Andrew Leigh

HOUSE OF REPRESENTATIVES, 17 SEPTEMBER 2019

We have just learned that Joe Isaac, one of the pre-eminent post-war economists in Australia's history has passed away. His work is highly relevant to the issues we're discussing today. I want to take a moment to pay tribute to the late, great Joe Isaac.

He was born on 11 March in 1922 in Penang. His family moved to Java soon after he was born and his early education was in Dutch. His family was evacuated to Perth at the time of the Japanese invasion. He then went on to study at Queen's College, where my grandfather Keith Leigh and Max Corden also got their education. He went on to do his PhD at the London School of Economics, where he studied with Coase, Hayek, Tawney, Laksi and his supervisor, Phelps Brown.

He taught at Melbourne and Monash universities, finding academic life in the 1950s and 1960s 'leisurely and enjoyable'. He noted there was a strong tension between the Melbourne and Monash universities at the time, but it's a tribute to Joe Isaac that in 2010 the two universities established the annual Joe Isaac workshop and symposium, collaborating with this man who had served in both departments.

He was appointed deputy president of the Australian Conciliation and Arbitration Commission in 1974, the first economist to be so appointed. Keith Hancock was the subsequent economist, and the organisation has continued to have an economist on the panel ever since.

He was a true internationalist. Joe Isaac was engaged by the International Labour Organization to advise the government of Ghana and by the Employers Federation of Fiji. He was commissioned by the Australian government to report on wages and trade union matters in Papua New Guinea and advised the government of Indonesia, taking advantage of his early upbringing.

He was a well published scholar, publishing in the Quarterly Journal of Economics 'The function of wage policy: the Australian experience' in 1958. In his Foenander lecture in 2006, he warned of the overreach of the Work Choices legislation. He pointed out the importance of fairness in industrial relations, drawing on the work of the new Nobel laureate Daniel Kahneman, and pointed to the important research on the link between inequality and health and the risk that, if we allow wage inequality to get out of control, it can have an impact on poverty and disadvantage.

He had worked on the issue of the real wage overhang in the 1970s, but it was only last year, at the age of 96, that he published a paper in the Australian Economic Review titled 'Why are Australian wages lagging and what can be done about it?' It's written by a 96-year-old but it could not be more timely to the issues we are discussing today. Joe Isaac pointed out that the bargaining power of organised labour has been weakened in a large section of the labour market. He noted that the rise of fragile work, such as part-time and casual employment, and the rise of ‘gig economy’ services has placed pressure on the bargaining power of employees.

He pointed to the challenge of sham contracting and to legislative changes that had affected entry rights for workers.

He noted work by Jim Sanford that the number of collective agreements had fallen by about 40 per cent in the last four years. He noted a bevy of changes that had been made to the rights of workers which had been accompanied by a significant decline in the unionisation rate. He pointed to the breaches that had occurred in employment conditions: exploitation of immigrant workers, underpayment of 7-Eleven employees and the nonpayment of penalty rates for hotel housekeepers. The lack of inspection of pay records, he said, went straight to the heart of this. As Joe Isaac concluded in his paper just a year ago, 'Slow wages growth in recent years has been associated with the significant change in the distribution of income in favour of high-income earners'.

A core challenge for Australia today is the challenge that Joe Isaac worked on throughout his long and distinguished career: how do we get wages growth going in Australia?

ENDS

Authorised by  Paul Erickson, ALP, Canberra.