31 May 2024
PDF version [1.1 MB]
Geoff Gilfillan
Statistics and Mapping
Executive
summary
There has been some debate over the past 2 decades as
to whether Australian businesses and organisations in the public sector have
increasingly been resorting to the use of labour hire workers and contract
workers to meet their labour needs rather than employing workers directly.
This paper seeks to shed light on trends in the use of
labour hire and contract workers in Australia to satisfy employer demand for
labour, as well as the characteristics of these types of workers.
The data shows labour hire arrangements have been a
feature of the Australian economy for several decades, but they account for a
relatively small and stable percentage of the workforce.
Labour hire workers are defined as employees that
found their current job through a labour hire firm or employment agency and
are paid by the labour hire firm/employment agency.
Australian Bureau of Statistics (ABS) Labour
Account data shows 327,100 people were working in the Labour supply
services industry in June 2023.[1]
These workers accounted for 2.3% of all employed people.[2]
Note that this estimate includes workers on-hired to other businesses and
organisations as well as employees engaged in administrative, managerial and
support roles for labour hire firms in the process of engaging and supplying
labour hire workers. It is not possible to disaggregate those working in
supportive administrative roles from those who are on-hired.
Labour hire workers peaked at 354,700 in March 2020 and then
fell by 48,000 or 13.5% through to June 2020 resulting from lockdowns imposed
to limit the spread of COVID-19.
ABS data reveals casual employees suffered the most in terms
of job loss after the imposition of COVID-19 lockdowns, and job recovery since
was slower for these employees after the economy re-opened.[3]
Labour hire employees are much more likely to be employed on
a casual basis than other employees.
- Around
83.6% of labour hire employees did not have access to paid leave entitlements
in August 2022 compared with 23.4% of all employees.
Labour hire workers are
disadvantaged by the lack of certainty and reliability regarding current and
future earnings and hours of work. But they appear to be relatively secure in
terms of their perceptions about keeping their job.
- Around
43.4% of labour hire workers reported in August 2022 they experienced variable
earnings from week to week (compared with 24.3% of all employees); 28.6% worked
irregular hours from week to week (compared with 20.4% of all employees); and
43.8% were not guaranteed a minimum number of hours each week (compared with
20.6% of all employees).
Just under 81% of labour hire employees expected to be with
the same employer in their main job in 12 months (compared with just over 90%
of all employees). Of those who did not expect to be with their current
employer in 12 months well over a half reported personal reasons for leaving
and none expected to be retrenched in the coming year.
Employees on fixed-term contracts
An employee on a fixed-term contract is engaged in
employment that will be terminated on a particular date or after an event (such
as the completion of a project). There were 345,400 employees engaged on a
fixed-term contract working in August 2023, accounting for 2.9% of all
employees (down from a 4.1% share in August 2016).
Just under 80% of employees on fixed-term contracts expected
to be with their current employer in 12 months. This finding suggests many
expect to roll over on to a new contract with their current employer once their
current contract expires.
Public sector agencies are much more likely to employ people
on fixed-term contracts than their private sector counterparts. The fixed-term
contract employee share of total employment was almost 5 times higher in the
public sector (9.2%) compared with the private sector (1.8%) in August 2022.
Independent contractors
An independent contractor operates their own business and is
contracted to perform services for others without having the legal status of an
employee. They are also characterised as having a high level of control over
the work they perform, including their hours of work, work location and how
they do the work.
ABS data shows of the just over 1.1 million independent
contractors working in Australia in August 2022, around 429,700 (or 38.4%)
reported they did not have authority over their own work. This finding
suggests that many workers classified as independent contractors may be closer
to employees in terms of lack of authority over the work they perform, but do
not enjoy the same legal status or protections as other employees.
In the 12 months to August 2023, the number of independent
contractors fell by 70,600 or 6.3% across Australia to 1,048,900. This
coincided with a fall in the independent contractor share of total employment
from 8.2% to 7.5%. The construction industry accounted for the largest share of
all independent contractors in August 2023 at 278,100 or a 26.5% share.
Contents
Executive
summary
Background
Why do employers use labour hire and
contract workers?
Sources of data used in this paper
Employees on fixed-term contracts
Independent contractors
Conclusion
Appendix
Background
The Australian labour market and economy has undergone
substantial structural change over the past 40 years, including the emergence
and strong growth of a range of service industries. This change has driven
employer demand for different occupational skills and more flexible forms of
employment to produce the goods and services demanded by consumers in a modern
Australian economy.
Different forms of employment – often described as
non-standard employment – have emerged as hiring options for employers. The
International Labour Organization (ILO) refers to non-standard work as:
… an umbrella term for different employment
arrangements that deviate from standard employment. They include temporary
employment [or fixed-term contracts]; part-time and on-call work; temporary
agency work and other multiparty employment relationships [or labour hire]; as
well as disguised employment and dependent self-employment.[4]
Note that the ILO does not include casual employment in its
discussion of non-standard employment as this form of employment is almost
unique to Australia. In several OECD countries there is evidence of the increasing
use of ‘on-call’ contract workers, ‘short part-time' workers and ‘zero-hour’
contracts (where there are no guaranteed hours of work).[5]
These types of workers could be considered similar to casual employees, but
their tenure is predominantly temporary.
In contrast casual workers in Australia can be with the same
employer for several hours, days, months or years. One ABS data source showed in
February 2021, 58% of casual workers in Australia had been with their current
employer for over 12 months and 27% had been with their current employer for 3
years or more.[6]
In other words the employment relationship is not necessarily temporary. This
phenomenon has contributed to the coining of the concept of the term “permanent
casuals” in Australia[7],
whereby casual workers continue to work for the same employer but have less
certainty about the length and timing of future hours and earnings, along with
the lack of access to paid leave entitlements.
The ILO has cautioned firms against becoming too dependent
on the use of non-standard employment (NSE) which they claim can have negative
impacts on their own economic performance.
An over-reliance on NSE can lead
to a gradual erosion of firm-specific skills in the organization, limiting its
ability to respond to changing market demand. While there may be some
short-term cost and flexibility gains from using NSE, in the long run, these
may be outweighed by productivity losses. There is evidence that firms that use
NSE more, tend to underinvest in training, both for temporary and permanent
employees, as well as in productivity-enhancing technologies and innovation.[8]
The ILO has highlighted potential risks to workers engaged
in non-standard employment including the increased likelihood of job
insecurity, lower relative earnings for these workers, irregular and uncertain
hours of work and its negative implication for having a satisfactory work/life
balance. The ILO also emphasised the increased possibility of workplace
accidents due to poor induction and training.[9]
Why do employers use labour hire and contract workers?
By recruiting labour hire workers, employers can avoid or
transfer the responsibility for providing leave and other employee
entitlements. From an employer’s perspective these arrangements provide
flexibility by facilitating short-term hiring during periods of increased
business activity and circumvents the need to retain workers during periods of
more subdued activity.
From an employee’s perspective labour hire and contract work
provides opportunities for people to get a foothold in the labour market which
may not be available under a more rigid regulated labour market. However,
growth in labour hire employment may also contribute to more people becoming
dependent upon more precarious and irregular forms of employment given most
labour hire workers do not have access to paid leave arrangements and have less
certainty about their future hours of work.
Sources of data used in this paper
Different data sources have been used to understand how many
labour hire and contract workers there are in Australia, their characteristics,
conditions of employment and relative job stability. The sources are summarised
in the table below.
Table 1 Summary of data sources used to measure extent
and characteristics of labour hire and contract work
| Data source |
Data attributes
and disadvantages |
| ABS, Labour
Account |
The best source of
data for industry employment and jobs including the size of the Labour supply
services sector. No data is available on demographic characteristics of
employees. |
| ABS, Characteristics
of Employment (COE) |
The best source of
data for demographic characteristics of labour hire workers and contract
workers as well as their pay, working conditions and job stability. Questions
on labour hire are asked in the supplementary Labour
Force survey at two yearly intervals. |
| ABS, Jobs
in Australia (JIA) |
Uses data from the
Australian Taxation Office and the Linked Employer-Employee Dataset (LEED) to
understand characteristics of people in jobs as well as the number of jobs
generated by labour hire companies and employment agencies over a 12-month
period.[10] |
Definition of labour hire
employees
Labour
hire employees are defined by the ABS as people who ‘found their job through a
labour hire firm/employment agency and are paid by the labour hire
firm/employment agency’.[11]
For a more detailed definition of labour hire workers see the Appendix.
Labour hire firms and agencies undertake the screening,
selection, and placement of people and engage in the supply of their own
employees to employers for a specified period at a contracted price. The labour
hire firm pays the individual employee (the labour hire worker) their wage or
salary. Labour hire workers are employees of a labour hire firm, rather than
the firm that they are on-hired to. In a labour hire employment arrangement,
there is no direct employment or contractual relationship between the host and
the labour hire worker. Instead, the worker is engaged by the labour hire
agency, either as an employee or as an independent contractor.[12]
Trends in use of labour hire employees
The primary source for estimates of
labour hire employees used until recently was the ABS Characteristics
of Employment (COE) data series, which is conducted as a supplementary
survey to the Labour Force survey in August of each year.
There has been some conjecture as to whether responses to
the ABS Labour Force survey captures all people working in the labour hire
industry. The accuracy of these estimates is contingent upon household survey
respondents understanding whether they, or another member of the household, are
an employee of the labour hire firm or employment agency and are paid by them,
rather than the firm or organisation they are on-hired to (also known as the
host company).[13]
For example, household survey participants may respond that they or another
household member, work in the industry sector they are on-hired to (such as
manufacturing or mining) rather than the industry status of the labour hire
firm they are paid by (which is the Labour supply services sector in the
Administrative Services industry).
The possible under-reporting of numbers of labour hire
employees was discussed in the 2022 report of the Senate Select Committee on
Job Security.
ABS data on labour hire is confusing at
best—misleading at worst. Survey report after survey report—correctly cited—allows commentators to argue that labour hire and temporary
third-party employment are not increasing in Australia. All the while, the
industry grows, increasing in size and value, and reporting more and more jobs
in its industry-level data.[14]
In the report the Senate Committee recommended:
… the Australian Government provides funding and support to
the Australian Bureau of Statistics (ABS) to enable the ABS to reconcile
information from the Characteristics of Employment, Labour Account, and Jobs in
Australia releases in order to provide clearer and more coherent information on
labour hire employment in Australia.[15]
This recommendation contributed to the publication of new
estimates for labour hire workers using data from the ABS Labour Account
which were first published in December 2022, and later updated in September
2023.[16]
Number of people working for Labour supply services
The number of people working in the Labour supply services
industry sector is used by the ABS as a proxy for the number of labour hire
employees in Australia. According to the ABS:
Labour supply services are characterised by business units
mainly engaged in supplying their own employees to other businesses on a fee or
contract basis i.e. where assignments are mainly on a temporary or short-term
basis and performed under the supervision of staff of the business they are
on-hired to.[17]
While labour hire workers are classified as being employed
in the Labour supply services industry, not all people working in Labour supply
services are labour hire workers. The industry sector also employs people that
are engaged in administrative, managerial and support roles associated with
supplying labour hire workers to other businesses. These workers cannot be
separately identified in the data. Consequently, the estimates may overstate
the number of ‘true’ labour hire workers who are on-hired to businesses and
other organisations. But it is unclear by how much.
The ABS publishes one digit and 2-digit Australia and New
Zealand Standard Industrial Classification (ANZSIC) employment estimates on a
quarterly basis in its Labour
Account series. These are much broader and higher-level classifications for
industries which don’t reveal employment estimates for on-hired workers
employed by labour hire companies.
Following the request from the Senate committee, the ABS
drilled down further into available data sources to get information on
employment for the 4-digit (7212) industry class of Labour supply services using
a combination of Labour Account and Jobs
in Australia data to produce estimates for the sector back to November
1994. The Labour supply services sector sits under the 2-digit Administrative
Services (72) industry subdivision which in turn sits under the 1-digit
Administrative and Support Services industry division.[18]
This data source provides a more useful and more reliable
longer term data series for numbers of labour hire workers than estimates
available from COE.[19]
Labour Account estimates draw on several separate ABS data sources including
the Australian
National Accounts, Quarterly Business Indicators Survey QBIS), Economic
Activity Survey (EAS), Public Sector Employment and Earnings (PSEE), the Labour
Force Survey (LFS), the Survey of Employee Earnings and Hours (EEH) and the
Linked Employer-Employee Database (LEED).[20]
The inclusion of business survey information in particular enables more
accurate and robust estimates of labour hire workers.
Note that employment estimates for the Labour supply
services sector are not published quarterly as part of the regular release of
Labour Account data. The ABS releases new estimates as part of its Labour
hire workers updates as soon as practicable after the release of new COE
data and Labour Account estimates for the June quarter.
Employment in Labour supply services grew steadily from
89,400 in September 1994 to a peak of 354,700 in March 2020 – just before the
outbreak of COVID-19 (see Figure 1).
Employment in the sector subsequently fell by 48,000 or
13.5% to 306,700 in the 3 months to June 2020, after the imposition of
lockdowns introduced by governments to combat the spread of COVID-19. The
number of labour hire workers has recovered slightly in the 3 years since – up
20,400 or 6.7% to 327,100 in June 2023 (see Figure 1). By comparison,
employment across the whole economy grew by 1.8 million or 14.3% in the 3 years
to June 2023 (in original terms).[21]
Figure 1 Number of workers employed in Labour supply
services, 1994 to 2023
Source:
Australian Bureau of Statistics (ABS), Labour Hire Workers (Canberra: ABS, June 2023), Table 1.
The Labour supply services sector share of total employment
in Australia steadily increased from 1.1% in September 1994 to a peak of 2.7%
in March 2018, and was last recorded at 2.3% in June 2023 (see Figure 2).
Figure 2 Labour supply services employment share of
total employment, 1994 to 2023
Source: Australian Bureau of
Statistics (ABS), Labour Hire Workers (Canberra: ABS, June 2023), Table 1.
Characteristics of labour hire workers
To get information about the characteristics of labour hire
workers we have drawn on the ABS Characteristics
of Employment (COE) survey data as well as the ABS Jobs
in Australia (JIA) data series. Data for characteristics of labour hire
workers from COE are available at 2-yearly intervals, with the most recent data
being August 2022.
COE was considered by the ABS to be one of the most useful
data sources for demographic characteristics and working conditions of labour
hire workers. Note that to avoid confusion with labour hire employee estimates
available from the Labour Account data series emphasis has been made on the
percentage of labour hire workers exhibiting demographic characteristics,
working arrangements and indicators of job stability rather than numbers of
workers.
Not all people who found their current job through a labour
hire company or employment agency are paid by them. Of employees who reported
finding their current main job through a labour hire firm or employment agency
in August 2022, 24.1% were paid by the labour hire firm or agency and the
remaining 75.9% were not paid by the labour hire firm or employment
agency (in their main job).[22]
It is the former group that we concentrate on in this report.
Demographic characteristics
The ABS COE data series shows just under two thirds (63.5%)
of labour hire workers in August 2022 were men, which compares with a male 50%
share of all employees. The data also shows 45.1% of labour hire employees were
under the age of 35 years, which compares with this age group’s 41.1% share of
all employees. Just under half (49.7%) of labour hire workers were born
overseas. By comparison just under a third (33.1%) of all Australian employees
were overseas born.[23]
The ABS Jobs in Australia (JIA) data series shows 689,500
Australians were employed in the Labour supply services sector at some point
over the 12 months of 2020–21. This compares with 680,000 in 2019–20 and
476,400 in 2012–13.[24]
Note that these are not point-in-time estimates such as those provided in the
Labour Account. People could have held a job with a labour hire company at any
point during the year and jobs could be held for a day, several days or months.
A person may have several jobs throughout the year with one or many labour hire
companies, some of which may be held concurrently with others.
Around 62.0% of people who held a job in Labour supply
services at some point over 2020‑21 were men and 34.9% were aged between
20 and 29 years. By comparison 21.2% of all employed people in Australia were
in this younger age group.
Prevalence of casual employment among labour hire workers
and indicators of job stability and security
COE data showed in August 2022 labour hire employees were:
- much
more likely to be casual employees with 83.6% of employees paid by a labour
hire firm or employment agency not having access to paid leave entitlements
compared with 23.4% of all employees. The casual share of all labour hire
employees has ranged between 80% and just over 84% since November 2008.
- much
more likely to have had a short tenure with their current employer than other
employees. Around 62.6% of labour hire employees reported they had been with
their current employer for less than one year compared with 26.0% of all
employees.
- slightly
less likely than all employees to expect they would still be working with their
current employer their main job in 12 months – at 80.6% compared with 89.2% of
all employees.[25]
Of the 19.4% of labour hire workers who reported they would
not be with their current employer in 12 months:
- 56.3%
cited personal reasons for leaving
- 27.6%
reported that their job was seasonal, temporary or a fixed-term contract
appointment
- 9.9%
reported that they were in a casual job that was expected to end
- 6.1%
expected their job to end for other reasons.
- None
of those labour hire workers expecting their job with their current employer to
end in 12 months reported economic reasons (such as being stood down or insufficient
work being available).
Labour hire workers are more likely to work full-time hours
than other employees. In total around 81% of labour hire workers in August 2022
were working full-time hours whereas 69% of all employees worked full-time.
Around 82% of labour hire workers working full-time hours in August 2022 did
not have access to paid leave entitlements (i.e. they were casual employees).
Despite the high prevalence of full-time work among labour
hire employees there is evidence of underemployment (or workers wanting more
hours of work). This was due to a combination of people who normally work
full-time hours not getting the number of hours they wanted in the week of the
survey and people who normally worked part-time reporting they wanted more
hours of work.
Around 18.0% of labour hire employees reported they
preferred more hours of work in August 2022 compared with 10.4% of all
employees. Of those labour hire workers who reported they were underemployed in
August 2022, 35.8% were full-time workers who worked part-time hours for
economic reasons in the survey week, and the remaining 64.2% were underemployed
part-time workers who wanted more hours and were available to work more hours.
In terms of relative job stability:
- 43.4%
of labour hire workers experienced variable earnings (i.e. varied from week to
week due to irregular hours) in August 2022 (compared with 24.3% of all
employees)
- 28.6%
of labour hire workers experienced irregular hours from week to week (compared
with 20.4% of all employees)
- 43.8%
of labour hire workers were not guaranteed a minimum number of hours per week
(compared with 20.6% of all employees) (See Figure 3).
Figure 3 Relative job instability of labour hire
workers compared with all employees, June 2023
Source: Australian Bureau of
Statistics (ABS), Labour hire workers (Canberra: ABS, June 2023), Table 3.
The results are consistent with outcomes previously observed
for all casual employees.[26]
The data shows that while labour hire workers have much less
certainty about their hours of work, and consequently earnings from week to
week, their perceptions of job security in the future are not that much
different to other employees, with 80.6% expecting to be with the same employer
in 12 months, compared with 89.2% of all employees.
Occupational profile of labour hire workers
Labour hire workers are engaged in a wide range of
occupations. Data from the ABS COE publication show Machinery operators and
drivers accounted for the largest share of labour hire employees in August 2022
(at 33,000 or 23.2%), followed by Labourers (25,100 or 17.6%), Professionals
(24,800 or 17.4%), Clerical and administrative staff (22,200 or 15.6%) and
Technicians and trades workers (19,600 or 13.7%) .
Drilling down further shows labour hire workers were more
likely to be Storepersons (15,300), Information and Communication Technology
(ICT) Professionals (11,800), Factory process workers (10,300), Carers and
aides (8,700), Road and rail drivers (8,700) and Automotive and engineering
trades workers (7,500).
Around 40.8% of labour hire workers were either machinery
operators, drivers or labourers whereas these occupations accounted for just
over a quarter (25.8%) of employees that weren’t paid by labour hire firms or
employment agencies (see Table 2).
Table 2 Occupation of employees paid by a labour hire
firm or employment agency, August 2022
| Occupation group |
Paid by a labour
hire or employment agency |
Not paid by a
labour hire or employment agency |
| % of total |
% of total |
| Managers |
4.0 |
12.1 |
| Professionals |
17.4 |
23.2 |
| Technicians and trades workers |
13.7 |
9.9 |
| Community and personal service workers |
7.7 |
5.7 |
| Clerical and administrative workers |
15.6 |
18.7 |
| Sales workers |
0.9 |
4.5 |
| Machinery operators and drivers |
23.2 |
14.2 |
| Labourers |
17.6 |
11.6 |
| Total |
100.0 |
100.0 |
Source: Australian Bureau of
Statistics (ABS), Labour Hire workers (Canberra: ABS, June 2022), Table 3.
Industry profile of labour hire employees
Information is also available from the ABS COE survey on the
industry of employees who found their current job through—and were paid by—a
labour hire firm or employment agency. However, the ABS has not published these
industry estimates in its data releases on characteristics of labour hire
workers.
While labour hire employees are paid by firms that are
classified by the ABS as being part of the Labour supply services sector,
respondents provided a variety of responses to the supplementary Labour Force
survey question on industry of main job. This suggests that many on-hired
workers considered themselves to be working in another industry rather than the
industry classification for labour hire companies. The industry chosen by
respondents is most probably the industry of the firm they were currently on-hired
to at the time of the survey. Given this confusion, the ABS could consider
asking additional survey questions in future on the nature of work that labour
hire workers are involved in with the firms they are on-hired to, including the
types of industries where they work.
Earnings of labour hire employees
ABS data shows more highly skilled labour hire employees
tend to earn much more on an hourly basis than other employees in the same
occupation groupings. For example, labour hire employees working in
professional occupations recorded median hourly earnings of $75.30 in August
2022 which compared with $55.20 per hour for other professional employees (see
Table 3).
In contrast Technicians and trades workers that were labour
hire employees were paid slightly less per hour than tradespersons that weren’t
labour hire employees ($36.10 per hour compared to $40.00). The discrepancy in median hourly earnings
is much smaller for other occupational groupings with a small wage premium
recorded for labour hire employees that were Community and personal workers
($30.20 per hour compared with $29.70 per hour for other employees in the
occupation). A wage penalty was recorded for Clerical and administrative
workers employed by labour hire companies and employment agencies (at $33.60
per hour compared with $38.10 per hour for other employees), and virtual wage
parity was recorded for Machinery operators and drivers (at $31.50 per hour
compared with $31.60 per hour for other employees).
Negative wage relativity outcomes for some occupation
groupings are evident despite casual labour hire workers being entitled to a
loading on top of their normal wage rate. This loading is usually set at around
25% in awards and agreements on top of the hourly wage rate to compensate for
lack of access to paid leave entitlements.[27]
As observed earlier, labour hire workers are much more likely to be casual
workers than other employees. The differences in median hourly wage rates could
also reflect differences in skills and experience of labour hire employees in
the occupation compared with other employees in the occupation.
Table 3 Median hourly earnings of employees by
selected occupation of main job, August 2022
| Occupation grouping |
Paid by a labour
hire firm or employment agency |
Other employees -
not paid by a labour hire firm or employment agency |
| Median hourly
earnings ($) |
| Professionals |
75.30 |
55.20 |
| ICT Professionals |
61.30 |
64.10 |
| Technicians and Trades Workers |
36.10 |
40.00 |
| Automotive and Engineering Trades Workers |
45.30 |
40.00 |
| Community and Personal Service Workers |
30.20 |
29.70 |
| Carers and Aides |
28.90 |
31.00 |
| Clerical and Administrative Workers |
33.60 |
38.10 |
| Machinery Operators and Drivers |
31.50 |
31.60 |
| Mobile Plant Operators |
26.80 |
28.40 |
| Road and Rail Drivers |
34.80 |
32.00 |
| Storepersons |
32.40 |
30.10 |
| Labourers |
30.00 |
29.00 |
Source: Australian Bureau of
Statistics (ABS), Labour hire workers (Canberra: ABS, June 2023), Table 3.
Note: Managers have been
excluded from the table due to the very small numbers that are labour hire
employees and associated high Relative Standard Errors recorded for hourly wage
estimates.
An audit of 63 labour hire firms conducted by the Australian
Building and Construction Commission (ABCC) in 2019 found a very high level of
non-compliance among employers in terms of providing correct monetary
entitlements to their workers and maintaining appropriate record keeping and
pay slip provisions (required under the Fair Work Act). Just under 80% of
labour hire firms audited were found to be non-compliant. The ABCC found just
under two thirds of those labour hire firms which were non-compliant had failed
to pay the correct allowances, overtime or penalties to their on-hired workers
that applied through relevant awards or enterprise agreements. Furthermore, 48%
of non-compliant employers contravened the record keeping and/or pay slip
provisions of the Fair Work Act.[28]
There have been several examples of incorrect payment of
labour hire workers being settled in courts. For example, a $106,430.63 court
penalty was imposed against a labour-hire company after it underpaid dozens of
vulnerable visa holders working on farms in Far North Queensland. The Federal
Circuit and Family Court imposed the penalty against NQ Powertrain Pty Ltd
after it admitted breaching workplace laws by underpaying 87 visa holders a
total of $49,933 between December 2018 and May 2020. The company made
deductions from the workers’ wages for accommodation and transport costs that
exceeded the maximum lawfully allowable and underpaid their entitlements under
the Horticulture Award 2010. The workers were from Pacific Island countries
including Papua New Guinea, Vanuatu, and the Solomon Islands.[29]
Employees on fixed-term contracts
Definition of employees on fixed-term contracts
Employees on fixed-term contracts are estimated by the ABS
from positive survey responses to the following 2 questions:
- Does
your employment have a set finishing date or event? (YES)
- If
your employment does have a set finishing date or event, is it because you are
working on a fixed-term contract? (YES)
Trends in the use of employees on fixed-term contracts
Using this definition there were 345,400 employees on a
fixed-term contract working in Australia in August 2023 who accounted for 2.9%
of all employees. This compares with 4.1% in August 2016 (see Table 4).
Table 4 Number of employees on a fixed-term contract
in Australia, 2014 to 2023
| August of each year |
Fixed-term
contract employees (‘000) |
Employees not on
fixed-term contracts (‘000) |
Total employees
(‘000) |
Fixed-term
employee share of total employees (%) |
| 2015 |
383.5 |
9,318.0 |
9,701.4 |
4.0 |
| 2016 |
405.4 |
9,499.7 |
9,905.1 |
4.1 |
| 2017 |
399.9 |
9,737.5 |
10,137.4 |
3.9 |
| 2018 |
406.6 |
10,077.1 |
10,483.7 |
3.9 |
| 2019 |
389.3 |
10,312.2 |
10,701.5 |
3.6 |
| 2020 |
411.5 |
10,026.0 |
10,437.5 |
3.9 |
| 2021 |
401.0 |
10,322.1 |
10,723.1 |
3.7 |
| 2022 |
389.7 |
11,074.8 |
11,464.6 |
3.4 |
| 2023 |
345.4 |
11,502.6 |
11,848.0 |
2.9 |
Source: Australian Bureau of
Statistics (ABS), Working Arrangements (Canberra: ABS, August 2023), Data 6.
Private and public sector use of employees on fixed-term
contracts
Public sector employers are more likely to employ people on
fixed-term contracts than employers in the private sector. The fixed-term
contract employee share of total employment was almost 5 times higher in the
public sector (9.2%) compared with the private sector (1.8%) in August 2022
(see Table 5). The fixed-term employee share of total employees in the public
sector was higher at 11.2% in August 2016.
Employees on fixed-term contracts in the public sector
accounted for 45.3% of all employees on fixed-term contracts in August 2022.
This compares with the public sector employee share of all employees which
stood at 14.1%. The employees on fixed-term contract share of total employment
in Australia has been just below or just above 3% between 2014 and 2022.
Note that the data for public sector employees includes
people who were employed by the Commonwealth government, state and territory
governments and local governments. A high proportion of teachers and registered
nurses are employed in the public sector and many are on fixed-term contracts.
Table 5 Number of employees on fixed-term contracts by
sector, every 2 years between 2014 and 2022
|
|
Aug 14 |
Aug 16 |
Aug 18 |
Aug 20 |
Aug 22 |
| Sector (‘000) |
|
| Public |
140.5 |
178.6 |
181.5 |
194.3 |
176.1 |
| Private |
215.6 |
225.9 |
226.8 |
219.8 |
213.0 |
| Total |
354.7 |
406.9 |
408.3 |
414.1 |
389.1 |
| Share of total employment in sector |
% |
| Public |
9.7 |
11.2 |
11.0 |
10.0 |
9.2 |
| Private |
2.1 |
2.2 |
2.1 |
2.1 |
1.8 |
| Total |
3.1 |
3.4 |
3.2 |
3.3 |
2.9 |
Source: Australian Bureau of
Statistics (ABS), Working Arrangements (Canberra: ABS, August 2023) using TableBuilder.
Note: Estimates for Public
and Private may not add up to the Total due to rounding. The totals shown in
Tabe 5 differ slightly to those shown in Table 4 for the years shown.
An alternative data source for use of employees on
fixed-term contracts in the public sector is the Australian
Public Service Commission. This source shows there were around 11,500
employees in the Australian Public Service (APS) who had a contract to complete
a specific task or for a specific term in June 2023. This group accounted for 6.8% of all APS employees – up from 7,200 or a 4.7% share in June 2014 (see Table 6).
Table 6 Australian Public Service (APS) employees by
contract type, 2004 to 2023
| |
Permanent Ongoing |
Total on contracts |
Non-ongoing —
Casual |
Total employees |
Non ongoing casual
share of total (%) |
Contract employee
share of total (%) |
| 2005 |
123,373 |
8,532 |
1,482 |
133,387 |
1.1 |
6.4 |
| 2010 |
150,442 |
9,519 |
3,831 |
163,792 |
2.3 |
5.8 |
| 2015 |
136,536 |
7,212 |
8,492 |
152,240 |
5.6 |
4.7 |
| 2020 |
132,249 |
7,703 |
10,423 |
150,375 |
6.9 |
5.1 |
| 2021 |
133,962 |
11,408 |
8,272 |
153,642 |
5.4 |
7.4 |
| 2022 |
140,829 |
9,252 |
9,210 |
159,291 |
5.8 |
5.8 |
| 2023 |
151,055 |
11,544 |
7,733 |
170,332 |
4.5 |
6.8 |
Source: Australian Public
Service Commission, APS Employment Data 30 June 2023.
Note: Data refers to APS
employees covered by the Public Service Act 1999.
The data shown in tables 5 and 6 are coming from two
different sources. Table 5 are estimates for employees on contracts derived
from supplementary questions asked as part of the ABS Labour Force Survey and
includes employees of Commonwealth, state, territory and local governments.
Table 6 is an actual count of employees in the Australian
Public Service that are on contracts. These estimates exclude employees of
state and territory government and local government.
Characteristics of employees on fixed-term contracts
The industries of Education and training, Health care and
social assistance and Public administration together accounted for almost
two-thirds (65.6%) of employees on fixed-term contracts in August 2022.
Education and training had the largest number of employees in fixed-term
contracts at 89,100, accounting for 25.8% of employees on fixed-term contracts
across all industries and 8.3% of all employees in the industry (see Table 7).
Table 7 Number of employees on fixed-term contracts in
selected industries, August 2023
| Industry |
Employees on
fixed-term contracts (‘000) |
Share of all
employees on fixed-term contracts (%) |
Total employees in
industry (‘000) |
Share of total
employees in industry (%) |
| Construction |
11.5 |
3.3 |
879.9 |
1.3 |
| Information, Media & Telecommunications |
8.9 |
2.6 |
144.9 |
6.2 |
| Financial & Insurance Services |
13.5 |
3.9 |
485.4 |
2.8 |
| Professional, Scientific & Technical Services |
24.6 |
7.1 |
985.7 |
2.5 |
| Public administration & safety |
70.8 |
20.5 |
912.8 |
7.8 |
| Education & training |
89.1 |
25.8 |
1,076.4 |
8.3 |
| Health care & social assistance |
66.7 |
19.3 |
1,923.2 |
3.5 |
| Other services |
9.2 |
2.7 |
361.0 |
2.6 |
| Total |
345.4 |
100.0 |
11,848.0 |
2.9 |
Source: Australian Bureau of
Statistics (ABS), Working Arrangements (Canberra: ABS, August 2023), Table 6 and
Data 6.
Employees on fixed-term contracts tend to be more highly
educated and more likely to work in professional occupations than other
employees. Employees on fixed-term contracts are also more likely to expect
that they will not be with their current employer in 12 months.
In August 2023, employees on fixed-term contracts were:
- much
more likely to have post-secondary school qualifications than employees not on
fixed-term contracts – 89.4% compared with 68.4%.
- much
more likely to have a Bachelor degree or above than other employees – 69.5%
compared with 36.5%.
- more
than twice as likely to be working in Professional occupations as other
employees – 53.7% compared with 25.2%.
- slightly
more likely to be working full-time than other employees – 71.7% compared with
68.9%.
- slightly
more likely to be born overseas than other employees – 37.9% compared with
32.7%.
- more
than twice as likely to expect to not be with their current employer in 12
months than other employees – 20.6% compared with 9.6%.
- slightly
less likely to have access to paid leave entitlements than other employees –
20.2% compared with 22.4%.
With just under 80% of employees on fixed-term contracts
expecting to be with their current employer in 12 months this suggests a
reasonable degree of job stability and security, and possibly the expectation
that many will roll over on to a new contract with their current employer once
their current contract expires.
Earnings of employees on fixed-term contracts
Table 8 shows there weren’t significant differences between
median hourly earnings of employees on fixed-term contracts and employees
employed on an ongoing basis in the occupation groupings where contract workers
are predominantly concentrated.
Table 8 Median hourly earnings of employees on
fixed-term contracts in selected occupations, August 2023
| |
Number of
employees on fixed-term contracts in main job |
Share of all
employees on fixed-term contracts in main job |
Earnings of
employees on a fixed-term contract in main job |
Earnings of
employees not on a fixed-term contract in main job |
| |
‘000 |
% |
Median hourly
earnings ($) |
| Managers |
35.4 |
10.2 |
66.70 |
54.10 |
| Professionals |
185.4 |
53.7 |
53.90 |
54.40 |
| Technicians and trade workers |
20.7 |
6.0 |
35.00 |
36.80 |
| Community and personal service workers |
41.4 |
12.0 |
34.40 |
33.40 |
| Clerical and administrative workers |
45.7 |
13.2 |
37.50 |
37.50 |
| Total |
345.4 |
|
48.80 |
39.50 |
Source: Australian Bureau of
Statistics (ABS), Working Arrangements, (Canberra: ABS, August 2023), Table 6 and
Data 6.
The only significant difference is the higher median hourly
earnings for managers that were on a fixed-term contract compared with managers
not employed on fixed-term contracts ($66.70 per hour compared with $54.10).
Median hourly earnings for all employees on fixed-term contracts is higher than
all other employees ($48.80 per hour compared with $39.50 per hour) which could
be partly due to the higher skill composition of employees on fixed-term
contracts.
Independent contractors
Definition of independent contractors
Independent contractors (or ICs) are defined by the ABS as
people who operate their own business and who are contracted to perform
services for others without having the legal status of an employee. In other
words, they are people engaged by a client, rather than an employer, to
undertake work required. Independent contractors are engaged under a contract
for services (a commercial contract), whereas employees are engaged under a
contract of service (an employment contract).[30]
For further information on defining ICs see the Appendix.
Trends in numbers of independent contractors
The number of independent contractors in Australia was
relatively stable at just under or just over 1 million between 2015 and 2021.
More recently, in the 12 months to August 2023 the number of independent
contractors fell by 70,600 or 6.3% to 1,048,900 (see Figure 4). The independent
contractor share of total employment in Australia fell from 8.2%in August 2022
to 7.5% in August 2023 and was as high as 8.7% in August 2016.
Figure 4 Number of
independent contractors in Australia, 2014 to 2023
Source: Australian Bureau of
Statistics (ABS), Working Arrangements (Canberra: ABS, August 2023), Table 4.
Industry profile of independent contractors
Table 9 shows the industry composition of independent
contractors.
Table 9 Independent contractors by industry, August
2014 and August 2023
| |
Aug 2014 |
Aug 2014 |
Aug 2023 |
Aug 2023 |
| |
Number of
independent contractors (‘000) |
Share of total
independent contractors (%) |
Number of
independent contractors (‘000) |
Share of total
independent contractors (%) |
| Agric, Forestry & Fishing |
29.5 |
3.0 |
22.7 |
2.2 |
| Mining |
5.6 |
0.6 |
3.8 |
0.4 |
| Manufacturing |
47.2 |
4.7 |
32.9 |
3.1 |
| Electricity, Gas, Water & Waste Services |
6.7 |
0.7 |
3.2 |
0.3 |
| Construction |
309.3 |
31.1 |
278.1 |
26.5 |
| Wholesale Trade |
16.6 |
1.7 |
18.7 |
1.8 |
| Retail Trade |
25.4 |
2.6 |
15.9 |
1.5 |
| Accommodation & Food Services |
10.3 |
1.0 |
16.4 |
1.6 |
| Transport, Postal & Warehousing |
64.0 |
6.4 |
104.7 |
10.0 |
| Information Media & Telecommunications |
12.4 |
1.2 |
20.1 |
1.9 |
| Financial & Insurance Services |
18.0 |
1.8 |
20.8 |
2.0 |
| Rental, Hiring & Real Estate Services |
13.9 |
1.4 |
17.4 |
1.7 |
| Professional, Scientific & Technical Services |
163.0 |
16.4 |
146.7 |
14.0 |
| Admin & Support Services |
74.6 |
7.5 |
78.0 |
7.4 |
| Public Administration & Safety |
7.6 |
0.8 |
8.9 |
0.8 |
| Education & Training |
33.9 |
3.4 |
40.3 |
3.8 |
| Health Care & Social Assistance |
70.7 |
7.1 |
136.3 |
13.0 |
| Arts & Recreation Services |
23.8 |
2.4 |
26.5 |
2.5 |
| Other Services |
60.9 |
6.1 |
57.3 |
5.5 |
| Total |
993.1 |
100.0 |
1,048.9 |
100.0 |
Source: Australian Bureau of
Statistics (ABS), Working Arrangements (Canberra: ABS, August 2023), Table 4.
The construction industry accounted for the largest share of
independent contractors in August 2023 at 278,100 or 26.5%. This is down from a
total industry share of 31.1% in August 2014 when there were 309,300 ICs
working in construction.
The number of independent contractors working in Health care
and social assistance increased from 70,700 in August 2014 to 136,300 in August
2023 while the number of independent contractors working in Transport, postal
and warehousing increased from 64,000 to 104,700. In contrast the number of ICs
working in Professional, scientific and technical services fell from 163,000 to
146,700.
Responses to questions related to authority over work
performed by independent contractors is collected by the ABS every 2 years (in
even years). An independent contractor is defined as having a high level of
control over the work they perform, including their hours, work location and
how they do their work. However, ABS data shows 429,700 independent contractors
– or 38.4% of all people classified as independent contractors – reported they did
not have authority over their own work in August 2022.
This finding suggests that some workers that come under the
umbrella term ‘independent contractor’ may be more likely to be closer to
employees in terms of lack of control over the work they perform, but without
the benefits, protections, and entitlements available to employees.
Conclusion
The use of labour hire employees in Australia increased
steadily between the mid-1990s and just prior to the impact of COVID-19 in
March 2020. Numbers of labour hire workers fell sharply as shutdowns imposed to
limit the spread of the virus began to negatively impact upon the labour market
and have only recovered modestly since. Casual employees were much more likely
to lose their jobs at this time and a substantial proportion of labour hire
employees are employed on a casual basis.[31]
Agencies in the public sector are more likely to use
employees on fixed-term contracts than businesses and organisations in the
private sector. But there are signs of a slight fall in the rate of their use
by the public sector between 2016 and 2022 (down from a 11.2% share of public
sector employees to 9.2%).
Data gaps still exist for labour hire employment in
Australia, particularly in relation to the industries that are more likely to
use labour hire employees. To better inform researchers and policy makers, the
ABS could consider making the distinction clearer in questions asked in
subsequent supplementary Labour Force surveys between the relationship labour
hire employees have with the labour hire company they are paid by, and better
identification of industries of companies they are on-hired to, and the activities
undertaken in their work placements.
Appendix
Definition of labour hire workers
Labour hire work involves an employment relationship between
an individual employee and a labour hire firm, and a commercial arrangement
between the labour hire firm and businesses that employees are on-hired to for
an agreed fee. The labour hire firm has responsibility for paying the labour
hire worker.[32]
Labour hire workers may be used for a variety of purposes
including:
-
to fill very short-term vacancies
-
to fill regular seasonal requirements such as in the agricultural
or food processing industries
-
to fill specific functions within the business by engaging labour
hire workers with particular skills such as maintenance
-
as a longer-term supplement to an ongoing workforce, with ongoing
and labour hire employees working alongside each other performing the same
work, and/or
-
to entirely replace an ongoing workforce.[33]
Definition of independent contractors (ICs)
The ABS uses responses to a series of questions included in
the Labour Force survey to determine their estimates for ICs. The questions
include:
- Do
you work as an independent contractor in your job?
- Do
you receive a pay slip/advice?
- Do
you/Does your business invoice or bill clients/employers?
- Excluding
wages and salary, are you able to make drawings from your employer/business?
An IC needs to respond positively to the first question but
depending upon the permutation of responses to questions, respondents can be
classified as either an IC, employee, or Other Business Operator.[34]
The Fair Work Commission uses several criteria to define
whether someone is an independent contractor. As part of the criteria, an
independent contractor:
- can
delegate or subcontract the services to be performed to another person or
business
- has
a high level of control over the work they perform, their hours, work location
and how they do the work
- bears
the risk for making a profit or loss on each task
- usually
is personally responsible and liable for poor work or any injury sustained
while performing the task (as such, contractors generally have their own
insurance policy)
- uses
their own tools and equipment
- by
agreement between both parties, decides what hours to work to complete the
specific task
- is
usually engaged for a specific task
- pays
their own tax and GST (if applicable) to the Australian Taxation Office
- pays
their own superannuation (note: in some circumstances independent contractors
may be entitled to be paid superannuation contributions)
- doesn’t
receive paid leave entitlements.[35]
[1]. Labour supply
services are characterised by business units mainly engaged in supplying their
own employees to other businesses on a fee or contract basis i.e. where
assignments are mainly on a temporary or short-term basis and performed under
the supervision of staff of the business they are on-hired to.
[2]. While labour
hire workers are classified as being employed in the Labour supply services
industry, not all people working in Labour supply services are labour hire
workers. The sector also employs people engaged in administrative, managerial
and support activities associated with supplying labour hire workers to other
businesses. These workers cannot be separately identified in the data.
[3]. Geoff Gilfillan,
COVID-19:
Labour market impacts on key demographic groups, industries and regions,
Statistical snapshot, Research paper series, 2020–21, (Canberra: Parliamentary
Library, 2020), 10.
[4]. International
Labour Organization, Non-standard
Employment Around the World, 2016, 9.
[5]. OECD
Employment Outlook 2019, Future
of Work, 60
[6]. ABS, Characteristics
of Employment.
[7] David
Peitz, We need more than a definition change to fix Australia’s culture of
permanent ‘casual’ work, The Conversation, 31 July,
2023.
[8]. International
Labour Organization, Non-standard
Employment Around the World, 2016, 20.
[9]. Michael Quinlan,
The
effects of non-standard forms of employment on worker health and safety,
Conditions of Work and Employment Series, 67, (Geneva: International Labour
Office, 2015), 6.
[10] JIA
estimates are published annually. but the data takes time to collect and
process, given they rely on the results of individual tax returns and business
Income Statements. For example, JIA data for 2020-21 was released in December
2023.
[11]. Australian
Bureau of Statistics (ABS), Characteristics
of Employment, Australia methodology, Glossary (Canberra: ABS, August
2023).
[12]. Anthony Forsyth
(Chair), Victorian
Inquiry into the Labour Hire Industry and Insecure Work, Final Report, (Melbourne:
Department of Economic Development, Jobs, Transport and Resources (Vic), 2016).
[13]. ABS, Labour
hire workers, June 2022.
[14]. Senate Select
Committee on Job Security, The
job insecurity report (Canberra: The Senate, 2022), 40.
[15]. Senate Select
Committee on Job Security, 42.
[16]. ABS, Labour
hire workers, June 2023.
[17]. ABS, Labour hire workers methodology, June 2023.
[18] ABS,
ANZSIC Numbering system and titles.
[19]. ABS, Labour hire workers methodology, Labour
Account (Canberra: ABS, June 2023).
[20] ABS,
Labour hire workers methodology, June
2023.
[21] ABS,
Labour
hire workers, June 2023.
[22] ABS,
Labour hire workers, Table 3, Selected
characteristics of labour hire workers, Aug 1998 – Aug 2022 (COE).
[23]. ABS, Labour
hire workers, June 2023.
[24]. ABS, Labour hire workers, June 2023, Table
2.
[25]. ABS, Labour hire workers, June 2023.
[26]. Gilfillan, Recent
and long-term trends in the use of casual employment, 18.
[27]. Fair Work
Ombudsman, ‘Casual
employees—What casual employees get’.
[28]. Australian Building and Construction Commission (ABCC), Response
to submission by the Construction and General Division of the Construction,
Forestry, Maritime, Mining and Energy Union to Senate Economics References
Committee, Inquiry into unlawful underpayment of employees’ remuneration,
[Submission no. 106, response], 10 July 2020.
[29]. Fair Work
Ombudsman, ‘Queensland
labour-hire company penalised’, media release, 5 July 2023.
[30]. ABS, Characteristics
of Employment, Australia Methodology, (ABS: Canberra, August 2020).
[31]. Gilfillan, Recent
and long-term trends in the use of casual employment.
[32]. ABS, Labour hire workers methodology, (Canberra:
ABS, June 2023).
[33]. Finance and
Administration Committee (Qld), Inquiry
into the practices of the labour hire industry in Queensland (Brisbane:
Parliamentary Committees, 2016), 9–10.
[34]. ABS, Working
arrangements.
[35]. Fair Work
Ombudsman, 'Independent
contractors’; Victorian Government, ‘Sham
contracting in the building and construction industry’.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
Creative Commons
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.
This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.
Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.