Wednesday, November 16, 2005

Who's marching for the unemployed?

Although I have never, and probably never will, take part in a protest march, protests themselves serve a useful purpose because they can reveal the strength of people's preferences. It is always difficult to judge what people are willing to pay for public goods (be they bridges, health care, restrictive IR regulations, etc) but a protest march provides an opportunity to measure this willingness. Plausibly, a rough estimate can be determined by the wages that protesters gave up to participate in yesterday's marches against the WorkChoices legislation.

Proceeding on this basis, and giving the ACTU the benefit of the doubt, there were 546 000 protesters yesterday. And, I'll even be more generous and assume that these protesters had a similar average productivity to the general Australian population (although the dominance of public servants among their ranks makes this highly unlikely). The average Australian produced $50 per hour last quarter and an 8 hour day means that across all the 546 000 demonstrators they gave up around $220 million in lost wages.

I have assumed that all protesters worked, which is probably a fair assumption since the beneficiaries of the IR laws will be the unemployed. For example, in the more liberal IR environments of the US, UK and NZ there has been an average unemployment rate of 5.9 per cent over the last ten years (compared to an average rate of 7.3 per cent in Australia). If our average over the next ten years lowers to 6 per cent, as a result of reform, then an extra 135 000 people will have jobs. Even if these new entrants just earn the minimum wage then they will earn an extra $13 500 over and above the dole. The average age of the unemployed is around 50 so, assuming on average of another 15 years in the labour force for the new employed, the net present value of these jobs is around $19 billion.

The upshot is that to offset these IR gains there would have to be the equivalent of another 80 days of action on the same scale as yesterday. In the face of these ratios, I don't think I will breaking my duck and joining a union march anytime soon.


Iggy Jr said...

After the reforms the average Australian worker should be producing more than $50 hour - and be earning more than before as well - regardless of whether the workforce expands. If I were a lazy unionist then I would be jumping on the last gravy train out of here!

Timothy Bradley said...

I think your math is a little off Matt: its not $220 million in lost wages- its $220 million in lost output. Who do you know that gets paid $50 an hour?

But that makes it worse right? These unionists (who by default are below the average productivity- otherwise why are they fighting moves to get paid only their marginal product) and crowds for hire are imposing most of these costs unto their employers.

As if we don't pay enough tax, but now we have to support their political action? When I saw on the news a placard among the protesters protesting the war in Iraq- that did it for me- no credibility whatsoever.

Also the ACTU figure of 546,000: what was the real count? I'm guessing 100,000, with productivity of $20 an hour. Closer to $16 million.

Sam Backo said...

You're a goose, A BLOODY GOOSE!!!!

Quack quack quack. That's all you do. You quack like a bloody Goose.

Us workin people are out there making a stand and what are you doing:


Us workin people are standing up for the rights of the workin man. We're not askin for much, just enough to put food on the table and perhaps a brew for a night cap. And what do you do?


And when someone quite rightly points out the crimes against humanity being committed in Iraq, what do you do???


Go on mate, it's time to see the.....


Timothy Bradley said...

May not even be $20 an hour...