Throughout 2008, Kevin Rudd and Wayne Swan remained optimistic to the point of absurdity about the state of the Australian economy in the face of the global economic crisis. How quickly things change.

As people around the country went back to work for 2009, the depth of the crisis became apparent. Unemployment is rising every month, reaching 4.5 per cent in December.

The mining and resources sector, which drove much of the growth in the Australian economy over recent years, has been hard hit. BHP Billiton cut 3300 jobs in January, most of them in the boom state of Queensland.

Retailer David Jones is cutting 150 head office staff and slashing the hours of its shop floor staff.  Car part maker CSR announced another 115 layoffs on the back of the collapse of the car industry.

The Sunday Age reported that 150 jobs are being lost every day in Victoria alone. Many economists are still predicting that the jobless rate could be 6 per cent by year’s end.
While Kevin Rudd and Wayne Swan scratch their heads over how to deal with the ever-deepening crisis, they seem agreed on one thing—the way to save jobs is to freeze wages.

Both are calling on workers to accept wage freezes or in some cases real wage cuts and shorter hours to “save jobs”.

Many union leaders, including the ACTU, have gone along with this idea. AMWU members at Alcoa in Western Australia agreed to a wage freeze for the next year after the company threatened to cut jobs.

But this approach has been rejected by Victorian Trades Hall Council secretary Brian Boyd.
The reality, of course, is that wage freezes are not designed to secure jobs—they are designed to secure profitability, and to ensure shareholders and CEOs don’t have to take a pay cut.

The real question is who will pay for the economic crisis—will workers agree to take pay cuts or will it be profits that are hit?

Rudd and Swan should be opposing pay cuts and sackings, as both will further reduce the money workers have to spend and therefore reduce demand, deepening the coming recession.

And if Rudd and Swan are serious about protecting jobs, they should direct the government’s spending packages into creating jobs, retraining workers and protecting living standards.

By Ernest Price

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