Monday, December 9, 2013

Globalisation: Is it a harbinger of our future?

When globalisation became the trend a couple of decades back, I guessed it would have a great impact on countries like Australia with a small manufacturing base. Surprisingly, however, it's not been as bad as I expected.

Competing with India and Asian countries, who have very low production costs seemed like it would adversely affect the standard of living of Australians who are comparatively highly paid and well looked after in the work environment. Even the USA doesn't provide as much leave as we do and Australia is still a country where people are paid more (a 17% loading) to go on leave.

It seemed to me that to remain competitive we would have to reduce our standard of living. In the same way that when you mix cold and hot water, the cold gets warmer and the hot gets colder to establish a new temperature, I expected our market to have to adjust downwards. That hasn't necessarily been the case ... yet.

With the mooted closure of GMH Holden's plant and the current income crisis faced by QANTAS Airways, perhaps the days are coming when Australian workers will need to be less fussy about work conditions and how much salary they are paid. We already employ thousands (or perhaps tens of thousands) of foreign workers on 457 Visas, mostly in retail and hospitality positions because Australians either don't want the lower paid jobs or don't work as well. All this at a time when we are paying the dole to healthy, young Australians who could work if necessity required it.

Governments can't bail out every industry that can't compete. What must happen is that we must become competitive by lowering our costs of employment and production, a panacea that nobody really wants. As we slowly lose our competitive advantage, it may be absolutely necessary for our survival.

What do you think?


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