As discussed in Chapter 6, the COVID-19 pandemic exposed the vulnerability of large parts of Australia's workforce, whose insecure and precarious employment left them suddenly without income as a consequence of pandemic-related public health measures.
Casual employees lost their jobs at almost 10 times the rate of permanent employees (over 20 per cent, compared with just over 2 per cent).
Without historically unprecedented levels of government support and intervention, many of these Australians would have faced poverty and homelessness, and the economy would have been severely damaged.
Job security has never been more valuable or more important, and yet, according to the Australian Council of Trade Unions (ACTU), over half of the jobs created since 'the worst period of the pandemic' are casual jobs, with two‑thirds of them being part-time:
Casual employment grew by over 400,000 positions in the rebound between May and November 2020—an average of 2,200 new casual jobs per day. That is by far the biggest and fastest expansion of casual employment in Australia's history.
In this chapter, the committee reviews a number of policy options suggested by submitters. These policy options are all designed to reverse the trend towards insecure work that has dominated in recent decades, and put Australia on a path towards more secure job creation.
The next chapter, Chapter 11, presents the committee's conclusions and final recommendations.
Arguments against reform
Before evaluating the options for reform made by submitters to the inquiry, it is prudent to consider arguments against reform submitted by some industry participants.
The Australian Chamber of Commerce and Industry (ACCI) urged the committee to 'exercise caution' in order to 'avoid damaging the performance and competiveness' of Australian business, saying the private sector in Australia represents around 87 per cent of employment.
Concerned about recommendations that might 'increase the regulatory burden' on business, in an already 'complex system', the ACCI suggested that the committee prioritise recommendations that would support 'doing business and growing jobs in Australia', or make no change at all:
ACCI sees no basis to recommend regulatory changes in this area. As set out in this submission, long standing, robust and adaptable regulation already exists and there is no basis to conclude it cannot address changes in how work is undertaken during the next decade, as it has in preceding decades.
The Australian Industry Group (Ai Group) argued against making any significant changes to Australia's 'current workplace relations framework', in particular 'the flexibility afforded by the common law tests in determining whether a worker is an employee or an independent contractor'. Ai Group submitted that Australia's workplace laws 'must recognise and accommodate the need for Australian businesses to engage employees and contractors in different ways' and '[o]verly prescriptive laws would stifle innovation to the detriment of businesses, workers and the whole community'.
Specifically, Ai Group argued for:
maintaining the use of the common law test for determining the distinction between employees and independent contractors;
no changes to the current sham contracting laws, which Ai Group said are 'appropriate and effective';
replacing the current state-based labour hire licencing schemes with a 'light‑touch' National Labour Hire Registration Scheme that would reduce the 'regulatory burden' on labour hire operators currently subject to more onerous schemes in Queensland and Victoria;
the removal of payroll taxes, which it described as 'discriminatory' and the cause of 'deadweight losses' across the economy; and
Ai Group was opposed to the idea of a portable leave schemes for platform workers, saying it would be a 'crippling levy' that would 'most likely lead to many business closures and a significant decline in platform work'.
Ai Group further argued that 'union claims inhibit the ability of businesses to be responsive and adaptable to market changes'. The only way jobs can be secure, Ai Group submitted, is by having policy settings in place that ensure that 'businesses remain profitable and competitive'.
The committee took these concerns on board in drafting its final conclusions and recommendations, and acknowledges the need for industrial relations (IR) policy and regulations to be developed in conjunction with both industry and employee representatives.
However, the majority of evidence received during the course of the inquiry—alongside the growing indicators of insecure work discussed in Chapter 2—reveal that current policy and regulatory settings do not provide sufficient protections for some workers. Nor do they incentivise the creation of secure, high-quality jobs.
Options for reform
The following options for reform represent a number of key regulatory and policy areas that have not been substantially covered in the committee's interim reports.
This list does not include every suggestion made by submitters, but focusses on those likely to have the biggest impact on levels of insecure work in Australia.
What follows are positive initiatives the Australian Government could pursue to chart a new course in Australia's IR policy, linking the nation's economic recovery from the pandemic to the creation of more secure and sustainable jobs.
Codify job security
Amending the Fair Work Act 2009 (Fair Work Act) to incorporate job security was an idea supported by a number of submitters.
National Youth Commission Australia submitted that including job security 'as an object of the Act', along with a re-definition of casual work that limited its use 'to genuine casual work', could help address 'society's failure to ensure that current and future generations of young people will be at least as well off as the immediate past generations'.
Similarly, the NFAW recommended the Fair Work Act be amended 'to balance employer-oriented and employee-oriented flexibilities in award-setting' by inserting 'job security … as a principal object of the Act as a whole', as well as specifically recommending that 'job security' and 'gender equality' be inserted into the list of 'objectives and tests of the award review process in the Fair Work Act'.
Incentivise secure job creation
Inquiry participants maintained that the pandemic offers an opportunity to rethink economic, IR and industry policy, using government investment and policy levers to incentivise the creation of secure jobs, allowing more Australians to better weather such shocks in the future.
The Centre for Future Work at The Australia Institute (Centre for Future Work) said the Government should focus 'continued support and stimulus' on helping the workers 'who experienced the worst effects of the crisis in 2020'. Rather than 'accelerating the trend toward insecure jobs', the Centre for Future Work said Government should 'work to stabilise employment relationships', providing 'more Australians with the benefits of stable, decent work'.
Professor Michael Quinlan and Dr Elsa Underhill highlighted how the pandemic has exposed Australia's 'vulnerability associated with the long-term decline in domestic manufacturing', as demonstrated by disruptions to supply chains for essential goods. They suggested the Government implement an industry policy 'that promotes more skilled, stable employment in manufacturing' to build local capacity, and encourage regional job creation.
The Victorian Trades Hall Council (VTHC) urged the Federal Government to 'utilise fiscal and economic mechanisms' to create new, full-time, permanent and well-paid jobs, instead of introducing 'perverse incentives that make the job market more insecure'. The VTHC pointed to the 2017 PaTH (Prepare, Trial, Hire) Internship scheme and the 2020 JobMaker Hiring Credit scheme, saying these schemes 'incentivised' companies to hire young people in low‑paid, part‑time jobs, 'with no guarantee of continued employment after the scheme', often replacing older, full-time workers with a 'revolving door' of insecure temporary workers. The VTHC concluded:
Wage subsidies can … be powerful tools for job creation, but these jobs need to be good, secure jobs that grow our economy. This is why impacts on job security needs to be a key consideration in evaluating the merit of policy proposals. VTHC recommends that the Federal Government develop an evaluation tool whereby policy proposals can be assessed for its impact on job security.
Professor Anthony LaMontagne from Deakin University suggested that governments should focus on not just creating jobs, but creating jobs that are sustainable and promote social and 'environmental sustainability'. Professor LaMontagne described a employment program where workers build social housing, helping to address 'a social problem at the same time as providing work for building contractors and construction workers'.
Regulate labour hire and disincentivise its over-use
The committee's third interim report on labour hire and contracting included three key recommendations on labour hire:
Recommendation 1, that the Australian Government amends the Fair Work Act to 'ensure the wages and conditions of labour hire workers are at least equivalent' to directly-employed workers (the 'same job, same pay' principle).
Recommendation 2, calling for the introduction of 'a comprehensive national labour hire licensing scheme covering all business sectors, and requiring mandatory registration and continuous compliance with all legal obligations'; and
Recommendation 4, urging government to increase its 'monitoring and compliance activities' in relation to labour hire operators.
Noting these recommendations, inquiry participants made suggestions indicating there may be scope to use amendments, or other policy levers, to reduce the use of labour hire over the long term.
Professor Quinlan and Dr Underhill observed that the movement towards licensing labour hire employers 'has gained momentum in recent years', and its time has come. According to Professor Quinlan and Dr Underhill, a licence to operate as a labour hire provider should be 'contingent upon':
employment practices 'consistent with minimum labour standards';
not disadvantaging workers for taking sick leave or lodging workers' compensation claims; and
accepting 'limits on the proportion of subcontracting/labour hire in high‑hazard industries like abattoirs and mines'.
Deeming casual labour hire workers as permanent employees 'after a set time period' could also lead labour hire employers towards building a more permanent workforce, and decrease the impetus for multiple job holding amongst labour hire workers.
Increase multi-employer and sector-wide bargaining
A number of inquiry participants proposed that increasing sectoral or collective bargaining would lead to an increase in job security for workers, especially those in the lowest-leveraged jobs and industries.
Data from the ABS indicates that award-reliant workers are the fastest‑growing category of workers, far outstripping workers on collective and individual agreements—both in number and in the pace of growth (see Figure 13.1).
The ACTU argued that Australia's bargaining system is extremely decentralised, compared with other OECD countries. With only 11 per cent of private sector employees covered by an enterprise agreement, the ACTU submitted that the system 'is failing to extend bargaining rights to the majority of workers', and many employers are exploiting the 'power imbalance' created by the system.
Figure 10.1: Number of employees covered by awards, collective agreements and individual agreements, 2008 to 2018
Source: Parliamentary Library research, ABS, Employee Hours and Earnings, cat. No. 6306.0 (back issues).
Professor Peetz said Australia's collective bargaining system is too complex, compared with New Zealand and other countries. There are too many 'restrictions on multi-employer or industry bargaining', creating a 'distinction between the legal treatment of single- and multi-employer bargaining' that is uncommon in industrialised countries:
The OECD in recent years has shifted from its fairly consistent support for decentralisation in industrial relations to a much more nuanced approach, that recognises that, empirically, coordinated or sectoral bargaining on average produces better outcomes that fully decentralised bargaining. … There are a number of reasons for saying that industry bargaining is a good thing. It gives both labour and capital more options on how best to collectively organise themselves, given that both will do it anyway. It reduces transaction costs. It reduces inequality. … It puts a brake on the race to the bottom.
The Centre for Future Work argued that the ability for workers 'to exercise bargaining power' through collective bargaining is 'essential' if workers are to have a chance 'of demanding and receiving more stable jobs, entitlements, and working conditions'. The Centre for Future Work recommended:
The Better Off Overall Test (BOOT) be maintained.
Capital-intensive sectors like construction, mining and resources 'should not be exempt' from rules mandating regular renegotiation of Enterprise Agreements.
Agreements should be 'subject to the genuine review and approval of workers'.
Introducing a 'notification system' to alert the Fair Work Commission and relevant unions when an Enterprise Agreement is due to expire.
Strengthening 'statutory obligations on employers to bargain' in order to ensure employers participate, thus encouraging and facilitating collective bargaining.
The Centre for Future Work also suggested that sectoral or industry bargaining is necessary for resolving 'imbalances' created by increased outsourcing and contracting out (including of government-funded social services), and use of labour hire:
An economy comprised of smaller firms, fragmented workplaces, and insecure work arrangements demands bargaining scope be expanded to re‑aggregate workers across sectors or industries, and allow them to fairly bargain for pay increases and other improvements. By fixing wages across similar businesses, sectoral bargaining can also drive new employer incentives toward real productivity-enhancing investments (such as new technologies and workforce skills), rather than just reducing labour costs.
The ACTU observed that the impacts of the pandemic on insecure workers demonstrated that the need for collective bargaining is more urgent than ever:
Inclusion of all workers in a functional system of collective bargaining, that goes beyond the enterprise that happens to directly employ them, is not just a matter of economic power. It is a vital mechanism to ensure workers have control over the safety of their work, across sectors, industries, franchises, labour hire arrangements, supply chains—or however work is configured. While its precise shape requires much further consideration, for industry bargaining to be successful it must follow these three principles:
It must be universal: it must meet the needs of workers who have fallen through the gaps in the current system.
It must be accessible in that all workers, including labour hire and contractors, must be able to benefit.
It must give workers a real voice and restore their power to determine their living standards.
The Australian Institute of Employment Rights (AIER) recommended 'removing all hurdles in the Fair Work Act regime to bargaining beyond the single enterprise'.
Focus on marginalised and disadvantaged workers
A number of inquiry participants made suggestions directed towards boosting job security among cohorts of workers that face greater levels of disadvantage or marginalisation.
For instance, the Centre for Future Work highlighted the need to build skills and capability among disadvantaged workers, recommending:
… the provision of targeted skills programs and employment services to the groups of workers most likely to be recruited into precarious employment: displaced workers, young workers who can't break into conventional jobs, international migrants, students and others.
Some of the most significant suggestions are detailed below.
Increase women's participation and job security
According to Ms Kate Jenkins, Australia's Sex Discrimination Commissioner, as at August 2021:
The gender pay gap in Australia is 14.2%
At retirement age (60-64 years), 23% of women have no superannuation compared to 13% of men
There are 18 women CEOs across all ASX300 companies
Majority of Australian industries are gender segregated, with women dominating in the lower paid industries of healthcare and social assistance (79%) and education and training (73%)
1 in 3 workers in the previous 5 years had been sexually harassed
One woman a week is killed at the hands of current or former intimate partner.
Participants made a number of suggestions aimed at increasing women's participation and improving the quality and security of jobs form women.
The ACTU submitted that women were impacted more heavily by the pandemic because they 'hold jobs with less employment security'. Despite the 'absolute' rise in levels of women's employment over recent decades, a rise in job security 'has not followed suit':
… 57% of women workers experienced one or more forms of precarity in their work pre-COVID-19 with women more likely to be employed in reduced hours, casual, and temporary positions than men. Women's jobs are characterised by fewer and less predictable hours, and fewer standard entitlements like sick leave, long service leave, holidays and superannuation. Insecure work in the social and community services sector is also less likely to have access to redundancy entitlements.
National Foundation for Australian Women (NFAW) noted that, even before the pandemic 'upended' the Australian labour market, women's participation had been about 10 percentage points lower than men's, at just over 61 per cent, compared to the male participation rate of almost 71 per cent.
Ms Jenkins advocated broader measures to remove barriers that prevent women participating 'on an equal basis to men', and make women more likely to engage in insecure or precarious work. Strategies Ms Jenkins proposed were:
Eliminate discrimination in hiring and promotional practices in the formal economy
Implement measures that increase women's representation in male dominated industries and occupations, and vice versa, and
Improve women's representation in decision making and leadership roles
Dismantle gender-based stereotypes that confine women to the home and characterise men as breadwinners, and that contribute to occupational and industrial segregation
Recognise, reduce, and redistribute care work, including improving access to affordable and flexible early childhood education and care.
The NFAW recommended a number of 'systemic measures' to raise women's workforce participation and increase women's job security, saying:
The federal Government must take a lead in supporting the more equal division of paid work and unpaid care between women and men by:
legislating for stronger protections from sexual violence in work and strengthening the response by government in relation to its own parliamentary and public service workforces
legislating … to reduce the incidence of insecure work and better protect workers
developing campaigns to support families more equally share unpaid work
providing leadership to create stronger norms and culture of gender equality.
The federal Government should better focus federal budgets towards ameliorating women's greater workforce disadvantages.
The ACTU suggested a 'legislated positive duty to address gender inequality' could assist in inspiring organisations to reduce the use of insecure forms of work.
Reform tax and superannuation measures that disadvantage women
Inquiry participants suggested that a number of rules and measures in the tax and superannuation system disadvantage women and need to be reformed.
For instance, the $450 per month minimum threshold for superannuation guarantee payments means employers are exempt from making superannuation contributions for workers who earn below this threshold. The NFAW submitted that 63 per cent of these workers are women and described the exemption as 'anachronistic':
The exemption affects primarily low paid and casual employees, and it encourages employers to limit the hours offered to those employees to ensure that they remain below that threshold. This exemption has been in place since the introduction of the superannuation guarantee, and it predates the ability for current payroll technology to process small amounts cost effectively. This anachronism must be removed in the interests of fairness.
In relation to the 30-hour exemption, the NFAW reported that this exemption is used to avoid paying superannuation to disability and aged care workers engaged under the National Disability Insurance Scheme (NDIS) and Home Aged Care packages.
Where workers are engaged 'directly by the user'—without an employing agency acting as an intermediary—the NFAW said NDIS clients are 'actively advised' to use the 30-hour exemption in section 11(2) of the Superannuation Guarantee (Administration) Act (cth) for 'work that is wholly or principally of a domestic or private nature' by using 'multiple part time workers instead of one full time worker', which removes the obligation to pay super:
Although this does make administration easier for the client, and it makes the funding stretch further, this is at the expense of the long-term economic security of the worker.
The NFAW recommended that 'the $450 monthly earnings threshold for the superannuation guarantee should be repealed', and that:
The 30-hour exemption in s.11 (2) of the Superannuation Guarantee Administration Act for work that is wholly or principally of a domestic or private nature should be reduced to 10 hours per week.
Support migrants and refugees to find and maintain secure, high quality jobs
FECCA pointed out that, while migrants and refugees are 'some of the most educated, driven and entrepreneurial members of our society', many (especially newly-arrived migrants and refugees) face 'barriers to obtaining employment', including:
difficulties obtaining recognition of skills, qualifications and experience earned overseas
English language proficiency, including employer discrimination with regards to accent
experiences of discrimination, prejudice or racism
lack of networks for seeking and securing employment
limited familiarity with the Australian workforce, employment systems and culture
pre-migration experience, including experiences of torture and trauma.
These barriers can often mean migrants and others from culturally and/or linguistically diverse backgrounds 'find themselves in lower-skilled and low‑paid jobs'. One way of addressing this disadvantage would be for governments to 'to improve access to recognition of overseas qualifications' so migrants can 'work in their area of expertise'.
The committee thanks inquiry participants for these and the many other suggestions that were made over the course of the inquiry.
The committee's first, second and third interim reports have already addressed a number of areas in need of reform. While those areas have not received attention here, the committee notes that recommendations made in those reports are intimately connected with many of the matters discussed in this chapter.
The committee's concluding comments and final recommendations follow.