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COVID-19 challenges have shown the value of a universal wage

COVID – 19 challenges have shown the value of a universal wage

If 20 years ago, you had raised with me the idea of a universal wage, I would have laughed at you. Fancy giving people money for nothing – enough money to actually live on. But right now the Government is doing just that, and I think it should continue.

Based on my experience as a manager, confidant and adviser, I’d say around 60 per cent of people hate their jobs, cannot commit the attention required, or are at least ambivalent toward turning up each day. Mostly this is because of a mismatch between how those employees see themselves in the bigger picture and their innate interests and abilities, or because they are simply so committed elsewhere that they have nothing to give to work.

Sometimes these people have health issues, or their loved ones do. They might be involved in violent relationships, trapped in a dreadful cycle of dependence from which there is practically no escape.

Some might be aspiring musicians or artists, trapped in (to them) a world of corporate drudgery. Some may have, for reasons of politics, religion or personal preference, fundamental differences of opinion with the way business is conducted or services are provided (an anti-vaxxer working in a doctor’s practice, for example).

We like to think that the government is supporting people, but in every case it is not the government, but the private sector and households that do the supporting. That’s because (and I exclude the relatively minor contribution of government-owned businesses), the government is solely funded through taxes and the only net taxpayers are businesses and households. Put more directly, these two sectors pick up the tab for all manner of society’s failings.

A sick employee comes to work and infects other staff. The employer is paying for time off for all (or in a casual environment, to find replacement staff), on account of a selfish or ignorant decision by one person. Worse, in the era of COVID-19, an employer is denied the ability to force people to have vaccinations (for anything) or even insist that the COVID-19 tracking app is downloaded.

What about family violence? No fault of the employer, which helps out with paid and unpaid leave entitlements (and sometimes much more), while society pays through policing, support for shelters and other ad hoc measures that while important in the short-term, can do little to empower victims with the means to establish a new life.

Losses from investment or superannuation – there is no requirement for consumers to read the advice they are given, and no matter how much work has gone into preparing that advice, an assertion that “I didn’t understand it” is sufficient grounds to uphold a claim against the business providing the advice. Which really amounts to businesses underwriting retirement incomes.

Unsubstantiated claims of stress, bullying, harassment and workplace safety are commonplace. Consider the employee whose work performance dropped off a cliff. Professionally counselled by female colleagues, she made a compo claim on the basis of stress, which discussions revealed was the result of her having an affair with a fellow in a nearby business. The insurance ombudsman would hear nothing of it and the insurer could not be bothered fighting. The employee was awarded several months’ salary, which as a cheat and a liar working in a business where trust is paramount, she did not deserve. Who pays for these ill advised indiscretions, most probably caused by deep-seated unhappiness (or stupidity perhaps)? Employers.

Well, like my last two articles, you can take this as a vitriolic whinge, or you can take the point that there are a lot of unhappy people out there, businesses and households are bearing the burden of their unhappiness, and perhaps there is a better way. It might take the form of a universal income for everyone between 23 and 60. A payment of $40,000 per annum (much the same as Jobkeeper) for example. I can hear the howls now, “never read such rubbish, David’s gone for the brekky bong”. But think about this:

  • Even entry-level people could tell bad bosses to get stuffed – the fall back would not be the dole, but a reasonable payment that would buy time to consider realignment and “next steps”. Businesses would face immediate pressure to invest in creating happy, productive workplaces.
  • People facing situations of family violence would know they have real options, and have the wherewithal to create a future for themselves (and by the way, I think a one-strike rule is overdue – one chance, no courts, and then it’s off to a camp for “hard-core reprogramming”).
  • Productivity would skyrocket because the people at work would be those that want to work. The number of time-wasting meetings and make-work projects would plummet.
  • People with skills not immediately suited to a standard workplace structure (artists, musicians and entrepreneurs mentioned above, for example) would be free to test and hone their skills and pursue their goals, over time, very likely adding immense value.
  • The career of home-making would be rewarded – with real money. And society would benefit from increased parental investment in families (and consequently less delinquency and the like). Each partner in a couple could take time out to study, make a career move, or spend time at home. There would be a massive reduction in labour-market friction.
  • Wages would increase because employers would be completing against a workforce with real options, based on personal preferences. Good employees will continue to be highly sought after and would command higher wages.

But how to pay for it? A significant component of the initiative would be self-funding.

Outside of the aged pension, Government spending on welfare (Newstart, child care payments, etc.) is already about $100 billion a year. Much of this is distinctly wasteful, and delivers little real benefit (child care subsidies for example, primarily benefit providers). Most of these existing payments would be redirected to the universal wage, resulting in people being better off through choice.

Some of the money would be taxed on receipt, but most would be spent, returning a significant portion to the Government by way of GST, income and corporate tax. Productivity gains would support higher wages and further increases in collection of taxes with the economic multiplier enhancing these recoveries.

Spending on ineffective social supports would collapse, because people facing difficulty would be able to consider their options and fund a new life. So would payments for personal and workplace related insurance claims (and hence premiums), because all those eligible would effectively be underwritten for the first $40,000 of income. The number of time wasting workplace tribunal hearings would also collapse, because in many cases there would be little or no economic loss.

And the secret sauce? Disbandment (or at least drastic restructuring) of the Fair Work Commission and its various destructive offshoots, and abandonment of individual industry awards. Why not – the default is $40,000 per annum, completely at your discretion and employers have to compete with that? All you have to do is set some basic standards of employment.

Social commentators all over bemoan “unfairness” – genuine choice makes such arguments irrelevant. The RBA and unions want wages to increase, and the Government is making noises about productivity and change – these things go hand in hand so let’s bind them with a universal wage.

If there is one lesson from the COVID-19 experience, it’s that people hate being trapped – so give them the opportunity for choice. The policy has deep social roots, and the potential for amazing gain right across society. Now is the time.

Originally Published – Wednesday, May 13, 2020
Rockhampton Morning Bulletin –themorningbulletin.com.au