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The Victorian Government this week introduced a new scheme allowing casual workers in the state to claim sick pay in addition to their standard hourly pay rate.
The sick pay guarantee scheme, which is being introduced on an initial two-year trial basis, will provide five days, or 38 hours, of paid sick or carers leave for workers, at the national minimum wage.
Yet a key industry body has labelled the scheme “a tax on business” at a time when the Victorian economy is still recovering from COVID lockdowns.
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Due to the nature of the employment market, the biggest employers of casual workers in Australia are labour hire firms, who then sub-contract these skills to their clients.
The industry body representing many of these companies – RCSA – has expressed concern about the impact the scheme will have on its members, and the broader Victorian labour market.
Yahoo Finance spoke to RCSA chief executive Charles Cameron to clarify his reservations.
“We have serious concerns about a policy that requires employers to double-fund sick and carers leave for casual employees” said Cameron, before going on to explain that current casual rates were calculated to include sick pay provisions already.
The first phase of the scheme is targeted at industries with large cohorts of casual workers, including:
Food trades workers and food preparation assistants
Retail and sales assistants
Aged and disability care workers
Cleaners and laundry workers
Although not an exhaustive list of industries that employ casual labour in Victoria – many white-collar industries, for example, are not included in the legislation – the state government estimates this initial phase will apply to more than 150,000 Victorians.
Victorian business still recovering
An additional concern for the industry is how this legislation is likely to affect the broader employment market in Victoria.
The RCSA believes Labour hire firms will be forced to pass on these additional costs to their clients, due to their current cost structures being unable to accommodate the increased employment provisions.
Cameron said this could not come at a worse time for many businesses in Victoria, who were still reeling from the impacts of the extended lockdown.
“Now, more than ever, they need access to a workforce that can help them flex up, down and across to pivot in line with new business opportunities” he said.
The worry is that increasing the cost of employing casual workers for Victorian businesses may mean many are unable to afford this option, thus reducing the number of opportunities available.
Is there an alternative?
One of the main reasons for the introduction of the scheme was to prevent casual workers feeling they couldn’t afford to miss work when sick – an issue during Victoria’s COVID lockdowns.
As Yahoo Finance reported during the peak of COVID lockdown back in August last year, this policy seemed like a ‘no-brainer’ at the time.
However, subsequent consultation with industry (of which RCSA was included) didn’t seem to have considered the potential costs to business, just as many were seeking to recover.
Part of the issue is that many casual workers may not realise their sick pay component is already included in their hourly rate, therefore failing to put aside this money for when they fall ill.
Cameron concedes this may be a problem, welcoming additional discussions to set a clearer structure going forward.
“If the Victorian government wish to make changes to the way casual employees access their existing paid sick and carers leave entitlements, there are many solutions that could be developed collaboratively with employers, “ he said.
Although the legislation is only applicable in Victoria at present – and only within certain industries – it’s clear other states will be watching with interest on how the scheme impacts the local labour market.
Judging by the response from industry, the potential risk to businesses is real.
As a result, it seems further discussions and alternatives need to be explored before Australia commits to such a policy on a nationwide basis.