THE RISE OF AN AUSTRALIAN WORKING UNDERCLASS

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1 1/ THE RISE OF AN AUSTRALIAN WORKING UNDERCLASS A CFMEU RESEARCH PAPER AUGUST 2016

2 ABOUT THE AUTHOR: Dr Kristy Jones, Research Officer, CFMEU Kristy Jones is the Research Officer at the CFMEU National Office. She holds a PhD and Master s degree in Economics and has previously worked as a lecturer at Monash University, a Trade Specialist at the Australian Indonesian Partnership of Economic Governance in Jakarta (AIPEG), an Economic Consultant in some of Australia s leading economic consultancy firms, a Board Director at not-for-profits and as an Economist in the public sector. RESEARCH STEERING COMMITTEE: 2/ Michael Cooney, Executive Director, Chifley Research Centre: Michael is the Executive Director of the Chifley Research Centre. He was previously Speechwriter to Prime Minister the Hon Julia Gillard MP, Senior Adviser at the HR Coombs Policy Forum, Crawford School of Public Policy at the Australian National University, and was Principal Policy Advisor to Federal Labor Leaders Kim Beazley and Mark Latham. David Hetherington, Executive Director, Per Capita David Hetherington is the founding Executive Director of Per Capita. He has previously worked at the Institute for Public Policy Research in London and for L.E.K. Consulting in Sydney, Munich and Auckland. He has written over 100 major reports, book chapters and opinion pieces on a wide range of economic and social policy issues, including fiscal policy, market design, social innovation, employment, education and training, disability, housing, and climate change. ACKNOWLEDGEMENTS: The CFMEU would like to thank the Research Steering Committee for their assistance on this research. The author would also like to acknowledge the assistance of the CFMEU Research Team: Peter Colley, Tom Roberts and Travis Wacey. A CFMEU Research Paper, August 2016

3 FOREWORD Rising inequality is a key threat to Australia s future economic growth and an urgent challenge to Australian decision-makers. After the global financial crisis and the peak of the mining boom, our economy should be well-placed to resist the economic and political pressures which can make us more unequal over time. However, we can see emerging economic threats which demand a long-term policy response. The cost of housing and health care is rising, education funding is inadequate and poorly targeted, retirement income is threatened, and at the heart of working life, unemployment is rising and real wage growth is too slow. These problems do reflect some of the challenges of economic change, but they also reflect the price working people are paying for the conservative policy consensus. The conservative plan for Australia is one which is quite explicitly designed to weaken our tax base and labour market institutions, to limit wages and incomes and shrink the social democratic state. At best, this misunderstands the relationship between economic growth, living standards in middle Australia and strong public finances; at worst, it is a deliberate effort to redirect the benefits of economic growth from people who work toward vested interests. So the CFMEU s paper Tough Jobs is a particularly timely report from the front line of the political economy of modern Australia. It names the key problems, makes a strong case for immediate policy measures to address them, and sets a platform of analysis and advocacy to restore the link between fairness and growth that is such a key feature of the Australian social and economic model. The Chifley Research Centre has been delighted to work with the union on this important project and we look forward to the discussion which will follow its release. 3/ Michael Cooney Executive Director Chifley Research Centre May 2016

4 CONTENTS 4/ Executive Summary... 5 Deregulation of the Australian labour market... 6 The rise of flexible labour... 8 Underemployment and unpaid work Unpaid overtime Unpaid internships Casualisation Labour hire and on-hire workers Contractualisation and Sham Contracting Uberisation: the peer-to-peer economy A looming threat: zero hour contracts A particular problem: Temporary overseas workers Temporary skilled migration (457) visa Working holiday visas and student visas The exploitation of temporary overseas workers Exploitation is structural The impact of deregulation: Inequality The declining labour share of income and global inequality Inequality in Australia Summary and policies for the future References... 32

5 ECONOMIC SUMMARY Over the past thirty years, particularly since the late 1990s, the dominant political paradigm has been that the Australian economy, employment levels and the Australian people will benefit from continued labour market deregulation and increased flexibility. These conservative policies have become a key driver of growing inequality due to emphasis on a specific type of deregulation: the removal of regulation protecting workers. In recent years, flexible labour has manifested itself through an increasing number of workers in insecure work: casualisation, labour hire and sham contracts. Over 2 million workers are now engaged on casual contracts, over half of Australians are either unemployed, wanting to work more hours or are working unpaid overtime and would like to work less. Labour market flexibility has primarily meant flexibility for employers; it has delivered few benefits to workers. Changes to Australia s migration schemes have removed the protection of employment opportunities for locals, and of good working conditions for both local and overseas workers. The growth of temporary work visas is indicative of a shift towards a short-term demand-driven migration, designed to meet the short-term needs of business. Widespread exploitation of overseas temporary workers is due to structural features of the system which facilitate noncompliance. exceptions mean many workers have little security and less protections. National Employment Standards need to apply to all forms of work. Social welfare systems need to ensure basic security for all. The system needs to be designed to take into account the changing nature of work, including the growth of insecure jobs. Progressive tax systems are also needed. Tax concessions and loopholes which primarily benefit the wealthy, and only further increase inequality, need to be reformed. New technologies need to benefit workers, not simply minimise costs for business. Technological advancements have allowed business to become more flexible, but they have also contributed to inequality through the automation of jobs. The economic gains from improved technology have been largely concentrated into profit. Improved labour productivity has not necessarily translated into better jobs or higher wages. As with the Just Transition towards environmentally sustainable economies 1, there needs to be a Just Transition to lessen the impact on workers from technological change in the workplace. Statistical measures of work need to be improved. High levels of underemployment and precarious work mean that the standard unemployment rate is inadequate as a sole measure of the condition of the labour market. 5/ Conservative advocates argue that a more flexible labour market benefits both business and workers as improved efficiency trickles down to higher wages and reduced unemployment. The reality is that work is now characterised by rising precarity and increased inequality. The benefits have gone disproportionately to the top. What has developed is a growing class of workers suffering from a lack of security and lower wages - the precariat. Labour laws need to provide adequate protection for all workers. Legally sanctioned We need a new consensus that the policies of the past are no longer adequate. Policy needs to focus on addressing the reduced quality of employment, inequality and managing a changing economy rather than being narrowly focussed on cutting costs, increasing productivity and efficiency dividends. Stubbornly high unemployment, declining wages and increasing work insecurity, underemployment and inequality will not be fixed by a further reduction of social safety nets or further labour market flexibility. They will not be fixed by a continuation of the conservative policies of the past. 1 Just transition is a framework developed by trade unions to protect the jobs of workers in relevant industries as the economy shifts towards low carbon and sustainable technologies.

6 DEREGULATION OF THE AUSTRALIAN LABOUR MARKET 6/ For the past thirty years, global economic and public policy thinking has been dominated by conservative liberalisation policies. This ideology advocates increasingly open markets where investment, trade and people can flow freely without any interference by government. From the 1980s, economic rationalist conservative policies were embraced by both sides of Australian politics. Liberalisation targeted capital, goods and labour markets. In Australia, the Accord agreement between the Labor Government and unions, sheltered working Australians from much of the damage that occurred as a result of Thatcherism in the United Kingdom and Reaganism in the United States. In the Prices and Income Accord, unions agreed to restrain wage demands in order to address inflation and unemployment in return for social wage provisions including Medicare, universal superannuation and family payments. The Accord saw the deregulation of the labour market with the introduction of enterprise bargaining negotiated at the individual organisation level, rather than industrial awards which included minimum wage and conditions at the industry level as unions felt restricted by centralised wage fixation. Post 1996, the election of the conservative Howard Government brought about an ideological shift towards more conservative deregulation policies and the end of the Accord and cooperation with unions. Workers were no longer protected from the impact of reform with progressive social policy. The conservative argument was that government polices had not gone far enough in terms of increasing flexibility in the labour market (O Neil, 2013) and that productivity was being held back by unions. The premise for deregulation was that competitiveness and economic growth can be improved by removing inefficiencies. The argument is that if the market is free to allocate resources without intervention, efficiency and profit can be maximised. Labour is merely a commodity - an input into production jobs are grown at any price including reduced job satisfaction, falling wage growth, reduced job quality and growing inequality. Unless labour is made more flexible, the costs of production will rise and business will move their activities and investment overseas where the environment is more competitive (Standing, 2011). Removing labour market rigidities, or increasing labour market flexibility, in this sense refers to businesses ability to treat labour as any other commodity, and to adjust to economic changes through easily and costlessly adjusting the size of its workforce, changing the number of hours worked by existing employees, adjusting wages including the minimum wage, changing conditions of employment, and to make decisions free from the constraints of consulting or negotiating with their workforce or unions. Efficiency is privileged above equity and rising income supposedly leads to improved living standards. Over the next decades, the conservative agenda continued through government policy. In 2005, Howard s WorkChoices further deregulated the labour market by removing unfair dismissal laws for businesses with less than 100 employees and removing the no disadvantage test which ensured workers weren t left disadvantaged by proposed agreements as compared to the award, and the individualisation of employment relations. This policy was widely rejected and the Howard Government was voted out at the following election. More recently,

7 flexible labour has manifested itself through increasing numbers of workers in insecure jobs: casualisation, labour hire, sham contracts and the use of temporary overseas workers. Flexible labour markets have been promoted without the radical changing of social protection systems that are needed to protect workers from the inevitable insecurity that arises as a consequence (Standing, 2013). In fact, reduced protection of workers has been complemented by increased regulation of trade union activities (Campbell and Tham, 2013). Campbell and Tham (2013) argue that the deregulation of Australia s labour market has occurred in two ways: through a process of direct elimination or weakening of regulation protecting workers, and secondly through the expansion of gaps within the regulations. Most attention is given to the first process, but the second, though more hidden, is equally important. The labour regulation system in Australia, as in all countries, contains gaps that can be used to lower wages and conditions for select groups of workers in comparison to the mainstream They contend that much of the conservative labour market deregulation process has been aimed at reducing regulation in areas of minimum labour standards and trade union rights; those regulations which protect workers, both individually and collectively. It has been driven by conservative ideology and political interest. Deregulation of the Australian labour market has not equated to the removal of all regulation, but rather the removal of a particular type of regulation - the regulations protecting workers. In some instances regulation has actually increased, particularly in relation to control and the subordination of workers. For example, stricter regulation surrounding the content of collective agreements, procedures for bargaining, and regulation of trade unions. The current Coalition government s recent attempts to resurrect the Australian Building and Construction Commission are a prime example. Rather, labour market deregulation has been a process of removing the protective aspect [of regulation] that is oriented to defending the interests of workers against the authority of employers or indeed branches of the state. (Campbell and Tham, 2013). The logic of labour market deregulation is consistent with general conservative ideology that policies that favour business will increase investment that will in turn create jobs. Under this ideology, the existence of inequality is supposed to reflect a just reward structure that provides incentives for people to work harder (Saunders, 2005). As the rich spend more, and business flourishes, the benefits will trickle down into the overall economy in terms of more jobs and higher incomes a rising tide that lifts all boats. Aggregate efficiency gains created by liberalisation mean that while some may lose out in the short run, an increasing overall pie means everyone will get more. As long as the increases to the wealth and incomes of the rich do not substantially reduce the incomes of everyone else, there is no harm. Let our children grow tall and some taller than others if they have the ability in them to do so Margaret Thatcher (1975). The reality is, increasing inequality is harmful. The International Monetary Fund (Dabla-Norriss et al., 2015) and World Bank (Kim, 2015) have found that benefits do not trickle down. What has happened is the number of people in informal and insecure jobs has grown and inequality has increased. Inequality in turn restricts growth and undermines social cohesion. Dabla-Norriss et al. (2015) find that increasing the wealth of the rich by one percentage point lowers a countries GDP growth by 0.08 percentage points, whereas increasing the wealth of the poor and middle class increases GDP growth by up to 0.38 percentage points. The OECD (2015) states that in recent decades, increased employment has not reduced inequality rather has increased it due to the gradual decline of the traditional, permanent, nine-to-five job in favour of nonstandard work- typically part-time and temporary work and selfemployment. 7/

8 The Precariat is a global phenomenon. It is not just a matter of economic insecurity. As bad is the fact that many people have no dignifying occupational identity. They do not feel they are becoming somebody, or doing the types of work they would like or what they had been led to expect when they pursued all those years of schooling. They feel cheated. And what helps define the Precariat is a feeling that they must do a lot of work that is not remunerated. GUY STANDING (2012B) THE RISE OF FLEXIBLE LABOUR 8/ The liberalisation of the labour market and increased labour flexibility has led to the emergence of a new social class of people suffering from precarity, which Standing (2011) labels the Precariat. The word Precariat is an amalgamation of the words precarious and the Proletariat. The Precariat is a social class of people defined by their existence without job security or predictability those with precarious employment. These people are only partially involved in the labour market, facing erratic unemployment or underemployment, and being forced to undertake unpaid activities in order to retain access to jobs. Many of them find the old-style of unionism irrelevant to their circumstances and consequently lack bargaining power. There are currently millions of workers in Australia whose work is insecure, many in casual, fixedterm, low paid jobs which impact negatively on their lives. While conservatives argue that many of these are entrepreneurs and high earning workers actively choosing flexible working arrangements, many are not. There is no comprehensive data available on the number of people currently in the Precariat in Australia, though ABS statistics indicate that 2 million Australians are working in casual arrangements, approximately 1 million are working as independent contractors, and over 1 million workers are underemployed and looking to work more hours. The ABS estimates that approximately 20% of employees do not usually work the same number of hours each week (ABS, 2015). For many of these workers, incomes are unpredictable and they lack employment benefits such as annual leave, sick leave, personal leave and superannuation. There are also an increasingly large number of workers who are underemployed and who would like to work more hours. On the other side of the coin, there are a rising number of workers who are facing increased demands from employers and who are contributing an increasing number of unpaid hours. Buchanan (2004) found that since the 1980s precarious forms of employment have grown at a much faster rate than fulltime permanent positions. The OECD (2015) finds that since 1995, more than half of the jobs created in OECD countries have been non-standard jobs. These non-standard jobs are often worse than traditional permanent jobs on a range of aspects including that they generally pay less, do not offer the same level of employment protection, involve less training, and higher probability of job loss and unemployment. The emergence of the Precariat, and the proliferation of insecure

9 work is not an anomaly, it is the result of deliberate government policies attempting to increase flexibility within the labour market. And it is increasingly affecting youth, women, the disabled and migrant workers. Prior to the 1970s, young people left school and entered an apprenticeship in manufacturing or primary industries, or the job market. From the 1970s, the problem of youth unemployment was attributed to a lack of skills and the solution focused on increasing education (Sheen, 2013). Over the past thirty years almost all OECD countries have seen a significant increase in educational attainment particularly tertiary education such that we are more educated than we have ever been before (OECD, 2015b). Despite unprecedented educational attainment (often accompanied by substantial debt) there are fewer appropriate entry level jobs available. Many take on a casual, short-term precarious jobs as well as unpaid internships and additional training at their own expense. The reality is, young people are increasingly looking to be poorer than their parents. The OECD (2015) finds that over the past 30 years poverty has shifted globally from the elderly to the young, with young people replacing the elderly as the group most at risk of poverty. 190 RELATIVE POVERTY RATE OF THE ENTIRE POPULATION IN EACH YEAR = 100, MID-1980s TO 2013, OR LATEST AVAILABLE YEAR Source: OECD (2015) MID 1980 MID BELOW ABOVE 75 9/ % 80 PROPORTION OF CASUAL AND PART-TIME EMPLOYMENT, AUSTRALIA 2016* *Source: ABS (2015) Cat. no Casual workers are those without paid leave entitlements and may be full-time or part-time. That is, part-time workers may also be hired on a casual basis such that a casual and parttime are not additive. This does not include workers on sham contracts who may also not have leave entitlements Part-time Casual

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11 UNEMPLOYMENT, UNDEREMPLOYMENT AND UNDERUTILISATION RATES, AUSTRALIA, 2016 *Source: ABS (2016) % Underemployed workers are defined as part-time workers who want, and are available for more hours of work than they currently have, and full-time workers who worked part-time hours during the reference week for economic reasons (such as being stood down or insufficient work being available). The underutilisation rate is the unemployed plus the underemployed expressed as a proportion of the labour force Unemployment Underemployment Underutilisation Underemployed workers are defined as part-time workers who want, and are available for more hours of work than they currently have, and full-time workers who worked part-time hours during the reference week for economic reasons (such as being stood down or insufficient work being available). CHARACTERISTICS OF EMPLOYMENT BY SEX, AUSTRALIA 2016 *Source: ABS (2016) % The underutilisation rate is the unemployed plus the underemployed expressed as a proportion of the labour force. Casual workers are those without paid leave entitlements and may be full-time or part-time. That is, part-time workers may also be hired on a casual basis such that casual and part-time are not additive. This does not include workers on sham contracts who may also not have leave entitlements. 11/ UNEMPLOYMENT UNDEREMPLOYMENT UNDERUTILISATION PART-TIME CASUAL MALES FEMALES In Australia, young people are substantially more likely to be engaged in casual and part-time employment and are more likely to be unemployed, underemployed or underutilised. The Precariat is also disproportionately female. In Australia, while the unemployment rate is similar for males and females, women are substantially more likely to be underemployed and underutilised with higher levels of part-time and casual employment.

12 We shall do more things for ourselves than is usual with the rich to-day, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter - to make what work there is still to be done to be as widely-shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us! JOHN MAYNARD KEYNES (1930) 12/ Underemployment and unpaid work Proponents of increased labour market flexibility assert that nonstandard employment provides benefits to both employers and worker by providing greater choice for workers within the labour market. Flexible working arrangements benefit workers as they provide the ability for workers to match their working hours to their needs. While technological improvements have provided the infrastructure for workers to be able to work their ideal hours, the reality is much more one-sided. Accompanying increased income inequality is inequality in the number of hours worked. The ABS estimates that 2.4 million employed persons (approximately 1 in 5) are working more than 45 hours a week. Another 3 million are working less than 30 hours a week (ABS, 2015). Kirsty Leslie director of the labour market national statistics centre at the Australian Bureau of Statistics (ABS) states There is a marked difference in distribution [of average hours worked]. A greater share of people are working long hours of 41 plus and, similarly for those working fewer hours, of 15 hours or fewer. (Delaney, 2013). Half of all Australians are either overworked, unemployed or wanting to work more. Less than half of the labour force feels they are working the right amount. A survey by the Australia Institute estimates that one in five workers are underworked and want to work more hours particularly women and part-time workers. Age and income are found to have a strong influence on underemployment. Younger workers and low income workers, those more likely to associate with the Precariat, are substantially more likely to be underworked and wanting more hours. Current labour and employment statistics do not reveal the true characteristics of the workforce. The usual division in the labour market has historically been between the employed and unemployed³, however deregulation has created additional divisions in terms of underemployment, precarious work as well as overwork (Campbell and Brosman, 1999; Denniss, 2001). The Australian Bureau of Statistics estimates underemployed workers as employed persons who want, and are available for, more hours of work than they currently have. While much emphasis is placed on the nation s unemployment rate (which rose between the late 1970s to mid-1990s, before falling and rising again post 2008), the rate masks deeper problems of underemployment. Since the late 1970s, the underemployment rate has more than tripled. The incidence of part-time work has increased from less than one in six workers in the late 1970s to almost a third of workers in 2016 (ABS, 2016). Unpaid overtime AVERAGE HOURS WORKED BY EMPLOYED PERSONS *Source: ABS (2016) Employed persons include employees, owner managers of incorporated enterprises and owner manageres of unincorporated enterprises Less than 30 hours hours 45+ hours Labour flexibility has not only contributed to unemployment and underemployment, but also to overemployment (where workers would like to work less but are unable to do so). Work is becoming more and more continuous. An increasing number of workers are undertaking work outside normal work hours or outside formal workplaces. Technology has driven workers to be available on demand and complete work that cannot be completed during normal work hours. Working people are also driven to devote hours to continuously upskilling at their own expense in order to remain competitive in a flexible labour market (Standing, 2012a). Unpaid work is now common for many Australian workers. A survey by the Australia Institute has found that more than half of workers work unpaid overtime donating $128 billion annually to their employers. On average, a full-time worker contributes almost 6 hours of unpaid work to their employer each week. Part-time workers contribute approximately 4 unpaid hours a week. ³ Even taking into consideration simply the employment rate Richardson (2012) argues that while proponents of increased labour market flexibility state that there is a clear link between flexibility and employment, no such simple link exists. Commonwealth Employment Service data estimated the average annual rate of unemployment in the 1950s at 1%, rising to 1.5% in the 1960s, increasing to 3.3% in the 1970s (RBA, n.d.) substantially lower than employment in the 80s, 90s and today.

13 UNDEREMPLOYMENT AND UNEMPLOYMENT Source: ABS (2016) % Unemployment rate Underemployment rate One third of workers want to work less hours than they currently do, with nearly half of full-time workers feeling overworked. Of those with annual leave available, half failed to use their annual leave entitlements. Overwork is driven by workplace culture, with the majority of workers (65 per cent) indicating they are expected to, or not discouraged from, working extra unpaid hours while over half (54 per cent) of workers are expected to, or not discouraged from, working at home outside of work hours. The figures have worsened since previous surveys, indicating that workplaces are failing to improve work-life balance. Forty two per cent of workers think their work-life balance is worsening most commonly because of long working hours (Johnson, 2015). The Coalition Government s Australian Building and Construction Commission and associated building code legislation will prohibit unions from including clauses in Enterprise Bargaining Agreements which prevent unlimited hours worked per day. Unpaid internships In addition to those overworking in paid positions, unpaid work in terms of unpaid work experience, unpaid trial work and unpaid internships are also becoming increasingly common (ILO, 2012). As young people, and the Precariat, find it increasingly difficult to find a permanent full-time job, unpaid training and apprenticeships have become a form of disguised employment as a way of businesses accessing cheap labour and to replace paid employees. While there is no comprehensive statistical data available on unpaid work experience in Australia, in a report commissioned by the Fair Work Ombudsman, Stewart and Owens (2013) found that significant numbers of workers, particularly young workers, are asked to undertake unpaid trials and internships and that unpaid work exists on a scale that is substantial enough to warrant attention as a serious legal, practical and policy challenge in Australia. A growing number of businesses are using unpaid internships to do work that would otherwise be performed by paid employees. In the last two decades and more, globalisation has wrought an enormous transformation in the world of work and the way it is regulated. In part this has resulted in a challenge to the standard employment relationship and an increase in precarious forms of work. Internships and the other types of unpaid work examined in this report can be seen as a further example of this shift to precarious work. Where not regulated effectively, they become part of an informal economy where there is a heightened risk of social exclusion for those who cannot afford lengthy periods of unpaid work, or who do not have the contacts to obtain the best internships. (Stewart and Owens, 2013). The internship explosion, like any other major shift in how people work and shape their careers, could not have occurred in isolation Post-industrial, networked capitalism has provided the ideal petri dish for the growth of internships, which are only one of many forms of nonstandard or contingent labor that have mushroomed since the 1970s. (Perlin, 2011). While the exploitation of young labour using unpaid internships has not yet reached the prevalence it has in countries such as the United States, it is a growing threat in Australia. In this year s budget, the Coalition Government announced the Youth Jobs PaTH (Prepare, Trial, Hire) program which requires young job seekers to work hours a week for 4 to 12 weeks, for which they will receive an extra $200 on top of their fortnightly welfare payment. This amounts to labour working for as little as an extra $4 an hour. Casualisation The OECD (2015d) estimates that the share of non-standard workers, including self-employed, part-timers, casual workers and those on fixed-term contracts in Australia is high at around 44%, compared with the OECD average of one-third. Using ABS data, non-standard and insecure forms of employment make up a substantial portion of Australia s workforce including 20% who are working as casuals, 8.6% who are independent contractors, and 2.5% of workers who are on fixed term contracts. 13/

14 WORKERS BY TYPE *Source: ABS (2016) Note: data obtained from ABS characteristics of employment as at August Breakdown of independent contractors into employees and owner managers by 2013 Forms of Employment data. Table does not segregate between parttime and full-time workers. Casuals Independent contractors Business owner mangers Employees Fixed term GROWTH OF CASUAL AND OTHER EMPLOYEES August 1988 = 100 Source: ABS (1999) Index Casual Other 14/ PROPORTION OF YOUTH CASUALISATION Source: ABS (1999) %

15 Over 2 million workers, almost one in five, are engaged in casual employment. Consistent with the Precariat, casual employees tend to work more in lower skilled occupations with the prevalence of casual employment highest in industries including accommodation and food (63% of all employees); agriculture, forestry and fishing (47.5%); arts and recreation (46.5%) and retail (37.6%). Almost one in four workers in the construction industry are casual (23.9%) and over one in ten in the mining industry (11.3%). Labourers face the highest proportion of casual workers by occupation where almost half of all workers (47.8%) are employed casually. Women are more likely to do casual work than men (23.6% as compared to 16.7%) as are those aged under 24 (52%) (ABS, 2015). May et al. (2005) find that the rise of casual work has been a major feature of labour market restructuring since the 1980s caused by, in addition to structural change, privatisation and reduction of unionisation. While data is not readily available over a long time period Buchanan (2004) estimates that casualisation has risen dramatically from around 10% of the workforce in 1970s to 20% in the late 1990s. The Australian Bureau of Statistics finds that between 1988 and 1998, 69% of the net growth in the number of employees was in casual employment. This growth was primarily in youth employment where year olds recorded the largest increases in the proportion of casuals. The number of year old casual employees and year old casual employees increased 63.5% and 50%, respectively in the decade to 1998 (ABS, 1999). Since 1992, the proportion of employees hired on a casual basis (using the number of employees without paid leave entitlements as a proxy) has increased from 21% to 24% (ABS, 2014). While the increase does not appear as dramatic as the increase since the late 1970s, the total number hides how casualisation is increasingly impacting young workers. The number of young people (15 to 24 years) on casual contracts has increased dramatically from around one in three young employees to half of all young employees (34% to 50%). Casualisation has also increased for those aged from 16% to 21%. Labour hire and on-hire workers Labour hire arrangements are a triangular relationship where workers are hired as either an employee or independent contractor by an agency which supplies the worker s labour to a third party client (the host) for a fee. In this arrangement, there is no direct employment contract between the host and the employee. Whilst the host typically has an employer s capacity to direct the work of labour hire workers, other general employment obligations are removed from the host who simply pays a fee to the labour hire agency. While statistics on the extent of labour hire in Australia are limited, the ABS estimates that approximately 600,000 workers found their work through a labour hire firm or employment agency in 2015 (6.3% of all employees or 5% of all working people). Of these, approximately 21% were paid directly by the labour hire agency. The most common industry using labour hire was manufacturing (18.89%). Mining and construction made up 5.31% and 8.44% of total employees paid by a labour hire agency, respectively (ABS, 2015). 4 The growth of the labour hire industry in Australia has been driven by an argument that employment through labour hire firms is a more efficient way of engaging labour as it, like casual work, allows employers to better match the peaks and troughs of the business cycle and to outsource their employment activities to a third party. As with many other forms of insecure work, the reality is that labour hire is simply a means for businesses to reduce their labour costs by pushing many of the costs and risks of employment onto workers (Buchanan, 2004). Underhill (2011) finds that the benefits of labour hire stem from the casual nature by which labour hire workers are hired; allowing agencies to hire and fire workers according to the demands of host organisations. Advocates of labour hire argue that non-standard employment provides greater choice for workers within the labour market; that labour hire and casual arrangements are beneficial as they provide flexibility for workers wishing to work limited hours. The reality is workers are not undertaking labour hire roles due to their flexibility. The ABS (2010) finds that only 7% of employees state flexibility as a reason for using a labour hire firm and only 3% of workers state a preference for short-term work. The overwhelming majority of employees used a labour hire firm due to difficulty finding work. This included: 71% who cited the ease of obtaining work; 9% who stated it was a condition of working in the job or industry; 7% who cited an inability to find work in their line of business; and 2% whose lack of experience prevented them from finding a permanent job. Brennan et al. (2003) found that approximately one third of labour hire workers felt they had no choice but to be a labour hire worker and two-thirds of workers would rather be hired directly. For growing numbers of workers, particularly lower skilled workers, casual work is the only form of employment available (Buchanan, 2004). Employees predominantly enter into labour hire arrangements due to a lack of alternative secure employment opportunities. Labour hire workers have been found to receive a lower hourly rate of pay than comparable direct hire employees; are more likely to be injured at work and are less satisfied with their work. Labour hire is not a more productive way to hire employees; does not lead to more permanent work and undermines the working conditions of permanent employees (Underhill, 2015; May et al., 2005; CFMEU, 2014); 15/ 4 Mining, Manufacturing and Construction workers make up 2.0%, 7.9% and 9.0% of all workers, respectively.

16 16/ Contractualisation and Sham Contracting Sham contracting is a device that attempts to disguise an employment relationship as one of client and independent contractor (CFMEU, 2011) where employers engage a worker on an ABN rather than employing them directly. Engaging a worker under contract rather than as an employee allows employers to avoid employment entitlements such as annual leave, sick leave and in some instances superannuation payments and workers compensation insurance. There are no comprehensive statistics on the prevalence of sham contracting in Australia. The ABS estimates that in 2014 approximately 1 million persons were independent contractors. The highest proportion of independent contractors were technicians and trades workers (30%) with the construction industry having the most independent contractors with almost 1 in 3 employed people (31%) on independent contracts (ABS 2015). Of all independent contractors, 40 per cent had only one active contract and 60 per cent did not have authority over their own work. Many contract arrangements are legitimate, however there is evidence that a large number of independent contractors are hired under sham contracting arrangements. These sham contracts allow employers to avoid paying for a range of the employee benefits and entitlements. CFMEU (2011) estimates that 26-46% of independent contractors in the construction industry are on sham contracts. Sham contracting has received significant media coverage recently, particularly after Myer s contracting cleaner Spotless was found to be underpaying workers using sub contractual agreements (McGrath, 2015). Independent contracting arrangements are also becoming more popular as a result of peerto-peer service platforms and the sharing economy. As with casualisation and other forms of insecure work, the benefit of sham contracting arrangements flow primarily to employers, allowing them to reduce costs by shifting risk onto workers: the emergence of a business model across both the private and the public sectors that shifts the risks associated with work from the employer to the employee, and minimises labour costs at the expense of job quality. (Biddington et al. 2012) Uberisation: the peer-to-peer economy SOMEWHERE ALONG THE LINE WE VE BECOME A NATION OF HUSTLERS - Delaney, The peer-to-peer, on-demand, or sharing economy is a decentralised model of exchange where individuals interact to buy or sell goods and services with the use of a peer-to-peer service platform. Examples include Uber, a multinational transportation platform which allows individuals to use their own car as a taxi and matches them with individuals requesting trips; Airbnb which allows individuals to rent out spare rooms or houses; and Airtasker, a platform which allows individuals to outsource everyday tasks and other individuals to bid to complete the task. It is estimated that 80,000 Australians currently work on peer-to-peer platforms more than once a month, but this figure is expected to grow rapidly (Minifie, 2016). Peer-to-peer platforms can provide benefits in that they can improve the efficiency of markets and allow people to make use of underutilised assets for income, such as spare rooms in their house. However in the case of labour platforms, the on-demand economy is significantly changing the work landscape. Most workers who utilise peer-to-peer platforms are currently working as independent contractors. As such, they lack many of the employment conditions and entitlements, such as a minimum wage, set hours, annual or sick leave and superannuation. They may also not be covered by worker s compensation, even though many people who utilise peer-to-peer platforms have characteristics of employees. For example, Uber sets the rates used by its drivers and provides drivers with equipment (i.e. the app). The debate about whether Uber drivers are contractors or employees is ongoing. A number of Uber Drivers in California have been ruled to be acting more like employees than contractors. The sharing economy has, and will continue to, move many workers into insecure work, where workers bid online to complete small tasks and are paid next to nothing to do so without employment benefits. Many people utilising peer-topeer platforms are doing so to supplement insufficient income from other unstable sources. A survey of Uber employees in the United States found that 61 per cent of drivers have either a parttime or full-time job in addition to driving for Uber. 91% of drivers said they were using Uber to earn more income to better support myself or my family, 74% of drivers said to help maintain a steady income because other sources of income are unstable/ unpredictable. A third of drivers indicated they were using the Uber platform to earn money while looking for a steady, fulltime job. However, 73% also said they would prefer a job where they could choose their own schedule and be their own boss than have a 9 to 5 job with steady benefits and a set salary (Hall and Krueger, 2015). As the sharing economy currently exists in a regulatory grey area, many existing standards do not necessarily apply. Proponents argue that workers benefit from the flexibility provided. However, while flexibility suits some workers, as peer-to-peer platforms compete aggressively with established business, many

17 workers may be forced to accept lower wages and increased insecurity. Peer-to-peer platforms have the potential to increase equality by allowing Australians to access work and business opportunities that may have not been previously possible. But they will also contribute to inequality if they drive down wages and create further work insecurity. A looming threat: zero hour contracts A zero hour contract is where an employee is required to be constantly available for work but is not guaranteed to receive any hours. A worker is employed but as the employer is under no obligation to actually offer any regular work they may be doing no work and receiving no pay or benefits. Currently, in Australia many employers of casual workers are not required to offer a minimum number of hours to casual workers, however casual workers are also not obligated to work when requested. In contrast to casual work where there is no obligation for the employer to offer work or for the employee to accept work, in zero hour contracts the employee agrees to be available for work when required. As with casual labour, workers often do not know how many hours they will get from week to week. As with other forms of flexible labour, they are often offered to the Precariat, particularly young workers, migrants and women. Standing (2013b) estimates zero hour contracts are becoming increasingly common in the United Kingdom, with the number doubling between 2004 and 2011 and almost a quarter of Britain s major employers having workers on zero hour contracts. In 2015, over 800,000 or 2.5% of the employed UK workforce are on zero-hour contracts with 1.7 million contracts existing indicating many workers are on more than one zero-hour contract (Sean Farrell and Press Association, 2016). As with other flexible working arrangements, proponents argue that zero-hour contracts allow employers to respond effectively to peaks and troughs in labour demand. However, the impact on workers is largely negative. Employees are required to be on constant stand-by, making it difficult to take on other work (or engage in other activities) in case they are called in to work, without the guarantee of receiving any hours at all. Average weekly earnings for workers on zero-hour contracts is around a third of that of permanent staff. The UK Office of National Statistics estimates that 1 in 3 people on zero-hour contracts want to work more hours (Sean Farrell and Press Association, 2016). As with contractual arrangements, insecure work hours make it difficult for workers to plan, save or to secure loans for housing etc. The UK s Labour Research Department says that zero hour contracts are increasingly being used to replace proper secure employment with its associated guaranteed level of paid work and other benefits. Even worse, it can be applied in such a way that a worker, in order to have any chance of getting paid work, is obliged to be available for work at the whim of the employer and so cannot commit themselves to any other employment. (Labour Research Department, 2013). Zero-hour contracts are a product of increasingly flexible labour markets. Rubery (2013) states This [zero-hour contracts] hasn t happened by accident: it is a product of many years of moving towards a flexible labour market, one that in practice means more power for employers over employees. She states zero-hour contracts are a contradiction in that they only involve obligations from the employee (to be available for work) without an obligation for the employer to provide any work. In Australia, awards specify minimum hours of work for employees, for example casual workers may be required to be given at least 3 hours of work for each day they work, if they aren t given these hours they still need to be paid a minimum of 3 hours. However, there are no obligations for employers to provide ongoing work except in some cases where a casual has been employed on a regular and systematic basis for more than 6-12 months. Maurice Blackburn employment law principal Giri Sivaraman states that workers in Australia without award minimum requirements have no protections. The National Employment Standards (NES) is largely silent on minimum requirements for casual employees (Fraser, 2016). United Voice states that zero hour contracts have become a troubling emerging trend across the aged and disability sectors in Australia as they provide workers with no guaranteed hours and thus no guaranteed weekly income (United Voice, 2016). 17/

18 A PARTICULAR PROBLEM: TEMPORARY OVERSEAS WORKERS Australia s approach to labour and migration has changed significantly in the past two decades, with increasing reliance on temporary migration. Post 1996, Australia has increasingly utilised a range of temporary entrant visas, many including work rights, such as working holiday makers, overseas students and temporary skilled workers (457 visas). includes 661,550 New Zealand special category visa holders. The number of temporary visas has increased in the past decade, with the number of temporary skilled migrant visas increasing almost 50% since 2007, the number of working holiday visa holders increasing by almost 70% and the number of student and temporary graduate visa holders increasing by almost 60%. Since access labour and to fill immediate skill gaps. It is supposed to add to labour flexibility by allowing Australian businesses to recruit workers with specialised skills and experience which they are unable to find locally. Campbell and Tham (2013) argue that the central aim of temporary migrant schemes is to answer employer labour needs by boosting the supply of labour to 800,000 18/ PROPORTION OF CASUAL AND PART-TIME EMPLOYMENT, AUSTRALIA 2016* *Source: ABS (2015) Cat. no , , ,000 Student & temporary graduate visa holders Working holiday maker visa holders Temporary skilled visa holders As at 31 December 2015, there were almost 2 million temporary entrants in Australia. Over 1.4 million of these people hold work rights (785,520 if you exclude New Zealand special category visa holders) making up 11% of Australia s 12.6 million strong labour force (6.1% excluding New Zealand special category visa holders) or 12.1% of Australia s 11.9 million employed persons (6.6% excluding New Zealand special category visa holders). Temporary entrants include 328,130 student visa holders; 159,910 temporary skilled visa holders (457 visas); 155,180 working holiday makers (417 and 462 visas); and 23,870 temporary graduate visas. It also 1998, the number of temporary skilled migration visas granted has increased over three hundred per cent from 30,000 (Elliot, 2013) to 96,090 (including 51,130 primary 457 visas granted and 44,960 secondary visas) (DIBP, 2015). By way of comparison, Australia s labour force increased from 9.2 million to 12.5 million over the same period (an increase of 74%). Temporary skilled migration (457) visas The temporary skilled visa was first introduced by the Howard government in 1996 to attract more skilled workers to Australia and to provide employers with a faster and more flexible way to particular industries or individual employers in the short-term, but that the aim is often couched in terms of resolving labour shortages, in the case of the 457 visa program, skill shortages. By framing the issue in terms of labour shortages, the aim of the scheme is defined not only as directly servicing employer needs but also as serving broader interests in the community. Increasing migration is not the only option to meet labour skill shortages, the economy can adjust through higher wages and better working conditions, as well as increased investment in training and technology

19 19/ (OECD, 2009). While temporary migration may be used to meet shortages in the short-run, the fact that half of temporary skilled migrants are converting to permanent residence indicates that temporary skilled workers are not simply filling short term gaps. This creates a problem when Australia s permanent migration is determined not in the best medium to long-term interests of the nation but through backdoor system of temporary work determined by business and opening up overseas workers to exploitation. Ruhs (2006) states that temporary migration programs are highly controversial, particularly among academics and policy advisors, as many previous programs have failed to meet their stated objectives, have resulted in unintended consequences, and were found to have been unworkable and undesirable. Of particular note is that the temporary work visa program has become a back-door for permanent residence with many temporary workers not returning and eventually settling in Australia as permanent migrants. The OECD (2009) states that while employers may be considered a reference group for identifying areas of skill shortage in the domestic market, historically employer requests have not been fully reliable. It is not surprising that employers advocate more liberal temporary migration programs, stating the need for flexibility. Employers will always have a demand for temporary overseas workers if they can lower their costs by employing them, even if this means they are employing overseas workers below minimum standards (Abella, 2006). Wright and Constantin (2015) conducted a survey of employers using the 457 visa scheme and found that 86% of employers surveyed state that they have experienced challenges recruiting workers locally. Despite identified recruiting difficulties, the survey found that fewer than 1 in one

20 20/ hundred employers surveyed had addressed skill shortages by raising the salary being offered. Labour shortages should first be addressed through a readjustment in the price of labour increased wages. An inability to find local workers to work at a specified wage rate, coupled with an unwillingness to offer higher wages, does not necessarily imply a skill shortage - particularly where local workers would be willing and able to work if the wage rate was lifted. This differs from a skill shortage in which there are simply not enough people with a particular skill to meet demand. In fact, 14% of employers surveyed said they did not have difficulties recruiting in the local labour market, which begs the question why they were allowed to hire workers on 457 visas in the first place. Currently, the 457 visa program allows employers to sponsor overseas workers from a wideranging occupation list that, with few exceptions, includes all ANZSCO occupations in skills levels 1, 2 and 3 whether skills shortages are present or not. The program requires some employers to conduct labour market testing before sponsoring an overseas worker, namely for occupations including trades and technical roles, community workers, administrative workers, engineers and nurses (Azaria et al, 2014). Even for this limited labour market testing requirement, there are many exemptions, e.g. for countries where labour market testing has been deemed by the minister as inconsistent with international trade obligations (e.g. workers from Chile, China, Thailand, etc.). Where labour market testing is applicable an independent review of the 457 visa program found that in its current form it has proven to be ineffective and does not assist in achieving the objective of providing evidence that suitable Australian workers are not available (Azaria et al, 2014). The OECD has pointed out that employer conducted labour market testing is not fully reliable (OECD, 2009). While many employers are using the program for its intended purpose, to fill short-term temporary skills shortages, structural deficiencies in the program mean it is also being used, along with working holiday visas and student visas, solely to reduce labour costs for businesses through the exploitation of cheap overseas temporary workers. While the main aim of the program is to address skill shortages, the structural deficiencies of the program mean that many employers are using the cover of filling skill shortages as a means to offer substandard wages and conditions. Working holiday visas and student visas Not all temporary visitor visa programs are driven by the official objective of alleviating short term skill shortages. The objective of the International Student Visa is to allow students to study in Australia and to work while undertaking their studies. The Working Holiday Visa scheme (417 and 462 visas) was initially intended to promote cultural exchange and closer ties between Australia and eligible countries by allowing young people to holiday for a year within Australia and to allow them to work as an incidental aspect of the holiday in order to support their travel funds. 5 The purpose of the working holiday visa has been blurred with the introduction of the second Working Holiday Visa Initiative in November 2005, which allows first-time working holiday visa holders to apply for a second visa after undertaking 88 days of work in the agricultural, mining or construction industries in regional Australia. The purpose of the Working Holiday Maker Program in addition to supporting the tourism industry, is also to support the Australian economy by providing supplementary labour for industries requiring short-term casual workers (Productivity Commission, 2015). The Department of Immigration and Border Protection states that the program has a special focus on helping employers in regional Australia meet short-term employment needs. The working holiday and student visas are not supposed to be primarily work visas. The holiday visa is designed for cultural exchange and the student visa is designed to allow study in Australia. But they are increasingly being used as de facto business employment visas. The exploitation of temporary overseas workers The exploitation of temporary overseas workers has received substantial media attention, particularly after Fairfax Media and Four Corners found systematic underpayment of wages and the doctoring of records by 7-Eleven convenience stores (Ferguson and Danckert, 2015a). One Pakistani student was paid as little as 47c an hour ($325 for 685 hours of work) (Smail, 2016). Other international students stated they were illegally paid as little as $10 an hour for 80 hour weeks (less than half the award rate) and threatened with deportation if they complained (Ferguson and Danckert, 2015b). The exploitation of temporary overseas workers for cheap labour is not isolated, it is endemic. A 2016 Senate inquiry into Australia s temporary work visa program found that, while some blame a few rogue employers, there is a substantial body of evidence that indicates there are underlying structural factors which are contributing to exploitation. Joo-Cheong Tham, an Associate Professor at Melbourne Law School, argues that accounts that lay blame on unscrupulous employers and rogue employers have serious shortcomings. A survey of 1,433 international students has found that 60% of international students in Sydney earn less than the national minimum wage, 35% are paid $12 or less an hour. In particular, Chinese students were found to have the greatest rates of underpayment with 73.5% paid below the minimum wage. One hundred percent of Chinese students working as casual waiters 5 For example see The Taipei Economic and Cultural Office Australia and the Australian Commerce and Industry Office, Taipei (2004), Memorandum of Understanding between the Taipei Economic and Cultural Office, Australia and the Australian Commerce and Industry Office, Taipei relating to working holiday visas, accessible at:

21 were found to be underpaid (Karp, 2016). The author of the survey Stephen Clibborn, stated that the underpaying of international students is common across the board and that while many students are aware they are being paid less than the minimum wage they felt they had no choice as they would not be able to find another job: It s great that the atrocities within 7-Eleven stores are getting the attention they deserve, but it s the tip of the iceberg of exploitation of migrant workers... A lot of other people are suffering. An audit of the fast food industry in 2016 by ER Strategies also found evidence of mass exploitation. Specifically, it found 84% of stores had some sort of underpaying occurring and 80% of stores had insufficient or no processes in place to check the working rates of employees. As did the Fair Work Ombudsman s investigation of the fast-food sector that found almost half of employers were not paying their staff correctly. Exploitation is also not restricted to the hospitality and retail industries, the Azaria s review of the 457 visa program found higher levels of non-compliance in other industries including the construction industry (Azarias et al., 2014 in Tham 2015). A comprehensive study by Fairfax Media in conjunction with Monash University found hundreds of thousands of workers across the economy, including in factories, building sites, farms and hairdressers, are being exploited with the belief they have no power. The study found 80 per cent of 1071 foreign language job advertisements offered wages below the minimum wage or award (Schneiders and Miller, 2015). Exploitation is structural Exploitation and underpayment of temporary working visa holders are not a series of isolated incidents. They are endemic and consistent with labour deregulation and increased labour flexibility. The shift represents a movement away from migration designed to meet Australia s medium to long term national interest to a system of demanddriven sponsored visas designed to meet the short term needs of business. Campbell and Tham (2013) suggest that the deregulation of Australia s migration schemes, particularly for temporary labour migration, has been consistent with the broader deregulation of the labour market whereby deregulation is the removal of regulation protecting workers. Specifically, they identify three protective purposes of migration regulation which are being removed: protection of the employment opportunities of local workers; protection of the working conditions of local workers and protection of the working conditions of temporary migrant workers. Tham (2015) argues that the widespread noncompliance with workplace laws is best explained by the interaction of precarious migrant status with the dynamics of poorly regulated labour markets stating that non-compliance with labour laws is far from an aberration, that exploitation is widespread and that this exploitation is due to the structural features of immigration laws and labour laws that facilitate non-compliance by those employing temporary migrant workers. He argues these structural features bring about the reality of non-compliance, the non-compliance is structural. The structural factors which contribute to this exploitation include: The dependence of some temporary visa holders on their employers to stay in Australia or to convert to permanent residency in the future. Employer-sponsored temporary visas increase migrant vulnerability as their ability to remain in Australia is dependent on their employer. An employer holds responsibility as both the visa holder s employer and sponsor. If the employer withdraws support for the visa holder, the visa holder has 90 days to find a new sponsor before their visa can be cancelled and they are forced to return home. Howe (2015) states that this threat, actual or perceived, can induce temporary workers to accept working conditions of any standard. Temporary skilled work visas are also being increasingly used as a pathway to permanent residence. Approximately half of 457 visa holders converted to a permanent or provisional visa over the past 5 years. Temporary migrants with aspirations towards permanent residency are also more likely to be vulnerable to exploitation as they are less likely to speak up about poor working conditions and risk the security of permanent migration. Howe also finds that the working holiday visa scheme is being used as a back door to the Australian labour market and there is no formal monitoring of where they are working or their conditions (Jasper, 2015). Limited authority to work and limited access to public provided services. While international students are independent in that their ability to stay in the country is not tied to their employer, a lack of experience, poor language skills and a desire to stay in the country can push students into exploitative employment relationships. The vulnerability of international students stems from two sources. Firstly, from the need to support themselves while in Australia and secondly, from fear they could be deported for breaching their visa conditions. International students are limited to working 40 hours a fortnight when studying. Many students often work extra hours, including cash-in-hand work at below legal wages, in order 21/ 6 As stated by Michael Campbell, Deputy Fair Work Ombudsman, at the inquiry into Australia s temporary work visa programs, Education and Employment References Committee, 18 May 2015, accessible at: 4c83-bdd8-9279e1683df7%2F0003;query=Id%3A%22committees%2Fcommsen%2Fe81e50f4-715c-4c83-bdd8-9279e1683df7%2F0000%22

22 22/ to support themselves while in Australia (Peake, 2015). This is particularly relevant as overseas students are not eligible for a range of government support available to Australians, such as Medicare. The limit means that many international students are being forced to work for low rates of pay in return for extra hours, and keeping quiet about it. Howe (2015) states that employers may encourage or require international students to work additional shifts knowing it will put the worker in breach of visa conditions. As a result of the breach, the temporary migrant worker can face the possible cancellation of their visa. This places the visa holder in an even more vulnerable position as employers may threaten workers with deportation. For working holiday makers, many of whom are unskilled young labour, employers may pay workers in cash at a rate below the minimum wage and young workers may accept this to keep their job (Howe, 2015). A lack of enforcement. Regulation is not effective where there is no monitoring, enforcement or penalties for breaches of this regulation. While there are approximately 2 million temporary workers in Australia, including over 1.4 million with work rights, the overseas worker team at the Fair Work Ombudsman consists of only 17 full time inspectors to investigate cases of exploitation over 80,000 visa holders per inspector. Inadequate enforcement and penalties acts as an incentive for employers to exploit temporary workers when the benefit from doing so outweighs the cost of the penalty or where the probability of being caught is sufficiently low. Change is needed in Australia s migration system Australian and permanent resident workers should have the first opportunity to work before employers engage temporary overseas workers for positions. The endemic exploitation of temporary overseas workers in Australia indicates that businesses are utilising overseas labour to minimise costs rather than to fill skill shortages. The structural change in Australia s migration scheme has been consistent with broader policies creating a more flexible workforce through the removal of protections for local and migrant workers. Australia s migration scheme should focus on the broader medium to long term national interests rather than directly servicing the short term wants of business. Employers will always demand access to temporary overseas workers if they can lower their costs by employing them. Temporary migrants lack mechanisms to protect and fight for their interests. Protections for temporary migrants need to be improved such that temporary overseas workers are less reliant on, and less vulnerable to, a single employer to remain in Australia or to seek permanent residency. All employers of temporary workers should be required to conduct labour market testing to ensure local workers are not available to perform the role first. Free trade agreements should not include clauses that trade away the Government s right to adjust migration law to include labour market testing. Access to temporary skilled overseas workers should be sufficiently costly to ensure that employers are not simply utilising visas to access cheap labour. Labour shortages should be met in the first instance by offering higher wages and training local workers. The fact that over 99% of employers did not raise the salary to address shortages indicates that many positions may not be genuine skills shortages, particularly where positions could be filled through an adjustment in wages. Employers should pay wages sufficient to attract local workers where available. Employers who have a genuine need to sponsor overseas workers must ensure they are also training local and young workers to reduce their need to rely on temporary overseas workers in future. Employers should be required to train workers and employ apprentices in the same occupations where they are using skilled overseas workers. The purpose of working holiday visas and student visas needs to be clearly articulated and the administration of these visas need to match their intended purpose, rather than being used as ad-hoc business visas. The work rights attached to working holiday visas need to better reflect the primary purpose of the visa. Working holiday and student visa holders should not be permitted as independent contractors (i.e. should be prevented from obtaining an ABN) and labour hire firms should be excluded from engaging workers on working holiday visas. The second working holiday visa initiative should be scrapped. Enforcement and penalties need to be lifted to adequately deter employers from breaching workplace and migration law. Significant and substantial additional funding and resources need to be devoted to monitoring the integrity of temporary visa programs and enforcement and prosecuting breaches. Sanctions against employers for breaches need to be higher. These policies should take into account the unequal power dynamic between employers and temporary overseas workers. Employers should hold more responsibility for exploitation or breaches of visa than employees to recognise the power dynamic in play.

23 THE IMPACT OF DEREGULATION: INEQUALITY Advocates argue that the labour market needs to be deregulated and made more flexible in order to increase efficiency and promote economic growth. This benefits both business and workers as improved efficiency flows down to higher wages and reduced unemployment. Deregulation has not meant the complete removal of regulation of workplaces. Rather there has been a restructuring in industrial relations and in the type of argue that Instead of the eruption of innovative agreements, workplace collaboration and flexibility promised by advocates of deregulation, the changes they have introduced have merely lead to a resurgence of unilateral managerial authority, a narrowing of bargaining pre-occupied with issues concerning hours of work and rising wage inequality. The removal of the protectionist regulation for labour markets removes compensation for become a growing concern for many developed and emerging economies. Inequality has been found to be harmful for long-term economic growth (OECD, 2015). Temporary, part-time and selfemployment accounts for a third of total employment in OECD countries. More than half of the jobs created since the mid-1990s have been in the form of insecure work. Households which rely on earnings from precarious work are much more likely to face poverty 23/ regulation which govern labour markets, in particular the removal or weakening of protective regulation for workers and increased regulation surrounding bargaining and controlling unions. Labour market deregulation has not delivered the benefits promised, rather it has contributed to the rise of precarious work and increased inequality. The new work environment is characterised by less stable, less secure work with lower wages. Briggs and Buchanan (2000) the unbalanced bargaining power between employers and employees, basic community standards surrounding work and the ability to minimise wage disparities. This has contributed to increased inequality, a reduced share of national income for labour and the growth of the working poor. The inclusiveness of economic growth and its relation to inequality and the declining labour share of national income, despite growing labour productivity, has with people more likely to be in the poorest 40% of society if they have non-standard work (OECD, 2015). The declining labour share of income and global inequality Since the mid-1970s, the share of national income going to labour has declined across the world, including in almost all of the G20 economies while the share going to capital (profit, interest, etc.) has increased (ILO et al., 2015). The declining labour share represents an increase in the

24 CHANGE IN LABOUR S SHARE OF NATIONAL INCOME IN SELECTED ECONOMIES *Source: ABS (2015) Cat. no % Spain Italy Repub of Korea USA Japan Australia Canada France UK 24/ returns to capital relative to labour as well as growth in average wages lagging behind growth in labour productivity. Changes in labour market institutions and the bargaining power of workers, along with technological change have contributed to the falling labour share. A decreasing labour share of income also contributes to inequality as capital is more concentrated than labour - i.e. a smaller proportion of people benefit from returns to capital than returns to labour. In addition, the distribution of the share of income going to labour itself has also been contributing to inequality with the share of labour s income increasing for the richest 1% while diminishing for the bottom 99% (OECD, 2015c). That is, the rich have received an increasingly higher share of labour s income at the expense of everyone else. A divergence between wages and labour productivity can also become problematic as, if productivity is no longer linked to wages, the wage incentive for workers to become more productive is removed. While labour productivity has been increasing in Australia, if the link between labour productivity and wages remains broken it may eventually lead to reduced productivity. Insecure work may also lead to reduced productivity if insecure work results in the breakdown of trust between workers and employers: Much of the innovation driving productivity growth is incremental, smallscale, but cumulatively very important. It depends on workers demonstrating commitment to their employer s business, but that depends on trust and on workers being treated as people rather than an intractable factor of production. (Coats, 2015) Consistent with other economies, Australia s labour share of income has declined since the late 1970s, after rising in the 1960s and early 1970s due to an increase in the bargaining power of labour and slowing productivity growth (Parham, 2013). Household wealth and income has become increasingly unequally distributed. Across 18 OECD countries, the 10% of wealthiest households hold half of the total wealth, the bottom 40% hold a little over 3% (OECD, 2015c). Oxfam estimates that the wealthiest 62 individuals in the world have the same amount as the half of the world s population approximately 3.6 billion people. The richest 1% is estimated to have more wealth than the rest of the world combined (Oxfam, 2016). Free market ideology asserts that extreme wealth and income are a just reward for hard work. There is no evidence that the wealthy work significantly harder than everyone else. It is hard to believe that 62 individuals are as productive as 3.6 billion people. The Gini coefficient is a statistical measure of a country s income THE LABOUR INCOME SHARE IN AUSTRALIA S MARKET SECTOR *Source: Parham (2013) %

25 distribution or inequality. A Gini coefficient of zero represents perfect equality, where as a value closer to 1 represents increasing concentration of income in the hands of a few (increased inequality). Since the 1970s, the Gini coefficient has increased for most developed economies. Technological improvements which have changed the structure of the labour market have also contributed to growing inequality. As technology has improved, many middle income jobs (particularly in manufacturing and primary industries such as agriculture) have been hollowed out as jobs are automated. The economic gains from these technological advances are concentrated in the hands of the owners of capital rather than increasing the living standards of the majority. The OECD (2015) estimates that almost a third of the widening gap between the top 10% of income earners and everyone else over the past 25 years can be attributed to technological advances. The Committee for Economic Development of Australia (CEDA) estimates that almost 40 per cent of Australian jobs could be replaced by technology in the next ten to fifteen years. Without better management, further technology will lead to further inequality. Improvements in technology also boost the productivity of labour. However improved labour productivity has not necessarily translated into higher wages. In most countries where labour s share of income has declined, growth in wages has been significantly lower than productivity growth. A declining share of income going to labour means that gains in productivity and increases in national income, are not leading into increases in wages. Rather, a larger portion of income is going to the owners of capital (profits, rent and interest). Inequality in Australia Average household incomes have grown in OECD countries over the past thirty years, however these increases have been coupled with rising inequality and a hollowing out of the middle class. Australia has fared relatively well in terms of income growth benefiting households across the income distribution and has avoided the shrinking income share of middle GINI COEFFICIENT OF THE DISTRIBUTION OF HOUSEHOLD DISPOSABLE INCOME 1974 TO 2013 *Source: ILO et al. (2015) and OECD (2015) Germany USA UK France Canada Japan Australia income households (IMF, 2015), This is largely due to a resources boom and the negative impact of conservative labour market policies being dampened by the social welfare reforms of the 1980s and early 1990s. From the mid-1980s to the late 2000s, Australia s real household income increased by 3.6% annually on average, compared with 1.7% for OECD countries on average (OECD, 2011). Between the mid-1990s and late 2000s, Australia had the second highest average income growth among OECD countries. Contributing to increased income for the lower income households has been Australia s progressive tax and transfer system and minimum wage system which has prevented the salaries of low income workers falling by the same extent as other countries, despite our relatively low rate of taxation and transfers as a share of GDP as compared with other OECD countries (Productivity Commission, 2015b; ACOSS 2015). Despite this, while incomes rose for everyone, they rose more for high income earners than low and middle income earners. The rising tide was lifting all boats, but some more than others (Hetherington, 2015). Though Australia had the fifth highest income growth for the lowest 10% of income earners, the difference between rates of growth for the highest and lowest income earners was similar to the OECD average. The OECD (2011) estimates that from the mid-1980s to the late 2000s, average income grew by 4.5% annually for the top 10% of Australian income earners; 50% more than the income growth for the lowest income earners (3%). This difference was comparable to the OECD average that found income growth of top income earners (2%), approximately 43% higher than income growth for the bottom 10% (1.4%). Data from the World Wealth and Income Database shows that in the 1980s and 1990s real income growth for the top 1% of income earners in Australia grew substantially more than the incomes of everyone else. As Australia passed through the peak of the resources boom, and largely avoided the impacts of the global financial crisis in , the conservative policies of late 1990s remained. As the resources boom followed by 25/

26 % AVERAGE REAL INCOME GROWTH, AUSTRALIA *Source: World Wealth and Income Database (2015) Bottom 90% Top 1% s 1980s 1990s 2000s % 26/ CHANGE IN SHARE OF INCOME AND WEALTH *Source: ABS (2015b) Lowest Quintile Income (1995 to 2014) Wealth 2004 to 2014) 2nd Quintile 3rd Quintile 4th Quintile Highest Quintile INCOME SHARE OF TOP 1, 0.5 AND 0.1 PER CENT IN AUSTRALIA FROM *Source: Atkinson and Leigh (2007) Top 1% income share Top 0.5% income share Top 0.1% income share

27 0.36 Johnson & Wilkins ABS 0.34 AUSTRALIA S GINI COEFFICIENT *Source: Whiteford (2014) from Johnson and Wilkins (2006) and ABS data. Gini Coefficient the housing boom progressed, investment returns became increasingly concentrated within a small segment of the Australian community. In the past decade, the share of aggregate income and wealth has increased for the top 20% of income earners while decreasing for everyone else. As a result, the highest paid 20% of Australians currently receive almost half of Australia s income (48.5%) and the richest 1 in 5 hold 62.1% of Australia s wealth. Oxfam estimates the richest 1% of Australians have the same wealth as the bottom 60%. By contrast, the poorest 20% have less than 1% of Australia s wealth (ABS, 2016). Higher income growth for the rich relative to everyone else contributes to increasing inequality. Australia experienced declining inequality between the 1950s and the early 1980s, as the share of income of high income earners decreased. At the beginning of the 1980s the trend reversed and inequality rose. The problem with increasing inequality, in addition to the negative impact on economic growth, is that income is often found to be associated with better health outcomes and life expectancy. In all societies those with higher incomes have better health and longer life expectancy than those with fewer resources, but the gap in health outcomes between rich and poor is significantly wider in more unequal societies. This is inconsistent with any commitment to the notion of social justice. It means that not all human lives are seen as equally valuable and it is difficult for some citizens to acquire the capabilities they need to choose lives that they value. (Coats, 2015). Those with more wealth also have increasing influence in the political process. This creates a vicious cycle as donations and lobbying power secure favourable policy that maintains advantage or leads to additional policy which further increases inequality; benefiting the wealthy at the expense of everyone else. Hetherington (2015) argues that the past two decades of increased income and living standards, including for lower and middle income earners (despite growing inequality), has added to a myth of Australian exceptionalism. But as the resources boom slows, the outlook for wages and inequality is even less positive. Australia s wage growth has been falling since 2011 and is at its lowest point since records began in 1998 (ABS, 2016b) despite faster growing labour productivity growth. The decline in wage growth relative to productivity growth means more income to capital in the form of profits. Increased profits has not necessarily translated into more quality jobs; continued decreases in wage growth will only further fuel income inequality which in turn will negatively impact economic growth. In fact, Coats (2015) argues that the policies which continue to be pushed by conservatives, such as relaxed regulation and weak trade unions created the conditions for the global financial crisis: Weak wage growth led to an increase in household indebtedness as people sought to maintain their living standards with their relative wages shrinking. A deregulated financial system repacked these debts into increasingly exotic derivative instruments and a small minority of financial services professionals made a great deal of money. The tower of debt collapsed, with devastating consequences for the global economy, when debtors began to default on their repayments. 27/

28 SUMMARY AND POLICIES FOR THE FUTURE 28/ Since the 1980s, gaining momentum since the late 1990s, the dominant conservative consensus has been that economic growth and reduced unemployment is best achieved through deregulation of the labour market and increased flexibility. In reality, while Australia has experienced consecutive years of steady growth and rising income, this income has flowed predominately to the top, inequality is increasing rapidly, labour is receiving less of the nation s income as compared to capital and jobs are becoming increasingly insecure. What has developed is a growing class of people suffering from insecure work, a lack of security, lower wages and less opportunities despite increased levels of training and education- the Precariat. The conservative policies of the past are no longer effective. Coats (2015) advises that we need to learn from the mistakes of the past and recognise the strengths of policies with good social outcomes, including the government s commitment to maintain full employment; a redistributive welfare state; and, the presence of strong labour market institutions (notably trade unions), which ensured a reasonably equitable distribution of incomes before the intervention of the tax and benefits system. POLICY MAKERS NEED TO RECOGNISE THAT THE CONSERVATIVE CONSENSUS IS NO LONGER ADEQUATE RECOMMENDATION: There needs to be a broad acceptance that the conservative policies of the past are not adequate. There is enormous inertia a tyranny of the status quo in private and especially governmental arrangements. Only a crisis actual or perceived produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable. Milton Friedman, West and Bentley (2016) argue that Australia is a victim of its own success. Conservative policies coupled with the resources boom may have been successful in terms of growth, but have led to increased inequality and are now constraining the country s ability to find its way towards new policies that will achieve future prosperity. They argue that, despite the fact that a different direction is needed, the conservative consensus of the past is so dominant it is rarely questioned. This conservative consensus does not provide an answer to our current circumstances as it does not acknowledge that market liberalisation creates and reinforces inequality. Those who benefit from the system also have little incentive to change the status quo. Policy needs to be focused on addressing inequality, social justice and managing a changing economy, rather than being narrowly focussed on cutting costs, increasing productivity and efficiency dividends. The increasing unequal balance of power between employers and employees need to be addressed. Workers need to have a voice for fairness and productivity (Coats, 2015). Stubbornly high unemployment, declining wages and increasing work insecurity, underemployment and inequality will not be fixed by a conservative government approach of further reduction of social safety nets or further deregulation and flexibility of the labour market. Cutting government spending and reducing deficits does not automatically equate to a strong economy and job growth. LABOUR LAWS NEED TO BE REFORMED TO PROVIDE ADEQUATE PROTECTION FOR ALL WORKERS INCLUDING CASUAL WORKERS AND CONTRACTORS RECOMMENDATION: The Fair Work Act and National Employment Standards (NES) need to be reformed such that adequate work standards apply to all workers, including casuals and those in insecure work. The National Employment Standards (NES) only applies partially to casual workers who are not entitled to many of the

29 PAYMENTS AS A PROPORTION OF AVERAGE WEEKLY EARNINGS *Source: Authors calculations. Payment data from Australian Government Guide to Social Security Law.Average Weekly Full-time Adult Ordinary Time Earnings from ABS (2015c) Youth Allowance Newstart Allowance benefits of standard employment such as paid leave, personal leave or notice of termination. Many workers are not covered by the NES, operating as independent contractors (including via peerto-peer service platforms). Working arrangements for many in insecure work are minimally regulated. Biddington et al. (2012) state that this legally sanctioned exceptionalism means a range of securities and protections for many workers are removed. The Australian labour regulation system is particularly porous, and numerous gaps exist as a result of limits in its coverage, e.g. the restriction to employees, limits in its enforcement, and the existence of numerous exemptions or derogations, such as for casual employees. As a result, labour market deregulation and the creation of new flexibilities for employers could be achieved through tightening of the scope of coverage of awards and statutes, loosening of enforcement, more and wider exemptions and more liberal rules around non-standard employment. Campbell and Tham (2013) The exclusion of workers in certain forms of insecure work allows employers to minimise costs by legally avoiding the payment of certain entitlements and protections, such as unfair dismissal. The extension of adequate work standards to these employees would reduce the incentive for employers to preference forms of insecure work. All workers need to be treated with equal respect. The system needs to be overhauled to ensure that workers engaged in insecure work are able to expect a higher degree of security than they currently do. Work standards need to be applied regardless of the type of contractual arrangement. This could be achieved through extending a version of the NES to all workers, including those in specific forms of insecure work. In addition to the extension of basic entitlements to all forms of employment, regulation needs to be improved to promote more secure work such as the restriction of using indefinite or continuous casual labour. The definition of who is an employee and who is an employer also need to be clearer, in order to reduce the use of sham contractual arrangements and labour hire. The Fair Work Act needs to tighten the definition of a casual employee to mean a person engaged on a contract of employment that terminates at the end of each engagement and involves intermittent, unpredictable work hours. A new definition should also be added of embedded labour hire employee. These labour hire employees should be entitled to the same rates of pay and conditions of direct employees under a labour hire agreement. The Fair Work Commission should be prevented from approving enterprise agreements where the majority of workers are classified as casual employees by their employer or where the majority of workers do not qualify for unfair dismissal provisions. The Fair Work Act should be amended to prevent employers making employees redundant in order to replace them with cheaper contract labour. The Fair Work Act should also include a provision which ensures remuneration rates of contractors are no less than that received by their full-time direct hire counterparts. SOCIAL WELFARE SYSTEMS NEED TO ENSURE BASIC SECURITY FOR ALL RECOMMENDATION: Australia needs to maintain adequate social welfare. Cuts to services and welfare payments need to be reversed or stopped. The pursuit of deregulated and flexible labour markets since the late 1990s has included the undermining of systems of social welfare through resource cuts to programs and welfare organisations. However, compared to other economies, Australia has been able to maintain a range of basic social safety nets such as Medicare, along with a relatively high minimum wage and progressive tax and welfare policies thanks to the social policies of the late 1980s and early 1990s. Much of the credit for this can be given to the Accord and a continued commitment to the ideas of social justice in the face of free market ideology. 29/

30 30/ Social security plays an important role not only in safeguarding people from extreme poverty, but also in reducing inequality and improving social cohesion and solidarity and fairness. Australia has fared relatively well, with progressive tax and welfare policies coupled with a resources boom - helping protect the middle and lower classes from the worst impacts of deregulation. Still, it has not been sufficient to prevent growing inequality. Reduced access to services and cuts to benefits also further entrench disadvantage and contribute to inequality. For example, in the 2014 Budget the Government planned to change eligibility for all new applicants for Newstart Allowance and Youth Allowance who are under 30 years of age. Under the proposed changes young people wishing to sign up to benefits would have needed to wait 6 months before they could receive any payment. Following the waiting period, they would have access to payments for up to 6 months in a 12 month period, dependent on the recipient participating in the Work for the Dole program. The Government also planned to increase the eligibility age for the Newstart allowance from 22 to 25 years. Such cuts and stringent criteria put further pressure on young people, particularly many of whom are part of the Precariat and are already struggling to find adequate full-time work. Policies such as these should not be implemented. RECOMMENDATION: Welfare payments must be indexed to increases in wages not inflation. Allowance payments also need to be indexed to increases in wages. The Australian Council of Social Security (2016) argues that households relying on allowances such as the Newstart Allowance for unemployment are at high risk of poverty, with 55% of those on the allowances living below the poverty line. They find that people on relying on allowances have repeatedly been excluded from payment increases with payments indexed only to the Consumer Price Index (CPI). As a result, payments as a proportion of average earnings has been decreasing. If wage growth increases, this trajectory will only continue creating an increasing underclass. In order to tackle increasing inequality, payments need to be increased. An independent commission should also be commissioned to advise the government on appropriate payment rates. The social welfare system needs to be redesigned to take into consideration the changing nature of work, including the growth of insecure work and structural economic change. There is unlikely to be a single fix, a variety of institutional, regulatory and social change is needed. Standing (2011) suggests that this would include a revival of social solidarity and universalism. Increased investment is needed in services such as health, education, public transport, affordable housing and services for the unemployed. At the very least, it should include a halt to the dismantling of the social protections we have left. TAXATION REFORM IS NEEDED AND IT MUST BE PROGRESSIVE RECOMMENDATION: Australia s tax system must remain progressive, tax cuts should not favour the wealthy. Tax avoidance by high wealth individuals and large corporations must be curbed. Taxation is important in order to provide social welfare and infrastructure. In order for equality, taxation needs to occur fairly. Australia has a progressive tax system by world standards, but the progressivity is in decline. Since the 1980s, the company tax rate in Australia has fallen from 46-49% to 30%. The 2016 Budget plans to reduce the rate to 25% over the next ten years. Australia s top marginal tax rate has fallen from around 75% in the 1950s to 46.5% (including the Medicare levy) today (Reinhardt and Steel, 2006). This is consistent with changes across the world which have seen the average top marginal rate of personal tax in OECD countries fall from around 67% on average in 1981 to 44% in 2015 (OECD Stat, 2016; Carter and Matthews, 2012). High income earners are utilising tax minimisation strategies and deductions such as trusts, negative gearing, the capital gains discount and superannuation tax concessions to reduce their tax liability. These concessions overwhelmingly favour the wealthy with over half (56%) of the benefits of negative gearing and capital gains tax concessions (Grudnoff, 2015) and 38% of the benefits of superannuation tax concessions (ABC, 2016) going to the top 10% of income earners. Large corporations have also been using tax loopholes to minimise tax, with 676 of Australia s largest companies (36% of 1858 companies) paying no tax on almost $423 billion in income (ATO, 2016). A review of Australia s top 100 foreign multinational corporations found that 76 (24 companies made an overall loss) paid an effective tax rate of just 16.2%, almost half the statutory 30% tax rate; a reduction of their tax bill of $5.36 billion (McClure et al., 2016). Concessions and loopholes reduce the effectiveness of progressive tax systems in redistributing income and reducing inequality. Progressive tax reform provides an opportunity to reduce inequality, specifically, reform of unfair tax concessions such as negative gearing, capital gains tax concessions and superannuation tax concessions. The use of these tax concessions as a means to reduce income tax by the wealthy should be constrained. Private trusts and companies should also not be allowed to be used to avoid income tax obligations; their use should be restricted. Tax avoidance by multinationals needs to be curbed. Tax loopholes should be closed. A Buffett style tax should be implemented to ensure high income earners pay a minimum rate of tax. 7 7 A Buffett tax is a tax policy that ensures that people earning above a certain income pay a minimum rate of tax on their income. The Buffett rule was named after investor Warren Buffett who believed it was wrong that he was paying a lower rate of tax by using strategies to minimise tax than his secretary.

31 The taxation of income derived through the provision of personal services should be reformed. The CFMEU (2011) estimates that $2.5 billion of tax revenue is lost in the construction industry alone through the abuse of sham contracting arrangements. This allows the employers of sham contractors to reduce their costs by paying less to their contractors because they can in turn rely on the expectation and ability of those contractors to lift their net income through a reduced tax bill. This unfairly reduces public revenue and results in ordinary PAYG taxpayers shouldering a disproportionate share of tax. NEW TECHNOLOGY NEEDS TO BENEFIT WORKERS, NOT SIMPLY MINIMISE COSTS FOR BUSINESS RECOMMENDATION: New technologies should benefit workers by providing flexibility that benefits employees, not just employers. Transitions to new technology in the workplace must be fair and lessen any negative impact on workers. The nature of work is changing, driven in part by improvements in technology in addition to structural change. Technology has allowed labour to become more flexible, but the beneficiary of this flexibility has predominately been employers. Technology has hollowed out jobs due to automation and the economic gains have primarily been concentrated in the hands of the owners of capital rather than increasing the living standards of the majority. Work is becoming more and more continuous, with many workers undertaking unpaid work outside normal work hours and outside traditional workplaces. Despite many workers feeling overworked, many other workers are facing underemployment and forced to take on casual work where employers are able to call them in to work on demand. New technologies should be embraced and used to improve working conditions for all workers, rather than simply minimising costs for business. Transitions to new technologies need to be fair. As with the Just Transition towards environmentally sustainable economies, there needs to be a Just Transition framework to lessen the impact on workers from technological change in the workplace, including social interventions to secure jobs and decent work. Flexibility should allow workers to have a real choice over their hours and place of work, while not reducing security or access to protections or entitlements. Workers need to be adequately compensated for the work they perform away from the office. Technology that allows workers to work from home should be used to improve work-life balance and allow workers to work from home when they choose, rather than just at the employer s convenience. NEW STATISTICAL MEASURES OF WORK ARE NEEDED RECOMMENDATION: Underemployment and rates of casualisation need to be used, in additional to the unemployment rate, as primary measures of the health of the Australian labour market. The one-track focus on the unemployment rate is limited as an overall indicator of Australia s labour force. It masks problems, such as underemployment and insecure work, which are becoming increasingly common as the labour market becomes more flexible. There are currently almost 730,000 unemployed people in Australia. There are over 1 million underemployed workers, over 2 million workers engaged in casual employment and over 3.7 million people working part-time. The unemployment rate sits at 5.7% at March 2016, the underutilisation rate is a much higher 14.2%. Conservative labour market policy and the growth of insecure work mean that the standard unemployment rate is, by itself, not a sufficient measure of the condition of the labour market. Additional attention needs to be given to supplementary indicators. Underemployment and the rate of casualisation should be used as a primary measure of the health of the labour market as well as other measures on the quality of employment. 31/