Comments on Frank Jotzo "China could outperform its carbon pledge", 16/07/2015
Firstly, it seems there is a typo in the fourth paragraph, that is, “Yet China could do better still. China is set to outperform its existing 2020 target of a 40–45 per cent improvement in emissions intensity compared to 2025.”
The last number should probably be 2005 instead of 2025.
Secondly, while the following sentence is understandable, I am not sure that it does not mask the shortcomings of a single factor productivity, particularly the huge differences in economic structures between different economies, such as the energy productivity:
"China’s energy productivity lags that of advanced economies."
China, as it is often called by many, is the world's manufacturing factory, as a result, it is not particularly meaningful to compare the so called energy productivity with the so called energy productivities of the advanced countries which are mostly services heavy, as opposed to industry heavy of the Chinese economy.
Thirdly, some of the arguments, while understandable in terms of impact on emissions, may not be particularly strong for China to adopt, if China has an overarching economic, urbanisation and climate change strategy/framework, or as the author put it "with overarching national policy priorities". For example, "If China’s government were to once again use large fiscal stimulus measures, it would need to avoid over-investment in infrastructure and thereby heavy industries."
Although China has made enormous progress in its infrastructure, the fact still remains that China's urbanisation is only about 50% and there is a long way to go simply for China to urbanise. There is no question that urbanisation means more infrastructure, and as a result, more investment in infrastructure will be needed.
When discussing climate change policy, it would be more helpful to put it into the appropriate framework.
I would bet that China is unlikely to sacrifice its urbanisation and hence investment in the related infrastructure purely for emission purpose.
Showing posts with label productivity. Show all posts
Showing posts with label productivity. Show all posts
2015-07-08
Technologies versus economics on resource productivity
Comments on Nick Florin et al "Resource productivity: four ways Australia can keep the good times rolling", 8/07/2015
Resource productivity is a relatively new term or concept, or at least to many economists, I suppose.
While it may be implied or internalised, the article does not discussion price signals or cost signals reasonably clearly as it perhaps should. Ultimately, the increase in the so called resource productivity must be reflected in economic terms, whether it is through better accounting of externalities associated with low resource productivity, or others.
The concept of resource productivity should be integrated with the framework of the total factor productivity as used in measure productivity by most people concerned.
Not every technology or technique will be adopted and economics is a factor in terms of adoption of technologies and techniques.
Resource productivity is a relatively new term or concept, or at least to many economists, I suppose.
While it may be implied or internalised, the article does not discussion price signals or cost signals reasonably clearly as it perhaps should. Ultimately, the increase in the so called resource productivity must be reflected in economic terms, whether it is through better accounting of externalities associated with low resource productivity, or others.
The concept of resource productivity should be integrated with the framework of the total factor productivity as used in measure productivity by most people concerned.
Not every technology or technique will be adopted and economics is a factor in terms of adoption of technologies and techniques.
Productivity Commission lost its strategic insight
Comments on Productivity Commission "Superannuation policy for post-retirement", 8/07/2015
I agree with the former Treasurer Mr Peter Costello (who was interviewed by the ABC's 7.30 program that was broadcast yesterday evening) that the public has lost confidence of the superannuation system/policies, given the nature of frequent changes in government policies. In that light the Productivity Commission (PC)'s inputs are not helpful at all.
The Productivity Commission, as its name suggests, should focus on productivity so people work smarter as opposed on force people to work longer and to retire or access their own superannuation more late in their lives.
As a result, the PC has lost its overall strategic insight on good or better policies in Australia.
Has the PC also become simply revenue driven?
Further, the PC may be helpful if it does research on how to improve older Australians' employment in the context of a strong age based discrimination that people over 50 are finding it difficult to find new employment once they are out of employment for one reason or another.
Another point is that even its title is deceptive or misleading when compared to its content and intention. If it is post-retirement, then why do not allow them to access their superannuation after retirement? It is a bit of inhumane, isn't it?
That is regrettable on the PC part.
The Productivity Commission, as its name suggests, should focus on productivity so people work smarter as opposed on force people to work longer and to retire or access their own superannuation more late in their lives.
As a result, the PC has lost its overall strategic insight on good or better policies in Australia.
Has the PC also become simply revenue driven?
Further, the PC may be helpful if it does research on how to improve older Australians' employment in the context of a strong age based discrimination that people over 50 are finding it difficult to find new employment once they are out of employment for one reason or another.
Another point is that even its title is deceptive or misleading when compared to its content and intention. If it is post-retirement, then why do not allow them to access their superannuation after retirement? It is a bit of inhumane, isn't it?
That is regrettable on the PC part.
2014-03-13
Rely more on productivity rather than population growth for economic growth
Comment on David Gruen "Asia’s economic challenges and policy choices", 12/03/2014, http://www.eastasiaforum.org/2014/03/11/asias-economic-challenges-and-policy-choices/
Gruen states that “Much of Northeast Asia is facing a period of demographic ageing. China, Japan and South Korea are already rapidly ageing societies, which in China’s case is a direct consequence of its one-child policy. This will detract from future growth, yet Northeast Asia has been unwilling or unable to adopt more open immigration policies like those that enabled Australia and the United States to partially replace ageing working age populations.”
Many Asian countries have very different conditions to Australia’s, so they are unlikely to embrace open immigration programs as Australia or some other countries do.
Further, while there is an issue in terms of inter-generational balance and/or transfer, growth relies on population growth is likely to mask the importance of productivity growth.
Even though sometimes demographic dividends may contribute to economic growth and possibly productivity growth, it is by no means a certainty that a growing world population is naturally optimal to the welfare of the people of the world as a whole.
China adopted the one child family planning policy in the belief that it was, rightly or wrongly, good for the country. Of course, its one child policy has not necessarily been the best family planning policy, even if one accepted that it is desirable to limit population growth. China now seems to be changing its one child policy, albeit very slowly.
It is important to carefully consider how population growth may or may not contribute to productivity growth and based on that to make informed discussion on the role of population growth in economic growth.
Gruen states that “Much of Northeast Asia is facing a period of demographic ageing. China, Japan and South Korea are already rapidly ageing societies, which in China’s case is a direct consequence of its one-child policy. This will detract from future growth, yet Northeast Asia has been unwilling or unable to adopt more open immigration policies like those that enabled Australia and the United States to partially replace ageing working age populations.”
Many Asian countries have very different conditions to Australia’s, so they are unlikely to embrace open immigration programs as Australia or some other countries do.
Further, while there is an issue in terms of inter-generational balance and/or transfer, growth relies on population growth is likely to mask the importance of productivity growth.
Even though sometimes demographic dividends may contribute to economic growth and possibly productivity growth, it is by no means a certainty that a growing world population is naturally optimal to the welfare of the people of the world as a whole.
China adopted the one child family planning policy in the belief that it was, rightly or wrongly, good for the country. Of course, its one child policy has not necessarily been the best family planning policy, even if one accepted that it is desirable to limit population growth. China now seems to be changing its one child policy, albeit very slowly.
It is important to carefully consider how population growth may or may not contribute to productivity growth and based on that to make informed discussion on the role of population growth in economic growth.
2013-02-21
Productivity Commission should be given more indpendence
Comments on Bill Carmichael "Expand the reform agenda and let Productivity Commission be heard", 20/02/2013, http://www.theaustralian.com.au/national-affairs/opinion/expand-the-reform-agenda-and-let-productivity-commission-be-heard/
I think it is important not only that the PC should be fully utilised in developing big policy items, but also that it should be well funded to the degree that it has the capacity to initiate its own policy review/research to deal with any areas where it sees there is big potentials in addition to government initiated reviews.
To do that, PC should be more independent and should be reporting to the Parliament as opposed to the government of the day.
Of course, government initiatives should have priority, should there is a conflict between government initiatives and PC's own.
In this way, it will be ensured that productivity will be in the centre and heart of government policies irrespective which side of political parties is in government. It will make Australia will be more efficient, more productive, more internationally competitive and less wasteful in spending government resources.
It might be called the Australian Parliamentary Productivity Commission, in a similar fashion to the newly established Parliamentary Budget Office.
I think it is important not only that the PC should be fully utilised in developing big policy items, but also that it should be well funded to the degree that it has the capacity to initiate its own policy review/research to deal with any areas where it sees there is big potentials in addition to government initiated reviews.
To do that, PC should be more independent and should be reporting to the Parliament as opposed to the government of the day.
Of course, government initiatives should have priority, should there is a conflict between government initiatives and PC's own.
In this way, it will be ensured that productivity will be in the centre and heart of government policies irrespective which side of political parties is in government. It will make Australia will be more efficient, more productive, more internationally competitive and less wasteful in spending government resources.
It might be called the Australian Parliamentary Productivity Commission, in a similar fashion to the newly established Parliamentary Budget Office.
2012-08-02
Understand why and how productivity has slowed in recent years
Comments on John Freebairn "Evolution of the productivity pariahs", 2/08/2012 https://theconversation.edu.au/australias-productivity-problem-why-it-matters-8584 and
http://www.businessspectator.com.au/bs.nsf/Article/productivity-australian-economy-private-sector-pub-pd20120802-WS2RU?OpenDocument
I think governments, businesses and economists probably need to have more realistic expectations and understand where the most important constraints to productivity improvements are and how to go about them to help raise productivity.
It probably means quite a number of new points or more creative thinking.
For example, the improvement in the terms of trade, as a luck gift to many Australians including Australian businesses, may mean they don't want to work that hard to raise productivity in the comparative sense, so they are happy to enjoy the life with better living standards. Alternatively, they need to be given greater incentives to work as hard as they did in the of no improvements in the terms of trade to produce the same improvement in productivity.
So this kind of work/leisure choice must be taken into account in analysing our productivity to really understand the true underlying factors on productivity in Australia.
However, I do share Professor Freebairn's view that government has important roles in raising productivity. Freebairn mentioned two of them: government policies such as taxation and government supply of services, like education, law and order.
Another important area the government has an important role is to ensure consumers get the maximum benefits from adequate competition, including from competition from overseas through trade policy.
It has been reported that Australians are charges much higher prices for many products or services than their overseas counterparts. This is not only detrimental to the welfare of Australians, but also is unconducive to competition and productivity.
The government must examine why that has been the case and develop the most appropriate policies to change it.
It is a mystery why the government hasn't done such work for so long.
2012-07-16
No cause for pessimism for the Australian economy
Comments on Henry Ergas “Policies
standing in the way of management can do great damage”, 16/07/2012,
http://www.theaustralian.com.au/news/opinion/policies-standing-in-the-way-of-management-can-do-great-damage/story-fn7078da-1226426636726
Ergas has made an important
contribution to the current debates on the multi-speed economy
associated with the mining boom and on productivity.
The latter first. I have made a comment
on the shortcomings of the viewpoint by Gruen et al that poor manager
performance was the main reasons for the latest productivity slow
down, by referring the charts consisting of one cross section
international data with a time seires of Australia's productivity.
That mix is problematic, because it says little how the international
comparison has changed over time. Further, it is doubtful that
international productivity would have performed better in recent
years over the pre-GFC period.
For Henry's viewpoint on the Dutch
Disease in the Australian economy, although it is correct to say that
adjustments are inevitable when mining booms as a result of increases
in international demand for mineral and a consequential rise of the
Australian dollar, the view that no policies can offset or lessen the
adverse impact of the mining boom on other trade exposed sectors is
likely to be false.
For one thing, his mining tax design
was one of policies that could just do that if the policy was
designed and implemented properly.
Further, monetary policies could be
designed in such a way that lowers both the demand of Australia for
international capitals and the Australian dollar.
A fine combination of fiscal and
monetary policies together would make the adjustments much less
painful than they have been.
2012-07-15
Meaning and meaningful in measuring producivity
Comments on Tim Mazzarol "
Poor management performance and the implications for Australia’s economic outlook", 15/07/2012, https://theconversation.edu.au/poor-management-performance-and-the-implications-for-australias-economic-outlook-8254
While Dr Gruen and Dr Dolman's paper fingers out at what they view as poor management, particularly amongst our nation’s manufacturing firms based on some interesting research recently completed by the World Management Survey, chart 1 and chart 2 alone are not necessarily helpful in supporting their viewpoint.
Chart 1 is a time series while chart 2 is a cross-sectional. Although chart 2 indicates what is argued in this article, that is, the difference in management between Australian manufacturing firms and world best such as the US, Japan and Germany, is does not say how that difference changed over the same time period shown in chart 1.
Besides, chart 1 show the multifactor productivity had declined since 2003 not just from 2008-09. Was that coincident with the mining boom from 2003?
Further, I doubt the meaning of multiproductivity shown by chart one would really mean much to firm and industry management, because such measurement, while having its merits, may have some weaknesses in terms of significant relative price changes. We all know that the mining boom was associated with significant rises in mineral prices. From profit maximisation point of view, if the out price rises, then even the multifactor productivity stays constant or goes backward the firm may still be more profitable.
That is the difference between academic style studies and real world operators.
So the question is how to be most meaningful in measuring productivity in the real world. That would require a bit of creativity, not simply adopt what is available. Creativity may be controversial when it first appears, so it needs courage too.
If I were to redo a study on productivity similar to show the case shown chart 1, I would take the changes in relative prices into account and come up with a new concept or new measurement for it.
PS: The same logic applies to the situation when an industry or the economy is experiencing recessions when capital is sticky in the short term and cannot be adjusted as freely and quickly as desirably. So from microeconomic point of view, firms maximising profits would take the most effort to do it and that does not necessarily mean an improvement in multifactor productivity.
Besides, chart 1 show the multifactor productivity had declined since 2003 not just from 2008-09. Was that coincident with the mining boom from 2003?
Further, I doubt the meaning of multiproductivity shown by chart one would really mean much to firm and industry management, because such measurement, while having its merits, may have some weaknesses in terms of significant relative price changes. We all know that the mining boom was associated with significant rises in mineral prices. From profit maximisation point of view, if the out price rises, then even the multifactor productivity stays constant or goes backward the firm may still be more profitable.
That is the difference between academic style studies and real world operators.
So the question is how to be most meaningful in measuring productivity in the real world. That would require a bit of creativity, not simply adopt what is available. Creativity may be controversial when it first appears, so it needs courage too.
If I were to redo a study on productivity similar to show the case shown chart 1, I would take the changes in relative prices into account and come up with a new concept or new measurement for it.
PS: The same logic applies to the situation when an industry or the economy is experiencing recessions when capital is sticky in the short term and cannot be adjusted as freely and quickly as desirably. So from microeconomic point of view, firms maximising profits would take the most effort to do it and that does not necessarily mean an improvement in multifactor productivity.
2011-04-05
Don't get commercially "politically correct"!
Comments on Robert Gottliebsen “Australia's missing productivity link”, 5/04/2011, http://www.businessspectator.com.au/bs.nsf/Article/TLS-Telstra-Orica-productivity-survey-CEO-pd20110405-FLS68?OpenDocument&src=rot
Here there is an interesting divergence between certain economists including some commentators who focus on the theoretic concept of productivity or the improvement of it on the one hand, and business people and entrepreneurs who are focused on the real world of profit and losses.
The claim that "unless you measure it you can’t improve it" is obviously a fallacy and the wrong type of characterisation or conceptualisation of the issue. It is nonsense to say if you don't measure it, you can't improve it.
It is just like if you don't understand the complex internal mechanics of a car, you can't drive it!
For businesses, understandably profit is the key - without it or without making it business people would fail and bankrupt, irrespective how they have or have not measured and / or improved productivity.
Presumably, there are many businesses that are quite profitable and well managed among those that have not "actually measure it (productivity)". Once you are focused on the essence and the key of business, productivity and the improvement of its may naturally fall into its proper place.
Equally, there must have been some failed businesses that did "actually measure it (productivity)".
In essence, let's not be too mechanical in business and become "commercially politically correct".
Here there is an interesting divergence between certain economists including some commentators who focus on the theoretic concept of productivity or the improvement of it on the one hand, and business people and entrepreneurs who are focused on the real world of profit and losses.
The claim that "unless you measure it you can’t improve it" is obviously a fallacy and the wrong type of characterisation or conceptualisation of the issue. It is nonsense to say if you don't measure it, you can't improve it.
It is just like if you don't understand the complex internal mechanics of a car, you can't drive it!
For businesses, understandably profit is the key - without it or without making it business people would fail and bankrupt, irrespective how they have or have not measured and / or improved productivity.
Presumably, there are many businesses that are quite profitable and well managed among those that have not "actually measure it (productivity)". Once you are focused on the essence and the key of business, productivity and the improvement of its may naturally fall into its proper place.
Equally, there must have been some failed businesses that did "actually measure it (productivity)".
In essence, let's not be too mechanical in business and become "commercially politically correct".
2011-03-29
Population growth definitely not essential for our large capital cities
Comments on “Population growth 'essential for capital cities'” reported by Jennifer Hewett, National affairs correspondent from The Australian, 29/03/2011, http://www.theaustralian.com.au/business/opinion/population-growth-essential-for-capital-cities/story-e6frg9if-1226029658946
There is nothing essential at all in that, namely "Population growth 'essential for capital cities'"!
It defies common sense, logic and facts in Australian largest cities, leaving aside small capital cities such as Darwin, Canberra and possibly Hobart.
Why can’t a constant population be good or better than a growing population for capital cities, given that it is per capita output or the productivity that matter to people’s living standard, and there are already significant infrastructure problems that cause traffic jam, poor and expensive housing and living conditions in our large capital cities like Sydney?
If the Urban Taskforce Australia a special interest group tied to some businesses that just want to pursue more and extra profits with little regard to living conditions of the average Australians?
Or is it a government agency?
If the latter, it needs to consider whether its methodologies are correct or not.
To me it is a poor and biased report with a wrong focus. Clearly, it has ignored the views and suffering of the residents in large capital cities.
It is interesting that why there is so little opportunity in Australia for the public to participate in public forums to air their views for this issue or to debate those special interest groups or even public agencies.
It is a pity and it is disappointing only those minorities representing businesses that have the opportunity to lobby and influence the government or bureaucrats!
There is nothing essential at all in that, namely "Population growth 'essential for capital cities'"!
It defies common sense, logic and facts in Australian largest cities, leaving aside small capital cities such as Darwin, Canberra and possibly Hobart.
Why can’t a constant population be good or better than a growing population for capital cities, given that it is per capita output or the productivity that matter to people’s living standard, and there are already significant infrastructure problems that cause traffic jam, poor and expensive housing and living conditions in our large capital cities like Sydney?
If the Urban Taskforce Australia a special interest group tied to some businesses that just want to pursue more and extra profits with little regard to living conditions of the average Australians?
Or is it a government agency?
If the latter, it needs to consider whether its methodologies are correct or not.
To me it is a poor and biased report with a wrong focus. Clearly, it has ignored the views and suffering of the residents in large capital cities.
It is interesting that why there is so little opportunity in Australia for the public to participate in public forums to air their views for this issue or to debate those special interest groups or even public agencies.
It is a pity and it is disappointing only those minorities representing businesses that have the opportunity to lobby and influence the government or bureaucrats!
2011-01-11
Productivity, inflation and wage growth
Comments on Peter Anderson “Wages policy undermines productivity quest”, 11/01/2011, http://www.theaustralian.com.au/news/opinion/wages-policy-undermines-the-productivity-quest/story-e6frg6zo-1225985225840
While I agree with the notion that wages growth should be in line with the growth of productivity, I find the following paragraph from the post confusing:
"Our annual productivity growth at present stands at 1.1 per cent. This is half of the average during the 90s. Wages are rising three to four times faster than productivity. Across the longer term, that is not sustainable."
Let me start with last sentence. Wages growth is nominal that is inclusive the effects of both productivity and prices change of inflation. Anderson's statement did not mention how inflation was, and that makes it unclear whether the wages growth of 3 to 4 times faster is too fast or not.
Secondly, the differences in productivity growth between now and the average of the 90s can be the effects of many factors, including both domestic and international influences. For example, if the world productivity, especially the industrialised economies also has similar differences, then our productivity slow down may not necessarily a purely domestic issue.
Thirdly, there should be a balance between productivity agenda, as important as it is, and other equally agendas, such as proper, legitimate protection of labour rights.
PS: Further, the growth of labour supply can also be an influence on productivity, other things equal. Labour supply is affected by population growth and participation rate. Population growth is also affected by immigration.
While I agree with the notion that wages growth should be in line with the growth of productivity, I find the following paragraph from the post confusing:
"Our annual productivity growth at present stands at 1.1 per cent. This is half of the average during the 90s. Wages are rising three to four times faster than productivity. Across the longer term, that is not sustainable."
Let me start with last sentence. Wages growth is nominal that is inclusive the effects of both productivity and prices change of inflation. Anderson's statement did not mention how inflation was, and that makes it unclear whether the wages growth of 3 to 4 times faster is too fast or not.
Secondly, the differences in productivity growth between now and the average of the 90s can be the effects of many factors, including both domestic and international influences. For example, if the world productivity, especially the industrialised economies also has similar differences, then our productivity slow down may not necessarily a purely domestic issue.
Thirdly, there should be a balance between productivity agenda, as important as it is, and other equally agendas, such as proper, legitimate protection of labour rights.
PS: Further, the growth of labour supply can also be an influence on productivity, other things equal. Labour supply is affected by population growth and participation rate. Population growth is also affected by immigration.
2010-12-14
Banks' sole criterion of policy reform too bare!
Comments on Michael Stutchbury “Lucky country can't bank on populist reforms”, 14/12/2010, http://www.theaustralian.com.au/business/opinion/lucky-country-cant-bank-on-populist-reforms/story-e6frg9p6-1225970526451
Michael, while I agree with you the Swan banking reforms are not real reforms but popular political treatments that will worsen consumer welfare in total, I do have some issues with the following criterion of reforms put forward by the Productivity Commission Chairman (to quote from your article):
'Last week, Productivity Commission chairman Gary Banks suggested that policy changes should only count as "reform" if backed by compelling evidence that they were the best option for improving productivity.'
Productivity is and should be only a part of overall consideration. Even though it could be an important consideration, it should not be the sole criterion for reforms.
For example, if the productivity effects remain the same and there are other significant benefits (say social distribution) under a policy change, it would be an important and worthwhile reform.
One has to understand that there are trade-offs between different policy objectives and productivity is but one of those objectives.
In that sense, what Banks argued was a partial approach and could be argued as an unhelpful argument or lobby by and from a special interest group, although I do not mean that Banks really had that intention. He might have been either in a different context or misunderstood.
What do you think?
Michael, while I agree with you the Swan banking reforms are not real reforms but popular political treatments that will worsen consumer welfare in total, I do have some issues with the following criterion of reforms put forward by the Productivity Commission Chairman (to quote from your article):
'Last week, Productivity Commission chairman Gary Banks suggested that policy changes should only count as "reform" if backed by compelling evidence that they were the best option for improving productivity.'
Productivity is and should be only a part of overall consideration. Even though it could be an important consideration, it should not be the sole criterion for reforms.
For example, if the productivity effects remain the same and there are other significant benefits (say social distribution) under a policy change, it would be an important and worthwhile reform.
One has to understand that there are trade-offs between different policy objectives and productivity is but one of those objectives.
In that sense, what Banks argued was a partial approach and could be argued as an unhelpful argument or lobby by and from a special interest group, although I do not mean that Banks really had that intention. He might have been either in a different context or misunderstood.
What do you think?
2009-07-01
Workplace relations regime needs to be fair, productive and long lasting
Comments on Michael Stutchbury “Boneheads are back on the streets”, 1/07/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/boneheads_are_back_on_the_streets/
The Rudd government was given a mandate to abolish Work Choices and replace it with a better and fair one. Work Choices just went too far in reforming workplace relations. As a result, it lost the support of most Australians.
In the same token, it seems the current new regime of workplace relations under Rudd / Gillard is doing the same – it has gone too far but in just the opposite direction.
The rights of every working person in Australia should be protected. Naturally, most individual employees are more vulnerable compared to most employers when employees and employers come together and negotiate working conditions and pays. There are clearly needs for laws to protect the rights of working people.
There can also be an appropriate role for unions to play. However, the role for unions should not be mandatory. Employees should have the right to have individual agreements if that is what they so choose.
A fair and productive work relations regime is important in both protecting the rights of employees and employers and being conducive to productivity. Neither too far to the right or the left is right. It needs a balanced approach.
Diversity also has its virtual. Forcing people to go either for the former AWAs or collective agreement will not be best for Australia.
It seems there is a need for more fundamental reforms to the regime governing work place relations. There should be a mechanism that can prevent any government from going too far to either direction.
The Rudd government was given a mandate to abolish Work Choices and replace it with a better and fair one. Work Choices just went too far in reforming workplace relations. As a result, it lost the support of most Australians.
In the same token, it seems the current new regime of workplace relations under Rudd / Gillard is doing the same – it has gone too far but in just the opposite direction.
The rights of every working person in Australia should be protected. Naturally, most individual employees are more vulnerable compared to most employers when employees and employers come together and negotiate working conditions and pays. There are clearly needs for laws to protect the rights of working people.
There can also be an appropriate role for unions to play. However, the role for unions should not be mandatory. Employees should have the right to have individual agreements if that is what they so choose.
A fair and productive work relations regime is important in both protecting the rights of employees and employers and being conducive to productivity. Neither too far to the right or the left is right. It needs a balanced approach.
Diversity also has its virtual. Forcing people to go either for the former AWAs or collective agreement will not be best for Australia.
It seems there is a need for more fundamental reforms to the regime governing work place relations. There should be a mechanism that can prevent any government from going too far to either direction.
2009-06-17
Why has racial and ethnic discrimination been so stubborn in Australia
Alison Booth, Andrew Leigh and Elena Varganova (2009: does racial and ethnic discrimination vary across minority groups? Evidence from three experiments) have found that there were economically and statistically significant differences in obtaining an interview when applying for an entry level job of the same kind between ethnic groups with the same education level but different ethnic names.
The differences vary from less severe discrimination for Italians to more severe for Chinese and Middle Easterners. The former group is a more established migrant group in Australia and the latter groups are more recent arrival ones. These two groups both have to submit at least 50 per cent more applications in order to receive the same number of interview opportunities as people with Anglo names / background.
What is more disturbing is their findings that by comparing with earlier studies and findings, their results did not indicate that ethnic and racial discrimination fell in the past 20 years from 1986 to 2007.
Their findings may suggest a number of possibilities. One is that there might be some real differences in productivity between the different ethnic groups. If employers know there are differences in productivity, then they may want to employ people from more productive groups. But the jobs Booth, Leigh and Varganova selected are entry level jobs and the education level of those applicants do not seem to suggest that there is unlikely to be significant differences in productivity between those groups.
The second is that there might be perceived differences in productivity between those groups due to their cultural and language differences. This could be a plausible hypothesis for further test.
The third is there might be some influences that relate to the lengths of each groups establishments in Australia, especially after the Second World War. This could also be plausible and may be another useful hypothesis to test out.
Another set of hypotheses is related to the assumption of profit maximisation of firms, assuming that most of the employers selected in their survey are for profit organisations. A truly profit-maximising firm should not be discriminative in terms of ethnic groups unless there are productivity differences among them.
Even if a firm is profit maximising, it may still display some discrimination if there is discrimination in the hiring department of that firm. There could be a principal-agent problem between the firm and its personnel department. So the influences of the personnel department may be reflected in their selection of different ethnic groups in their hiring of people.
The findings of Booth, Leigh and Varganova are interesting, especially given that Australia is a multi-cultural country and racial and ethnic discrimination is legally not allowed. Further studies and testing are needed to determine the true causes of the found discrimination and correct it to provide everyone a truly equal opportunity of employment.
The differences vary from less severe discrimination for Italians to more severe for Chinese and Middle Easterners. The former group is a more established migrant group in Australia and the latter groups are more recent arrival ones. These two groups both have to submit at least 50 per cent more applications in order to receive the same number of interview opportunities as people with Anglo names / background.
What is more disturbing is their findings that by comparing with earlier studies and findings, their results did not indicate that ethnic and racial discrimination fell in the past 20 years from 1986 to 2007.
Their findings may suggest a number of possibilities. One is that there might be some real differences in productivity between the different ethnic groups. If employers know there are differences in productivity, then they may want to employ people from more productive groups. But the jobs Booth, Leigh and Varganova selected are entry level jobs and the education level of those applicants do not seem to suggest that there is unlikely to be significant differences in productivity between those groups.
The second is that there might be perceived differences in productivity between those groups due to their cultural and language differences. This could be a plausible hypothesis for further test.
The third is there might be some influences that relate to the lengths of each groups establishments in Australia, especially after the Second World War. This could also be plausible and may be another useful hypothesis to test out.
Another set of hypotheses is related to the assumption of profit maximisation of firms, assuming that most of the employers selected in their survey are for profit organisations. A truly profit-maximising firm should not be discriminative in terms of ethnic groups unless there are productivity differences among them.
Even if a firm is profit maximising, it may still display some discrimination if there is discrimination in the hiring department of that firm. There could be a principal-agent problem between the firm and its personnel department. So the influences of the personnel department may be reflected in their selection of different ethnic groups in their hiring of people.
The findings of Booth, Leigh and Varganova are interesting, especially given that Australia is a multi-cultural country and racial and ethnic discrimination is legally not allowed. Further studies and testing are needed to determine the true causes of the found discrimination and correct it to provide everyone a truly equal opportunity of employment.
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