Neoliberalism, inequality and politics: the changing face of Australia.

Western, Mark ; Baxter, Janeen ; Pakulski, Jan 等

The 1980s and 1990s saw the most profound transformation of Australian public policy since World War II and one that fundamentally reworked a framework in place since Federation (Castles et al 1996; Kelly 1994). This transformation was underwritten by two principles: liberalism--the view that citizens are autonomous individual actors whose interests are best served when they are free from coercive government interventions into individual action (Yeatman 2000); and marketisation--the belief that free markets are arenas which best enable individual autonomy and produce efficient economic outcomes (Marginson 1997). These principles define 'neoliberalism' or 'hard liberalism' (Argy 2003).

How these policy, changes have affected Australian society is a deeply contested issue. For advocates, neoliberal policies produce improved economic outcomes, greater efficiencies in arenas in which markets operate, reduced public expenditure, diminished reliance on state-provided social welfare and increased individual choice. For critics, neoliberalism increases inequality, corrodes quality of life and produces an atomised society in which individuals are culturally disconnected from one another and from fundamental social institutions (Pusey 2003; Saunders 2002: 8-12, ch. 2). This paper introduces a comprehensive research project that intervenes in this debate by examining relationships between neoliberalism and social mobility and socioeconomic inequality, gender relations, and politics. In this paper we outline the substantive and theoretical arguments behind the project and present some evidence on the issues.

Neoliberalism in the Australia

Before the 1980s Australia had an internationally distinctive approach to public policy. based on some particularly high levels of government economic regulation but limited government ownership. Distinctive elements were tariff policy and import controls to protect domestic manufacturing, centralized wage determination according to cost of living and 'relative wage justice' principles, compulsory conciliation and arbitration of industrial disputes, and regulated immigration to minimise unemployment and protect wages (Castles 1993; Kelly 1994: ch. 1; compare also Grabowsky and Brathwaite 1986). The result was a set of interlocking labour market and public policy institutions that maintained high employment levels and real wages, compressed earnings dispersion and provided centralized legislative mechanisms for setting minimum pay and working conditions in occupations and industries according to 'reasonable' expectations about living standards rather than profitability or employers' capacities to pay. In the 1980s this approach was reappraised in favour of one emphasising deregulation and marketisation. The neoliberal reworking of public policy has its origins in the 1970s but began in earnest under the first Hawke Labour government, to be continued by subsequent Labour governments (Kelly 1994) and accelerated with the election of John Howard in 1996 (Harris 2001). The changes can be seen most starkly in four public policy areas.

Economic Policy: Neoliberal economic policy is reflected primarily in the rejection of Keynesian macro-economic demand management. In the post-war period to the 1980s, national governments typically used fiscal policy to attempt to smooth the business cycle. Since the 1980s, Federal governments have eschewed this tactic, instead depending on the Reserve Bank to control inflation and unemployment by setting official short-term interest rates. Currency stability, full employment and "economic security and welfare of the Australian people", interpreted as price stability, are the Bank's central objectives under the Reserve Bank Act.

Industrial Relations Policy: In industrial relations policy in Australia neoliberalism has primarily involved dismantling conciliation and arbitration and replacing it with individual agreements or agreements that are collectively negotiated at the enterprise level. Until the late 1980s and early 1990s most Australian employees had wages and working conditions established and regulated by legislative awards: industrial relations regulations covering occupations and industries and administered by Federal and State courts and tribunals. Awards prescribed wages, conditions of work, and aspects of vocational training (ACIRRT 1999: 13). By the 1980s, the Award system began to be dismantled in favour of decentralized agreements negotiated at the levels of the enterprise, workplace and the individual employee. Trade unions no longer needed be involved in pay setting for ordinary employees. In 2005, the Federal government passed new industrial relations legislation to establish a national system of workplace relations based on deregulated individual and collective negotiations between employers and employees, with no role for trade unions unless permitted by individual employers, limited scope for industrial awards and the Australian Industrial Relations Commission, and a new Fair Pay Commission to set minimum wages according to economic conditions and unemployment levels.

Education Policy: Neoliberalism in tertiary, education begins with reforms of 1987 to 1989, which replaced the binary system of universities and colleges of advanced education (CAEs) with a single structure merging CAEs and universities to establish new universities. Public funding of institutions shifted to a formula that encouraged universities to compete for research, training, and consultancy funds and for fee-based places for international and postgraduate students. Institutions were also encouraged to seek non-government support. The government share of funding declined from 91% in 1983 to just over 60% in 1994 and to just under 44% of the operating revenue of higher education institutions in 2003 (Marginson 1997: Table 8.5; Marginson, 2005: Table 4.2). Free tertiary education was replaced by direct fees for international students and some postgraduates, and the Higher Education Contribution Scheme (HECS) for undergraduates. In 2005 further changes allowed universities to vary the amount they charged in student contributions for government supported places and also to charge full fees to undergraduate students without government subsidised places.

Social Policy: Since the mid 1980s social policy development has been unambiguously neoliberal (Saunders 2002). Increasingly, the basic principle underlying the welfare system is mutual obligation, the idea that welfare recipients should "give something back to the community" in return for welfare assistance, as well as encouraging welfare recipients into the workforce (Harris 2001). Further changes included extending requirements to meet work activity tests in order to receive income support payments.

Neoliberalism thus reflects a deep transformation of Australian public policy and social and political institutions. But it would be a mistake to identify it solely with deregulation and state withdrawal. More accurately, in the last 20 years or so, the state has been actively remaking the economy and social institutions to allow markets to flourish (cf. Fligstein 2001) and to mimic, in state agencies, market principles that operate in private corporations. In this sense, neoliberalism continues (albeit in a new direction) a process of state-sponsored 'nation-building' that predates Federation (see Connell and Irving 1980; Castles 1985; Western 1993) and is concerned with providing the institutional conditions for markets to operate even in arenas where they did not do so previously.

Why care about Neoliberalism? Inequality, Politics and Culture

Such dramatic shifts in public policy potentially have major consequences for people's lives because they shape the institutional framework within which individuals and organisations operate (Western and Baxter 2001a). When governments open the economy to international competition, change access rules for education, privatise government businesses and services, and encourage low-wage and casual employment over unemployment, they influence the activities of communities, organisations, households and individuals. Such transformations also profoundly affect politics and culture by influencing public debate, community perceptions and the actions of political parties, voters, trade unions and other organisations.

In Australia, as elsewhere, the primary, arguments for neoliberalism are economic ones, most notably that free markets are necessary for sustained economic growth, employment growth and income growth (Kenworthy 2004). Critics, on the other hand, typically highlight two broad sets of consequences ostensibly associated with neoliberalism: rising economic inequality (see, for example Saunders 2002: ch. 7; Quiggin 1999) and an impoverished culture, politics, civil society, and quality of life (Pusey 2003). In this paper we outline a research agenda for investigating the impact of neoliberalism on some key areas of social life and present some preliminary, findings from this work. Our broader project is concerned with empirically investigating critics' claims that neoliberalism is associated with rising economic and social inequality, and significant political and cultural change.

The Research

In examining the impact of neoliberal policies on Australian society, over the past twenty years we will focus on social mobility, and socioeconomic inequality, gender inequality and political and cultural change. The project will rely on over time analyses of existing secondary datasets and a new national survey conducted in 2005 (Western, Baxter, Pakulski, Tranter, Western and van Egmond 2005). In the remainder of the paper we describe the three core areas of concern and present some data on the extent of recent trends.

Social Mobility and Socioeconomic Inequality

How have social mobility patterns and access to education and labour markets changed over the period of neoliberal reform? By promoting market mechanisms, advocates of neoliberalism argue that ascriptive inequalities associated with socioeconomic status, gender, ethnicity, and class are undermined as advancement in education and labour markets becomes increasingly merit-based (Marshall, Swift and Roberts 1997: ch. 1) As market principles become universal, equality of opportunity increases because markets are "blind" to gender, class, ethnicity and socioeconomic status differences (Treiman 1970). This argument implies that family background and social structure will matter less for social mobility, educational and occupational attainment and effort and ability will matter more. Although we do not yet have over-time data on these issues, cross-national comparisons of intergenerational mobility suggest that free market capitalism might actually restrict, rather than promote, equality of opportunity. In particular, social democratic countries that intervene directly to address structured inequalities associated with class and gender exhibit more intergenerational social mobility than liberal democracies that rely more heavily on markets, because policy interventions that weaken markets also minimise social background effects on mobility (Grusky and Hauser 1984; Erikson and Goldthorpe 1991; Western 1994; Western and Wright 1994). Our project will address this issue in detail by modelling trends in intergenerational mobility over the period.

Research into the determinants of educational access and attainment is also crucial for understanding connections between neoliberalism and socioeconomic inequality, because education is the single most important determinant of occupation in advanced societies, especially for desirable high-wage, high-skill jobs of the "new economy" (Bernhardt, Morris, Handcock and Scott 2001) and contributes significantly to economic growth (Dowrick 2002). International research conducted in the 1990s found little evidence that social origin effects on education are declining over time (Shavit and Blossfeld 1993) despite increasing participation rates and policies designed to improve access. Lamb also reports that the transition from secondary schooling to university education is particularly influenced by social background in Australia (Lamb 1997; Lamb 2001; Lamb and McKenzie 2001). More recently however, Marks and Macmillan (2003) find some evidence that social background effects on access to university education in Australia are declining, although this depends in part on which population of students one focuses on. A key empirical task of the project is to examine trends in social background effects on access to education, particularly university education, which is increasingly necessary for access to advantaged professional and managerial jobs.

Gender Relations

Shifts in public policy are also likely to shape gender inequality. We examine three key areas: gender relations in paid work; inequality in the home; and state and welfare dependency. Patterns of gender inequality in paid work have been well-documented in Australia (Ryan and Conlon 1989; Edwards and Magarey 1995; Probert 1998), but there is less understanding of how these are influenced by public policy shifts. Cross-national research (e.g. O'Connor, Orloff and Shaver 1999) provides some answers. Scandinavian countries, with social democratic welfare regimes emphasising gender equality and family-friendly policies, tend to have more labour market gender equality than liberal welfare states (e.g. Britain, USA) (O'Reilly and Fagan 1998; Crompton 1999; Ellingsaeter 1999). Scandinavian countries also have higher female labour force participation rates, greater earnings equality and greater compatibility between paid and unpaid work. However, they also have higher levels of occupational sex segregation and fewer women in managerial positions than liberal welfare states (Wright and Baxter 1995). Interactions between state policies and labour markets are thus subject to variations across sectors and national contexts.

Labour market deregulation is intended to allow firms greater flexibility in hiring and employment and to localise bargaining between employers and workers. What have been the consequences for gender relations at work? Early researchers assumed that labour force participation is unambiguously good for women (Hartmann 1987), but more recently others have argued that the benefits to women of paid employment ha, been undermined by economic restructuring and women's concentration in casual and part-time, sex-segregated, low-paid, junior positions (Edwards and Magarey 1995 Probert 1998). We examine the extent to which neoliberal policies have strengthened or undermined gender inequality, in paid employment in terms of access to the labour market, levels of sex segregation, patterns of authority and the gender gap in earnings Looking at aggregate data some mixed patterns are apparent.

[FIGURE 1 OMITTED]

Figure 1 shows the average weekly earnings of full time employees between 1983 and 2004. The data show that public sector workers on average earn more than private sector workers with a gender earnings gap maintained in each sector. On average, male public service workers consistently earn most while female private sector worker earn least. Figure 1 also shows private sector earnings falling behind public sector earnings around 1991. This coincides with the first efforts at wage decentralisation that occurred between 1988 and 1991 in which awards were relegated to safety net status and enterprise bargaining replaced awards as the main form of achieving wage increases. Looking at relative earnings by gender, women's earnings in the private sector increase from 77 percent of male earnings to 81 percent in 1991. Following this increase, women's earnings fall behind again temporarily during 1992 and 1993 as wage decentralisation appears to affect female earnings before it affects male earnings. After 1993, male private sector earnings also show a decrease in growth, bringing the gender gap in earnings back to previous levels at around 82 percent. In the public sector, female earnings reached a high of 90 percent of male earnings between 1992 and 1993 but subsequent growth in average male public service earnings has increased the gender gap again, with female earnings falling to 87 percent of male earnings by 2004. Overall, the gender earnings gap remains substantially larger in the private than in the public sector.

Table 1 presents a regression analysis that examines potential changes over time more closely. Average weekly earnings of full time employees are regressed on time measured in quarterly intervals, while dummy variables control for the interaction between gender and sector (to model the gender pay gap between sectors) and the interaction between time, gender and sector (to model growth in average quarterly pay).

Table 1 confirms the image presented by Figure 1: female private sector workers earn least, with all other categories earning significantly more, while male workers consistently earn more than female workers. Of particular interest is the lower half of Table 1, which shows that the pay gap between female private sector workers and other groups is increasing over time. While on average female private sector earnings increased by $6.11 per quarter, female public sector workers' pay increased by an additional $1.39 per quarter (i.e. $7.50)--a larger increase than for male private sector employees. All other things held equal, male public sector workers' pay increased most. While, notably, female public sector workers' pay increased, on aggregate men continue to earn more than women, and the position of female private sector workers appears to be deteriorating.

Future analyses will further explore these differences between public and private sector described above. Two factors will demand particular attention. The first is skill levels: structural differences in levels of skills between the genders in the private and public sector are likely to explain a substantial part of the differences found in our analyses. Secondly, pay agreements will be taken into account, with collective bargaining predominant in the public sector and awards setting the norm in the private sector.

Women's employment is much more strongly linked to responsibilities for unpaid work and care in the home than is men's (Western and Baxter 2001b). These differing linkages underlie gendered patterns in men's and women's labour market experiences. While there have been substantial increases in married women's involvement in paid employment since the 1970s, there have been minimal changes in the gender division of labour in the home (Baxter 2002). Married women are still responsible for approximately 70 percent of unpaid caring and domestic work and men's involvement in unpaid work has not increased (Baxter 2002). Women's responsibilities for domestic work and childcare are behind the growth in non-standard forms of employment, especially part-time and casual work, according to some researchers (Hakim 2000; Wooden 2001), because these forms of employment are sought by working mothers looking to reconcile competing responsibilities in the family and the labour market. Data on casualisation bear on this issue.

[FIGURE 2 OMITTED]

Figure 2 shows casualisation trends by gender as a proportion of all employees (solid lines) and controlling for gender (dotted lines). As a proportion of all employees, casualisation has remained consistently higher over time for women, however, from 1996 onwards male casualisation trends have been catching up to female levels. This fact alone tends to undermine arguments that casualisation is driven by the labour supply behaviour of women.

Neoliberal policies may also maintain or challenge gender inequalities in unpaid work. For example, policies which encourage women to pursue part-time employment may also maintain the status quo in the home. We know that women employed part-time spend almost as much time on domestic work as women employed full-time and that lower earnings lead to greater involvement in unpaid work (Baxter 1993). At the same time, cutbacks in childcare facilities may encourage women to withdraw from the labour market, further entrenching traditional gender divisions in the home. One key element of the project is therefore an over time analysis of changing patterns of domestic labour, and the connections between involvement in domestic labour and paid employment, for women and men.

Politics and Culture

Neoliberalism offers both optimistic and pessimistic scenarios for political and cultural life. From one perspective, deregulation of the economy and labour market, the withdrawal of government services, economic restructuring and perceptions of rapid social and economic change all potentially contribute to insecurity about daily life, a breakdown of interpersonal trust, declining confidence in social institutions and diminishing civic and political involvement (Putnam 2000; Pusey 2003; Saunders 2002). These are precisely the conditions which Inglehart and Baker (2000) argue lead to the development or re-emergence of survival and traditional values. Moreover, uncertainty about security may lead to intolerance of cultural diversity, a commitment to traditional gender roles and sexual norms, and shifts in public opinion away from collectivist egalitarian orientations to individualist competitive ones (Saunders 2002: 75-82). On the other hand, rapid social change can be seen as producing new social opportunities and potentially the valorisation of individual choice with respect to identities and lifestyles (Phillips and Western 2005). The project addresses these issues by focusing particularly on shifts in public opinion around key economic and social issues, changes in social values, and patterns of political behaviour. We provide some indications of changing patterns below.

Political ideology refers to clusters of political and social attitudes that may or may not be coherently organised. Political ideology matters because it potentially shapes the actions of voters and parties (McAllister 1992). Of key interest are sources of support for and opposition to neoliberal views, and whether neoliberalism is associated with a "rightward shift" of the Australian electorate. While there is some evidence that Australians in 1995 were more in favour of economic deregulation and marketisation than they were in 1984 (compare Braithwaite 1988 with Western 1999), there is no research that comprehensively documents and explains changes in the full range of public opinion over the entire period. Recent research by Saunders (2002) most closely links neoliberalism to shifts in political values and ideology but the empirical analysis relies largely on one national survey conducted in 1999. In later stages of this research we will model trends in political ideology over the 20 years to assess whether and how Australian public opinion has become progressively more neoliberal. In Figures 3 and 4 we report trend data on attitudes to the power of trade unions and big business, income and wealth redistribution and preferences for reduced taxation or increased social spending. These data are drawn from Australian Election Surveys and our new national survey for the current project.

[FIGURE 3 OMITTED]

[FIGURE 4 OMITTED]

In examining how the electorate views union power in this period Figure 3 suggests that there is less concern about the power of trade unions than there used to be. The number agreeing that trade unions have too much power falls from 70 percent to under 40 percent among those surveyed in the period 1987 to 2005, with the biggest decline occurring between 1996 and 2005. Interestingly, over the same period the percentage thinking that business has too much power grew from just over 50 percent in 1987 to over 70 percent between 1998 and 2004, with a jump to 80% in 2005. This suggests that a corollary of reducing union power in the eyes of the electorate is the provision of too much power to business. The 2005 data was collected during and just after the introduction of Howard's controversial Work Choices workplace deregulation. It is possible that the intense publicity, surrounding the introduction of Work Choices legislation advertising executives were calling the Federal government's publicity campaign the most expensive in Australian history (ABC 2005) appears to have had an impact on attitudes toward big business.

Figure 4 presents attitudes to two issues that touch the core of neoliberal social economic policy: income and wealth redistribution, and whether the government should choose to reduce taxes, or instead spend more on social services. As in Figure 3, the responses are mixed. Attitudes towards reducing taxes or spending more on social services show a trend break in the mid-1990s. While in 1993 and 1996 well over half of all Australians preferred a tax break over social spending, this had dropped markedly by 1998 and was reduced to just over 35 percent by 2004. The tide of increasing support for tax cuts at the expense of diminished public provision of social services appears to have clearly turned (cf Wilson, Meagher and Breusch 2005: 103-105).

At the same time, Figure 4 shows an upward trend in the percentage of respondents who agree (strongly) with a redistribution of wealth and income towards ordinary working people, from around 45 percent in 1987, 50 percent in the 1990s and fluctuating between 50 and 60 percent between 2001 and 2005. One might interpret this finding as suggesting that an egalitarian ethos derived from mythic components of Australian identity (Ward 1958; Western 1983) underlies these beliefs. More to the point is the fact that it is difficult to reconcile an increasing support for egalitarian distribution of wealth and inequality with neoliberal rhetoric which stresses individual achievement, the importance of competitive advantage and the role of inequality in providing incentives for risk-taking and effort. The two trends in beliefs highlighted in Table 4 underline the complexity of the issues we are addressing.

Neoliberalism also potentially undermines sociostructural effects on voting by weakening collectivist orientations and promoting individualism. To examine these trends we analyse changing processes of electoral choice that reflect neoliberalism's impact on values, political ideology and the social bases of party support. With both major parties embracing neoliberalism particular attention will need to be devoted to trends and differences in support for major and minor parties, as minor parties (the Australian Democrats, Greens, and One Nation) in the main have publicly rejected key aspects of the policy. Previous research shows that postmaterialist values for instance, particularly favour minor parties over major ones, while economic interests shape choices between major parties (Western and Tranter 2001). Figure 5 gives an insight into class based voting in Australia over the last two decades.

[FIGURE 5 OMITTED]

The figure shows the ALP and Liberal party first preference vote shares for the House of Representatives, for respondents describing themselves as working class and middle class, respectively. Together these two classes comprise between 85 and 90 percent of Australians over the period, with only marginal shifts in composition. A comparison of the two figures reveals that there remains a clear difference in party preferences between the two classes. The ALP is the most popular party within the working class, while the Liberals are the middle class champions. Whether the gap between these two parties is caused by the typical ebb and flow of the electoral tide or--as neoliberal changes would predict--the gap is structurally lessening, cannot be determined on these data alone and will be explored further in research to come.

Conclusion

Major structural changes have been a feature of Australian society over the past twenty five years. The nature of work has changed with greater casualisation, an increase in part-time employment at the expense of full-time work and the emergence of other non-standard employment arrangements such as irregular working hours. Income inequality has increased (Saunders 2003). Mutual obligation has been identified in government welfare policy as a major responsibility of all citizens, particularly the disadvantaged. The notion that society has an obligation to the disadvantaged has been replaced by a call for citizens to take responsibility for their own welfare, and the market is seen as a more efficient distributor of valued resources than the state.

What are the impacts of these structural changes for social mobility, changes in gender relations both in the work place and the home, and changes in political behaviour and identification and related social values? The evidence we have reported here shows there are important patterns and discrepancies that need explaining. There are no recent analyses of trends in social mobility in Australia, but the research on the importance of social background for education has mixed findings. Gender relations in paid work have shown some change most notably in the increase in casualisation and part time employment among women and the increase in casualisation among men. Income differences between men and women within sectors have been maintained although average female public sector earnings have increased and are now roughly equivalent to average male private sector earnings among non-managerial full-time employees.

Perceptions about the power of businesses and unions are contrasted. Alongside a major decline in union membership we see a decline in the view that unions have too much power, accompanied by an increase in the view that private business has too much power. The belief that redistribution of income and wealth should favour ordinary people and that surplus should be spent on social services rather than reducing taxation are two views that have increased in strength over the last two to three decades. Clearly a case can be made to link these trends to the structural changes we have argued have occurred in Australia society, over the last several decades. But the picture is by no means clear cut. Our task over the rest of the project will be to document the changes in the three areas of social inequality and mobility, gender relations and political and cultural values as precisely as we can, and link them to the institutional and structural changes that are also taking place.

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Endnotes

(1.) The University of Queensland Social Research Centre, The University of Queensland

(2.) School of Social Science, The University of Queensland

(3.) Faculty. of Arts, The University of Tasmania

(4.) School of Sociology and Social Work, The University of Tasmania

Table 1. Regression Analysis of Average Weekly Earnings
of Full Time Employees on Time and Gender by Sector

 1983-2004
 Unstandardized Standard
 B coefficients Error

Constant 261.53 *** 3.88
Pay gap
Female public sector (1) 53.38 *** 5.49
Male private sector (1) 78.44 *** 5.49
Male public sector (1) 97.31 *** 5.49
Pay increases
Time 6.11 *** 0.08
Time by female public sector (2) 1.39 *** 0.11
Time by male private sector (2) 1.15 *** 0.11
Time by male public sector (2) 2.46 *** 0.11

Source ABS 6302.0 Average Weekly Earnings
spreadsheets, Australia (Trend) *** p<.001