Wednesday, May 25, 2022

Anti-Competition in Labour Markets

Wage  stagnation is when wages stay the same over a long period, usually measured in years. How long have you earned the same wage? How does this happen?

PaySlipBanSA believes labour market competition is necessary to make sure the market serves us – society and employers – equally. If we don’t, worker dignity will be compromised in favour of profit at labours cost and continuing inequality.

Americans refer to anti-competition laws as anti-trust. In South Africa we refer to the Competition Act. It’s important to note that the highest law in the land is the Constitution and that it enshrines dignity, equality and fair labour practice.
In an article

Antitrust in the Labor Market: Protectionist, or Pro-Competitive?

The author asks, What would it actually look like to bring antitrust into the labor market?

Extract 1

As with any enforcement regime, antitrust often starts with the lowest-hanging fruit: out-and-out written evidence of anti-competitive practices, such as the Justice Department’s 2010 lawsuit against Silicon Valley employers for colluding not to hire one another’s programmers.

This is partly why the recent increase in the use of non-compete clauses has drawn attention in antitrust circles. As a would-be vertical restraint, non-compete clauses aren’t as easy to target under antitrust as horizontal collusion, but they are there, in writing—prohibitions on competition in the labor market, to the benefit of employers. And they should be banned, or at the very least subjected to a high burden of proof requiring a substantive defense on the part of employers who impose them, plus an affirmative finding that they do not act to reduce wages or restrict job offers.

Extract 2

Studies show that reclassifications result in immediate wage reductions and no other changes in terms of employment, suggesting that they amount to employer’s exploiting their wage-setting power by changing the legal structure of their business.

Extract 3

In conclusion, the view that the competition authorities expressed to the OECD in 2015 looks increasingly out of touch with the labor market and the broader macroeconomic conditions that currently exist. It is true that redirecting antitrust enforcement to confront monopsony power would be a substantial departure from the way it has been conducted in recent decades, and as such there are both court decisions and agency policies that go against it. But just because a policy has been in place for a long time does not mean it is a success, and recent evidence implies a significant policy change is necessary and justified—much as an intellectual movement in academia once shifted antitrust policy substantially, it’s time for new evidence to change it once again.

Read the full article to understand the importance of competition between employers!

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