From The Union

Poor managers are letting Australian businesses and workers down Australia’s managerial class must accept its responsibility for the decade of lost productivity that we’ve experienced since the Global Financial Crisis (GFC).

The constant theme in reporting over the last decade or more is that these workers are being let down by managers who aren’t up to international standards. According to one recent study, “increasing management capability even at a moderate level has direct benefits for productivity and exports intensity” of around 13%. This would make a huge difference, not only to the bottom line of local businesses, but to our ability to compete on an international scale. In Australia, our GDP per hour worked (a key measure of productivity) hasn’t improved by more than 3% in a year since 2002 – indeed it has been below 1.5% per year for the majority of the last 18 years. This is a sad indictment on the ability of managers to bring our domestic industry into the 21st century at a time when numerous technological advancements should have made the work of improving productivity easier than ever. Other countries are taking advantage of the fourth industrial revolution to invest in new capital and improve productivity, that’s why our productivity sits below the OECD average. Our poor performance is not inevitable and we need to start focusing on what is causing our problems with productivity: managers. Improvements in labour productivity have been slow since the turn of the century, but it has continued to improve. The same cannot be said of capital productivity, which has been declining over the same period. While some of that can be attributed to the impact of the mining boom, the biggest driver of Australia’s historically bad productivity performance can be attributed to the poor performance of manufacturing businesses, according to Dr David Gruen. The failures that drive those poor national figures can be traced to poor firm-level decision-making. Australian managers fall behind their international counterparts in “operations, management of people and strategic planning, and workforce development and optimisation” according to Dr Gruen. If Australia, and in particular the manufacturing industry, is to achieve the productivity that we need over the next decade, we need managers that are better educated, more experience and who embrace innovation. Without these vital micro-economic reforms our local companies – and the workers that rely on them – won’t be able to compete on the international stage for the high skill, high wage jobs producing the goods and services that consumers need and want. Workers are already doing their part – two-thirds of working age Australians now hold a post-secondary qualification, the highest rate ever. There has never been a bigger pool of highly skilled, jobready workers looking to advance their careers in a whole range of professions. Despite the efforts of workers to invest in their own education, employers are not doing their part. There were over 130,000 fewer apprentices in 2019 than there were in 2013 – a shocking trend that should worry any employer who relies on skilled workers. Workers representatives haven’t been idle either – the Australian Manufacturing Workers Union (AMWU) and many other unions have engaged with employers and government during the COVID-19 period to talk about realistic solutions to the problems that are putting our members’ jobs at risk. It was the union movement that pushed for a wage subsidy, which was vehemently opposed by the Government until the moment that it became their policy. Despite the obvious problems that let hundreds of thousands of workers fall through the cracks, JobKeeper has been instrumental in preventing the worst fears for economic ruin from being realised. The AMWU also worked with employer organisations and government in the NCCC process to chart a way forward for industry. We wanted to see manufacturing make it through this crisis and emerge from the other side stronger than ever. Sadly, many of the joint recommendations from that committee have been gathering dust on the shelf for six months with no concrete action to protect manufacturing jobs. This has led to 60,000 jobs being lost in the manufacturing industry since the end of last year – a disaster for our industry. Manufacturing has an important role to play in helping our economy get through the Covid crisis and arguably a bigger role to play in the recovery. We all want Australia to be a country that builds things, but it is just as important that we’re a country that invents, designs, maintains, and improves things. We’re only going to achieve a growing, dynamic and world class manufacturing industry if we’ve got support from government and investment from the private sector. But as long as Australia’s managers underperform their global counterparts, it will be hard to attract and retain the most talented workers. For too long the focus on improving productivity has been on cutting wages and conditions of workers, rather than developing their skills. Luckily workers have taken it on themselves to improve their education despite these obstacles. Unfortunately, we have not been so lucky when it comes to managers. What we need now is a plan to help our struggling mangers to better use the highly skilled, flexible workers and high-tech capital at their disposal. We need to expect better from our highly paid managerial workers, we need to support them, so that they can unlock the potential and attract the overseas investment that our industry desperately needs.