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.