Australia’s economic landscape has undergone a seismic shift over the past four decades, fundamentally reshaped by the forces of globalisation. This transformation has brought about profound consequences for workers, businesses, and society at large. The decline of manufacturing jobs, concentration of wealth among corporations and elites, and stagnation of wage growth for the bottom half of earners paint a stark picture of an economy in distress. Meanwhile, corporate profits soar and CEO compensation has skyrocketed, dwarfing that of the average worker. The data is telling: manufacturing jobs have plummeted from 1.2 million in the 1980s to approximately 900,000 in 2023. ASX 200 profit margins hover between 10-12%, and the CEO-to-worker pay ratio has ballooned from 40:1 in the 1990s to an alarming 150:1 by 2022. Yet, both major political parties – Labor and the Liberal-National Coalition – seem ensnared in a cycle of rhetoric, offering little in the way of substantive solutions to address the uneven impacts of globalisation. This post delves into why Australia’s political duopoly is failing to tackle these challenges and explores what meaningful solutions might look like.

The Globalisation Paradox: Winners and Losers

Globalisation, broadly defined as the integration of economies through trade, investment, and technology, has proven to be a double-edged sword for Australia. On one hand, it has driven economic growth, particularly through the mining and agricultural sectors. Australia’s free trade agreements with countries such as China, Japan, and South Korea have opened markets for iron ore, coal, beef, and wheat, contributing to a trade surplus of AUD 10.4 billion in 2023. Cheap imports from low-wage countries have also reduced the cost of consumer goods, from electronics to clothing, helping to keep inflation in check. According to the Australian Bureau of Statistics (ABS), the consumer price index (CPI) for imported goods has risen by just 1.2% annually over the past decade, in contrast to 2.5% for domestically produced goods.

However, these gains come at a significant cost. The decline of manufacturing – down 25% in employment since the 1980s – reflects a structural shift as companies off-shored production to countries like China, where labour costs are a fraction of Australia’s. The Productivity Commission notes that Australia’s manufacturing sector now accounts for merely 6% of GDP, compared to 12% in the 1980s. This hollowing out has severely impacted regional communities, with towns like Geelong and Whyalla losing thousands of jobs in the automotive and steel industries. Workers in these sectors, often lacking the skills for high-tech or service-based roles, face unemployment or underemployment. The ABS reports that underemployment rose to 6.4% in 2023, with many displaced workers trapped in casual or low-skill jobs.

The wealth generated by globalisation has not been equitably shared. Corporate profits have surged, with ASX 200 companies posting record margins of 10-12% in recent years, driven by cost-cutting, automation, and access to global markets. Meanwhile, real wage growth for the bottom 50% of earners has stagnated, averaging a mere 0.3% annually since 2010, despite productivity growth of 1.4% per year. This disconnect – where productivity gains no longer translate into wage increases – underscores a key failure of globalisation’s promise. Instead, wealth has flowed upward. The CEO-to-worker pay ratio, which stood at 40:1 in the 1990s, reached a staggering 150:1 by 2022, according to the Australian Council of Trade Unions (ACTU). In contrast, countries like Germany and Japan, with stronger industrial policies, have maintained ratios closer to 50:1.

The Political Duopoly’s Failure to Respond

Australia’s political system, dominated by the Labor Party and the Liberal-National Coalition, has struggled to effectively address these pressing challenges. Both sides have embraced globalisation, championing free trade and deregulation since the 1980s under leaders like Hawke, Keating, and Howard. While these policies spurred growth, they also exposed workers to global competition without adequate safeguards. Today, neither party offers a coherent strategy to mitigate the downsides of globalisation, instead relying on populist rhetoric or incremental tweaks that fail to address the root issues.

The Coalition’s Approach: Market Faith and Trickle-Down Promises

The Liberal-National Coalition has long leaned on market-driven solutions, arguing that deregulation, tax cuts, and trade liberalisation will create jobs and prosperity. Their 2019-2023 term saw corporate tax cuts for large businesses, with the effective tax rate for ASX 200 companies falling to 25% from 30%. The Coalition claimed this would boost investment and wages, but the evidence is scant. A 2021 Treasury report found that only 20% of corporate tax cuts were reinvested in wages or hiring, with the majority allocated to dividends or share buybacks. Meanwhile, the Coalition’s trade agenda – securing deals like the Regional Comprehensive Economic Partnership (RCEP) – prioritised export sectors like mining, which employ just 2% of the workforce, over manufacturing or services.

In response to job losses, the Coalition has doubled down on “flexibility” in labour markets, promoting casualisation and gig work. However, this has exacerbated insecurity for workers, with 25% of the workforce now in non-permanent roles, according to ABS data. Their retraining programs, such as the JobTrainer scheme, have been underfunded and poorly targeted, reaching only 10% of displaced workers in manufacturing-heavy regions. The Coalition often frames globalisation as an unstoppable force, absolving them of responsibility to protect vulnerable workers. This hands-off approach ignores the reality that countries like Germany have employed active industrial policies to preserve manufacturing jobs while embracing global trade.

Labor’s Approach: Incrementalism and Union Placation

The Labor Party, traditionally seen as the champion of workers, has also fallen short. Since taking power in 2022, Labor has focused on modest wage increases and workplace reforms, such as the Secure Jobs, Better Pay Act, which strengthens collective bargaining rights. While these are positive steps, they do little to address the structural issues exacerbated by globalisation. Labor’s wage growth target of 3.5% annually has been undermined by inflation (4.1% in 2023), leaving real wages stagnant for most workers. Their retraining initiatives, like the National Skills Agreement, allocate AUD 12.6 billion over five years but lack specificity on how to transition manufacturing workers into high-demand sectors like renewables or technology.

Labor’s trade policy mirrors that of the Coalition, focusing on expanding exports rather than protecting domestic industries. Their support for the Indo-Pacific Economic Framework (IPEF) prioritises supply chain resilience but offers no clear plan to repatriate manufacturing jobs. Labor’s rhetoric often centres on “fairness” and “jobs of the future,” yet their policies lean heavily on appeasing unions rather than tackling the deeper issue of wealth inequality. For instance, their tax reforms have left high-income earners and corporate profits largely untouched, with the top 1% still holding 22% of national wealth, as reported by the ABS.

Both parties find themselves ensnared in a globalisation trap: they rely on its benefits – export revenue, cheap goods, and foreign investment – while failing to address its costs. Neither has proposed bold reforms to redistribute wealth, protect workers, or rebuild industries. Instead, they offer superficial solutions – tax tweaks, limited retraining programs, or populist slogans – that leave displaced workers stranded.

The Human Cost: Displaced Workers and Stagnant Communities

The decline of manufacturing has left a trail of economic and social devastation. In regions like the Hunter Valley and Latrobe Valley, factory closures have led to unemployment rates as high as 8%, double the national average. Displaced workers, often middle-aged and lacking tertiary education, struggle to find comparable jobs. A 2022 study by the University of Melbourne found that 60% of former manufacturing workers earned less five years after losing their jobs, with many shifting to low-paid retail or hospitality roles.

The social toll is equally severe. Job loss correlates with higher rates of mental health issues, family breakdowns, and substance abuse. The Australian Institute of Health and Welfare reports that unemployment is linked to a 20% increase in psychological distress. Communities once anchored by factories now face declining populations and crumbling infrastructure, as young people migrate to cities for work. This urban-rural divide fuels resentment, feeding populist movements that both parties have failed to address constructively.

The benefits of globalisation – such as cheaper goods and export wealth – offer little solace to these communities. While a flat-screen TV might cost less, it does not replace a stable job or a sense of purpose. The political duopoly’s focus on macroeconomic gains overlooks these micro-level losses, alienating the very voters they claim to represent.

Solutions: A Path Beyond Rhetoric

To address the challenges posed by globalisation, Australia requires bold, structural reforms that neither Labor nor the Coalition has fully embraced. Below are five key areas where Australia could act to ensure the benefits of globalisation are shared more equitably, while supporting workers and communities.

1. Industrial Policy for the 21st Century

Australia needs a robust industrial policy to rebuild manufacturing in high-value sectors such as clean energy, advanced materials, and medical technology. Germany’s Industry 4.0 strategy offers a model, combining government subsidies, public-private partnerships, and R&D investment to modernise manufacturing. Australia could allocate 1% of GDP (AUD 25 billion annually) to a Manufacturing Future Fund, targeting industries with export potential and job creation. This would require redirecting funds from fossil fuel subsidies, which topped AUD 11 billion in 2023.

Such a policy must prioritise regional hubs, leveraging existing infrastructure in places like Geelong or Newcastle. Tax incentives for companies that invest in local production, coupled with tariffs on non-essential imports, could incentivise onshoring. Unlike the Coalition’s market-driven approach or Labor’s vague “jobs of the future” rhetoric, this would provide a concrete path to sustainable employment.

2. Comprehensive Retraining and Lifelong Learning

Displaced workers need more than short-term training programs. Australia should establish a national retraining framework, modelled on Singapore’s SkillsFuture initiative, which provides every citizen with credits for lifelong learning. A AUD 5 billion annual investment could fund tailored programs for manufacturing workers, focusing on skills for green energy, automation, and digital technologies. These programs must be accessible in regional areas, with income support for participants to ease the transition.

Unlike current schemes, which often prioritise urban youth, this framework would target mid-career workers, offering pathways to roles with comparable pay and stability. Partnerships with TAFE and universities could ensure quality, while industry input would align training with demand.

3. Wealth Redistribution Through Tax Reform

To address the wealth skew, Australia must reform its tax system to capture more of the gains from globalisation. A progressive wealth tax on the top 1%, who hold 22% of national wealth, could raise AUD 20 billion annually, per the Australia Institute. Closing corporate tax loopholes, such as profit shifting to low-tax jurisdictions, could yield an estimated AUD 10 billion in additional revenue, according to the Australian Taxation Office (ATO). These funds could finance retraining, healthcare, and regional development.

Labor’s reluctance to tackle wealth inequality and the Coalition’s preference for corporate tax cuts have left this issue unaddressed. A fairer tax system would reduce the CEO-to-worker pay gap and fund public goods, thereby restoring trust in the system.

4. Strengthening Worker Protections

The pressure on wages resulting from globalisation necessitates stronger labour protections. Australia could adopt Scandinavian-style collective bargaining, where industry-wide agreements set minimum wages and conditions. This would counter the casualisation pushed by the Coalition and ensure that wage growth keeps pace with productivity. Labor’s recent reforms are a commendable start, but they lack the ambition to cover gig workers or small businesses.

Additionally, a universal basic income (UBI) pilot, funded by wealth taxes, could provide a safety net for displaced workers, affording them the time to retrain or start businesses. While politically contentious, trials in Finland and Canada have demonstrated that UBI can reduce poverty without disincentivising work.

5. Rebalancing Trade Policy

Australia’s trade deals have often prioritised exports over domestic industries. Future agreements should include clauses that protect local manufacturing, such as requiring a percentage of production to occur domestically. The EU’s trade agreements frequently incorporate such provisions, balancing global integration with local job preservation. Labor and the Coalition must also invest in supply chain resilience, reducing reliance on Chinese imports for critical goods such as pharmaceuticals and semiconductors.

The Political Challenge

Implementing these solutions requires a level of political courage that Australia’s duopoly has thus far lacked. Both parties are beholden to corporate interests and short-term electoral cycles, often avoiding reforms that might alienate powerful donors or voters. The rise of minor parties like the Greens and One Nation reflects a growing frustration with this inertia. To break the cycle, Labor and the Coalition must engage with communities – not just unions or business lobbies – and articulate a vision for inclusive growth.

Civil society also plays a critical role. Unions, community groups, and academics can pressure politicians by amplifying the voices of displaced workers and proposing evidence-based policies. Public campaigns, similar to those that led to the 2019 banking royal commission, could force action on wealth inequality and job losses.

Conclusion: Beyond the Duopoly’s Rhetoric

Globalisation has transformed Australia, delivering wealth and opportunity but also deepening inequality and insecurity. The decline of manufacturing, stagnant wages, and soaring corporate profits highlight a system where the gains are unevenly shared. Yet, neither Labor nor the Liberal-National Coalition offers genuine solutions, trapped by their commitment to the status quo of globalisation and their fear of bold reform.

The path forward lies in an industrial policy that rebuilds manufacturing, comprehensive retraining for displaced workers, tax reforms to redistribute wealth, stronger labour protections, and a rebalanced trade agenda. These measures would ensure that globalisation serves all Australians, not just corporations and elites. Until the political duopoly moves beyond rhetoric and embraces structural change, the promise of a fairer, more prosperous Australia will remain elusive.

Australia’s workers deserve better. It is time for solutions that match the scale of the challenge.