Will there be a surplus of workers in the future?

Key point:

• Despite some of the alarmist predictions that there will be a surplus of workers in the future, a shortage of workers may be more likely.

Some commentators suggest that improvements in technology will mean swathes of work can be delegated entirely to machines, leading to a massive surplus of labour and potential re-imagining of how people will allocate their time to work or leisure.^[1]

Historical evidence suggests a surplus of workers is unlikely. The introduction of information and communication technologies has significantly changed labour markets, but the working week has not changed much:

• Since the 1960s, hours worked per capita in Australia has stayed fairly stable (outside of economic downturns).^[2]
• Following the widespread adoption of information and communication technologies, there was no discernible negative impact on employment across G20 countries.^[3]
• Treasury projects that hours worked per person will remain essentially stable over the coming decades.^[4]

The historic evidence demonstrates that, when labour-saving technology is adopted, labour is re-directed to other areas of demand. Australia’s labour markets are reasonably effective at accommodating change. Throughout history, many technologies have taken over tasks that were previously done by people: from the loom and the harvester, to mass textile production and automatic teller machines.

While there will always be some friction in how work is allocated to labour, concerns about large-scale labour surpluses appear unfounded.

Indeed, as the former Reserve Bank Governor, Glenn Stevens noted in 2015: “it may be that jobs will be ‘robotised’. But on the other hand, in the long run, we may need that to some extent. Demographic factors suggest strongly that, all other things equal, the problem isn't going to be a shortage of jobs, but instead a shortage of workers.”[5]

A shortage of workers is more likely

While no one can predict the future, well-respected economic agencies like the Treasury or Reserve Bank of Australia suggest a shortage of workers is more likely.

Along with other developed economies, Australia’s population is becoming older, and our working age population will become smaller relative to the overall population.

Potential shortages of workers would be exacerbated without a well-managed skilled migration program.

According to the Australian Government’s intergenerational report, in 2014-15, around 15 per cent of the Australian population was 65 or older. By 2054-55, this is projected to increase to almost 25 per cent of the population, as a large portion of Australians reach retirement age and as the life expectancies of older Australians increase.

The ratio of working age Australians to Australians over 65 is projected to decrease from 4.5 in 2014-15 to 2.7 in 2054-55.

Treasury has projected the participation rate for Australians 15 years and over will decrease from 64.8 per cent in 2014-15 to 62.4 per cent in 2054-55, largely because of ageing (see Figure 1).

To date, the ageing of the population has been offset by the increases in participation resulting from greater female participation in the workforce and more recently an increase in participation in the labour market by older workers.[6]

While any long-range economic projection needs to be viewed with some caution, the ageing of the population is likely to see an end to the longer-term increase in labour force participation. As a result – and everything else being equal – this would tend to make the labour market tighter than it has been. 

Indeed, McKinsey noted in their 2017 report A future that works that the general consensus appears to be that flat or falling participation rates due to ageing may mean developed economies around the world may experience shortages of workers.[7]

Which groups could be left behind BY FUTURE CHANGES in the LABOUR FORCE?

Key points:

• The most credible estimates suggest 5 to 10 per cent of jobs could be displaced by technology over the next 10 years.
• Many of the people in these jobs will be able to successfully adapt (in some cases, after re‑skilling) and will return to the workforce. However, some groups are at a higher risk than others of job losses. Research undertaken by AlphaBeta shows that men are at more risk than women; low-skilled workers are at more risk than high-skilled workers; and workers in regional areas are at more risk than those in urban areas.
• It is also possible that the forces of change in the future of work may exacerbate disadvantage already faced by some groups of Australians, such as those people in long-term joblessness, many of who receive Newstart Allowance.
• Government efforts to prepare for the future of work should be calibrated to ensure that support is available for groups who are most at risk of being left behind.

An accompanying document discusses the impact of technology on the labour market, and possible jobs that could be displaced (Factsheet: Will technology destroy jobs?).

The most important impact of technology is the tasks within existing jobs, which will require every Australian worker to adapt. Technology will also directly and indirectly create jobs.

However, it’s important to recognise that a small number of jobs will certainly be substituted by technology. Although no one can predict the future, estimates of large-scale job losses are probably unfounded. The most credible estimates suggest 5 to 10 per cent of jobs could be entirely substituted by technology over the next decade.

The loss of any job has a personal, emotional and financial cost for the individual involved. It is critical to examine the groups of people who may be at most risk of job losses, to ensure that government support is available for them.

Some groups have a higher risk of job losses than others

The number of voluntary job changes in the labour force is much higher than the number of involuntary transitions. In 2017, 2.6 per cent of the labour force experienced a job loss, compared to 10.7 per cent who experienced a voluntary job change.

The number of job losses is also smaller, as a proportion of the Australian labour force, compared to 20 years ago: currently 2.6 per cent, down from 4.2 per cent 20 years ago.[8]

Involuntary job losses can arise from a number of circumstances where a worker may be:

• laid off or retrenched
• made redundant
• dismissed (for reasons of performance or conduct), or
• out of work because their employer had to close for economic reasons.

While this is lower than historical averages, there are some groups who have experienced a higher level of job losses (Figure 1).

The incidence of job loss is higher for groups with some sets of personal characteristics, including: men; low‑skilled workers or workers in regional areas (Figure 2).

However, AlphaBeta find that the factor with the biggest impact on job losses is the industry that a worker belongs to (Figure 3).

As Figure 3 represents the incidence of job losses by industry over the last five years, it will reflect the economic and business cycles in those industries at that time. Different industries will experience different business conditions at different times.

In some cases, the rate of job losses is determined by the dynamics within an industry. Some industries have more job change than others, due to the nature of the work.

It is critically important to understand the areas where people regularly go through transitions – even if they often secure employment shortly thereafter. Government needs to provide a different set of support services for people who regularly go through change.

The analysis undertaken by AlphaBeta is only an initial piece of work; it is not an exhaustive analysis of every possible cohort. But we believe government should undertake a comprehensive cohort analysis to make sure that employment and welfare services are tailored for the particular circumstances of high-risk cohorts.

The forces of change can exacerbate existing disadvantage and barriers to work

While these cohorts may be most likely to experience retrenchment in coming decades, other cohorts will continue to face complex barriers to work (such as people with disability).

One critical cohort that could be further disadvantaged in the future of work are those Australians in entrenched joblessness. Of those people who receive the Australian Government’s Newstart Allowance (the primary unemployment payment), over 45% (340,000 people) have been on the payment between one to five years. Around 20% (over 145,000 people) have been on the payment for five years or more and this includes almost 25,000 people who have been on Newstart for 10 years or more.^[9] The circumstances of Newstart recipients are discussed further in Box 1.

The future of work will sharpen the need to assist disadvantaged people to enter or remain in the workforce, and make support available for those who may lose their jobs over the short to medium term.

Box 1:

People who are on Newstart for many years are among the more vulnerable members of our community

Long periods of unemployment can make it difficult for people to move back into steady work and may put people at risk of relying on income support for much of their lives. Such entrenched disadvantage can and, too often, does reach across generations.

We are particularly concerned for the wellbeing of people who are already at risk of being left behind and who may be face further challenges in a changing labour market.

The adequacy of income support payments should be reviewed as part of a broader package to improve the ability of long-term employed Australians to return to work.

We believe that income support for those out of work should not be punitive. Income support should not act as a disincentive to working, but nor should it diminish the capacity of people to get a job. Job seeking is not costless and should be accessible. If a bus fare or a collared shirt become unaffordable, then getting to job interviews and presenting as a credible employee may move out of reach.

Steady work is the best way out of hardship and disadvantage. Changes to the welfare system alone – be they small or wholesale – will not be enough. Improving the welfare system must be combined with policies that reduce disincentives to work, improve employment services and lift the competitiveness of business taxes and regulation to create jobs and stronger wages growth.

The welfare system also needs to be fiscally sustainable over the long term to prevent the need for sudden and blunt cuts in spending. This challenge will increase, not lessen, over the coming decades as the population ages. Getting people into jobs thus delivers a double dividend.

Despite recent improvements, a large and growing proportion of people stay on Newstart long-term

Almost 730,000 people were receiving Newstart at the end of June 2018.[10] Over time the number of people on Newstart has closely followed the number of people who are unemployed.

There is a substantial group of people who are new to the welfare system and only need Newstart for a reasonably short time. Over 60 per cent of people who begin Newstart payments (who haven’t been on another form of income support before starting Newstart) leave the payment within a year – or roughly 255,000 people.[11]

While there is no publicly available data on the proportions of people who stop receiving Newstart because they have found a job compared to people moving to another payment, it is likely that this group of people is largely accessing Newstart as it is primarily intended – as a short-term stop-gap while they search for a new job.

But despite recent improvements, there is a large and growing proportion of people who have been on Newstart for years (Figure 4). Around 52 per cent of Newstart recipients, or almost 380,000 people, have been on the payment for less than two years. But a growing number of people are receiving Newstart for two years or more. In 2014, only a third of people on Newstart had been receiving the payment for two years or more (or about 230,000 people). That figure is now 48 per cent or about 350,000 people.

The average amount of time a person on Newstart has spent in the welfare system has almost doubled over the past 16 years. In June 2002, people who were receiving Newstart had been on some form of income support for an average of 141 weeks (more than two and a half years), by June 2010 this average had risen to 165 weeks (more than three years). By June 2018, the average duration had doubled to 285 weeks (five and a half years).[12]

Further work should be done to understand the skill level of people who have been on Newstart for years and the barriers they face to gaining and maintaining employment. It is likely that a larger investment in building skills and work readiness, as well as more intensive support to seek and maintain employment, will be needed for this group of people to move into sustained employment and less reliance on welfare.

Will people have less security in their jobs in future?

Key points:

• Some claim the Australian labour market is increasingly volatile, insecure and precarious. Some reports on the future of work claim that permanent employment will decrease, that changing jobs regularly will become essential to advancement, or that individuals will need to be part of the “gig economy”.
• There is no evidence to suggest the current labour market is less secure than in the past.
• Technology is enabling new ways of working, such as gig economy work, but these represent a small portion of the workforce.
• Forms of work have not significantly changed: casual employment and independent contractors remain at much the same level as in the past. The most significant change is the rise of permanent part-time employment, which reflects a cultural change in allowing people greater choice and control over how they structure their work.
• Finally, it does not appear that people are changing employers more frequently. The number of job losses (involuntary transitions) is over a third lower now than 20 years ago. If anything, data suggest that people are moving slightly less, and staying with their employers slightly longer.
• Although the data indicates the labour market is no less secure than in the recent past, many Australians genuinely feel anxious and under pressure. We understand that many working Australians are concerned about coping with the cost of living and their capacity to provide a good life for themselves and their families – and, even in good economic times, some Australians will struggle to find and maintain a job.

Some suggest the nature of workplaces and employment relationships is currently undergoing change.

There is anxiety within some parts of the community that jobs will be increasingly volatile, insecure or precarious.

Some level of mobility and re-allocation is essential for a dynamic labour market, however, we are conscious that each instance of unemployment – especially involuntary retrenchment – can be financially and emotionally difficult for each individual and their family. For that reason, change will often involve some cost.

We have approached the question by examining:

• the emergence of the “gig economy”, as a form of work
• whether the prevalent forms of work have moved away from permanent employment, and
• whether people are changing jobs (whether by choice or not) more often.

The gig economy is a small, but legitimate, form of work

The gig economy involves an independent contractor receiving an on-demand stream of work from a digital platform. The gig economy provides participation opportunities for people on a short-term basis that gives them some autonomy around scheduling work. Examples of gig work include driving, household tasks or one-off professional services like graphic design.

It appears that most people who engage in gig work do so to supplement their primary income.^[13]

Although the gig economy is certainly a new phenomenon, it appears to be relatively small in Australia. Estimating the size of the gig economy is challenging. Gig economy workers are not explicitly measured by official statistics, but would be categorised as independent workers or contractors.

The Household, Income and Labour Dynamics in Australia survey data suggest that there is no evidence of any rise over time in independent work (as a primary source of income) and, if it is increasing as a source of secondary income, it is being offset by declines in other forms of secondary work.^[14]

The best estimates suggest the gig economy comprises as low as one to four per cent of the current workforce (although these estimates are not without their own imperfections).^[15]

Some predict substantial future growth in the gig economy.^[16] Estimates are made on the basis that many workers prefer the choice and autonomy of gig economy work over permanent employment.

There could be limits to growth in the gig economy, including that:

• it is not necessarily in an employer’s interest to parcel work into ‘gigs’ and maintain a vast network of possible workers.^[17] Permanent employment contains many advantages for some employers, including the reduction of transaction costs associated with recruiting staff, ease of instructing staff, and the ability to train or deepen the knowledge of a workforce, and
• some individuals may value the permanency of employment (and other benefits of employment) over the benefits of gig work.

For these reasons, we expect the gig economy may continue to grow in specific areas that are suitable for gig work, but is unlikely to be the dominant form of work in most parts of the labour market.

A majority of Australians will still be in full- or permanent part-time employment.

Much commentary on the future suggests that the nature of an individual’s form of work is undergoing significant change. Change often appears to be overstated.

The most dominant form of work in the labour force is full-time permanent employment (Figure 1).

The primary change has been a slight increase in the proportion of the workforce who are employed on a permanent part-time basis, and a slight decrease in the proportion of those who are permanent full-time (Figure 2).

Increasingly, part-time workers are in permanent part-time employment, not casual employment (Figure 3).

There has been much commentary to suggest there have been increases in casual employment or independent contracting. This is not supported by evidence:

• The proportion of independent contractors in Australia was slightly lower in 2017 than about a decade earlier: down to 8.3 per cent from 9.0 per cent.^[19]
• The proportion of casual workers is currently sitting around 20 per cent of working Australians. The level of casualisation in Australia remained at the same approximate levels since the mid-1990s.^[20]

While some people undertake a particular form of work out of obligation, many individuals choose their preferred form of work. These choices are made by balancing preferences for factors like flexibility, autonomy, security, entitlements and advancement prospects. The number of workers engaged in each form of work may change as workers shift the preference or priority of the various factors.

The move towards part-time employment is probably driven mostly by the preferences of workers. It would accord with many of the surveys about current priorities for Australian workers.^[21]

Workers are, if anything, moving less and staying with employers longer

Much of the commentary on the future of work suggests that workers are increasingly switching jobs (whether through choice or compulsion).

In fact, Australians workers are not switching jobs any more than in the past (whether a voluntary or involuntary transition). In particular, it is important to emphasise that the number of job losses (involuntary transitions) is lower now than 20 years ago (Figure 4).

The lower rate of job losses reflects a strong economy. With record-high participation levels and low unemployment, it is easier for Australians to find and keep work.

Evidence does not support the idea that workers are switching employers more often. Although levels of staff turnover in the workforce can fluctuate year-to-year,^[22] the amount of time that Australians spend with one employer (their job tenure) has remained much the same since the mid-1990s (Figure 5). If anything, the average job tenure has risen a little.

Workers’ job tenure may remain relatively high for many reasons, including the costs of changing jobs, friction in the labour market, workers wanting the security that comes with continuity of employment, the higher average age of the workforce, companies taking greater efforts to retain their workers, or the potential increased prevalence of an individual regularly changing jobs within a single employer.

Different surveys reach different conclusions about whether younger workers (“millennials”) are currently preferring longer job tenure, or the flexibility and autonomy of gig economy work. While it seems accepted wisdom that millennials prefer mobility and advancement, some surveys suggest that millennials express feelings of concern about competing in the job market and prefer to remain with a single employer. For example, the proportion of surveyed millennials who would like to stay with their employer for more than five years was 28 per cent in 2018.^[23]

The level of future job turnover is difficult to predict. It is entirely possible an unexpected event may significantly increase job churn in the short-term. However, there is no evidence currently available to suggest job tenure will be any shorter or less certain – or that there are greater job losses in the labour market – than has occurred in the recent past.

What is the ACTU’s plan for the future of work?

Key points:

The Business Council wants a system that:

• delivers a strong, reliable and sustainable safety net for workers and enables businesses to be agile and successful, and
• is future oriented and better balances the needs of workers and employers.

The Australian Council of Trade Unions (ACTU) has proposed a wide-reaching agenda for Australia’s workplace relations system.

This agenda is predicated on tackling incorrect claims that the Australian labour market is increasingly ‘insecure’, inequality in Australia is at record high levels and the enterprise bargaining system is failing.

The modern workforce will see jobs and tasks become more fluid, with individuals taking on broader tasks. It should not be constrained by prescriptive lists of duties or conditions from which the enterprise or the worker cannot deviate.

We don’t know what the jobs of the future will be. But we do know that the more rigid the system is in defining job roles, the more difficult it will be for enterprises to adapt.

The Business Council believes many of the ACTU’s proposals will not deliver good outcomes for workers or employers.

They will make the workplace relations system even more rigid than it is now. They will force people to engage with unions – even if they don’t want to. They will reduce workers’ ability to choose how they work or to negotiate for the conditions that matter to them most. And they will reduce enterprises’ capacity to make decisions to keep them agile and competitive, so they can keep staff employed or hire new staff.

The ACTU’s false claims

False claim 1 – Australia is more unequal than it has been in 70 years

• A recent Productivity Commission report found that sustained economic growth has delivered significantly improved living standards for the average Australian.
• Since the 1980s, all income deciles have experienced income growth, with the bottom decile doing well, if not slightly better than most deciles.
• Australia’s progressive tax and highly targeted transfer systems substantially reduce inequality as does the provision of in-kind government support (including health, education and child care subsidies).
• The Productivity Commission notes that no single metric can definitively answer whether inequality, poverty and disadvantage in Australia rose, fell or remained steady in recent years. Accordingly, it uses an array of indicators and observes changes over time.
• Economic mobility is high in Australia, with almost everyone moving across the income distribution over the course of their lives. For example, over a 16-year period the average Australian was classified in five different income deciles.
• An endless debate about inequality does nothing to help those who are doing it tough. Taxing more so governments can spend more would ultimately undermine economic growth and real wages and the capacity to deliver better and fairer outcomes for the community at large and the most vulnerable in particular.
• What we need to do is focus on the causes of entrenched disadvantage, particularly intergenerational poverty, and work together on solutions.

False claim 2 –insecure work is increasing

• There has been a lot of commentary to suggest there have been increases in casual employment or independent contracting. This is not supported by evidence:
  • The number of independent contractors in Australia was lower in 2017 than 10 years earlier, down to 8.3 per cent from 9 per cent.
  • The proportion of casual workers is currently sitting around 20 per cent of working Australians. The level of casualisation in Australia remained at the same approximate levels since the mid-1990s.[24] 
  • Increasingly, part-time workers are in permanent part-time employment, not casual employment. In 2016, 46.8 per cent of part-time workers were permanent compared to 39.5 per cent in 2004.
• There has also been a large amount of public discussion about the implications of the gig economy. However, best estimates suggest the gig economy comprises as low as 1-4 per cent of the current workforce.
  • This style of work provides participation opportunities for people on a short-term basis that gives them some autonomy around scheduling work.
• We must make sure people have employment protections, but we do not want to cut off work opportunities, particularly for young people.

False claim 3 – the enterprise bargaining system encourages employers to undercut one another to compete on wage costs

• Wage increases under enterprise agreements are delivering higher wages than the economy wide average.
  • The average annualised wage increase for all agreements was 2.8 per cent in March 2018. This is above the pace of wages growth recorded by the (economy wide) wage price index which rose by just 2.0 per cent over the year to March.
  • Wage increases under enterprise agreements have been higher than growth in the wage price index for the last seven years.
• The Business Council recognises that many workers are worried about their wages and are finding it hard to make ends meet. We are deeply concerned about this issue.
• Ultimately it is productivity growth that increases real incomes. In the 1990s, productivity gains came from economic reforms including establishing the enterprise bargaining system. Productivity growth ran at an average 2.2 per cent a year. That was also the pace of real income growth.
• In the 2000s, real income growth also ran at about the same rate, but slower productivity growth was offset by the record terms of trade.
• With the terms of trade boom now over and productivity growth remaining weak, real income growth has slowed.
• Enterprise bargaining agreements provide a mechanism for workers to negotiate higher wages – but this will only happen when workers and employers work together to boost an enterprise’s productivity.

False claim 4 – the enterprise-only bargaining system is failing… the pay increases it delivers do not reflect productivity increases.

• The current weakness in real wages growth reflects weak productivity growth.
• Over the past year labour productivity has run below long run average levels (with growth of 1.0 per cent). Over the past two years labour productivity has barely risen – it is up just 0.3 per cent over a two-year period.
• The long-term link between real wages growth and productivity growth remains unbroken. Over the past 26 years, productivity is up 51 per cent and real wages are up 54 per cent.

False claim 5 – the enterprise-only bargaining system is failing. More and more people are falling out of it.

• It’s correct that the numbers of employees covered by current enterprise agreements have fallen dramatically: from a peak of 2,626,600 employees covered in March 2014 to 1,781,900 in March 2018.
• But employers are only moving away from enterprise agreements to rely on the award system because the approach taken by the unions has made the system so hard to work with. It is rigid, complex and intrusive into business operations.
  • The system was made worse by the Fair Work Commission’s decision in May 2016 to reinterpret the ‘better off overall test’, which is now impractical and unpredictable.
• The Business Council wants workers to get better wages, and the enterprise bargaining system is the best way to do this.

The ACTU’s agenda

Introduction of industry-wide and sector-wide bargaining

The ACTU argues that workers must be able to negotiate across sectors and industries to ‘establish a solid basis for more secure, fairly paid work’.

The current workplace relations system already establishes a solid basis for secure, fairly paid work.

Is the ACTU suggesting that the minimum wage, the current awards system, and enterprise bargains that they negotiated don’t offer secure fairly paid work?

How do workers get the benefits of their hard work in their own enterprise if they are forced to negotiate across the sector? All workers will be stuck at the same terms and conditions of the worst performing organisation.

Workers who have helped build successful, profitable companies will miss out on being able to negotiate higher wages and improved conditions. How is this fair?

If all the levers a business can use to help it adapt and stay competitive are written into rigid, one-size-fits-all agreements, businesses will struggle to adjust. Jobs will be at risk.

Small businesses in regional areas will have to match the wages and conditions offered by businesses in the capital cities. They will be forced into arrangements that make no sense to them because they bear no resemblance to the way they run their business.

How will they find the money to do this and still have the capacity to take on new workers? How can we expect them to do this and still have money left over to upskill and reskill their existing workers?

Ultimately, an industry-wide bargaining system will only empower the big unions at the expense of workers.

Trade union membership is only 10.4 per cent in the private sector (941,500 people). The ACTU’s system means unions will negotiate wages and conditions in sectors where they have no or a handful of members. Workers will lose their ability to influence the negotiations – to fight for the conditions that are important to them. Why should workers be roped into dealing with unions when, clearly, many don’t want to?

Australia's modern award system already provides a full set of legally enforceable wage rates and conditions of employment at the industry level.

Agreements provide a mechanism for workers to negotiate above award conditions. They provide an opportunity for workers and employers to discuss the unique circumstances of the enterprise and map out a plan for how they can work together to make the workplace better and the enterprise grow. This role shouldn’t change.

We shouldn’t unravel a tried and tested system, established by Labor, and take ourselves back to the dark ages. We don't need to go back to a strike ridden, conflict driven workplace relations system in this country.

The best way to achieve wages growth and meaningful jobs for workers is to reform the system so it encourages workers and employers to collaborate to solve problems and use their skills and capital to maximum effect, not through a rigid workplace relations system.

Abolish all restrictions on agreement content

The ACTU wants to abolish all restrictions on the content of enterprise bargaining agreements.

This would pave the way for unions to charge people for negotiating agreements because apparently non-union members – 86 per cent of all workers and more than 90 per cent of private sector workers – are ‘free riders’.

The unions have a record of trying to add clauses into agreements that force workers to pay bargaining fees, even when they are not union members. Trying to take money that is due to go into workers’ pockets. The ACTU needs to clarify whether this is going to happen.

Limiting the content of agreements matters because once an agreement is settled, they set the rules for three to four years.

In a world where technological change can disrupt business models at short notice, enterprises cannot afford to wait for an agreement to expire to change how they operate.

They need agreements that give them the capacity to make decisions to keep their company competitive and their staff employed.

Workers and employers should be able to negotiate agreements that make sense in the context of that enterprise and all its workers.

Bloated agreements will be the enemy of getting tasks to change and adapt to technology, which is the enemy of job creation. Jobs will be at risk. Workers will miss out.

Abolish non-union agreements

The ACTU argues that agreements should only be made with unions representing workers.

The latest data tells us that union membership is at a record low. Only 14 per cent of all Australian employees and 10.4 per cent of private sector employees have chosen to become a union member.

Why should unions have carte blanche on enterprise bargaining when they do not represent the vast the majority of workers?

Workers should have a choice about whether they engage with unions.

Workers should have a choice about who will best represent their needs and preferences when negotiating an agreement. They shouldn’t be roped into a system they have chosen to avoid.

Workers should have a choice about whether they fund a union.

Giving unions unfettered control over agreements – even when workers do not want them to be involved − will encourage some employers to walk away from negotiations and rely on awards. Workers will miss out on the higher wages and improved conditions gained through agreements.

Abolish all restrictions on award content

The ACTU wants to abolish all restrictions on the content of awards.

Awards have a core purpose of providing a safety net of wages and conditions. But, many have already ventured into territory that workers and employers should negotiate.

Australia is the only country that has awards. They are confusing and complex – for workers and employers. Confusion and complexity is unacceptable in a government-mandated safety net.

Removing restrictions on award content would make the award system even more complex. It would also open the door for unions to further define occupations, dictating how workers do their jobs and how employers structure their workforces, regardless of what the worker or employer needs.

Restrictive job design is not how the modern workforce operates. The modern workforce is about individuals taking on broader tasks, not being confined to an outdated and pre-determined list.

We don’t know what the jobs of the future will be. But we do know that the more rigid the system is in defining job roles, the more difficult it will be for enterprises to adapt. We also know that more interesting and meaningful jobs will be created when workers and employers have some say in what the jobs are.

For small businesses that rely heavily on the award system, increasing the scope of awards is likely to add red tape and unnecessary costs.

This will discourage many employers from expanding their business and taking on new staff.

If it’s going to be complicated and costly to expand, why would we expect a business to bother? Small business owners do not have the time or resources to navigate their way through a complex system.

New national employment standards to address the problem of ‘insecure work’

The Business Council strongly supports workers having the opportunity to secure work and believes that any business that breaks the laws or exploits workers should be held to account.

However, the evidence is clear that the labour market is no more volatile or precarious than in the past.

The ACTU is ignoring that evidence and has proposed that we need a range of new measures to address the increase of ‘insecure work’, including limiting the use of casual employment, labour hire and fixed term contracts.

These false claims scare people who worry about their job security and the future of their children.

Additionally, the ACTU's proposals fail to recognise that workers are not the same. Workers have different needs and preferences for how they want to work.

As technology enables new ways of working and new generations enter the labour market, it’s likely that workers’ needs and expectations will become even more diverse.

Casuals, fixed term contracts and labour hire are an important part of the mix of employee work arrangements. These types of jobs provide valuable opportunities for people, particularly low-skilled workers and young people, to gain a foothold in the jobs market. They are often a pathway into a permanent job.

The proposals also imply that workers have no choice when deciding on their employment arrangements – this is not always the case. This flexibility can suit the requirements of many workers as well as employers.

While some people undertake a particular form of work out of obligation, many individuals choose their preferred form of work. These choices are made by balancing preferences for factors like flexibility, autonomy, security, entitlements and advancement prospects. Many people prefer casual or contract work for the flexibility or pay premium. It is not necessarily an indicator of insecurity.

Australia needs a modern workplace relations system that delivers a safety net for workers and gives all enterprises the agility they need to compete and succeed.

Restricting workers and employers from being able to access the full suite of employment arrangements will be at odds with many workers' wishes. It will create barriers to employment – with disadvantaged groups most likely to feel the negative effects.

The Business Council’s reform agenda

We want a system that:

1. Has a strong, reliable and sustainable safety net for all workers.

2. Reflects the fact that how people want to work is changing, and businesses need the capacity to make the decisions required to stay competitive and be productive.

3. Meets the needs of workers and employers.

This ultimately requires us to balance social and economic objectives. And to balance these objectives without over regulating or under regulating the system.

4. Recognises that workers and employers are not the same.

Some workers will enjoy the freedom created by new ways of working. Other workers are likely to prefer the security and entitlements gained via permanent full-time and permanent part-time work arrangements. Many parts of the community use casual and contract jobs as a stepping stone to permanent position.

Employers will need to juggle the different needs and expectations of their workforce with the achievement of business objectives. We need the system to give them the capacity to do this.

5. Has agreements that allow a focus on the unique circumstances of an enterprise.

Enterprises need agreements that give them the capacity to make decisions that will help their business adapt, be more agile and be globally orientated.

This will be the key to creating new employment opportunities. It will also be vital to deliver the productivity improvements needed to deliver higher wages.

Empowers workers and enterprises can negotiate to realise shared objectives −the ability of an enterprise to overcome challenges and harness the potential of its workforce will be key to creating a more productive and successful enterprise.

6. Has a trusted ‘independent umpire’.

Download the fact sheets:

Will there be a surplus of workers in future?

Which groups could be left behind in the future?

Will people have less security in their jobs?

What is the ACTU’s plan for the future of work?

[1] See, for example, R Avent, The Wealth of Humans: Work and its Absence in the Twenty-first Century, 2016, Penguin Books, Great Britain, or M Ford, The Rise of the Robots, 2015, Oneworld Publications, Great Britain.

[2] J Borland and M Coelli, ‘Are robots taking our jobs?’ Australian Economic Review, vol 50, issue 4, pp 377 – 397, 2017.

[3] Organisation for Economic Cooperation and Development, Future of work and skills, February 2017, https://www.oecd.org/els/emp/wcms_556984.pdf

[4] The Treasury, 2015 Intergenerational Report, March 2015, https://treasury.gov.au/publication/2015-intergenerational-report/

[5] G Stevens, The Long Run, speech delivered 24 November 2015.

[6] Reserve Bank of Australia, Ageing and Labour Supply in Advanced Economies, December 2017, https://www.rba.gov.au/publications/bulletin/2017/dec/5.html

[7] McKinsey Global Institute, A future that works: automation, employment and productivity, January 2017.

[8] AlphaBeta, Mapping Australian workforce change, October 2018.

[9] Department of Social Services, DSS Payment Demographic Data, June 2018.

[10] Department of Social Services, DSS Payment Demographic Data, June 2018.

[11] Department of Social Services, DSS Payment Demographic Data, June 2018.

[12] Department of Social Services, Income support customers: statistical overviews, various papers published from 2002 to 2013; Department of Social Services, DSS Payment Demographic Data, June 2014 through to June 2018.

[13] McKinsey Global Institute, Independent work: choice, necessity and the gig economy, October 2016, https://www.mckinsey.com/featured-insights/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy.

[14] M Cowling and M Wooden, ‘Self-employment and independent workers’, The Household, Income and Labour Dynamics in Australia Survey: Selected Findings from Waves 1 to 16, released August 2018, University of Melbourne.

[15] Grattan Institute, Peer-to-peer pressure: policy for the sharing economy, April 2016, https://grattan.edu.au/report/peer-to-peer/ ; McKinsey Global Institute, Independent work: choice, necessity and the gig economy, October 2016, https://www.mckinsey.com/featured-insights/employment-and-growth/independent-work-choice-necessity-and-the-gig-economy

[16] See, for example, Deloitte, Human Capital trends 2018, https://www2.deloitte.com/au/en/pages/human-capital/articles/human-capital-trends.html; Intuit, Intuit 2020 report, https://http-download.intuit.com/http.intuit/CMO/intuit/futureofsmallbusiness/intuit_2020_report.pdf

[17] Refer to, for example, Coase’s theory of the firm in explaining how organisations structure themselves and their work.

[19] Australian Bureau of Statistics, 6333.0 Characteristics of Employment, August 2017.

[20] Australian Bureau of Statistics, 6333.0 Characteristics of Employment, August 2017; Australian Bureau of Statistics, 6105.0 Australian Labour Market Statistics, July 2014; Productivity Commission, Forms of work in Australia, April 2013.

[21] McCrindle and Care Support Network, Australia Casual Workforce Report, https://mccrindle.com.au/insights/blog/happy-working-gig-economy-depends-whether-choice-forced/; Hays, 3 in 4 Aussies would take a salary drop to work from home, 1 March 2016, https://www.hays.com.au/press-releases/HAYS_322060; CSIRO, Tomorrow’s Digitally Enabled Workforce, January 2016.

[22] Australian Human Resources Institute, AHRI Pulse Survey, 2015, https://www.ahri.com.au/__data/assets/pdf_file/0018/52344/PULSE_retention-and-turnover-2015.pdf

[23] Deloitte, The 2017 Deloitte Millennial Survey, 2017; Deloitte, The 2018 Deloitte Millennial Survey, 2018.

[24] Australian Bureau of Statistics, 6333.0 Characteristics of Employment, August 2017; Australian Bureau of Statistics, 6105.0 Australian Labour Market Statistics, July 2014; Productivity Commission, Forms of work in Australia, April 2013.