Anyway, let us for a moment accept the EIU’s judgment that Australia’s economic performance is below that of most of the developed and developing world and look at the other categories. The IR category, in which Australia comes 19th, is a weird mixture of things: union participation is assumed to be a good thing, so Australia’s low level of union participation, at just over 20%, marks us down, especially compared to China, which has 100% union coverage, even though the report admits Chinese unions are government-controlled and therefore not really unions. Presumably the productivity hardliners at the Business Council don’t want our union participation to increase.
Our lack of mandatory breaks for hourly workers also apparently marks us down, as does our low level of mandatory redundancy requirements. On the other hand, we compare quite well on annual leave and hours worked per week. So, if we cut our working hours further, legislated for more breaks, made it more expensive to sack people and all joined unions, Australia would be up in the top 10 on this in no time.
The big reason we get marked down on “policy and regulatory framework” is because of our high manufacturing wages. Now, it’s only a few days since Judith Sloan was telling us not to get too hung up on productivity analysis based on international comparisons of manufacturing, but anyway. The EIU has helpfully used US dollars in its wages comparison, ensuring Australia doesn’t come off favourably at all compared to the rest of the world.
Conversely, Australia ranked highly on “operating environment” because of our strong educational system?—?apparently we expect our kids to be at school for 21 years, the highest in the world?—?and high workforce and education participation by women, low corruption and childcare services. Although, apparently, we’re not very open to global trade and competition, because on that we rank below the protectionists of Europe and Japan.
There’s some other peculiarities as well. There’s something called “trade as a percentage of GDP” which apparently is unrelated to trade as a percentage of GDP, because Australia’s score is “-0.5”. Although that’s OK because the Kiwis rated “-1.3”. Unless the lower the score, the better. It’s hard to tell in this report whether lower or higher is better.
Now, international economic comparisons are difficult and I don’t envy the EIU’s task. Getting comparable data is always hard. As someone who regularly goes digging for data overseas, I can vouch that most expeditions offshore leave one grateful for the quality of the ABS, despite its shortcomings.
But I defy even the most puritanical IR deregulista to find material in here that provides evidence for the pressing need for IR reform, however the business media want to spin it.
This article first appeared at Crikey.
