Where to for Employment From Here?

In the brief period between the initial lockdown and the Andrews government stuff-up lockdown, I managed to catch up with 2 colleagues from my Macquarie Bank days for lunch. As usually happens on these occasions, there was a lot of reminiscing and discussion about how different work was 15 or so years ago. Thinking back on our chat later on, I was struck by just how true a statement this is.

The press have always liked to paint a picture of Macquarie as a rapacious money-grubbing organisation with the morals and ethics of your average house cat, but my experience for most of my time there was that they genuinely cared about and tried to look after their staff. When faced with an economic downturn or some other crisis, rather than respond by sacking great swathes of people, the business groups most affected were encouraged to adapt to changing circumstances, or re-deploy excess people into other areas. 

Also while like any big company there were poor performing staff, rather than throwing up their hands in frustration and making them redundant at the stroke of a pen, the inclination of management was to try to make them work in other roles and then if that still didn't work, send a subtle message through the profit-share system to suggest to them that they might be better served looking for employment elsewhere. As a lot of people tend to confuse ambition with ability, this worked surprisingly well. But importantly, while they did look around for another job, even the least effective employees could go about their daily lives knowing that their employment was reasonably secure.

Fast forward a few years however to the Global Financial Crisis and everything suddenly changed, at least in the business I worked in. The senior executives who'd pocketed 10 figure bonuses for years off the back of our exceptional profitability all of a sudden couldn't get rid of us quickly enough. Instead of providing support to work through the issues in the business, we were requested to sack 25 per cent of the staff then make those who were left work crazy hours to stabilise things so they could sell it off to the highest bidder. Of course, being 2009, pretty much no-one had any cash to buy a used property funds business (a fact that seemed completely lost on senior management) and we wound up being flogged off at a bargain-basement price to an organisation that at the time was very much a second tier operator.

In what seemed the twinkling of an eye, more than 100 staff found themselves suddenly parachuted into an organisation where the working environment was very different. Where previously, independent thinking and good ideas to advance the business were encouraged, all of a sudden we found ourselves in a place where we had to accept the fact that the boss was always right. Even when he wasn't, which was quite a lot of the time. 

Not surprisingly, a lot of the staff including myself found this deeply unsettling. It's not great feeling suddenly unwelcome in a business you have spent 13 odd years helping to build, and I for one was quite relieved when 2 years later they put me out of my misery and made me redundant. However, I found the whole process of being parcelled up and sold off to an organisation that I would never have voluntarily have worked for so distasteful that I subsequently decided to go and work for myself and it was a long time before I was prepared to commit to being a salaried employee again. Ultimately however time heals all wounds.

I mention all this, because observing the corporate environment in the time since the GFC, working condtions for employees have not reverted to the relatively benign conditions of pre-2008 but have continued to be quite fraught as far as job security is concerned. The current COVID-induced recession has also made this much worse, with even high-performing staff not being safe, particularly if they are on the wrong side of 45. Recently I've had two exceptionally capable colleagues who are also among my best friends in the industry summarily punted from their senior positions, one because the business he worked in doesn't seem to have any handle on how to deal with the current situation and the only idea they could come up with was to lay a lot of people off, and the other presumably because the management thinks his replacement will somehow do a better job. Well, good luck with that, because this guy is one of the most diligent and hard-working people I know and they are big shoes to fill.

However, can you just imagine how morale must be among the remaining staff seeing this sort of behaviour from their employer, and the stress particularly among junior staff thinking, hang on a minute, what's to stop this happening to me? And as we slowly come out of the mess wrought by COVID and start to try growing the economy again, having employees worrying about this sort of thing is a big, big problem.

It's convenient for Baby-Boomer demographers to dismiss Milennials as a bunch of flaky commitment-phobes who go round eating smashed avocado, drinking awful beer and growing scraggly beards. However, thanks to being part of a large family, I'm related to quite a few of them and I can say confidently that they all want the same things as their elders which is to say, owning their own home and starting families. But when their employers display no patience or inclination to work through short term problems and instead react by flicking off employees at the drop of a hat, can you really blame them for putting off long-term life and investment decisions for as long as possible?

I watched with interest on "Insiders" last weekend as Josh Frydenberg talked up the government's strategy to implement bold changes to stimulate economic growth. I'm not sure how far he's going to get negotiating with the trade unions by invoking the ghosts of Ronald Reagan and Margaret Thatcher, but it's true they are going to have to make some sweeping changes because the Reserve Bank has run out of ammunition in terms of providing cheap finance as a stimulus. However another key driver of growth is consumer spending and perhaps by giving business an incentive to stop behaving like they have over the last 10 years and instead adopt a more pre-GFC way of thinking, employees will start to feel more secure about their situation and start making longer term life decisions with all the requisite consumer spending that entails.

Ok, so here is an idea. The government wants to pass its company tax cuts but the Senate currently won't let them. But what if they made access to the tax cuts subject to companies signing up to a new employee-employer charter which required companies to offer improved job security? Some of these measures could include:

• A minimum 3 year's salary redundancy payment in circumstances where an employee is not otherwise eligible for dismissal
• Having a minimum percentage of employees hired as either full time or part time employees as opposed to casual labour
• Casual employees having a guaranteed minimum of paid hours each week and being entitled to superannuation and leave benefits after a certain period of service
• Sale of any parts of the business being prohibited unless the purchaser of the business is also a signatory to the charter or agrees to honour the existing employee arrangements

While this would obviously give businesses less flexibility in its labour arrangements, it would however force them to think twice about how they deal with their staff, and cutting their tax bill by a third is probably a big enough incentive to get them to sign up to the charter and make them adopt more longer-term thinking about their business instead of just reacting to problems in an off the cuff way. Particularly seeing if they don't sign up to the charter, the best employees will naturally gravitate to the firms that are prepared to do so.

Also by framing the tax cuts this way, the government could quite rightly heap political pressure on both Labor and the capricious cross-bench in the Senate by pointing out they are holding up an initiative that is designed to improve job security. Even in this partisan and uncooperative age, that ought to be enough to get them through.

As well, it would probably be enough to get people spending again and help grow the economy. God knows I wouldn't have bought the house I did in 2005 if I'd known in 4-5 years time our business was going to be sold off to who it was,  but in the comfort zone I was in at the time, I was more than happy to make that decision. I'm sure the younger generation would too given the same chance.

Plus if they have to spend cash on things like houses, cars and baby infrastructure, they won't have the leftover cash to spend $40 on a slab of undrinkable wheat beer brewed in some converted outhouse in the Adelaide Hills. Which would mean craft breweries would probably all go out of business, and wouldn't that make for a much better Australia?