Trend towards labour hire eroding wages, conditions of WA jobs

If you feel like your wages have stagnated in recent times, chances are you’re not imagining things.

According to the wage price index, which is widely accepted as the best measure of wage growth, a record low rate of 1.9 per cent was recorded nationally in 2017. Last year wasn’t much better, recording a rate of 2.3 per cent.

Putting that in perspective, that rate is less than two-thirds of the average wage growth of 3.5 per cent-plus that was seen during the decade-and-a-half to 2013.

Industries that are experiencing forward momentum aren’t immune either. As commodity prices grow and mining projects ramp up across Australia, wages haven’t kept pace. Last year the industry recorded 1.8 per cent wage growth across the country, the second lowest rate of any industry nationally. Compare that with 2012, when industry wages were growing at rates above 5 per cent.

What has caused this slow down, especially in industries that have strong demand for skilled workers? Given groups like the CCIWA have argued WA is facing a skills shortage to sustain the current uptick in mining activity, shouldn’t wages naturally also be increasing?

We’ve previously talked about wage theft, a systematic issue seeing Australian employers underpaying their workers by more than $1 billion each year. That remains a serious problem and it will need stronger regulations and protections from the state and federal governments.

But another, more insidious trend has emerged as a driving force behind low wage growth and worse conditions for Australian workers: labour hire.

There has been a systemic and long-term trend towards decreasing the number of permanent, directly employed workers in favour of a casualised, less secure labour force.

According to the latest ABS estimate, about one-in-12 Australian workers is classed as an “independent” contractor but a significant portion of those people have no control about how they perform their work. One-in-25 of Australians now work for a labour hire company.

It’s not just a trend in the private sector. Since the change of federal government in 2013, 18 of the largest government departments more than doubled their spending on contracted labour while simultaneously introducing staffing caps and cutting 15,000 public service jobs.

While business likes to advocate that employees working in the labour hire sector have more freedom and flexibility, the truth is that these workers have less protections and oversight than direct-hire employees. This leaves these people more vulnerable to exploitation by employers.

It’s not just a matter of oversight either. Workers in the labour hire sector often earn hundreds of dollars less a week, with poorer conditions, than their directly employed counterparts. This creates a deflationary effect on wages and conditions across the board as directly employed labour become fearful of being replaced.

The insecure nature of the work also puts families under enormous strain. In addition to the reduced wages, those working in labour hire positions struggle to secure approval for a mortgage or other loans, depriving these families of an opportunity to build their future.

The net result of this trend over the decade has been the creation of an unfair disparity between direct-hire and labour hire workers. Collectively, business and government have effectively created a ‘second class’ of worker.

With a federal election around the corner, now is the time to be making the case to government and big business that we need to halt this trend and prevent the creation of a two-tier system for workers in this country.

There are some direct reforms we could enact now to help turn the tide, such as requiring that labour hire workers receive the same pay for the same work as direct employees, reducing the ability of employers to hire people as casuals for ongoing work, and a crackdown on companies utilising “independent” contractors who are for all intents and purposes employees of the company.

Perhaps most importantly, we need to expose just how far this practice has crept into WA workplaces. An inquiry into labour hire practices would go a long way to shining a light on the mining industry and other sectors that have been at the forefront of eroding wage growth and conditions for WA workers.

Whatever happens, we need to move quickly. Labour hire has been a defining trend of this decade. If we don’t address these issues now, it may become the norm for the next generation of WA workers.

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