2. Structural change and its consequences
Between the mid 1970s and 2000, Australia's paid labour supply, calculated as average hours worked per head of total population 15 years of age and above, fluctuated around 20 to 21 hours a week. If the size of the potential workforce were adjusted for deferral of labour supply by extended education and the infirmities of an aging population, it would presumably be found to have increased appreciably over that period. Of males 15 and over at the 1976 census, 7.5 per cent were aged 65 and over, and at the 1996 census the figure was 13.7 per cent. However, profound change had occurred in the relative contributions of different segments of the potential workforce—males and females most impressively—the organisation of work, conditions of employment, the goods and services produced, methods of production, and in Australia's international trading and financial relationships.
In mid-1974 unemployment, often becoming long-term, had risen sharply and stayed much higher than in the preceding 25 years and, until a sustained recovery from severe recession occurred in the early 90s, rates of economic growth had been much lower. A series of institutional reforms in the 1980s and 1990s, intended to promote efficiency and growth, had little immediate effect on unemployment, although rates fell gradually in the later 90s.
The speed and extent of change provoked a degree of insecurity. Public discussion concentrated largely on domestic social and political factors, which clearly were important, but broadly or closely similar things were happening in other industrialised or industrializing countries. Those countries were most obviously but not only liberal parliamentary democracies with capitalist economies. Countries with other political systems were also affected; perhaps to the extent that they entrusted investment, production and growth to national and international markets. The critical factor appeared to be the nature of the economic system, or its effective core, and apparently something basic to those systems had changed.
The time series on employment and varieties of employment presented here not only bear the marks of short-term fluctuations of the ordinary business cycle but also reflect underlying trends that cannot be extrapolated to predict any plausible future. They are best understood as representing a long transition from one more-or-less steady state of economy and labour market to another. Analogous transitions had happened before. The preceding two or two-and-a-half centuries had seen not one but several industrial revolutions, and a consensus emerged gradually among those who accepted the discontinuity of change that this probably was another. There was less agreement on what was driving it and where it might lead.
Theories of the propagation of major innovations and their eventual expression in whole systems of production went at least as far back as Marshall, who wrote of the diffusion and application of new ideas: 'An epoch-making idea…starts the thoughts of the world on a new track [but] is seldom fully effective for practical purposes till many minor improvements and subsidiary discoveries have gathered themselves around it…' (Marshall 1890 (1920), p. 205). In 1999 the chairman of the Federal Reserve Board, discussing 'the unexpected emergence [of] labor productivity acceleration' in the United States, suggested that this was 'not just a cyclical phenomenon or a statistical aberration but reflects—at least in part—a more deep-seated, still developing, shift in our economic landscape.' Structural shifts of that kind 'have visited our economy from time to time in the past', and now:
The newest innovations, which we label information technologies, have begun to alter the manner in which we do business and create value… They were unanticipated and evolved, for the most part, independent of the ebbs and flows of economic activity [but] there has been a perceptible quickening in the pace at which [they] are applied. [An] evident acceleration of the process of 'creative destruction' which has accompanied these expanding opportunities has been reflected in the shifting of capital from failing technologies into those technologies at the cutting edge (Greenspan 1999).
Seventeen months later, Greenspan again asserted that 'Technological innovation, and in particular the spread of information technology, has revolutionised the conduct of business over the past decade' (Greenspan 2000).
The reference to 'creative destruction' was an unacknowledged quotation from Joseph Schumpeter, who attributed those major events to the operation of the so-called Kondratiev cycle of economic development, a theoretical construct which describes the past reasonably well but was never accepted as establishing the existence of long, regular and—crucially—self- generating cycles of growth, decline and recovery. Schumpeter referred to the changes resulting from innovation as 'economic evolution', explaining that, although the term was unsatisfactory, 'it comes nearer to expressing our meaning than any other, and it has the advantage of avoiding the associations suggested by the…term 'progress', particularly the complacency the latter seems to imply'. He went on to explain that 'evolution is a disturbance of existing structures and more like a series of explosions than a gentle, though incessant, transformation' (Schumpeter 1939, pp 86,102). Or, in a memorable restatement, that:
in dealing with capitalism we are dealing with an evolutionary process… Capitalism…is by nature a form or method of economic change and not only never is but never can be stationary… The fundamental impulse that…keeps the capitalist engine in motion comes from the new consumer goods, the new methods of production or transportation, the new markets, the new forms of industrial organisation that capitalist enterprise creates. [This] process of industrial mutation…incessantly revolutionises the economic structure from within…destroying the old one [and] creating a new one. This process of Creative Destruction is…what capitalism consists in and what every capitalist concern has got to live in (Schumpeter 1942 (1947), pp 82-83).
Predictions that new information technology—to which some added biotechnology and materials technology—would transform productive systems and their institutional frameworks, had been made since the early 1980s, and in Australia by 1996 the Economic Planning Advisory Commission (EPAC) had no doubt that:
The advance of information technology will change almost every job. The scale of change is at least as great as with other technological advances such as the steam engine or car. It has increased the pace of innovation and structural change and will further increase globalisation and competition. It will both create and destroy many jobs, and change the balance of skill requirements. [Because of] new technology and changed social attitudes… the old style of work organisation…large-scale mass-production, with rigid job delimitation and hierarchical management…is being replaced by organisational styles that emphasise innovation, small teams, autonomy [and so on] (EPAC 1996b, p. viii).
It seemed highly probable that deep change was occurring, likely that it proceeded from technological innovation, and possible that the most important of the innovations related to information technology. Only time could tell, and in any case both Schumpeter and Greenspan expected the ups and downs of the ordinary business cycle to persist, despite any underlying shift.
The detail of what was happening in the Australian labour market, and especially the new things that were happening, or changes in the significance of things once unimportant but now of interest, could not be distinguished clearly. The main statistical categories had been defined at or before the beginning of the period covered in this paper. Some had become misleading or irrelevant and, once beyond them, the available information was little better than anecdotal, showing that certain things were indeed occurring but insufficient to quantify them. For example, a substantial proportion of 'casual' workers were in fact persons running their own businesses and the variety of arrangements within the category, 'independent contractor', created difficulties for courts, tribunals and the Australian Taxation Office (ATO), as well as for analysts.
Public discussion was also confused because people misunderstood the statistics that did exist. The term 'dramatic' tended to be overused and misapplied to changes that in reality were gradual but prolonged, sometimes because rates of growth were confused with growth in absolute numbers. A fact such as, 24 per cent of all jobs in both 1983 and 1998 were full-time jobs occupied by women can be interpreted as meaning that the rate of female full-time employment had not changed. In fact, 26 per cent of all women over 15 years of age were working full time in 1983, and 29 per cent in 1998. It is hoped that the present work will aid understanding of the meaning of the statistics we have and help to define the statistics missing but needed.