Yahoo Finance Your rising job insecurity is a myth: Here’s why
Job security is a key topic in Australia, with concern that a rise in temporary jobs is forcing Aussie workers into less secure employment, with minimal paid leave entitlements.
The current government in Canberra has made this alleged ‘job insecurity’ a major part of its industrial relations reform agenda, introducing its landmark “Secure Jobs, Better Pay” bill to Parliament in October.
But, a new report from Melbourne Institute has cast doubt on the whole topic, with their data indicating that the percentage of Australians without paid leave entitlements has hardly changed since the late nineties.
Which raises the question, do we really have a problem with rising job insecurity in Australia?
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No evidence of increase in temporary hiring
Yahoo Finance spoke with Charles Cameron, CEO of recruitment industry body RCSA to get his views on the recent report.
“As the report suggests, the proportion of temporary on-hire workers – around 2.2 per cent of the workforce - has remained unchanged or even declined slightly over the last two decades,” Cameron said.
He goes on to add that RCSA’s member base, who are the recruitment agencies that service the demand for hiring contract and permanent workers across Australia, have seen little to validate the view that temporary employment has risen significantly in recent years.
Another form of employment which is reportedly increasing is ‘fixed-term contracts’, where employees are paid a salary and entitlements but have a defined end date rather than a permanent role.
Once again, Cameron points out the report suggests there is no evidence of this assumed rise.
“People on fixed-term contracts make up 3.1 per cent of all employed persons, a figure which has remained stable over time,” he said.
So, if the data suggests a rise in temporary employment isn’t actually occurring, why the need for the legislation?
A reduction in flexibility?
Although very few would argue against the principles of “secure jobs, better pay”, many business groups have raised concerns that the proposed legislation may lead to unintended consequences.
It’s a theme Cameron is keen to expand on.
“For the staffing industry, the big concerns in this legislation are around limitations to fixed term contracts,” he said, going on to explain that the new laws would force employers to offer permanent employment to fixed term employees after two years.
While this may be welcomed by those employees, it would significantly reduce flexibility in the labour market.
This is particularly problematic for the infrastructure sector, Cameron said, given this industry employs workers on a contract basis for large projects, which have a defined end date.
“Infrastructure projects often run beyond 24 months, while supply chain and other issues could legitimately see reason that projects get extended more than once,” he said.
Under the new legislation, employers in this sector would be obliged to offer permanent employment to workers who may not be needed at the end of the project.
This may result in fewer projects being undertaken, as employers would not want the financial burden of employing staff with no guarantee of having work for them when the project ends.
Even as we transition to more renewable energy sources going forward, the renewable energy sector will equally require major infrastructure projects to aid this transition.
Limiting workforce flexibility may hinder the ability of companies to deliver these.
What does all that mean for workers?
In Cameron's opinion, the legislation may not result in a positive outcome for many.
“Put simply, there is no evidence to support claims of growing job insecurity. This [legislation] is a solution without a problem, and it runs the risk of creating new ones,” he said.
With a slowing economy likely in the coming months as the full impact of interest rates filter through, the abundance of job opportunities we have been used to in recent times is likely to end.
Creating legislation that reduces workforce flexibility for employers in a potential economic downturn is unlikely to end well for Australian workers, despite its good intentions.
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