Casualisation — not just a union-business debate, but maybe key to new growth

Despite the media love-in for Scott Morrison’s industrial relations reform “process”, some parameters and hard points have emerged that make it clearer this isn’t the peace in our time that some excitable journalists were suggesting earlier in the week.

First, the government reserves the right to ignore any outcomes, or lack thereof, from its IR workshops and try to legislate unilaterally, with Attorney-General Christian Porter flagging that the government will go ahead without any agreement from its industry-union working groups.

A Hawkeian consensus it ain’t.

Second, Morrison won’t guarantee that the reforms the government will pursue won’t disadvantage workers. Indeed, merely to ask about that, as Sabra Lane did yesterday, is to invite criticism by the prime minister.

“The problem with that position, and this has been the problem with this industrial relations debate for all time, is it quickly descends into these sorts of issues,” he complained to Lane. “And we need to get past all that. We need to get past the point where it’s turned into black and white discussions.”

So, yes, “get past” this fixation with reforms that immiserate workers. Stop asking questions. And forget the better off overall test, we won’t even get a “no disadvantage” test at this rate.

That clears the way for the government to attempt to portray itself as an honest broker between employers and unions and, when the two sides can’t agree on anything, produce its own shopping list of reforms that just so happen to make some workers worse off, but all in the name of a more productive and flexible workplace. And, hey, at least they have a job, right?

But Morrison has flagged that a “key issue” would be casualisation.

“The opportunity should be there for [employees], where they’re effectively operating as full time employees, that they would have the opportunity convert to full time work,” he told Lane. “Now, that’s a reasonable position.”

Meantime, ACTU secretary Sally McManus repeatedly flagged casual work and job security as major issues for the union movement in her op-ed on the reform process today.

Now if Morrison is clever, and willing to be non-ideological, this is an issue on which he could, improbably, deliver a win-win that would provide valuable political capital.

The debate over casualisation has been going for years and usually proceeds like this: the union movement says casualisation and the rise of the gig economy is rampant and a terrible thing for workers and the economy. Employers say the overall rate of casualisation hasn’t changed in twenty years and the gig economy is wonderful for workers who want flexibility to fit employment in with their lifestyles.

Both sides have a point: casualisation did rise significantly in the 1980s and 1990s — but has remained at that elevated level ever since.

But a paper from the Reserve Bank in 2018 shed further light on the issue by examining not the formal level of casual employment but perceptions of job insecurity.

It found, using data from the HILDA survey, that there’d been a significant fall in perceptions of job security after 2012 right across the workforce, and it remained, at the time of the report, well below levels before and after the financial crisis.

What drove this? The actual state of the labour market, both unemployment and underemployment, were, as expected, important. And unsurprisingly “workers in casual roles report lower job security than those in non-casual roles”.

But the report found only “part of the fall in job security during the post-mining boom period can be explained by the weaker labour market”.

Other factors were also important: “trade exposure and automation have the expected significant negative relationship with perceived job security,” whereas factors “associated with higher job security include: working full time, having a permanent position, having longer tenure, being female, being older, having less formal education and living outside a capital city”.

But there was also an x-factor: “Aggregate conditions not captured in our model appear to be the key driver of job security concerns. The recent decline in perceived job security has been broad based across industries, occupations, job structure and personal characteristics. As such, we cannot pinpoint any one factor that has led to the decline in perceptions of job security.”

The RBA authors argued job insecurity is a key reason for wage stagnation — workers who were more uncertain about their capacity to retain a job were less likely to seek higher pay rises.

And the link between job insecurity and lower consumer spending and higher savings rates is — apart from being common sense — established both here and overseas.

Australian retailers have been lamenting for years that Australians have been reluctant to spend, and lower household expenditure has crimped economic growth; the RBA devoted an entire section of its February Statement of Monetary Policy to weak household consumption in recent years.

What if the government took the ACTU’s arguments about casualisation seriously and undertook to enable the easier transition of casual workers, if they wanted, to full-time employment?

As the RBA study indicates, employment conditions are only part of why workers feel job insecurity.

But a lowering of the overall level of casuals in the workforce, coupled with strong employment growth (which will require more fiscal intervention) could improve perceptions of job security back to levels of 2012.

If the RBA is right, this will feed into higher wages growth, and will also lift household spending — with corresponding benefits for all Australian businesses and especially retailers.

A win for workers, a win for business and a political win for a government trying to pitch itself as above the ideological fray, even if its real agenda is to deliver for its business donors.

If Morrison is half as smart as some in the press gallery seem to think he is.