Bending Over Backwards: New Zealand’s temp economy and capital’s growing need for flexible labour

Posted: December 7, 2014 by Admin in Class Matters, Economics, New Zealand economy, Poverty & Inequality, Unemployment, Workers' rights

Job LossThis article first appeared on Redline back in July 2013; however because ‘zero hours’ contracts are in the news a bit now, it seems worth drawing attention to the article again

by O’Shay Muir

New Zealand, like many developed nations, is witnessing a change in the nature of what we consider work.  Once-cherished notions of a lifetime career are starting to be called into question.  Now ‘experts’ talk of the idea of an individual going through many career changes throughout their adult life.  A process of continual upskilling, renewing and reinventing as this brave new worker tries to keep up and stay relevant in an ever-changing marketplace.  Along with the concept of a lifelong career, even the very idea of full-time work has been called into question as business owners demand a more flexible workforce that can bend and stretch to the whims of market conditions.

Employers are able to find this much-needed workforce through the temporary worker.  A worker who is able to fit the changing needs of the organisation, a worker who does not need extra training and, most importantly, a worker who can be let go as quickly as they were employed.  So who are these temporary workers and what is the importance of temporary employment in capitalism?

Temping widespread

According to the Household Labour Survey in the March 2008 quarter, one in ten employees (9.4 percent) were working in temporary jobs. Those most likely to be employed in temporary employment were youth (aged 15-24), followed by prime-aged (25-54) women and older men and women (55+).  Contrary to popular belief, temporary workers are more than just the young and low-skilled (e.g. seasonal workers), but make up a wide range of the labour-market demographic.  Those employed in fixed-term jobs were mostly prime-aged, tended to have relatively high levels of education and to have skills for professional or technical occupations.  Casual employees tended to be younger than fixed-term employees and included people with a wide range of educational levels.  Seasonal workers tended to have the lowest levels of education.  The majority of casual workers (29 percent of the total) was employed in service and sales occupations and more than two thirds were employed in professional, technical or clerical jobs (http://www.dol.govt.nz/publications/research/temporaryworkers/temporary-workers-summary.pdf).   From these figures we can see that temporary employment is an issue that covers the entire demographic of the labour force and because of this we need to be asking ourselves why do workers ‘choose’ temporary employment and why do employers demand it?

Our first question is very easily answered. On page 3 of the Department of Labour’s report into temporary employment (A Profile of Temporary Workers and Their Employment Outcomes – Summary) the following was stated: “Thirteen percent said that they held a temporary job because they were not able to find a permanent one, or because they hoped their current temporary job would become permanent. This implies that around 13 percent were working in temporary jobs on an involuntary basis. However, forty percent of temporary employees said they would prefer a permanent job, indicating that a more substantial group of temporary employees were not entirely happy with their temporary job status” (http://www.dol.govt.nz/publications/research/temporaryworkers/temporary-workers-summary.pdf).

So there we go; our answer is as easy as pie.  Most workers ‘choose’ temporary employment not because they want to, but because they have to.  This now leaves us with our second question, why do employers demand temporary employment?  The answer to this question is that it is not so much temporary workers that they demand, but the flexibility that temporary employment offers.  Labour flexibility is a very important aspect of a modern capitalist economy and can be broken down into five key aspects.

1.    Numerical flexibility: Being able to increase or decrease the size of the workforce in response to changes in market demand.

2.    Contractual flexibility: Being able to determine what sort of employment relationship the employer wants.

3.    Job flexibility: The ability to move employees from one job to another.

4.   Work-time flexibility: Being able to operate whatever hours the employer chooses. According to the Department of Labour’s 2009 survey into temporary employment, 62 percent of casual workers had their hours changed from week to week in order to suit the employer’s needs. (http://www.dol.govt.nz/publications/research/temporaryworkers/temporary-workers-summary.pdf).

5. Pay flexibility: To increase or decrease pay levels to meet supply and demand (Geare & Edgar, 2007).

Rebranding old practices

Like much of capitalist discourse, phrases such as ‘labour flexibility’ are simply rebranding of essential capitalist practices that are as old as capitalism itself. These five key aspects of labour flexibility are no different than the various ways Marx explains how capitalists try to exploit their workforce and increase surplus-value.  Absolute surplus-value, relative Surplus-value, hell even the Relay System, fit into this notion of labour flexibility.  It does not take a genius to figure out that labour flexibility is to the benefit of the employer and not the employee.  However, this does not stop the bourgeoisie from framing the concept in such a way that would have many believing that labour flexibility is to the benefit of all. That is the power of bourgeois ideology and a perfect example of this is given by the National Party in their 2005 Employment Relations policy. It states: “Employment law should encourage a flexible, productive high-wage economy” (Geare & Edgar, 2007: 229).  This statement would have you believe that labour flexibility increases the income of workers, but in actual fact it is quite the opposite. Although temporary workers tend not to be paid less per hour than similar permanent workers in similar types of jobs, their total annual earnings are likely to be substantially lower (http://www.dol.govt.nz/publications/research/temporaryworkers/temporary-workers-summary.pdf).  As Geare and Edgar (2007: 237) note, “Job flexibility is an attack not only on the job security of work groups, but also on the independence and security of unions. Work-time and pay flexibility usually indicate a worsening of conditions, with longer hours, often for lower take-home pay.”

But what about productivity, surely labour flexibility and productivity go hand in hand?  The answer is yes they do. Capitalists are able to increase productivity and their rate of surplus-value (and profit) through better organisation of their workforce (relative surplus-value). The problem, however, is that the majority of New Zealand’s labour force is employed in the service sector (most service sector workers belong in the sphere of circulation and as such they do not create surplus-value, they simply help the capitalist to reduce the cost of realising surplus-value through the part of their labour-time that is unpaid).  Moreover, due to the vast use of Information Technology employed in this sector, there is a growing need for a more skilled workforce that is able to operate, create and maintain this technology, although at the same time these very same technological advancements are used to deskill the labour process (see, for instance, https://rdln.wordpress.com/2013/05/16/information-technology-and-the-rise-of-new-zealands-modern-servant-class/).

This growing need for skilled labour employed within the sphere of circulation is best outlined by Marx’s description of the ‘commercial worker’ in volume 3 of Capital in part 5 (Merchant’s Capital) chapter 17, (Commercial Profit), p299:  “The more developed the scale of production, the greater, even if not proportionately greater, the commercial operations of the industrial capital, and consequently the labour and other costs of circulation involved in realising value and surplus-value. This necessitates the employment of commercial wage-workers who make up the actual office staff” (Marx 1894).  Unfortunately temporary workers tend to be less skilled than permanent workers.  According to the Department of Labour’s 2009 survey on temporary workers, they were less likely to receive structured training at work (18 percent received training) compared to permanent employees (32 percent received training) (http://www.dol.govt.nz/publications/research/temporaryworkers/temporary-workers-summary.pdf).

Skilled and flexible?

This leads us to the contradiction between labour flexibility and the need for skilled labour. Employers demand both flexible and skilled labour; many complain that they cannot get well-trained staff, yet are unwilling to offer training and at the same time temporary workers are not able to gain the experience that they need due to the inconsistent nature of their employment (moving from job to job).  Most likely this dilemma will not be solved by employers deciding to increase staff training; in today’s brave new world, it is the responsibility of the worker to make sure that they keep up with the requirements of the market and take the initiative to gain the skills that they will need to be employable, in their own time, with their own money and not at the employer’s expense or precious time.  Employers will demand greater labour flexibility and, sure as hell, they will complain that they cannot find the staff that they need.

It is important to remember, however, that flexibility is a means to an end (profit) and not an end in itself.  In today’s unstable and uncertain economic environment, employers demand a flexible workforce that can easily be changed/rearranged to suit ever-changing market conditions, compared to a rigid hierarchical system of labour that was influenced by the stable economic conditions of the post-WW2 boom era (Geare & Edgar, 2007).  The need for greater labour flexibility was influenced both by the economic troubles that began unfolding in the 1970s and the depressed character of labour market conditions during the 1980s (Geare & Edgar, 2007).  In order to understand these economic problems and their influence on the demand for greater labour flexibility we need to go back to 1968.

Up until 1968, New Zealand, like most of the developed world, benefited from the post-war boom.  Rising living standards and a benevolent welfare system seemed to be a norm that would stay with us forever; things could only get better. However growing expectations of rising living standards began to take its effect on capitalism as rising labour costs started to become too much for capitalists to bear (also the re-establishment of industry in Europe and Asia that had largely been destroyed during World War Two, was now reaching new heights of productivity) and by 1968 the good times started to come to an end. The law of the tendency of the falling rate of profit, described by Marx as “the single most important law of modern political economy”, began to set in.  The impact of this phenomenon in New Zealand could first be seen by the introduction of the nil wage order of that year (1968), but New Zealand was not struck with recession until 1973-74. (https://rdln.wordpress.com/2012/10/14/low-horizons-and-the-legacy-of-defeats/).

The global phenomenon of a falling rate of profit combined with Britain joining the European Community (we lost our largest trading partner) in 1973 and the start of the oil crises that same year, had a big impact on the New Zealand economy.  The old way of doing things was no longer working and the solution was not to be found in Muldoon’s ‘Think Big Project’.  Something had to change and the main influence for this change came from the ideas of neo-liberal economic philosophy, influenced by Thatcherism in Britain and Reaganomics in the United States.

No longer would the government hold the hands of struggling enterprise, but they did lend a helping hand in implementing legislation that would help to ensure businesses had access to the flexible labour markets that they needed to be profitable in the new unstable and uncertain economic conditions of the time.  This ‘much-needed’ legislation was first put into place by a wolf in sheep’s clothing, the Labour Party.  In 1987, under the Lange Labour government, the Labour Relations Act (LRA) 1987 was introduced. This Act abolished compulsory arbitration for interest disputes.  As Geare (2007: 301) records, “Arbitration would be available, but only if both parties agreed. If, however, the workforce and the union were weak, the employer could refuse to go to arbitration and thus maintain the status quo.”  (See also Labour’s legal leg-irons: https://rdln.wordpress.com/2012/04/30/labours-legal-leg-irons/#more-2657.)  It is interesting to note that although the bases for New Zealand’s prior industrial relations (Industrial Conciliation and Arbitration Act 1894) appeared to be in the interest of workers, in its essence it was designed to quieten down growing labour militancy and class struggle in New Zealand.  Due to a weakening union movement, thanks to high unemployment and growing job insecurity, employers no longer needed the government to keep the peace and, according to the New Zealand Business Roundtable, even the LRA did not go far enough; they wanted nothing less than all-out war on workers (Geare & Edgar, 2007).

In 1991, under the National Government, employers got their wish of being able to deliver a killer blow to the union movement with the Employment Contracts Act.  Although the Act did not go as far as many business lobbyists had hoped (scrapping minimum wage laws etc), it did remove compulsory union membership and allowed for much greater labour flexibility (Geare & Edgar, 2007).  To this day, employment laws are based upon this Act and temporary employment is simply a reflection of the demand for greater labour flexibility that this very Act was designed to encourage.

All-in-all temporary employment is an issue that affects a wide demographic of the labour force and, as the demand for greater labour flexibility grows, so will the demand for temporary workers. This will lead to growing job insecurity and a shortage in skilled labour as market conditions will change faster than workers can keep up and as employers become more reluctant to train staff on the basis that they can simply acquire the skilled labour that they need in the marketplace.

Over a century on from the winning of the 40-hour week, capitalism can’t even allow for the maintaining of that standard.  In New Zealand, it has lengthened the hours of one chunk of the workforce, made another chunk unemployed, and keeps yet another section of the working class stuck without enough hours to make ends meet.

References

Department of Labour (2009). A Profile of Temporary Workers and Their Employment Outcomes – Summary. http://www.dol.govt.nz/publications/research/temporaryworkers/temporary-workers-summary.pdf

Ferguson, P. (2012). Low horizons and the legacy of defeats. https://rdln.wordpress.com/2012/10/14/low-horizons-and-the-legacy-of-defeats/

Geare, A.J. and Edgar, F.J. (2007). Employment Relations: New Zealand and Abroad. Otago University Press. Dunedin, New Zealand.

Marx, K. (1894). Capital: A Critique of Political Economy: Volume Three: The Process of Capitalist Production as a Whole. Progress Publishers. Moscow, USSR.

Muir, O. (2013). Information Technology and the rise of New Zealand’s modern servant class.  https://rdln.wordpress.com/2014/12/10/information-technology-and-the-rise-of-new-zealands-modern-servant-class/

Further reading: Information technology and the rise of NZ’s modern servant class

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Comments
  1. Don Franks says:

    Not good news and what can we do in the face of it?
    Without an alternative class based strategy, the working class will continue to be atomized in this way.
    Lacking any independent ideas of their own, the union movement has actually assisted in the process of job destruction. For example:

    “Unions know that the pressure to balance work and family life is a major problem for many workers, and we are excited to be campaigning alongside community groups for a legislative right to request flexible working hours,” previous NZCTU president Ross Wilson said at the 2007 launch of the Quality Flexible Working Hours Coalition.
    “Unions are committed to seeing progress on the introduction of legislation,” Ross Wilson said.
    “We will continue our advocacy for a legislative right for all workers to request flexible working hours, to help establish a culture that recognises workers’ considerable responsibilities outside of the workplace, and to support quality of family life.”
    “The changing nature of the workforce and societal change mean there is a need for genuine flexibility for all workers, and all organisations will need to bite the bullet on flexible work organisation.”
    “As part of unions’ strong interest in work-life balance, we will be urging union members and their families to get involved in campaigning for a legislative right for all workers to request flexible working hours,” Ross Wilson said.

    I believe that good intentions formed a part of this union office response. But arguing as the officials were, from a position of weakness, the only lasting effect of their effort is to help legitimize a flexibility favouring the employers.

  2. Phil F says:

    Every week or so I see something on TV or in the newspaper that just makes me think how thoroughly inept capitalism is as a way of organising the resources, including the human labour resources, of the world. In an economy/society not driven by the imperative of maximising profit, but driven by the imperative of a good life for all, we actually could have flexible working hours. We could work a 20/25-hour week and that would provide all the goods and services necessary for a pretty good life for every single person on the planet and still have a bit over to plough back into expanding production for the next generation.

    How we get this message across to people is the difficult one. Without them already at least starting to think more critically and beginning to take action, even some serious defensive action, discussion about a rational much better alternative to capitalism is limited to the small pools of the already-convinced.

    Phil

  3. O'Shay says:

    Analyzing the problem (Capitalism) is one thing, knowing the solution (revolution/Socialism) is another thing and convincing others that there even is a problem and what needs to be done to solve it, is a whole other ball game. The low-horizons and atomization of NZ workers is both a reflection of a legacy of defeats and the changing nature of work. In my personal opinion left-wing alternatives to Capitalism will make little impact on the NZ political landscape both until other countries can be used as an example and a serious economic crises in NZ starts to shake some sense into people, wake them up and let them know that there are more important things happening in NZ then who’s going to get voted off in what God awful, mind-numbing talent/cooking/renovation reality show they can come up with next.

  4. Phil F says:

    Those shows would make a good article actually. It’s like there is no end to them. The ones about cooking and renovation, in particular, seem to be indicative of a turning inwards. We can’t change the world, but we can change the way our house looks or what we eat.

    Phil