Photo Above: Who is Really Calling the Shots! Australia’s richest person, mining billionaire Gina Rinehart flanked by Scott Morrison and Donald Trump at a White House state dinner during Morrison’s trip to the U.S. in September 2019. As in the U.S., in Australia, governments and state institution serve the capitalist exploiting class. That is why even during the pandemic, Australia’s tycoons have become even richer at the expense of working class people.

Corporate Bosses Use Pandemic to
Increase Their Exploitation of Workers

• The Ever Increasing Share of National Income That Is Being Plundered By the Capitalists
• Force Companies to Increase Hiring at the Expense of Their Ever More Bloated Profits!

12 September 2020: Over the last several months, business owners have thrown hundreds of thousands of workers out of their jobs. Even the ballooning unemployment rate hides the true extent of job losses. Many workers have given up the search for work and are thus not counted as unemployed. A huge number of casual workers simply are not getting shifts anymore or barely more than a few hours of work every month. They may be officially counted as “employed” but they know what they are actually going through!

Yet business owners – from the bigwigs of large corporations to smaller business bosses hiring just a few workers – have been crying poor too. And the right-wing federal Coalition government, the Coalition and ALP state governments and the mainstream media keep on telling us that “we are all in this together” in terms of the current economic pain. However, the hard facts revealed a couple of weeks ago by the Australian Bureau of Statistics (ABS) prove what many people already know: that we are in fact not all in this together. They show that while total wages for the three months to the end of June plummeted by 3.3% [1], corporate profits have surged by a staggering 15% in the very same period [2]. To give a sense of how big that profit explosion is, consider this: if corporate profits continue to skyrocket at the same compound rate every quarter for the next three quarters as well, profits would have increased by 75% in just one year!

Sure, the bosses of some sectors like tourism and travel businesses are experiencing falling profits [2]. However, this is more than made up for by the surge in profits in other sectors. For example, profits in the construction sector surged by 54% in the June quarter [2].  And while some retail outlets are not doing so well, others are making such a killing that total corporate retail profits have skyrocketed by over 30% in just three months [2].

Yet, when the media report on the suffering caused by the pandemic, they focus heavily on the challenges of business owners and very little on the hardships of workers. The media and politicians especially like to speak about the difficulties faced by small business owners. Yet while small business owners of cafes, restaurants and motels have certainly been hard hit by the economic crisis, the profit increases amongst small businesses in the media, information and telecommunications sector, the construction industry, mining and some parts of retail have been so huge that the overall profits of unincorporated businesses – that is, overwhelmingly smaller businesses – have risen by a solid 1.6% in just the months of April, May and June alone [3].

So how have business owners – especially those of bigger operations but to a lesser extent those of smaller ones too – managed to actually increase their profits when overall the economy is in the worst recession since the 1930s Great Depression? How are they able to reap in yet more spectacular profits when the overall income produced by the economy has crashed by 7% in just the three months to the end of June [4]?  The capitalist business owners have achieved this by grabbing a still bigger share of national income at the expense of the wage workers who actually do the work. This is a proven by a very revealing figure detailed in the national accounts for the June 2020 quarter: the Unit Labour Cost. The Unit Labour Cost represents the average amount that bosses must outlay in wages and superannuation for each dollar of added value that workers produce [5]. In other words, the higher the Unit Labour Cost the less that workers are being exploited, while the lower the Unit Labour Cost, the more that workers are being ripped off. Well, that Unit Labour Cost crashed by nearly 10% in just the June quarter alone [6]! That means bosses have spectacularly increased their rate of exploitation of workers during the pandemic. One way they have done this is to use the cover of the pandemic to cut their workforce and force those still employed to toil even harder for the same pay. The greedy capitalist business owners know that many workers still in jobs are nervous about resisting bosses when they see so many of their colleagues being thrown out of work. In other cases, corporate bosses and smaller business owners alike have been slashing working conditions over the last few months. For example, they have been forcing workers to work shifts without paying them shift or weekend penalties. So much for “we are all in this together”!

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Now, bosses want to increase their rate of exploitation even more. They are demanding laws to extend workplace “flexibility” arrangements that will enable them to more broadly avoid paying shift rates. In the mouths of the capitalists, “workplace flexibility” means the bosses forcing workers to work in whatever arrangement that is most profitable for the capitalists and workers not organizing collectively to resist. The Liberal/National government is pushing this agenda aggressively. They have insisted that firms eligible for JobKeeper be able to unilaterally impose changes on employees’ work hours, duties or work location. With typical spinelessness, the ALP “opposition” is, for the most part, going along with the “flexibility” push. Even the ALP-dominated leadership of the ACTU trade union federation has said that it is in principle willing to negotiate on issues of “flexibility.” The ranks of the workers movement should revolt against their current leaders acquiescing to this agenda! We must fight to stop the rollbacks of workplace rights for workers! Stop any cuts to wage loadings for shift work! For wage rises not wage cuts! Let’s fight against unemployment by forcing the capitalist bosses to maintain much larger workforces at the expense of their ever expanding profits!

The Ever Increasing Share of National Income
That Is Being Plundered By the Capitalists

As the total output that the economy is producing is plummeting during this recession and some smaller businesses in certain sectors are indeed doing it hard, the capitalist bigwigs have overall actually become richer because they are seizing a much bigger proportion of the national income than they were previously. The pie has become a lot smaller but the share of that pie that the capitalists have grabbed for themselves is just getting so much larger. Therefore, there’s a lot less pie –  filled to the brim as it is with the fruits of our working class labour –  left to be distributed among the millions of working class people.

That business profits have been rising at a much faster rate than wages is not something that started during the pandemic. It has been going on for several decades now. The ABS data for the June quarter gives us a sense of just how much workers are being denied the fruits of their own labour. They show that total profits for the period of all private sector businesses employing labour [7] – that is, excluding the genuinely self-employed sector – was a whopping $120.1 billion; of which $109.6 billion was extracted by corporations [8] and $10.5 billion from unincorporated businesses [9] (largely smaller businesses). In the same period, total wages across the private sector were $141.9 billion [10]. That means that on average in capitalist businesses – that is, those hiring labour – 54% of the value that has been added by the operation of the business goes to wages and salaries and 46% goes to the business owners as profits. That is despicably unfair! For one, workers far, far outnumber business owners. Moreover, it is workers who are doing the work that actually produces the output of an enterprise. After all, how much of the iron ore that makes multi-billion dollar profits for the likes of Andrew Forrest and Gina Rinehart has ever been dug up or transported or processed by any one of these tycoons? None at all! And how many of the cardboard boxes that makes Visy owner, Anthony Pratt, his fortune has he ever folded or contributed to their development, manufacture, storage or transport?

The breakdown in distribution of income in an average business of 54% to wages and salaries and 46% to profits does not tell the whole story. For the fat salaries and bonuses of CEOs, directors and other top executives are also classified in the ABS figures as “wages and salaries.” But these big bosses are invariably also part or full shareholders of the company or sometimes even the sole owners of an enterprise in the case of smaller businesses. Although these people are numerically few compared to workers, their salaries and bonuses are so bloated that they make up a significant portion of total wages and salaries. If we moved their salaries and bonuses into the profits side, we would find that the split in income distribution in an average business is pretty much 50% to the workers and 50% to the business owners (indeed, it may well be that the capitalist bosses are getting even more than 50%). That seems a lot for these already fat cats to sit on their lazy, exploiting behinds! Let’s ponder what this fact means for workers. Consider a worker, lucky to have a full-time job, who receives $50,000 per year in wages. On average that worker is actually adding $100,000 or more to the net revenue of the business – that is, to the enterprise’s revenue minus all the expenses including raw materials, stationary, electricity, transport etc. Yet of that $100,000 of value that the worker is adding to the business operation, she or he receives back just $50,000 in wages. The other $50,000 is stolen by the business owners! That is the level of capitalist exploitation going on every day in Australia right across the economy – from large corporations employing thousands of workers to smaller businesses hiring just a few.  

The reality is that even before the pandemic hit, this rate of exploitation of workers had been increasing remorselessly. Thus, for the earliest date that ABS data is readily available, the March quarter of 2001, the official breakdown – the real one as we have discussed is even less favourable for workers – in average income distribution in a business was 64% for wages and salaries and 36% for business profits [7] [10]. Yet by just before the pandemic, at the end of the December quarter of 2019, the average distribution in Australia’s private sector had become just 58% for wages and salaries and 42% for profits. Now, in just six months, the percentage of income going to wages and salaries has crashed by a further 4%, while the proportion going to profits has surged by the same amount.

It seems that the income of ultra-rich business owners is set to rise even further at the expense of working class people. The conservative Morrison government has flagged that it may accede to the demands of business bigwigs and make yet another cut to company tax levels even as it has disgustingly decreed that Jobseeker payments for unemployed people will be slashed by $300 a fortnight from next month onwards. This must be resisted! Yes, economic stimulus is needed but in a way that actually benefits the masses. The working class and its allies should demand:

• No income tax cuts for high income earners (that is, those on more than $250,000 per annum).
• No corporate tax cuts. Greatly increase company tax rates instead to cover some of the ballooning debt.
• No reduction in Jobseeker payments – increase them instead!
• A massive increase in provision of low-rent public housing. With millions of working class people struggling to pay rent this is an urgently needed measure.
• A huge increase in funding for aged care. For all this funding to go to publicly-owned aged care centres. Due to the greed of private aged care business owners, the profit-driven aged care sector has failed to ensure the safety of residents and aged care workers during the pandemic, leading to the horrific, unnecessary deaths of hundreds of people. The aged care sector must be nationalized. The present employment of aged care workers on insecure casual terms should be replaced by their employment on a permanent, secure basis. For the number of aged care workers to be greatly increased and for public resources to be devoted to the systematic training of all aged care workers.
• Free 24 hour childcare and free pre-school education accessible to all infants. This is vitally necessary to enable women’s full participation in economic, political and community life. All the funding should go to publicly owned childcare centres and pre-schools – the childcare sector must be nationalized.

Force Companies to Increase Hiring at the Expense of
Their Ever More Bloated Profits!

Other than through more intensively exploiting their workers, there is another reason why capitalist business owners have overall been able to greatly increase their profits during the pandemic. Though the government’s JobKeeper program, in the context of a social order where bosses are able to retrench workers at will, has helped some workers remain in employment, overwhelmingly the main beneficiaries of the program have been business owners. And this was always the government’s intention! In our leaflet, No Job Cuts! No Unpaid Stand Downs! that was written more than 4 months ago, in the early days of JobKeeper, we warned of this massive problem with the scheme:

“JobKeeper is financed not from wealthy company owners but from the public budget. And you can bet that it is working class people who are going to be made to cover most of the resulting public debt. We face cuts to public service jobs, the further sell-off of public housing, the return of the dole back to near starvation levels, more health and education services being made user pays and further privatisation. What makes this more terrible is that some of the capitalists receiving JobKeeper subsidies did not actually have plans to cut their workforce because they needed to keep exploiting their workers to protect profits or market share. Thus, many billionaire and multi-millionaire capitalists are now going to receive huge donations from the public budget that amount to a combined multi-billion dollars amount.”

With the ABS figures showing that corporate profits have skyrocketed by 15% in the June quarter alone, the above prediction has now been confirmed.

Yet given that capitalists are, currently, completely free to throw workers out of their jobs at any time if that is what it takes to maximize these bosses’ bottom line, what should then be our attitude to JobKeeper? Well, it means that while fighting to impose a program for jobs that will consistently benefit working class people and that can truly get rid of unemployment, we should in the interim insist on the maintenance of JobKeeper, demand its extension to cover the millions of workers not presently included in the scheme – including all casual workers, visa workers and international students – and oppose the Morrison government’s plan to reduce JobKeeper payments from the end of September onwards. The ALP and ACTU oppose the Morrison government’s plan to slash the level of JobKeeper payments and to the extent that they are actually standing by that position that stance should be supported. However, overwhelmingly, the main game should not be about JobKeeper but about fighting for a class struggle program to end unemployment. And here the ALP and the current pro-ALP leadership of most of our unions have nothing at all to offer. Indeed, the ALP is so intent on ensuring their own acceptance by the powerful big end of town – and even more so under “left” current ALP leader, Anthony Albanese, than under the openly right faction former head, Bill Shorten – that they cannot even moot a scheme that would reduce unemployment at the expense of business profits.

When one realizes that for every $100,000 of value added by a worker, on average about $50,000 is extracted by Australia’s capitalists, then it is very obvious what we need to do to fight unemployment: we need to force those capitalists to divert some of that money that they are grabbing from their workers as profits – perhaps to use to buy their third Mercedes, their eighth holiday home or their second luxury yacht – and use it instead to hire more workers. Capitalist business owners seek not to maximize production but rather to operate at that certain level of production with a certain size workforce that will produce the maximum profits for them. The reason that they don’t want to have a still bigger workforce producing more goods or services is that once that “optimum” level (for them) is reached any further increase in workforce would actually lead to a drop in their profits; for one, because they would need to reduce the price too much to sell the extra goods or services that the additional workers are producing, secondly because they may need to pay higher wages when there is less unemployment and thirdly because they would need to spend more on training as they start to hire less trained workers. However, if we could compel the business bosses to hire more workers, they would be forced to increase production of goods or services to make use of those extra workers and then have to lower the cost of the produced items in order to sell them all. So we would end up with an economy with more workers employed, more goods and services produced and lower prices – all of which would be great for the working class masses but which would be achieved at the expense of capitalist profits. Consider, for example, how this would work with the supermarkets – and we know that the filthy rich owners of Coles and Woolworths have continued to rake in fabulous profits during the pandemic [11]. If these bosses of the supermarket giants were forced to hire more workers and prevented from cutting any workers’ wages or conditions they would end up increasing opening hours to make use of the extra workers and probably increase the time spent on job training. Furthermore, so that they would gain some benefit in terms of total sales from having the extra staff, they would need to slightly lower prices to sell more goods and, thus, utilize the extra labour that they have been compelled to take on board. Moreover, to make use of the extra workers they would probably have more customers served by check out staff rather than self-serve counters. Apart from this being beneficial to the working class because more workers get employed, working class customers would also benefit through lower prices, faster and more convenient service and longer supermarket opening hours.

Of course, the capitalist supermarket bosses would absolutely hate this as would any capitalist being forced to employ more workers than they want to. They will scream blue murder at the loss of profits. Meanwhile, Liberal, ALP and ALP/Greens governments, who all ultimately serve the capitalists, will also militantly oppose such demands. That is why the only way that we can compel the bosses to hire more workers at the expense of their profits is through determined mass struggle. We need such powerful working class action that the capitalists and the governments that serve them will realise that the cost of not acceding to our demands is potentially greater and more threatening to their overall domination of society than the loss of profits that would ensue from meeting our demands. Even during a pandemic, powerful working class action is still possible. In July, five hundred workers organised by the National Union of Workers at Woolworths’ warehouse in Wyong, NSW took powerful strike action to demand decent pay. The striking workers, who also established a picket line to enforce the strike, additionally demanded the conversion of long-term casuals to permanency.

In order to unite workers across different workplaces into a common fight for jobs for all and in order to ensure that the rights of workers at smaller businesses – where industrial action is less effective – are also protected, we should fight for actual laws that force bosses to increase the number of workers that they employ. Among the demands that we should fight for are:

• A ban on all job cuts or unpaid stand downs by any firm making a profit, however small.
• A ban on all job cuts or unpaid stand downs by any company whose highest paid executive or director has an annual salary and bonus package in excess of $1 million.
• A ban on job cuts or unpaid stand downs by any business whose total profit over the previous, say seven, years exceeds any current losses.
• The forcing of any company still making a profit to increase its number of full-time paid employees by at least twenty-five workers for every one million dollars of quarterly (i.e. three monthly) profit. By the way, since total profits of private sector businesses utilizing hired labour was more than $120 billion in the last quarter, this measure alone would immediately lead to an extra three million full-time jobs.
• A ban on all cuts to wages and workplace conditions from pre-pandemic levels.
• The immediate conversion of all casual workers into permanent employees with all the rights of permanency.
• Any business that violates any of these measures to be confiscated and transferred into public ownership.

To such a program, the capitalist exploiters and all the ruling class politicians, mainstream media commentators, “experts” and official economists who serve them will scream that this is “totally impractical”, “will cause investment to collapse”, “will lead to a plummeting of business confidence” etc etc etc. When they do, all socialists should use that opportunity to explain to the working class masses that this is precisely why we socialists insist that the means of production be stripped away from the rich capitalists and brought into public ownership under a workers government. For if the capitalists insist that plainly rational measures to ensure that every worker gets a permanent, secure job is “not practical” and “will cause investment to collapse” under their system, then this is the best proof one can get that their system needs to be swept away once and for all by the workers and all our allies and replaced by a socialist system that we can truly call our own.

References

[1] Australian Bureau of Statistics, 5676.0 – Business Indicators, Australia, Jun 2020, TABLE 18. WAGES AND SALARIES, Current prices, Percentage change from the previous quarter, Released 31 August 2020, https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5676.0Jun%202020?OpenDocument            

[2] Australian Bureau of Statistics, 5676.0 – Business Indicators, Australia, Jun 2020, TABLE 12. COMPANY GROSS OPERATING PROFITS, Current prices, Percentage change from previous quarter, Released 31 August 2020, https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5676.0Jun%202020?OpenDocument            

[3] Australian Bureau of Statistics, 5676.0 – Business Indicators, Australia, Jun 2020, TABLE 14. UNINCORPORATED GROSS OPERATING PROFITS, Current prices, Percentage change from previous quarter, Released 31 August 2020, https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5676.0Jun%202020?OpenDocument            

[4] Australian Bureau of Statistics, 5206.0 – Australian National Accounts: National Income, Expenditure and Product, Jun 2020, Released 2 September 2020, https://www.abs.gov.au/ausstats/abs%40.nsf/mediareleasesbyCatalogue/C9973AC780DDFD3FCA257F690011045C?OpenDocument

[5] Australian Bureau of Statistics, 5206.0 – Australian National Accounts: National Income, Expenditure and Product, Jun 2020, > Explanatory Notes > Glossary, Released 2 September 2020, https://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5206.0Glossary1Jun%202020?opendocument&tabname=Notes&prodno=5206.0&issue=Jun%202020&num=&view=

[6] Australian Bureau of Statistics, 5206.0 – Australian National Accounts: National Income, Expenditure and Product, Jun 2020, Table 42. Unit Labour Costs, Released 2 September 2020, https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5206.0Jun%202020?OpenDocument 

[7] Australian Bureau of Statistics, 5676.0 – Business Indicators, Australia, Jun 2020, TABLE 15. BUSINESS GROSS OPERATING PROFITS, Current prices, Released 31 August 2020,
https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5676.0Jun%202020?OpenDocument

[8] Australian Bureau of Statistics, 5676.0 – Business Indicators, Australia, Jun 2020, TABLE 11. COMPANY GROSS OPERATING PROFITS, Current prices, Released 31 August 2020,
https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5676.0Jun%202020?OpenDocument

[9] Australian Bureau of Statistics, 5676.0 – Business Indicators, Australia, Jun 2020, TABLE 13. UNINCORPORATED GROSS OPERATING PROFITS, Current prices, Released 31 August 2020,
https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5676.0Jun%202020?OpenDocument

[10] Australian Bureau of Statistics, 5676.0 – Business Indicators, Australia, Jun 2020, TABLE 17. WAGES AND SALARIES, Current prices, Released 31 August 2020,
https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5676.0Jun%202020?OpenDocument

[11] The New Daily, Coles rides virus-induced boom to record profit, 18 August 2020,
https://thenewdaily.com.au/finance/consumer/2020/08/18/coles-profit-2020-virus/