Analysis: Recession is a Reason to Fight

Australia is now firmly in the throes of a recession, as is the rest of the world. Unemployment is at levels not seen since the Great Depression. Entire industries have been destroyed, and many companies will close their doors and simply will not be seen again.

Previous editions of this Bulletin have argued that the economic crisis, though catalysed by the COVID-19 pandemic, was in the makings well before the first COVID case emerged in December 2019. This was evidenced by the crisis in retail, with some 169 closures of outlets in January 2020, as reported in the Sydney Morning Herald in the same month. Those closures and the impact of the retail crisis emerged before the full impact of low sales over the Christmas and holiday period would be realised. In January 2020, these were figures not seen in several decades.

The economic downturn is bound up in an ever deepening social crisis caused by the increasing cost of living and wages stagnation. When COVID-19 hit Australia in around March 2020, it brought on a recession already in the makings because of the necessary shut down of industries to attempt to contain the virus. 

Job Losses 

Various predictions have been circulating about projected job losses and unemployment rates. Westpac has been predicting more than 814,000 job losses, bringing the official unemployment rate to 11 percent. Warren Hogan, professor of economics at University of Technology Sydney, estimated 1.8 million Australian workers would lose their jobs, an unemployment rate of more than 15 percent.

Scores of jobs have been lost across entertainment, hospitality, manufacturing and construction.  Although construction is being touted as the industry keeping Victoria in business, 50,000 construction jobs were destroyed in the last 12 months, taking the industry’s labour market share from  9.5% to 9.1% over a period of 12 months from September 2018 to September 2019 – well before the impact of COVID-19.

Here is a glimpse at some of the unemployment figures emerging over the past months.

 


 

Hospitality and tourism

 

Star Entertainment Group – 8100 workers

Flight Centre – 1500 workers

Helloworld – 275 workers

Allianz Partners Australia – 45 workers

Virgin Airlines – 8000 workers

QANTAS – 6000 workers

 

Consultancy 

 

Deloitte Australia – 700 workers

KPMG Australia – 200 workers

 

Media and journalism

 

Australian Broadcasting Corporation – 250 workers

News Corp – 100 workers

Seven Network – 38 workers

Foxtel – 70 workers

 

Mining and Energy

 

Woodside Energy – 500 workers

Chevron – 600 workers

BHP Billiton – 400 workers, 6000 workers globally

CBG Resources – 70 workers

Origin Energy – 140 workers

 

Retail

 

Woolworths – 1500 workers

Wesfarmers – 1300 workers

Myer – 90 workers

Uber – 100 workers, 3700 workers globally

Luv-a-Duck – 61 workers

 

Higher Education and Research

 

Charles Sturt University – 145 workers

Monash University – 277 workers

Deakin University – 400 workers

University of Wollongong – 150 to 300 workers

Central Queensland University – 296 workers

National Gallery of Australia – 30 to 40 workers

CSIRO – 40 workers

 


 

What is causing the downturn – even before COVID?

The current economic crisis is also known as a crisis of over production. That is, a crisis of too many commodities and not enough consumers. Those buying the products, consumers, and those producing the products, producers (or workers), are overwhelmingly the same people. In an extremely simplified way, the less likely consumers are to buy products, the less profit a company makes to reinvest in producing more products. The less reinvestment into new products, the less producing work for producers. The less work for producers, the less disposable income to spend on products, and the cycle continues. 

COVID-19 accelerated business closures in retail, tourism and hospitality – because they had no choice, under state emergency powers to stay open. However, consumer confidence had declined such that retail and hospitality were already experiencing decreases in profits. This was caused by wage stagnation and the growing cost of living – causing consumers to lack confidence and so save their money rather than spend it.

Wage stagnation in Australia has been attributed to a decline in trade union membership, which in turn gives rise to labour market flexibility (casualisation, zero hours contracts, the gig economy), and limited bargaining power of workers. In other words, the constant and successive attacks on Australia’s labour movement, under Hawke, Howard, Rudd/Gillard, Abbott/Turnbull/Morrison – has finally reached its objective.

So wage stagnation limits how much consumers spend, leading to businesses realising fewer profits, causing businesses to invest in production less, leading to unemployment. 

Another factor is also at play. The diminishing planetary resources. This is what is impacting the ever increasing cost of living, not just in Australia but right across the world.  As oil and other fossil fuel reserves decline, major companies search for other places to mine and drill – plummeting the earth’s resources. In order to exploit the earth’s resources on lands not of the company’s origin, wars of aggression are waged by Nations – notably, not by the companies that will benefit. The conflict in the Middle East is primarily a war of resources, exploiting already existing cultural, ethnic, religious and communal divisions. Conflict is on the brink of breaking out between Ethiopia and Egypt, over damming of the Nile River, which would reduce Egypt’s agricultural output by between 10 and 30%. With the plummeting of the planets resources, the increasing temperature of the Earth, seemingly infinite resources such as water, become scarce. 

All of this drives up the cost of living. In the Middle East and Europe, people – workers – have been demonstrating in the streets over the cost of oil and food – these demonstrations have been going for over a year. This is a global problem not a mismanagement of individual nation state budgets.

In the current economic framework, the decision of what to produce and in what quantity, is left to the market.  So if consumers stop buying a particular product, then the product stops getting produced. The problem with this is that being left to the market means there is no planning, and the consequences are brutal for the producers, that is, the workers – because mostly they just lose their jobs. It’s also brutal for the planet because the consideration of how much of what resource to take is left to the market (read profit), not a concept of future planning or future need.

In a pandemic, when entire industries have closed down, and the market is flooded with unemployed workers looking for work, there is no centralised mechanism to redeploy workers to new markets. So toilet paper factories simply produced more toilet paper, distilleries converted from gin to produce hand sanitiser – but we could not convert the old Holden factories into factories that produced ventilators.  And we could not mobilise QANTAS to get these ventilators to Italy or India, where the need for ventilators was greatest. And by extension, we could not deploy the scores of unemployed workers to do this work.

The market mechanisms are also brutal in that capitalism relies on, in fact depends on, competitors in the same industry.  So although the coal and fossil fuel industries are destroying the planet, those companies manufacturing energy from these sources must compete in order to survive.  And by survive, that usually means eliminate the competition. 

Before the pandemic, people had mobilised around the climate emergency. New markets for clean, safe energy manufacture had been contemplated by scientists and environmentalists. Again, the brutality of the market economy, also known as capitalism, meant that new, clean and renewable energies were required to go into competition with existing fossil fuel manufacturers – that had the backings of major Nation States with their arsenal of massive financial subsidies, lawyers to tie everyone up in unnecessary legal battles, intelligence and surveillance, and militaries.

Capitalism cannot resolve the crisis of over production humanely. Competition means that companies will compete to survive, including wiping out other companies, and it will be the workers that pay – as we are seeing in the unemployment figures, reported above.

History shows us that the crisis of over production, and limited resources, is more often than not resolved through war. We are seeing the United States posturing against China, Iran and Russia. We are seeing Egypt and Ethiopia about to war over water.  

These wars are not for us. They are not for workers, though it will be workers’ bodies on the front lines. These wars are about the planet’s dwindling resources, the creations of new markets, so that companies can continue to survive yet another round of capitalist overproduction. These crises come and go periodically. And they are always resolved brutally, under capitalism.

And in order to convince us to go to war willingly, an entire propaganda machine is mobilised to convince us that we are each other’s enemies. Consider the reporting on China and Hong Kong. Consider the reporting on Muslims, immigration, asylum seekers.  

But there is another way.

A planned economy – one that responds to the needs of workers and the needs of the planet. One that recognises that when too many cars have been made, and these cars are causing distress to the earth and its animals, that it is time to find another way to transport people around. One that recognises that when too many phones are about, that the answer is to stop making phones, rather than to make poorer quality phones so that they need to be constantly replaced. An economy that can accommodate the outbreak of a pandemic, and redirect research towards finding a cure, redirect resources like food and entertainment to people that are required to stay still, to stop its spread. One that is able to stand still, to stop the spread of disease, and that people don’t starve as a result.

This planned economy is only possible if those responsible for the bulk of production – the workers – are in collective control of it, and that economy is organised around human need, and planetary protection, not profit.

Although this concept of workers’ control of the economy is not widely shared, there are very many workers, unionists and activists committed to resolving the current crisis of capitalist overproduction in a way that minimises the brutality against workers.

There is a current “rolling conference” being held over a number of months, called Global Trade Union Assembly.  While not the only way forward, this series of discussions, and the global meetings enable worker activists to get together to discuss what kind of organising is required, globally, to resolve the crisis in our favour -  and then to organise towards those outcomes.

 


 

For more information about the Global Trade Union Assembly, go to:

https://slucuny.swoogo.com/gtua2020

We must organise.  We must fight back. We must win.

Workers change the world