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A Casual Discussion: High casual rate stifles productivity
OCCASIONAL PAPER
Around the world it is understood that the modern sources of productivity growth are skills and new ideas. The Productivity Commission has concluded there was no discernible acceleration in Australian workforce skills during the 1990s, with skills failing to contribute significantly to productivity growth. There was a faster increase in skills in the 1980s.
Labor rejects this low road to low skills and low wages.
A favoured vehicle for traveling this low road has been the increased use of casual employment: 30 percent of growth under the present government compared with 10 percent growth in full-time employment. Even the government-appointed employment advocate considers that the growth in casual employment has gone too far.
Continuing productivity growth will be mission impossible if businesses fail to invest in the skills of their employees. Yet employers have little incentive to invest in training casual workers who are likely to leave if they find more secure jobs. Is it any wonder that the government's own Intergenerational Report forecasts productivity growth to slump back to mediocre 30-year average by 2005?
In justifying the use of casual employment the government chants the mantra of choice and flexibility. But it means choice for employers and downward flexibility for vulnerable working Australians. Casual employment denies workers basic working conditions like sick pay, holiday pay and overtime loadings. Casual employees find it very difficult to obtain mortgages and other bank loans.
Labor recognizes that there is a need for casual employment in seasonal and irregular work. We also recognize that some employees are not concerned about the lack of security and irregularity of casual work. These workers accept that their casual pay loading compensates for these disadvantages. But many worry about the lack of job security and other entitlements. They are often employed on a regular basis, most for over a year, with the same employer. A staggering 1.3 million Australians fall into this category.
Labor believes that casual full-time and part-time work needs to be more clearly defined to help casuals who are, in effect, full-time or part-time workers to obtain the entitlements of permanent employment if they so desire. Casuals who wish to convert to part-time work would, of course, forgo their casual loading. Labor's proposal would not add paid leave entitlements to the casual loading, as some commentators have falsely claimed.
Casuals who wish to remain casuals would be free to do so; the proposals would not be compulsory. I am committed to working with business groups and unions in developing the detailed policy.
Productivity growth through skills formation will be very difficult to achieve in a workforce where one in four employees is a casual and the growth of casual employment is faster that in just about every other OECD country. Choice and flexibility should apply to employees, not just their employers.
[Reproduced from The Australian Financial Review, 28 January 2004 with permission]