Marxist Interventions

Do imports cost jobs?

What's wrong with "fair trade"

By TOM BRAMBLE [email protected].

For an expanded version of this article see: T. Bramble, "Free trade, fair trade and job loss", in D. Kelly (ed): Research on Work, Employment and Industrial Relations 2001, AIRAANZ Conference Proceedings, Volume 1.

During 2000, AMWU National Secretary, Doug Cameron called for "social tariffs" as part of a campaign for "fair trade" at the ACTU and ALP national conferences. This call had a great resonance. Stagnant wages, job insecurity, attacks on union rights, and cuts to welfare have been the lot of Australian workers now for 25 years. The jobs lost have in many cases been skilled and have been replaced by hundreds of thousands of new jobs in non-union, low-wage, and insecure positions. Millions of workers know from their everyday experience of the huge gap between the current Australian "prosperity" lauded by conservative media and politicians and the reality that they face. Many of them blame cheap imports and "unfair" foreign competition. But is this really the case?

Of course Marxists don’t support the free market; we are for an international planned economy run democratically by workers. But protectionism, in whatever guise, is not a viable alternative because it doesn’t address the real causes of the problem.

As a matter of fact, most jobs are lost in sectors facing no import competition. The Australian Centre for Industrial Relations Research and Teaching (ACIRRT) has calculated net changes in employment between 1988 and 1998 in a variety of sectors. Table 1 presents data on the eight sectors where employment was significantly lower at the end of this decade. Of the net loss of nearly a quarter of a million jobs, more than 60 per cent was accounted for by the five sectors where import competition was irrelevant, involving employers such as the Commonwealth Bank, SECV, State Rail NSW, AMP, and the federal public service.

Table 1: Sectors with the largest overall ("nett") job losses, 1988-98


Jobs lost

Electricity, gas & water


Rail transport




Public administration & defence




"Sheltered" industries

146,500 (61.3% of jobs lost)

Textiles, clothing & footwear


Machinery & equipment


Metal products


"Exposed" industries

92,400 (38.7% of jobs lost)

Total nett job loss


Source: ACIRRT (1999: 131).

At worst, therefore, a maximum of less than 40 per cent of the nett losses since 1988 (predominantly in manufacturing) might be attributable to imports from low-wage countries. What is the evidence that trade with such countries was, in fact, responsible? While import penetration in manufacturing industry has been increasing since the 1970s (Fahrer and Pease, 1994: 183), Table 2 demonstrates that the share of imports is one-half or less in seven out of eight industry sectors, the exception being machinery and equipment.

Table 2: Import share in Australian markets, 1998-99


% import share

Food, beverages and tobacco


Non-metallic mineral products


Wood and paper products


Other merchandise


Petroleum, coal and chemical products


Basic metal products


Textiles, clothing and footwear (TCF)


Machinery and equipment (incl. Transport eqt.)


All merchandise


Source: Australian Bureau of Statistics Manufacturing, Cat. No. 8225.0, 1999, p. 104

Furthermore, of those manufactured goods that are imported, most come from high-wage countries. Table 3 shows that of the top seven sources of merchandise imports (chiefly manufacturing goods), together accounting for 60 per cent of all such imports, only one, China, is low-wage, and is responsible for only 6.8 per cent of imports.

Table 3: Merchandise imports by country, 1999-2000



Market share %
















Other EU









South Korea



























Hong Kong






Other countries






Source: Australian Bureau of Statistics International Merchandise Trade, Cat. No. 5422.0, June Quarter 2000, p.67.

The domination of high-wage countries as sources of Australian imports also holds true when individual sectors are identified: see Table 4 below. In seven out of eight manufacturing sectors, imports from low to medium -wage countries account for at most 40 per cent of all imports. In sectors such as chemicals and transport equipment, imports from high wage countries account for 85-90 per cent of the total.

Table 4: Proportion of Australian manufacturing imports that are from high wage (OECD) countries (1999-2000)


% sector imports

Machinery and equipment (incl. Transport eqt.)


Wood and paper products


Basic metal products


Food, beverages and tobacco


Other merchandise


Petroleum, coal and chemical products


Non-metallic mineral products


Textiles, clothing and footwear


All merchandise


Source: Derived from Australian Bureau of Statistics International Merchandise Trade, Cat. No. 5422.0, June Quarter 2000, p.26-27; 47-48.

The major areas of job loss in manufacturing have been those with relatively low import competition and where the majority of imports come from high-wage countries (Fahrer and Pease, 1994: 200). These include transport equipment; other machinery and equipment; and basic metals. The exception is textiles, clothing and footwear (TCF), where imports from low to medium wage countries account for 36.0 per cent of the market for TCF goods in Australia. Chief amongst these is China, which accounts of 20.0 per cent of all TCF goods sold in Australia. We will return to the TCF case later.

A final figure that helps put the fair trade case in perspective is that imports from low- to medium-wage countries are equivalent to only 13 per cent of all manufacturing sales in Australia, being dwarfed in most cases by local production and imports from high-wage countries. The data cast serious doubt on the fair trade arguments that Australian markets are being flooded by cheap imports, and that such imports were a significant contributor to job losses in the past decade.

Real causes: the employer offensive on jobs

The Keating and Howard governments’ free-market agenda is primarily designed to justify an ongoing employer offensive against workers, whose aim is to restore rates of profit in Australian industry to those prevailing in the mid-1960s. Higher productivity is central to this endeavour, and full-time jobs at decent rates of pay and working conditions are an obstacle. It is this imperative that lies at the heart of mass redundancies that have become a feature of Australian society over the past 25 years, regardless of trends in international trade.

Thus Lloyd (1985) has concluded: "For employment, the long-term problem is one of substitution of capital for labour, rather than the substitution of imported for domestic supplies" (cited in Lowe and Dwyer, 1994: 229). Similarly, Fahrer and Pease (1994: 203) calculate that "Productivity effects have been the dominant force behind the decline of manufacturing employment, in aggregate accounting for more than 100 per cent of the jobs lost between 1981/82 and 1991/92". This was true in eleven of the twelve manufacturing sectors they studied. What of the twelfth sector, TCF, where the Reserve Bank economists confirm that "low-wage imports accounted for about one-third of the 28,000 jobs lost, including about one-half of 6,000 jobs lost in footwear" (Fahrer and Pease, p.203)? This would seem to give some support to the fair trade argument. Nonetheless, even here, "Despite this large import effect, productivity improvements accounted for about two-thirds of the fall in employment in this sector" (Fahrer and Pease, 1994: 203).

The dominant effect of productivity on employment reduction is reinforced by data from the latter half of the 1990s. Between 1994 and 1999 manufacturing productivity rose by 14.2 per cent, but employment fell by 2.5 per cent. In machinery and equipment productivity rose by 23.2 per cent, but employment decreased by 3.9 per cent, while the relevant figures for TCF are plus 15.1 per cent and minus 15.3 per cent (ABS Cat. No. 8221.0). The key to job losses throughout manufacturing has been rationalisation and speed-up (aka benchmarking, and best practice). This is as apparent in banking, warehousing, and telecommunications as it is in the production of shirts and shoes.

Why "fair trade" is no solution

The elevation of productivity to a secular god by ALP and Coalition governments has simply exacerbated job insecurity for Australian workers. The problem with the fair trade alternative is not just that it mis-diagnoses the source of job losses but that it is based on worshipping the same god. Despite their differences, both fair traders and free traders agree on one basic point: that profitability and business viability are the prerequisite for reduced unemployment. They differ only on how this can be best achieved. The free traders are increasingly convinced that unions are an obstacle to achieving a return to high corporate profits. The fair traders want unions to be involved in this urgent national mission.

The basic argument of the fair traders was laid out by Tom McDonald, national secretary of the BWIU during the Accord years. In Unions 2001, McDonald "explained" to unionists that:

There will be increasing global competition across all industry sectors… With few exceptions, the imperative for Australian workers will be to achieve international competitiveness and best practice, and it will be within this disciplined environment that unions will have to operate. In many cases, unions will have to encourage workers and management to strive for best practice work and production techniques. (Unions 2001, cited in Bryan and Rafferty, 1999: 77).

Likewise Doug Cameron, the chief exponent of fair trade, confirmed his support for "a more open, internationally competitive economy" in July 2000 (Workers Online, No. 62). The mechanism favoured by fair traders to achieve the kind of changes to work practices required by business is the industry plan of the type established by the Hawke Government in the 1980s, the idea being to bring unions, industry and government together to achieve planned rather than chaotic change, and improvements to skills and technology rather than a low-skill, low-wage path. Thus the Victorian branch leadership of this union argued in 1999 that:

The national industry plans of the 1980s provided examples of limited but significant success in policy innovation… the challenge now is to build on this approach (AMWU, 1999)

To this end, the branch called for protection against "high import penetration", a Victorian Manufacturing Council composed of business, government and union leaders, and an agenda of "workplace change and innovation" (AMWU, 1999). The problem with such an approach has already been demonstrated by the outcome of the Steel Industry Plan in relation to jobs and closures, referred to above. Similar outcomes were evident in heavy engineering, the vehicle industry, and fabricated metal products. That such plans have done nothing to secure jobs for union members is actually conceded by the fair-traders. Here is what Doug Cameron himself told a conference of employers in August 1998:

We have sought real partnerships and been betrayed; we have promoted co-operation, not capitulation; we have benchmarked; we have introduced teams; we have talked endlessly about training and competency with almost no results for the bulk of our members; we have innovated; we have been flexible; we have restructured the Award; we have simplified the Award; we have strived for best practice in manufacturing workplaces; we have bargained and bargained and bargained.

None of this has been enough for government or employers. … the workers have been abandoned to market forces and the latest fads, such as downsizing, contracting out and re-engineering (emphasis added) (cited in Long, 2000).

Yet the AMWU leadership wants to engage in the same process all over again! Because they are committed to the same basic agenda as the employers, boosting international competitiveness of Australian industry, the fair trade unionists have nowhere else to go but to throw themselves once again into the arms of business.

Neither the free traders and nor the fair traders have a strategy that will advance the interests of Australian workers. Such a strategy will have to start with the basic premise that the chase for productivity and international competitiveness is part of the problem, not the solution.

(Elsewhere on this site, Ashley Lavelle writes about foreign ownership of Australian industry.)


1. The category "low to medium wage countries" includes Singapore, South Korea, Taiwan, and Central and Eastern Europe, as well as Indonesia, China, India and others of similar type.

2. This finding does not have universal support in the economic journals, where opinions differ quite sharply. Just in relation to Australia, there are those, such as Gaston (1998) who suggests that while data comparing growth of imports and employment trends reveals "no obvious connection" (p.125) between the two phenomena, closer econometric modelling reveals "a large and significant impact" (p.128). Others, such as Fahrer and Pease (1994), find that the contribution of imports to employment reduction is quite minor (these findings are outlined in more detail below). See Gaston (1998) for a review of the debate in North America and Australia but which, unfortunately, makes no reference to the arguments of Fahrer and Pease (1994).

3. Analysis of employment in the TCF sector is hindered by the fact that much of the "job loss" has simply been the result of a shift from factory production to "outwork" which consequently disappears from ABS employment data. These are not jobs that have been shifted overseas.


ACIRRT (1999): Australia at Work, Prentice Hall, Sydney.
AMWU (1999) ‘Keep the Heart of the Victorian Economy Beating’, Victorian branch, mimeo.
Australian Bureau of Statistics Manufacturing Industry, Australia, Cat. No. 8221.0, 1998-99.
Bryan, D. and Rafferty, M. (1999): The Global Economy in Australia, Allen and Unwin, Sydney.
Catley, B. (1996): Globalising Australian Capitalism, Cambridge University Press, Cambridge.
Fahrer, J. and Pease, A. (1994): ‘International trade and the Australian labour market’, in P. Lowe and J. Dwyer (eds) International Integration of the Australian Economy, RBA, Sydney.
Gaston, N. (1998): ‘The impact of international trade and protection on Australian manufacturing employment’, Australian Economic Papers, June 1998, pp.118-36.
Industry Commission (1996): Implications for Australia of Firms Locating Offshore, Report No. 53, AGPS, Canberra.
Klein, N. (2000): No Logo, London.
Long, S. (2000): ‘The new Australian militancy’, Australian Financial Review, 18 March.
Lowe, P. and Dwyer, J. (eds) International Integration of the Australian Economy, RBA, Sydney.
Workers Online
, ‘Fair trader: interview with George Campbell’, No. 62, 14 July 2000, NSW Labor Council.

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