Casual work and COVID-19

For many years the labour movement has been warning us about the perils of insecure work.

The claim is that many Australian workers are subject to unpredictable and fluctuating pay, irregular and unpredictable working hours, inferior rights and entitlements, lack of certainty over job continuity, and a general lack of control over their working situation. This, in turn, will feed into adverse consequences for the health and well-being of these workers and their families.

More recently, workers in these more insecure forms of employment have borne the brunt of job losses arising out of the COVID-19 pandemic, and for those that have maintained employment, some have even been blamed for helping spread the disease within workplaces.

So, does this mean we need wholesale reform of the employment system, or, outside of our pandemic circumstances, is the system largely working?

While insecure work comes in many forms, in Australia it is casual employment that is most prominent. A key feature of this type of employment is the absence of any advance commitment on the part of the employer to both the continuity of employment and the number of days or hours to be worked.

Precise estimates differ with the way casual employment is defined and measured, but it is generally accepted that around one in five Australian workers are in casual jobs, a level that has remained little changed for two decades (but is much higher than it was in the early 1980s).

Further, among industrial nations, Australia appears to be unique. While casual-like forms of employment exist in other countries, the incidence is relatively low, and tends to be restricted to jobs where demand is highly variable and unpredictable. In contrast, in Australia, many casual employees work regular hours for the same employer over long periods.

So why is Australia so different? One answer lies in the long tradition of making explicit provision for casual employees in industry awards, thereby legitimising the use of this form of employment by employers.

Second, casual employment has been further encouraged by a requirement that casual employees receive a pay premium. Today that premium is 25 per cent for all workers covered by awards.

But why would any workers accept such jobs if working conditions are as bad as portrayed by the critics?

The usual explanation is that workers have no choice – that for many, especially those with few skills, casual jobs are the only jobs on offer.

But another explanation is that casual jobs are mostly not bad jobs, or at least the workers taking those jobs don’t think so.

HILDA Survey data, for example, show that while casual employees are far more likely to express dissatisfaction with their job security than other employees, this doesn’t translate into markedly lower levels of overall job satisfaction.

And nor is there any evidence that casual employment is associated with any obvious adverse health effects.

My own analysis of the longitudinal HILDA Survey data (undertaken in collaboration with Professor Duncan McVicar at Queen’s University Belfast and Markus Hahn at the University of Melbourne and under review at a health journal) has been unable to find any evidence of significant associations between casual employment and a range of self-reported health measures.

Similarly, two previous studies, here and here, analysing these same data were unable to find any negative associations between casual employment and subsequent reports of mental health status.

In other research with Dr Inga Lass (now at Germany’s Federal Institute for Population Research) we have, however, shown that casual employment is associated with significantly lower household incomes. But the major factor driving this is relatively fewer working hours, an issue that wouldn’t necessarily be resolved by conversion to permanent employment.

Many workers will also be attracted by the 25 per cent pay premium on offer. While casual workers typically don’t have access to paid annual and paid sick leave and public holidays, for most the 25 per cent premium appears to be more than adequate compensation.

Indeed, for many workers in low-wage jobs (which is where casual employment is concentrated) additional income will be much more highly valued than paid time off.

Moves to prohibit casual employment, or at least, restrict the conditions under which casual contracts could be used, may therefore leave many workers feeling worse off.

Indeed, since late 2018, most awards contain clauses that give some casual employees – those that have worked a regular pattern of hours over a 12-month period – the right to request conversion to permanent employment. Despite this, there is little evidence of employers being swamped with requests given there has been no marked drop in casual employment.

It may be that some casual workers are trading off the longer term benefits of a permanent position, like being eligible for a promotions, in return for the immediate casual wage premium.

In yet other research, for example, we have shown that the mean difference in hourly wages between comparable permanent and casual employees is more like 6 per cent – well short of the mandated 25 per cent premium.

We conjecture that this is explained by two phenomena: (i) non-compliance by employers; but also (ii) permanent employees being treated more favourably in terms of accessing higher award classifications, promotions, and over-award payments.

Now let’s imagine casual employment was prohibited and all employees were employed in a “permanent” job. Would the former casual employees, who would still be working in the same relatively low-wage jobs, be any less likely to be victims of employers not complying with award pay provisions? Unlikely.

Would more workers be accessing promotions and upward wage trajectories? Again, very unlikely.

Would they have been less likely to have lost their job during the pandemic? Perhaps, though the main outcome would likely have been more workers on JobKeeper support rather than forced onto JobSeeker support.

It is true that, because of the absence of sick leave entitlements, casual employees do have a greater incentive to work when ill or symptomatic than permanent employees.

But surely this is better handled by emergency measures, like special pandemic leave, rather than through the complete overhaul of our systems of employment regulation?

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