Self Reliance and the Employment Revolution

By Roskam, John | Review - Institute of Public Affairs, March 2005 | Go to article overview

Self Reliance and the Employment Revolution


Roskam, John, Review - Institute of Public Affairs


THE OLD INDUSTRIAL RELATIONS SYSTEM

The condition of Australia's old industrial relations system has dominated the policy debate following the 2004 federal election. There has been argument about such things as setting the minimum wage, the role of the AIRC, and the number of allowable matters in industrial awards.

The discussion, however, has largely missed the point. Most of the players in the industrial relations system have been so caught up in the old way of doing things that the transformation of work in Australia has been ignored. The 'industrial relations club' remains fixated on models of the employment relationship that are out-of-date.

Our current structure of industrial relations-relying on awards, arbitration and conciliation-is literally a product of the nineteenth century. The central assumption of that structure-that the interests of employers and employees are fundamentally different-is also a basic assumption of Karl Marx, another long-discredited product of the nineteenth century.

To ensure Australia's continued prosperity into the twenty-first century, we require a system which encourages creativity, rewards initiative, and responds to the needs of individuals and families. The existing system meets none of these criteria.

What is occurring in Australia is nothing less than a transformation of how we work. The traditional employer/employee relationship is becoming less relevant as an increasing number of individuals are rejecting the restrictions of an inappropriate industrial relations system. Individuals are choosing to work for themselves to gain the benefits of the choice and flexibility that self-employment provides. The consequences of this transformation for the economy, for society, and for our political parties will be dramatic.

HOW THE WORLD HAS CHANGED

The trend to self-employment will accelerate in coming decades. Five major reasons explain this change.

First, the nature of the Australian economy will continue to develop with knowledge-intensive and service industries assuming a more important position. These industries already have a high proportion of self-employed workers.

Second, as the population gains the higher levels of education required for the jobs of the future, the number of self-employed will increase, as better educated workers are more likely to choose self-employment.

Third, older workers are more comfortable becoming self-employed than are younger workers, and the effects of this will become apparent as the population ages.

Fourth, individuals are demanding choice over their working arrangements, as they are in every other aspect of their lives, and self-employment provides this.

Fifth, individuals are more willing to assume responsibility for the decisions that affect their lives and their families. Outside the family, deciding the course of his employment is perhaps the biggest decision an individual can make.

The phenomena just described raise issues beyond the scope of industrial relations, and they are the focus of a new research project of the IPA entitled A Self-Reliant Society. Other issues to be considered during the project include such matters as the extent to which individuals and families are seeking greater control over their financial assets, and what the consequences of this might be.

This article is one of the first outcomes of the A Self-Reliant Society project. Specifically this article examines:

* the number of people self-employed;

* the growth of self-employment; and

* the political consequences of self-employment.

HOW MANY PEOPLE ARE SELF-EMPLOYED?

There is no simple answer to this question. The idea that people might not be either 'employees' or 'employers', but could be 'self-employed' is relatively new. The development of measures of self-employment, therefore, have lagged behind traditional indicators such as the number of people who are unemployed, or who are union members, or who are not in workforce at all. …

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