Money Finance News Precarious living just ain’t what it used to be

Precarious living just ain’t what it used to be

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Jobs minister Michaelia Cash wants to 'keep Australia working', but at what hourly rate?
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The federal opposition finds itself in an awkward position going into 2018 thanks to the union movement’s campaign to ‘convert’ casual workers into permanent employees.

Peak union body, the Australian Council of Trade Unions, said on Wednesday that it wants a much clearer definition in the Fair Work Act of what constitutes a ‘casual’ worker, plus a defined six-month period after which a casual must be offered permanent status by an employer.

The problem is, the ACTU is drawing a confusing line between precariously employed casuals earning 15 to 25 per cent loadings on normal award rates, and “fake casual” contractors or gig-economy workers who can end up working for much lower rates.

“Fake” casuals, as ACTU secretary Sally McManus put it on Wednesday, are told by employers “to go and get an ABN number when they’re actually permanent workers … just to reduce their wages and conditions”.

The non-fake casuals, by contrast, have been a constant feature of the Australian workforce since the early 1990s, representing a remarkably steady one in five jobs, as academics Mark Wooden and Sue Richardson showed last year.

Shadow Employment Minister Brendan O’Connor knows that, hence the awkwardness of trying to craft a message around ‘fake’ casuals, without openly contradicting the ACTU on actual casuals.

Mr O’Connor said on Thursday: “There are people who would want to work in casual work, that’s true. But too often people are working without any minimum hours, they are not able to get a home loan or a car loan because the banks won’t give them a loan because they don’t have any certainty of employment.”

But will the guaranteed offer of a permanent job appeal to many of those workers?

History suggests not. During the mining boom of the mid-2000s, Australia had labour shortages in both the mines and in city jobs vacated by workers heading to the mines – and yet the rate of casual employment didn’t budge at all.

The bigger picture

Meanwhile, the Turnbull government would rather not debate the issue at all, especially while incoming jobs minister Michaelia Cash is busy rebranding its ‘jobs and growth’ strategy with the phrase ‘let’s keep Australia working’.

After strong jobs growth in 2017, most of them full-time roles, the last thing the government wants to discuss is the paradoxical problem of flat-lining wages.

But the ‘fake’ side of casualisation is a big part of that paradox, because gig-economy workers and ABN-wielding independent contractors are substantially undermining Australia’s ‘modern awards’ and ‘enterprise bargaining’ wage setting mechanisms.

As Council of Small Business chief executive Peter Strong has told me many times over the years, “when you run your own business there is no minimum wage”.

Neither Labor nor the unions can, or should want to, stop the owner of a corner deli putting in as many hours as they need to in order to break even.

That’s because there is no exploitation or power-imbalance between the worker and employer if they are the same person.

Things are quite different, however, when an individual is part of the gig economy bidding for work online.

As Mr O’Connor notes: “We are seeing digital platforms selling labour … people are being paid in some instances half the minimum wage per hour because of those digital platforms.”

This is one reason the ‘total weekly earnings’, averaged across male and female workers and converted to 2017 dollars in the chart below, has been flat-lining for four years.

 

Every gig-economy worker or independent contractor that puts in 12 hour days for the equivalent of six hours’ pay has two important effects on the labour market.

Firstly, their ‘client’ is getting double the bang for their buck, and therefore is strongly incentivised to find more such contractors.

Secondly, the worker disappears from unemployment figures and props up the ‘hours worked’ figures, giving a false impression of how many people in Australia have escaped the curse of under-employment.

If Labor has any sense, it will see the bigger threat is not the steady 20 per cent of workers with casual jobs, but the ‘fake casualisation’ eating at the very heart of Australia’s wage-setting system.

That is where the ‘living wage’ is most under threat, and that’s where its policy-making firepower should really be focused.

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