Editorial: Don’t sacrifice jobs and living standards for crisis

Every week brings news of thousands of jobs lost as the Australian economy falters.
Revised growth projections from the IMF have underlined the depth of the decline facing the world economy. Slashing its previous growth forecast made just two months ago, it predicts that the global economy will shrink this year for the first time in 60 years.
The world’s major economies are facing deep recessions, if not outright depression. The US economy is expected to shrink by 2.6 per cent, and the euro zone by 3.2 per cent. Japan is facing a spectacular 5.8 per cent contraction in its economy.
This means hundreds of thousands more people face unemployment as the effects of the global recession hit Australia.
The official government projection was for 7 per cent unemployment by mid-next year. Investment bank JP Morgan is now predicting unemployment to rise to 9 per cent. This would mean half a million more people losing their jobs.
The stories of workers sacked at companies like Pacific Brands or Drivetrain will be repeated across the country. Some have worked for 30 years at the companies before losing their jobs. At Drivetrain workers lost most of their retirement payouts when the company declared bankruptcy.
As one worker at a Pacific Brands factory in Sydney put it “people are scared—some of them have a mortgage and kids going to school”. Their lives have now been destroyed by the free market.
But a fight to save jobs is possible. At Pacific Brands, manufacturer of well known labels like Bonds, 1850 job cuts were announced in February. This is a profitable company—it made $57.6 million profit in the second half of 2008, excluding a one-off write off of $200 million in assets that it is using to justify job cuts. Its sackings are nothing but a blatant cost-cutting exercise.
Machinery and stock at Pacific Brands factories across Australia would be worth millions. If workers were to occupy the factory, and stop machinery and stock being taken out of the plant, they could force the company to investigate keeping its factories running.
The promise by the Transport Workers Union and the Maritime Union not to transport machinery out of the factory should the company try to move it was a step in this direction.

Wage cuts don’t save jobs
The alternative approach many groups of workers are taking—of working reduced hours or taking wage cuts is a disastrous route.
John Buchanan, of the Workplace Research Centre at Sydney Uni, told Lateline that a major study of the effects of this approach in the early 1980s recession in the US found it did little to save jobs. Where a company was facing closure, “cuts in wages helped prolong the life of some companies by six months, but then the companies just went belly up anyway”.
But what it did result in was a decrease in workers’ living standards across the board, as bosses took the opportunity to entrench lower wages and cut working conditions.
As Buchanan said “it had a minimal impact on employment growth but it had a lasting impact on job quality”—because when the recession ended bosses refused to restore wages to previous levels.
We should not accept the claims by business that they cannot afford to maintain jobs. If we fight back we can make business profits bear the cost of the recession, not our jobs and wages.


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