New analysis shows that COVID-19 is not affecting Melburnians equally. Many of Melbourne's disadvantaged municipalities with substantial concentrations of casual workers have the most confirmed cases of COVID-19.
The value creation paradox
A seeming paradox in the modern economy is that we have become more efficient at creating value at the same time as the number of people and transactions required to generate that value has exploded.
Take preparing a meal in a restaurant for example. In decades past, the restaurateur would more than likely have kept a stable and trusted team of employees both in front and back of house, geared to cover maybe 80 per cent of the peak trading hours in the week. When things got busier, the team just worked harder for the relatively short period in question. When the customers were few and far between, the boss carried the spare capacity and deployed workers to other tasks, like keeping the place clean and tidy and running errands for particular supplies. Typically, the team would have sourced the required produce independently and prepared most ingredients in house.
It’s different now.
It is common for restaurateurs to hire labour in precise quantities to match the trading profile of the week. It is also common for these businesses to buy some ingredients in pre-prepared forms – like pre-cut chips or frozen desserts - themselves assembled in factory kitchens employing precise quantities of labour. Services like cleaning, marketing, menu writing, cellar purchasing, book-keeping and equipment selection are out-sourced.
The apparent paradox is that even though the meal in question would have been processed by many more hands, so to speak, than years gone by, it probably lands on the table at a higher quality and lower real price. This represents an increase in productivity.
This atomisation of the value creation process, with concurrent increases in productivity, has occurred throughout the economy and especially so in sectors that directly sell to humans – health care, aged care, retail and education to name a few.
Increases in productivity is meant to bring higher wages. Instead, we’ve seen very sluggish wages growth for many years, and the overall share of wages and salaries in the national income pool is at historic lows.
One of the reasons for low wage productivity growth is the casualisation of work, this being an essential ingredient in matching labour input precisely to production needs. Casualisation diminishes the bargaining power of labour. It makes union organisation difficult and saps the motivation of individual workers who can see no real career in their employment.
Unsurprisingly, casualisation bears a correlation with low income and socio-economic disadvantage.
