Lindsay Tanner is an intelligent bloke.  He has laid a glove on the Libs in an article in the Herald Sun headed "Howard's law of the jungle."  (July 5, 2005)  But the fightback is flawed, although the voters may not realise that.

Tanner writes as a man who as an employer has had to sack people, cop unfair dismissal claims and negotiate wages and conditions with his staff.  Not many parliamentarians of either color can make that claim.

He says: "I had to deal with all sorts of threats to the union's financial position.  It's not easy being an employer.

"Not all workers are competent and committed."  Henry is currently dealing with exactly that situation so the statement strikes a real chord.

Tanner makes the case for "some balance and fairness in the employment relationship."  This is something we would all agree with, certainly John Howard would agree with it.  However, Tanner claims "Howard's new laws go way too far.  They will destroy the limited balance and fairness large numbers of Australian workers currently rely on.

"With strikes at record lows and employment strong, they are directed at problems that don't exist."

There are several points to make in reply.  Firstly, the labor market is by no means as satisfactory as Tanner implies.  If one adds to the officially unemployed the people who are self-employed independant contractors (there are now more of these than union members, incidentally) working less than they'd like to work, employees who get less than the amount of paid work than they'd like to get, people in their fifties or sixties who are "retired" but would rather be working, people on disability pensions who would be better of with paid employment if they could find it, it is easy to make the case that the effective rate of unemployment is closer to 15 % than 5 %.  (Thanks to Professor John Freebairn of Melbourne University for this estimate.)

So  my first point is that the labor market is far from delivering outcomes that all members of the potential workforce are happy with.  Also, of course, surveys show that significant numbers in paid employment are unhappy with their wage, do not feel appreciated by their employer, etc, etc. For example, a forthcoming Roy Morgan international labor market poll shows that only 51 % of working Australians are "very satisfied" or "satisfied" with their current wage, only 56 % are satisified with job recognition and only 41 % are satisfied with job opportunities in their current position.   

Overall, however, the same Roy Morgan survey shows that 75 % of Australian workers in paid employment are "very satisfied" or "satisfied" with their job, higher than the percentage answering the same way in the United Kingdom.  This should come as no suprise as conditions of employment are generally tougher in the UK.

Allowing for those who are now unemployed or underemployed, the proposed reforms may well increase overall satisfaction.  From a narrowly economic point of view, flexibility of wages and conditions will mean more people will be employed.  Of course, union leaders will immediately say "flexibility" is code for "wage reductions."  But if 15 % of the potential workforce are partly or wholly unemployed, downward wage flexibility might be just what they need to find a job.

(Many years ago, I wrote of the vested interests of various parties who effectively stand in the way of full employment. Protecting wages is an example of looking after those who have jobs at that rate, but it does nothing for those who might have a job at a lower rate of pay.  This article is linked here.)

However, the government makes the case that on average wages might well be higher after its reforms are in place.  Certainly it is a fact that real wages have risen much faster under the current government than under the Hawke-Keating government and its "Accord" with the ACTU.

I suspect it is impossible to know the answer about whether introduction of "more flexible" wages and conditions will lead to more or less satisfaction allowing for all the relevant aspects of  "job satisfaction". To the extent it is another step in the reform of the Australian economy, the net effect is likely to be more people working harder for higher average wages and some people more employed than they would be but with lower wages.  In practice sensible judgment will only be possible years after the event. In the meantime, there is a battle for people's hearts and minds on the subject and Lindsay Tanner is a powerful, if in my view misguided, advocate for the naysayers in this battle.

Tanner makes another point in his article, one that in my mind is far more powerful.  John Howard "is protecting chemists from competition from supermarkets.  He's protecting the privileged positions of companies like Telstra and Qantas."

"In John Howard's world low-income workers have to compete with each other, but they're denied the full benefits of competition when they buy medicines or make phone calls.  How fair is that?"

Chemists, Telstra and Qantas could of course point out that they need protection because of the generous employment conditions they are currently forced to provide to their workers, which brings us back to the first point.  In economics, as in life, everything depends on everything else.  This point, however, requires some subtlety to grasp, and will probably not gain traction in the political debate.

So Lindsay Tanner has conjured a hit, gentle readers, a palpable hit.  With more arguments like this, Labor will be back in the game.  As I said at  the outset, Lindsay Tanner is a clever bloke.

The article first in this "fightback" series is about Craig Emerson's undefined notion of "fairness".