating many of the ideas that underscore the research in this blog: especially the idea that one of the main barriers capital in Australia faces is a labour shortage, or better yet, a shortage of labour-power.  Some of the early development of these ideas can be found here and here. I have been meaning to write a more thorough and systematic exploration of these ideas and research but as of yet I have not been successful.

The start of my thinking was that major changes to Australian welfare broke the script of how radicals, anti-capitalists and ‘The Left’ thought about welfare. Rather than a retreat of the state it was burrowing of the state deeper into the minutia of the behaviour of people on benefits – for example welfare quarantining which restricts what people can purchase and where, increased pressures to enter formal education, more punishments for failing to make meetings and the development of ‘participation plans’ that mandates changes in various areas of people’s lives. I don’t have the figures with me currently but from what I remember the cost per person to subject them to welfare quarantining is around about $5000 per year (yearly Newstart payments are approx. $12500). Also these changes were designed when unemployment was very low – less than 5%.

Also the context of the development of these changes was very complex. Many of these changes had first been applied in 2007 as part of the Northern Territory Intervention exclusively against Aboriginal people. This seemed be a continuation of the racist policies of discrimination and marginalisation that have been a core part of Australia’s colonial history. But then we saw very similar welfare practices generalised against those on benefits on a whole (at present only six regions have income management but the legislation allows it be extended to the whole of Australia).

I contend that the only way to grasp these changes is to understand them as a state intervention into the lives of those on welfare to increase the amount of labour-power in society – that is to change them as people, how they act and behave so they will seek employment and fit capital’s requirements to be employable. This is because in the conditions of the continual mining boom there is shortage of labour-power.

A short diversion. What is labour-power and how can the state attempt to increase it? The source of all wealth is the interaction of human creativity with the fecundity of the earth. In this sense labour ‘is the living, form-giving fire; it is the transitoriness of things, their temporality, as their formation by living time.’[iii] This is true in all societies. But in capitalism production is not organised to increase wealth, but rather wealth is produced so capital can endless accumulate more capital. Capitalist production produces commodities so they can be sold: it is the selling and realising the value which is objectified in them that matters for capitalists (of course these commodities most often, give or take, must have some kind of use and must be made to at least a basic standard or people won’t buy them – and conversely may be willing to spend more on high quality products…though this can often have to do with the social status of a brand).  ‘Use-values are produced by capitalists only because and in so far as they form the material substratum of exchange-value, are the bearers of exchange value.’[iv] Marx argues that profit is possible in capitalism because in some industries, those that produce commodities, surplus-value is created. That is capitalists start with X amount of money, they purchase means of production ( machinery and raw materials) and hire workers and then put them to work. In this process the value of the machinery and raw material is transferred to the commodities that are produced, whilst something different happens with the labour that is hired. Workers sell their ability to work for wages: ‘their capacity for labour[Arbeitsvermögen], in other words labour-power [Arbeitskraft].’[v] The amount of work that they do in the time they are hired for has a certain flexibility ( they can slack off and do nothing – yay! or work very hard and intensely, work at an average rate etc.) and thus produce or contribute to producing commodities that when  they are sold will have a greater value than that which is spent on their production and thus produce surplus-value. In this sense the exploitation of labour-power is ultimately the source of all profit. Though in a real existing capitalist society profit appears in many different forms and circulates through all of the system. ‘Surplus-value is therefore split up into various parts. Its fragments fall to various categories of persons, and take on various mutually independent forms, such as profit, interest, gains made through trade, ground rent, etc.’[vi]  Many of us work in industry that don’t produce commodities or produce surplus value – but they still make a profit (and importantly are in practice just as important to the functioning of capitalist society as commodity producing activities, as are forms of work that don’t make a profit but reproduce capitalist society… a topic for another day). Readers are advised to read the Third Volume of Capital.

Thus for capitalism to exist it is dependent on the existence of a class of people who only have their ability to work, their labour-power, to sell. Capitalism can’t be capitalism if there isn’t this group of people who can’t make a living any other way except by working for others. Much of the violent history of capitalism is the formation of this class through their expropriation from other forms of living and subsistence. ‘And this history, the history of their expropriation, is written in the annals of mankind in letters of blood and fire.’[vii]

But labour-power isn’t a fixed quality it is a ‘dynamis’, a potential, which lives in our actual bodies and minds. It’s the complex sum of physical and mental abilities, skills and competencies, personality, aptitude and attitude.[viii] This is why at work so much effort is applied by capital to manage our labour, to make us work at a certain rate, in a certain way and increasing to control and produce our attitudes and feelings at and about work ( being a ‘team-player’ being ‘bubbly’ etc.) But labour-power as a whole is created across the terrain of our lives. Feminists such as Federici, James, Dalla Costa and Fortunati have pointed out how crucial the unpaid work of (mainly) women in the home is to reproducing labour power.[ix] Althusser shows how the creation of a certain kind of person, a subject, via the reproduction of ideology, is necessary; ‘the reproduction of labour power requires not only the reproduction of its skills, but also, at the same time, a reproduction of its submission to the rules of the established order, i.e. a reproduction of submission to the ruling ideology…’[x] Virno argues “the non-mythological origin of that mechanism of expertise and power which Foucault defines as bio-politics can be traced back, without hesitation, to the mode of being of the (sic) labour-power.”[xi] Bio-power/bio-politics (to simplify to the ridiculous) are the terms Foucault uses to explain how the individual body and the population on a whole become subjected to numerous forms of management. For a banal example look at how the Qld state government attempts to make sure people eat healthy or all the processes that the unemployed are subject to by Centrelink and Job Network Agencies.

Marx argues that the unemployed form an ‘industrial reserve army’ which play two crucial roles in producing the supply of labour-power. On one hand they, to quote Marx, provide the “mass of human material always ready for exploitation by capital” that is they provide the labour-power necessary for continual expansion of accumulation.[xii] On the other the competition for jobs works to regulate the price of wages. Marx writes “taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and this in turn corresponds to the periodic alternations of the industrial cycle.”[xiii] The competition of workers for work puts a downward pressure on wages.

What then is the impact of a shortage of labour-power? Most obviously the increased demand for workers give workers increased bargaining power over wages and conditions, and perhaps even increased confidence (the militancy of the 60s and 70s can be in part attributed to the security workers felt in conditions of full employment. I suspect the massive explosion of debt today dampens this effect). But also it works to limit capital’s ability to function as capital. It caps how capital can expand – why invest if there is no one suitable to hire? – or at least compels them to invest in more productive technology and work practices. Secondly it would limit how capital can circulate from industry to industry. Capital has a tendency to move from industries of a lower rate of profit to those of a higher thus working to establish an average rate of profit the result being one in which commodities tend to sell not at their values but at their price of production and capitalists receive a profit based on the amount of capital invested and the organic composition of their capital (the ratio of means of production to workers) not the actual surplus-value produced at their firm. Caffentzis argues this is also what makes the capitalists a class as it creates a common interest for them in the health of capitalism as a whole.[xiv] However readers may be aware that there is serious consternation in circles of power in Australia that an average rate of profit is not being established and rather we are living in a ‘two-speed’ or ‘patch-work’ economy with export related manufacturing and retail suffering. Could it be that the shortage of labour-power, along with the specifics of mining (there are after all limited mining opportunities) are  working to prevent capital from moving from these sectors to more profitable ones? (As an a side I have an hypothesis which I wish to explore in the future that this lack of an average rate of profit can help us explain the split nature of Australian capitalists, with mining companies unwilling to act in the interest of capital on a whole).

But what is the evidence to suggest that there is such a labour-shortage? These welfare changes and the logic behind them are most clearly articulated in the Federal Budget 2011-12. Here they constituted part of a much larger initiative entitled Building Australia’s Future Workforce: trained up and ready for work. In this Budget the government clearly argues that the Mining Boom Mark II is causing a labour shortage. ‘The mining boom will inevitably see the re‑emergence of capacity constraints, particularly skill shortages, leading to increased wage and price pressures.  This, along with a high exchange rate, will put pressure on those sectors not directly linked to the mining boom.’[xv] At the time unemployment was below 5% and Treasury expected it to continue to decline.[xvi]  Thus the purpose of this budget was to respond to this. ‘The Budget responds to Australia’s workforce needs through investments in skills and training that are more targeted to the needs of industry, and other measures to boost participation to ensure there are opportunities for all Australians to experience the benefits of work.’[xvii] The changes to welfare were just part of this initiative with the government also planning major changes to develop a better funded and industry coordinated approach to training (that is the state taking on the cost of reproducing labour-power) and efforts to encourage older workers to stay in the job market longer.[xviii] In the Building Australia’s Future Workforce: trained up and ready for work document there is a clear narrative linking a labour shortage, lack of industry relevant skills (which may also means a form of resistance on the part of workers to choose occupations on the basis of industry’s need?) and lack of participation in the workforce by pockets of the population.

Now of course the 2011-12 Budget predictions about the economy were wrong. Whilst growth in Australia is strong it is not as strong as then imagined. In particular drops in demand for iron ore and coal has weakened the strength of the Australian economy.[xix] (It is also the cause of a shift in investment to Liquefied Natural Gas). Unemployment was at last count 5.3%.[xx] This is still close to functional full employment but it does mean that the concerns about unemployment having an impact on inflation have lessened (i.e. the worries about the labour shortage driving up wages and thus prices has reduced).[xxi]

Does this mean the labour shortage is over? Well no but perhaps the pressure has lessened. In terms of the welfare changes it is clear that they arose out of the state’s attempts to address the labour shortage. Here is another important theme: the difference in speeds between the dynamics of capital accumulation and state legislation. The former moves much faster than the latter and thus there is always going to be some form of temporal discord between the two. Secondly if we look at the arguments coming out of the mouths of Australian capitalists ( for example the Australian Chamber of Commerce and Industry and the Business Council of Australia) we see a long-term concern about labour and skills shortage due to continual growth, an aging population and the size of the sector of the population outside the labour-market.

Interestingly at the end of the December 2012 the Business Council of Australia, the Australian Council of Trade Unions and the Australian Council of Social Service released a joint statement entitled Opportunity for All. A remarkable document for two reasons at least: one it shows the continual cooperation of business, labour and community organisations to address the shared problems of capitalism; and that it calls for an increase in welfare payments – yes that is right one of the major employer organisations think the unemployed should get more welfare.[xxii] But this document continues the argument that there is a shortage of labour-power. Quote: ‘As the population ages over the coming decades, labour shortages will become an impediment to economic growth. The technological and information revolution is transforming the nature and organisation of work, requiring an ongoing commitment to improving the education and skills of our workforce.’[xxiii] They continue:

In some industries and regions, employers are already struggling to find enough people to fill critical job vacancies, while at the same time there are many Australians unable to find work or who would like to work more hours. To build prosperity and share it widely, it is vital that we bring into the workforce those people who have been left out or are being churned between work and unemployment. Having come together to consider these issues, our three organisations agree that while the economic opportunity is there to do so, we will work together to reduce entrenched disadvantage and reduce long-term unemployment. Everyone wins if we can bring people currently excluded from the labour market into regular decent work – that is, work that is productive and delivers a fair income in conditions of freedom, equity and security in line with human dignity - poverty and reliance on social security are reduced, labour shortages are eased, and the economy can grow faster without coming under inflationary pressure.

In this way we can pursue social and economic objectives at the same time, in Australia’s national interest.[xxiv]

What is hidden here is how much of this labour-power shortage is perhaps a question of struggle from below. At this point I can only speculate as I haven’t done the co-research to verify these claims. But in the context of low unemployment are we seeing workers use this security to refuse certain types of employment and certain types of employment conditions? There is a popular discourse that young workers in particular are refusing work discipline and demand quick career progression and special treatment. Whilst a friend pointed out the other day that the development of ‘fly-in-fly-out’ (FIFO) workers for mining is a major victory for the companies vs the unions as the companies no longer have to invest in building a town which then became sites of union organisation and power, could it also be that companies are having to swallow the costs of flying workers across the country as workers are not willing to leave their lives in the city and the lifestyle to which they have grown accustom to? Witness the continual whinging of Western Australia mining companies that East Coast based workers aren’t willing to suck it up and move out west. How much can we attribute the skill shortage to a desire to imagine a future based on a form of employment that workers think pleasurable rather than what industry needs – and thus learn skills that have reduced industrial application? And can we talk about that taboo – how many people who are on benefits are making a tactical choice to avoid (often poorly paid forms of) work so frankly they can do something more worthwhile with their time? And in these struggles is it possible to find in them a kernel of bigger emancipatory, communist tendencies?

There are a number of political implications that arise from this. Firstly if there is a labour-shortage why isn’t it being solved through immigration? If workers conditions are being propped up by this shortage does that mean that there is a material basis for wide-spread anti-immigrant and racist feelings propagated by the mainstream political parties, the media and the Populist Right and what is the relationship between this and the historical support of the large sections of the labour movement and Australian Labor Party for racist anti-immigration policies?[xxv] Troubling questions at best. It may also help us understand the current push for increased productivity, which maybe a front line of struggle in 2013 as capital attempts to do more which each worker. Thirdly it means for the time being (and yes economic conditions could shift in a heartbeat) a radical politics that emphasises the threat of unemployment is out of step with broad sections of people’s lived experiences – even if it gels with those losing their jobs through public sector cuts and the shrinking of manufacturing. For many the problem isn’t the shortage of work but rather its surplus – there is too much of it. Look at the level on unpaid overtime![xxvi] The attacks on those on welfare is about intensifying work for an already overworked population by increasing the competition for jobs.  In this moment where it seems the class is ‘objectively’ strong yet ‘subjectively’ disorganised can we start crafting a politics for  ‘a good life’ rather than ‘a life put to work’?[xxvii]


[iii] Karl Marx, Grundrisse: Foundation of the Critique of Political Economy (Rough Draft) (London: Penguin Books, 1993), 361.

[iv] Karl Marx, Capital: A Critique of Political Economy, trans. Ben Fowkes, vol. 1 (London: Penguin Classics, 1990), 293.

[v] Ibid., 270.

[vi] Ibid., 709.

[vii] Ibid., 875.

[viii] Paolo Virno, A Grammar of the Multitude (Los Angeles, CA & New York,NY: Semiotext(e), 2004), 81.

[ix] cf. Mariarosa Dalla Costa and Selma James, The Power of Women and the Subversion of the Community, 3rd ed. (Bristol: Falling Wall Press, 1975); Silvia Federici, Revolution at Point Zero (Oakland CA: PM Press, 2012); Leopoldina Fortunati, The Arcane of Reproduction: Housework, Prostitution, Labour and Capital trans. H Creek (Brooklyn, NY: Autonomedia, 1995).

[x] Louis Althusser, On Ideology (London  New York: Verso, 2008), 6.

[xi] Virno, A Grammar of the Multitude, 83.

t Marx, Capital: A Critique of Political Economy, Vol.1, 784.

[xiii] Ibid., 790.

[xiv] George Caffentzis, "Against Nuclear Exceptionalism with a Coda on the Commons and Nuclear Power,"Crisis and Commons: PreFigurative Politics After Fukashima, (Tokyo University of Foreign Studies2012), 3.

[xvi] "Budget Paper No. 1: Budget Strategy and Outlook 2011-12 Statement 2: Economic Outlook,"  http://www.budget.gov.au/2011-12/content/bp1/download/bp1_bst2.pdf.2-29

[xvii] "Budget Paper No. 1: Budget Strategy and Outlook 2011-12 Statement 1: Budget Overview,"  http://www.budget.gov.au/2011-12/content/bp1/download/bp1_bst1.pdf.1-6

[xviii] "Budget 2012: Building Australia's Future Workforce: Trained up and Ready to Work,"  http://www.budget.gov.au/2011-12/content/glossy/skills/download/glossy_skills.pdf

[xix] "Mid-Year Economic and Fiscal Outlook: Part 2: Economic Outlook,"  http://budget.gov.au/2012-13/content/myefo/download/02_Part_2.pdf.14

[xx] Australian Bureau of Statistics, "6202.0 - Labour Force, Australia, Nov 2012," Australian Bureau of Statistics, http://www.abs.gov.au/ausstats/abs@.nsf/mf/6202.0

[xxi] "Mid-Year Economic and Fiscal Outlook: Part 1: Overview,"  http://budget.gov.au/2012-13/content/myefo/download/01_Part_1.pdf.5

[xxii] the Australian Council of Social Service (ACOSS), Business Council of Australia (BCA), and Australian Council of Trade Unions (ACTU), "Opportunity for All: A Joint Statement by the Australian Council of Social Service (Acoss), Business Council of Australia (Bca) and Australian Council of Trade Unions (Actu)."  http://acoss.org.au/uploads/2012-12-04_Opportunity-For-All_ACOSS-BCA-ACTU_Joint%20Statement.pdf?utm_source=ACOSS+Media&utm_campaign=fe98e73400-2012_12_3_&utm_medium=email.6

[xxiii] Ibid., 1.

[xxiv] Ibid., 2.

[xxv] Ann Curthoys and Andrew Markus, eds., Who Are Our Enemies: Racism and the Working Class in Australia (Neutral Bay: Hale & Iremonger,1978).

[xxvi] Josh Fear and Rich Denniss, "Something for Nothing: Unpaid Overtime in Australia,"  https://www.tai.org.au/index.php?q=node%2F19&pubid=702&act=display

[xxvii] B W Joseph, "Interview with Paulo Virno,"  http://interactivist.autonomedia.org/node/4982

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[i]reblogged from With Sober Senses
the image is by Redback Graphix a ground breaking screen printing collective who were deeply involved in the struggles of the time.

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With Sober Senses
Jan 6 2013 02:16

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