Antipodean Angst – part 8

The Business of Business

There is a lot of importance given to business, globally and domestically, and the ways in which they operate, employ staff, and renumerate staff. There have been fundamental changes to all aspects of the ways business operates and the environments they operate in. While this has worked for the past thirty years it is a system that is bound to falter, regardless of the ways in which business operation has evolved due to technology, as it was unsustainable in that profit was the sole motivator and little else.

Australia is no exception.

Much of the current workforce in Australia knows only of the system within which they work and nothing of what the workforce used to be, except for the stories that older Australians tell. To many people under forty it would seem that these stories of what used to be are surreal and perhaps fabricated in the patina of the past.

Forget about Maslow’s hierarchy of needs and the changes he enacted in the industrial revolution, for he was a pariah of those times. Exploiting workers in that era was the norm because they meant nothing to the upper echelons of society, who were their masters and people were little more than serfs. Maslow saw that his labour force could be more productive if they were given a basic education, better housing and sanitation, and better working hours with limits put on the age of workers among other things. Basically he invested in people so that everyone got something out of the arrangement, pretty revolutionary stuff for that era. His methods worked and paid tremendous dividends, so much so that it slowly became the employment model. Times change and how population live and work change, but over the years this investment by the employer in the employee and the return from the employee worked well and evolved with the times to suit the evolution in class differences.

In some ways, despite our modernity, we are going backwards while appearing to go forward; our upper echelons enjoy privilege that is far beyond the people who create that wealth for them and it is all wrapped up in socially acceptable language. People have become, in some ways, a commodity and that is sadly a somewhat historical thing.

In the time of long ago, before the nineties, employment was different, and attitudes were different.

This was a time when you could leave a job in the morning and have a new job by the afternoon without all of the convoluted processes that are part of getting even the most menial job today. Much of the time the positions were permanent positions, unlike today.

There was a government organisation called the Commonwealth Employment Service (CES) and that did not require you to register. Instead you could walk in and there were boards with cards pinned to them, each card was a position that needed to be filled. You picked a card, took it to the counter and the person behind the counter called the employer, you then went down to the business and had a quick interview. Most of the time you started the next day, it was that simple. If it didn’t work out, regardless of if it were the employer or employee, you simply went back and did it again until it did work out for all involved.

Today it is a complicated process of applying with Centrelink and becoming part of that system, then you have to join with a job provider, and then you almost exclusively go and look for a job on your own. That is if you decide to follow that path, most do as they want or need some money coming in to survive.

To say that the process is flawed is an understatement and without going in detail to how the system actually works it is enough to say that the system is stacked against the person looking for work. It is a system that operates for job providers to make money from the efforts of job seekers and they are basically record keepers and enforcers of regulations. There have been volumes written on the flaws of this system and the inequalities and injustices, so enough said here.

Businesses today, in some instances, have evolved to use an algorithm to screen job applications. It takes little vision to see the flaws in this approach, yet such is the push to use technology that it is considered a brilliant approach. Yet it is a flawed approach as it reduces humans to mere numbers.

 Then there are labour hire companies. They, with some exceptions, have evolved little and make no bones about the fact that they are the interface between businesses that need temporary labour and people who are temporary labour. You could call it industrial prostitution with the labour hire agencies being the pimps, the workers are the whores and the businesses are the johns. It works and that is all it needs to do.

Disturbingly, the casualisation of the workforce is entrenched in Australia and this began in the nineties with the adoption of parts of an American model made famous by ‘Chainsaw Al Dunlap’. This is separate to labour hire and that distinction must be noted as there is a fundamental difference between labour hire companies providing additional labour in the short term and an employer holding a largely casual or part-time labour force.

This bloke was the driving force that led to what we largely have today in employment. For that he should be regarded as a business leper in that he destroyed a system that valued people and instead turned them into a commodity to be used and then discarded in the sole interest of profit bereft of any morality.

It goes without saying that he was the darling of business and Wall Street in the era spanning the nineties. The reality was that it was all just one big sham that Dunlap used to make massive amounts of money for himself. At the end of it all he was revealed as destructive in his activities, much of which was illegal.

Dunlap’s approach was simple, he undertook mass sackings of workforces in companies, and then they were rehired as casual labour. This removed employer responsibilities towards workers and for the employer this saved money and in turn increased profit. Then Dunlap basically cooked the books which raised the share prices of the companies, from which he made immense profits as he walked out the door as he cashed in his share options.

For the businesses this approach worked, and was pretty sexy, as it also gave them bigger personal and shareholder profits, yet it was a doomed concept. Doomed in that companies lost experience and the loyalty of their workers, for people always adapt to their reality, and they soon realised that if a company held them in no regard then they would simply sell their experience to the highest bidder.

A point in fact is that the average time a person spends within any given business in current times is roughly two years. They gain experience from that business and then sell themselves to another company for a higher remuneration, and the cycle continues. Businesses complain about this from time to time but do relatively little to address the problem. The workers have no choice but to operate in the environment that is.

Somewhere along the line PC culture became involved and equal opportunity was replaced with equality in employment. In that there are fundamental differences. Equal opportunity meant that you could advance upon your own merits and ability if you had the desire, drive, and strength to make this happen. Equality took that away and instead gave opportunity or advancement based upon a poorly designed model based in large part on race, gender or sex regardless of merit or ability in large part. How it has become the way of employment in current society is a bit of a mystery. It simply places people in positions that they may not be suitable for based on attributes that should not be relevant.

Business 101 is that you produce something and then sell it at a profit. It matters little if it is a good or a service. It is the people, who also happen to be the workforce, who are the consumers, excluding what is exported or imported. You also use the best tool for the job, and that is true when employing people. This is all simple logic.

However the model in Australia is a large casual workforce (approx. 25 percent), a gig economy, a permanent part-time workforce, and a permanent workforce.  There are three main factors surrounding the casual and part-time pool of employees of which are reasonable explanations can be found in the ‘Characteristics and use of casual employees in Australia’ report 2018. The official findings regarding employment satisfaction compared with the societal view on employment satisfaction has differences of opinion.

Regardless, under-employment is increasing with all the resultant problems. The pandemic displayed this with a percentage of people working in hotel quarantine were also working at least one other job in order to make a living above the poverty line. This wasn’t a problem until those workers contracted the virus and then spread it. Despite this uncomfortable fact very little was done to address it.

The top of the management and corporate tree enjoys vast pay-packets and bonuses, while the people who do the actual work have reduced pay-packets relative to cost of living, due to small increases in wages over time, reduced hours, reduced benefits, and a significantly reduced sense of job security in a significant part. This is sector specific, as some sectors are different to others due to demand.

A point in fact is that the obscene amount top executives are paid is the stuff of legends and also a serious bone of contention in society that is complained about, but nothing is ever done about this except to whinge occasionally. Interestingly it matters little when the financial parachute opens for those at the top regardless of their successes or failures. Either way they are renumerated handsomely, even when they walk out the door of a company they have ruined.

Considering that manufacturing has gone from being a significant part of the Australian economy to being an insignificant part plays a part in this inequality and insecurity of employment as we moved to being a more service-based economy. That is due in part to companies moving their manufacturing bases offshore and exploiting the labour forces of other countries, basically slave labour removed from the public view in order to maximise profit.

Value adding is how companies make profit. Value adding is defined in that what can be produced in the country of origin, being that one dollar spent in production results in two dollars gained is replaced with a significant increase if production is moved offshore. If the company moves production away from the country of origin the value adding then results in the one dollar spent resulting in anywhere up to eleven dollars in profit. Simply put they are exploiting a foreign workforce at the expense of a domestic workforce in the pursuit of profit. Neither companies nor consumers are willing to see how this is destructive to the country of origin and also the country of production due to the exploitation of people in pursuit of profit.

This results in cheaper goods for consumers and reduced overheads for companies. Yet the consumers continue to consume, and prices are cheaper as the goods are produced with the modern version of slave labour and the goods themselves can be of a lesser quality which requires them to be replaced as they fail. Repairing products has become largely cost prohibitive and repairers have declined in Australia. A sort of perfect circle of creation, consumption and destruction, except that it creates a ripple of problems that radiate out into all areas of society eventually. Yet companies love it for the profits generated and consumers love it for the cheap prices paid for goods. Basically, short term wins in exchange for a long-term loss.

This all depends on supply chains and a ‘just in time’ system of supply as it is cost prohibitive for companies to hold large stock inventories as the cost of warehousing reasonable stockpiles, and staffing for that form of warehousing doesn’t fit into the profit model. The model only works when the goods arrive in country, go to a distribution centre, and then to the stores. The distribution centre being a quasi-warehouse catering to demand inventories. The pandemic and the shutting down of borders exposed this weakness in a multitude of industries, including offshore service industries that provide support for country of origin customers as countries went into lockdown and economic activity stalled.

Australia is largely a service workforce today and 2020 has exposed the fundamental weakness of the business practises that has evolved to make this a business standard.

In simple terms greed is good at any cost and this is actively promoted in Australia with no regard to anything else that is beneficial to society as a whole. Think about that; if what can be purchased for one dollar instead of two dollars is attractive despite the fact that the saving is at the expense of jobs, employment security, and national security within your country.

Also exposed was when one country is in large the global factory. A change in the geo-political climate then creates problems for dependent countries and for the outsourced production of companies. Particularly when there are opposing political ideologies between the countries. This is the point when the security of the nation comes to the fore. The country that is the global factory can impose its will on the consumer countries by means of economic blackmail or coercion.

This model of business works just fine as long as a few things are factored in. Easy credit is one of the factors and it has been with bank loans approved online with few checks and balances in place to determine affordability to repay the loans, overuse of credit cards, payday loans, buy now and pay later companies, store credit and so on. Another factor is the dependence on the economy never going backwards which means that there will always be work available. Then there is the perception of public confidence. Take these away and it falls in a heap. 2020 has exposed these weaknesses and yet it is still largely ignored.

Business seldom invests in people in significant real terms as that investment has little long-term gains for a business due to an employee using a business to gain experience and then moving on. It is a self-defeating cycle to which the solution is simple, yet it requires a significant change of mindset on behalf of both the employer and employee. The employer needs to invest in the employee in the long term and the employee needs to invest in the employer with loyalty and longevity of employment. Both need the security and stability that this provides.

Developing manufacturing in country that has been moved offshore and developing new industries that provide for the growth, security and stability of the country needs to happen, yet it is nothing but largely empty words backed up with little action. Investing in people as an integral part of a company is somewhat an anathema as that requires a commitment on both sides that has been, in large, eradicated from the political, public, and commercial consciousness.

This would require initial government initiative, implementation, and support, yet this is only talked about as the mechanics of such a concept doesn’t fit with the current system of business and employment. Securing domestic economic security is about changing the mindset of Australians and that is a difficult thing to achieve as much of the work that needs to be done is considered to be beneath us as we think we are too smart or evolved to consider some types of manual labour as being worthwhile. It is much simpler to import the labour to do the things we don’t want to.

The welfare and employment service industry needs to be overhauled and replaced with a simplified system that works to put people into jobs rather than create wealth for job providers. How this would be achieved is difficult due to the current complexity of existing systems and little investigation on productive changes with appropriate checks and balances to prevent exploitation. The payoff for people, government, and revenue not spent would be worth finding a way.

 Labour hire more or less works but requires some security for the labour force it uses to provide that mobile skills base as the back-up for businesses that need additional labour as required.

The changes needed require a massive altering of the mind-set of both business and society and also a rationalisation of the wages structure from top to bottom. Not some socialist, utopian ideology of equal distribution of wealth, more a rationalisation that places a monetary value on the individual dependent on what they do rather than the position or qualification that they hold regardless of ability.

The current economic retractions and the coming retractions due to the impacts from the pandemic responses by state and federal governments should be the opportunity and catalyst for changes. Rather there is a view that things will simply ‘bounce back’ once the restrictions are lifted. The opposite is true as the welfare supports will be reduced and removed which will in turn expose not just the weakness in the economic operation within this country, but also the destruction of non-viable businesses that have existed under the pre-pandemic era. It will take little to turn a recession into a depression as government largesse is a global activity during the pandemic as they prop up the economies of their respective countries and is unsustainable.

Australia needs to rediscover the concepts and attitudes that actually built this nation. It needs to rediscover that its people are its greatest asset, and it needs to rediscover its national identity and pride rather than be driven by the mentality of minorities that only desire to destroy these things.

Australia needs to abandon the concept of useless wealth. By this term ‘useless wealth’, it means the creation of wealth on frivolous and meaningless things and instead replacing it with meaningful things. Examples of which include individuals holding massive property portfolios that are little more than a house of cards, rationalisation of credit and debt within households. Remove the glamorisation of useless businesses such as ‘influencers’, who promote anything and produce nothing. Change the attitude of businesses that are driven by profit at any cost and instead replace this with an attitude of investment in the long term rather than the short term. Australia needs to cease selling its assets, physical and intellectual, to other countries and government needs to stop selling its physical assets that are vital to the operation of the country in the interests of a short-term profit which has a long-term loss to the nation both in profit and security.

Government needs to rediscover that nation building is more than the party in power and more than one term of government, nation building is a vision of what is needed for the nation and having the resolve and determination to rise above party politics to achieve this in the national interest regardless of who is in power.

To do anything less than these basic things will result in the reality that the concept of Australia as a nation is to be nothing more than empty words and meaningless gestures and this is a gross disservice to our future generations. Currently Australia is largely a consumer nation that produces little. We dig up our resources and export the raw product instead of value adding, we export our produce and import the refined product rather than value add onshore. Our production of infrastructure is outsourced rather than funded internally, and then we pay for decade upon decade to repay the debt with the profit going offshore in large part. Service industries are outsourced whenever able to maximise profit, and the value of customer service is more a concept than a reality.

The restrictions imposed on development of industry are hampered by red and green tape that makes development a risky and expensive business. It is on Federal, State, and Local government levels and in some circumstances can be so intertwined that the cost of development outweighs the value of investing in development. This needs to be examined and then re-evaluated in order to make investment in industry a viable proposition.

The business of government is inextricably linked with the business of businesses. To fail to understand or appreciate this simple, fundamental concept is the mark of a truly insignificant mind.

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