A Down Under Perspective on the Labour Market, Rita Palmeira

The trade-off between flexibility and security in the labour market seems to be a never-ending discussion. During the last four months, I have particularly experienced the implications of such trade-off, while working as a casual employee in Sydney.

There is no standard definition of casual employment in the Australian labour legislation, even if about 20% of all wage-earners in the country are employed as casuals (Australian Bureau of Statistics, 2012). However, it is commonly agreed that casual employees are workers “on demand”. That is, their jobs are either temporary, have irregular hours or no guarantee to be ongoing. Thus, casual employees are usually excluded from the traditional job benefits but receive an higher hourly payment rate. This premium is around 15-25% and should compensate for the absence of paid holidays, sick leave and a termination notice period.

The number of casual employees has been growing over the last decades, from 15.8% in 1984 to 27.7% in 2004 (Independent Inquiry into Insecure Work in Australia, 2012). Actually, during those two decades, 54% of all new jobs created were casual positions (Kryger, 2004). From 2004 onwards, the proportion of casual employees slightly declined and then remained stable around the 20% already referred, as the number has been growing at a lower rate than the total labour force (Australian Bureau of Statistics, 2012).

So what does it imply to be a casual worker? Well, it varies from industry to industry and I know that my experience is (obviously) not representative. But, as a waitress, I got to understand what flexibility really means.  It means having no idea how many shifts you will have next week. It means going to work without knowing when your shift will end – it will depend on how busy the restaurant gets on that night. It means receiving a text message in the morning, asking if you can work in the afternoon. It means receiving a phone call cancelling a shift, just a couple of hours before it is meant to start. It means going on holidays without any assurance that they will need you when you come back. And so on and so forth.

Clearly, not everything is awful about casual employment. Actually, if there was no such thing called flexibility, I would have never been hired in the first place. I had zero work experience as a waitress and I was not an English native speaker. Still, they hired me, even though experience and ability to communicate are probably the two most important skills a server should have.

Actually, this is one of the main arguments used in favor of casual employment, as it provides an opportunity for unskilled workers to enter the labour market and gain experience. Casual employment is designed in such a way so that it offers the right incentives to both employees and employers. On one hand, job seekers have an incentive to accept a casual position, in order to gain experience. At the same time, employers have no reason not to hire them, as there are no dismissal costs, in case workers do not meet their expectations. Thus, it seems to be a win-win situation.

In addition, it is argued that casual employees are much more likely to make the transition to permanent employment than the unemployed, due to their experience and networking. Also, contrary to what happens with unemployment, casual work avoids the deterioration of human capital.

In the end, casual jobs seem to be a good solution for those seeking to balance work with study or other activities. But what if it is your only source of income and you have a family dependent on it? A casual job makes it almost impossible to plan the future, due to the high volatility of income from week to week (based on the number of shifts). Also, career progression is compromised if you are a casual worker.

Thus, should labour policies promote the creation of more casual jobs or should they be more protective? Australian legislation used to favour casual employment, a lot. However, several campaigns against it led to some changes in the labour legislation, namely the introduction of a law against unfair dismissal. So, as usual, the right policy seems to rely somewhere between both extremes – but it is always difficult to achieve a perfect trade-off.

About the author: Rita Palmeira is a Student in the Master in Economics at Nova SBE. Her areas of interest include Macroeconomics and Political Economics. She is also enrolled in the CEMS MIM Program 2011/2013.

Advertisements

2 Comments

  1. Hi Rita!
    I really appreciated your article on the situation and evolution of casual workers in Australia. Firstly, I liked it because it was based on your own personal experience, which I did not know so far, and it seemed quite realistic. Secondly, I found it refreshing since it brought about a discussion on the labour market of country I was not so aware of, and it was thus a total novelty. In addition, it was not concerned with the problems in the labour market only – it presented the idea of “casual works” and the arguments in favour and against it, so that policy makers may consider it for the future (or not). Finally, it was very well written.
    From my point of view, “casual work” really seems as a possible solution to the rigidity in the labour market, as it definitely is a good way of creating more jobs and maybe of promoting the integration of some population segments in the labour market, namely the youth. Even though it induces income volatility and provides no insurance for workers, it seems definitely a good stimulus to very rigid labour markets, or those affected by economic and financial crisis. So, answering your question “…should labour policies promote the creation of more casual jobs or should they be more protective?..”, my response is a yes, with some calculated restrictions.
    Once again, congratulations for your article.

    1. Thank you for your comment, Rita!
      I totally agree with you when you say that casual employment is a way of promoting the integration of some population segments, namely the youth. Actually, 40% of casual employees are aged 15-24 and about 70% of them are studying at the same time (ABS, 2011). This is great because, since they are studying, there is a high probability that they will find a better job and thus make a transition from casual to permanent employment. But still, the calculated restrictions that you mentioned are needed to “protect” the remaining casual workers.

Leave a comment or suggestion

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s