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Tag: Alison Pennington

  • Turning ‘Gigs’ Into Decent Jobs

    Gig Economy

    Turning ‘Gigs’ Into Decent Jobs

    Submission to Inquiry into the Victorian On-Demand Workforce
    by Jim Stanford and Alison Pennington

    Authors

    Jim Stanford

    Alison Pennington

    Senior Economist

    What’s a ‘gig’ job, anyway? There’s lots of media hype about how people won’t have jobs in the future (they’re so old-fashioned). Instead they’ll work a never-ending series of gigs. Will they love the supposed ‘freedom’ and ‘flexibility’? Or will they yearn for the good old days when a job provided regular hours … and a regular paycheque?

    The government of Victoria is holding an important inquiry into the conditions and challenges of working in the ‘on-demand’ economy: a polite euphemism for gigs. The Centre for Future Work has made a submission.

    Our submission notes that digitally-mediated on-demand production typically incorporates five broad characteristics:

    • Work is performed on an on-demand or as-needed basis. Producers only work when their services are immediately required, and there is no guarantee of ongoing engagement.
    • Work is compensated on a piece-work basis. Producers are paid for each discrete task or unit of output, not for their time.
    • Producers are required to supply their own capital equipment. This typically includes providing the place where work occurs (their home, their car, etc.), as well as any tools, equipment and materials utilised directly in production. Because individual workers’ financial capacity to provide these up-front investments is limited, the capital requirements of platform work (at least that used directly by workers) are small.
    • The entity organising the work is distinct from the end-user or final consumer of the output, implying a triangular relationship between the producer, the end-user, and the intermediary.
    • Finally, some form of digital intermediation is utilised to commission the work, engage the producer, supervise it, deliver it to the final customer, and facilitate payment. In the modern economy, this last criteria is hardly exrtaordinary: virtually any job imaginable today relies on some form of digital task allocation or management.

    Despite the media hype which on-demand platforms have generated, the scale of employment engaged in on-demand work so far is rather modest. The number of people engaged in actual productive work organised through a digital platform is small (less than 1% of the labour force), and a large (likely majority) proportion of those rely on on-demand work for only a minority of their total income. Many people have signed up to perform work through one or more of these platforms, but do not stay with the platform long, and/or do not work many hours in the role.

    Another stereotype that needs to be challenged in considering on-demand work is the common claim that these employment practices are novel and innovative. Here it is crucial to distinguish between the technical innovations which these businesses utilise, and the changes in work organisation which those models also introduce. In fact, the major organisational features of digital platform work are not new at all. These practices have been used regularly in labour markets for hundreds of years; what is novel is the use of digital technologies for organising, supervising, and compensating work in that manner. And the growth of insecure or precarious work practices is not an essentially technology-driven phenomenon. Rather, the growing precarity of work, including in digitally-mediated on-demand jobs, reflects the evolution of social relationships and power balances, more than technological innovation in its own right. Appreciating the social and regulatory dimensions of technology and work organisation contributes to a more holistic and balanced understanding of the rise of on-demand work, its consequences, and its potential remedies.

    All the core features associated with on-demand work are long-standing. The practice of on-call or contingent labour – whereby workers are employed only when directly needed – has been common for hundreds of years. In an Australian context, a famous example is the former practice of dockworkers lining up each morning (for example, along Sydney’s ‘Hungry Mile’) in hopes of attaining employment that day; other examples are common in other sectors (including minerals, forestry, manufacturing, and agriculture).

    Home-based work, and other systems in which workers supply their own capital equipment, have also been common in many applications and contexts – from the ‘putting out’ system for manufacturing textile products and housewares in the early years of the industrial revolution, to the important role played by owner-operators in many modern industries (including transportation, resources, fisheries, and personal services).

    Piece-work compensation systems also have a long if uneven history. Employers have long aimed to tie compensation directly to output (as a way of shifting responsibility for managing work effort and productivity onto workers). Yet at the same time, the use of piece-work is constrained by numerous well-known problems, including difficulties in applying them in situations which require an emphasis on quality, not just quantity of output (like most service sector activities), and where work is performed jointly by teams or larger groups of workers.

    Finally, the triangular relationship that is evident in the on-demand economy between the worker/producer, the ultimate end-user of their labour (whether a business or a consumer), and an intermediary/‘middleman’ business is also very familiar from economic history. Past examples include labour hire services, “gang-masters,” and other forms of labour supply intermediation. Under this triangulated model of employment, it can be unclear who is the actual ‘employer’; this ambiguity opens the possibility for various negative practices and outcomes, which have been recognised for years in legislation, regulation, and jurisprudence.  An example is Australia’s long-standing rules regarding ‘sham contracting’, and more recent initiatives to regulate labour hire businesses in Queensland and Victoria.

    In short, the core features of on-demand work are not novel; and claims that this way of organising work is ‘new’ are not valid. Rather, on-demand businesses reflect a resurgence of very old business practices, that date back hundreds of years. So ‘gig’ employers cannot be allowed to invoke claims of technological advancement, to justify work practices that are hundreds of years old – and in many cases violate community standards and traditional labour laws.



    Full submission

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  • On the Brink

    Unions & Collective Bargaining

    On the Brink

    The Erosion of Enterprise Agreement Coverage in Australia’s Private Sector
    by Alison Pennington

    Author

    Alison Pennington

    Senior Economist

    Media releases



    Business Council of Australia Research Confirms Centre for Future Work Research



    Future of Collective Bargaining on the Brink

    Australia’s enterprise bargaining system is crumbling rapidly in private sector workplaces, according to dramatic findings from the Centre for Future Work.

    The report shows that the number of current enterprise agreements in private Australian businesses has collapsed by 46% since the end of 2013.  The number of private sector workers covered by enterprise agreements has plunged 34% in the same time. In 2017, just 12% of employed private sector workers were covered by an enterprise agreement – down from 19% in 2013.

    If current trends in renewals, new agreements, and terminations continue, less than 1800 agreements would survive to 2030, at which point just 2% of private sector workers would be covered by a collective agreement.

    The dramatic downturn in collective bargaining in Australian businesses reflects a number of simultaneous trends, creating a ‘perfect storm’ that jeopardises the future of private sector bargaining. These trends include a drop-off of renewals of expired enterprise agreements; the dramatic decline in the number of newly negotiated agreements; and a surge in terminations of agreements.

    “It is no exaggeration to conclude that collective bargaining in private businesses will go extinct in coming years if these devastating trends are not reversed,” said Alison Pennington, Economist with the Centre for Future Work and author of the report.

    The report provides a forward simulation of enterprise agreement-making if current trends in renewals, new agreements, and terminations continue. The simulation indicates that the total number of private sector enterprise agreements would fall by half (to below 6000) by 2023, and the proportion of private sector workers covered by agreements would fall below 6%. Things get worse in subsequent years, with less than 1800 agreements surviving by 2030, when only 2% of private sector workers would be covered by a collective agreement – unless urgent action is taken the change existing policies and restore effective access to collective bargaining.

    “The accelerated collapse of enterprise bargaining in the private sector has been a key cause of the unprecedented weakness in wage growth experienced in Australia since 2013,” Pennington said. “When workers have no collective voice or collective bargaining power, they have no chance of successfully negotiating better wage increases from their employers.”

    The report also shows that the rapid decline in enterprise agreement coverage for private sector workers has been mirrored by a rapid increase in the proportion of workers paid according to the minimum terms of Modern Awards.

    “The evidence is overwhelming that Australia’s current system of collective bargaining is completely inadequate for representing workers in our evolving economy, with an increasingly fragmented labour market,” Pennington concluded. “A viable collective bargaining system is essential to shared prosperity, but it will require far-reaching changes to the current rules to keep collective bargaining alive.”  The report proposes several broad directions for reforming current laws and practices, to stop and reverse the dramatic decline in collective agreement coverage.

    PLEASE NOTE: This posted version of the paper corrects a previous error arising from a data coding problem which resulted in an inaccurate allocation of newly approved enterprise agreements between new and renewal agreements.



    Full report

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  • Are States Filling the Democratic Void?

    Are States Filling the Democratic Void?

    by Alison Pennington in New Matilda

    Alison Pennington

    Senior Economist

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    Originally published in New Matilda on December 2, 2018

    The recent Victorian election results showed Australian voters want governments to play a pro-active role delivering public services, infrastructure, improved labour standards, and sustainability. They showed that in a time of deep cynicism with federal politics, States (and Territories) can play an important role filling the democratic void left by dysfunction and policy paralysis at the Commonwealth level.

    This commentary from Alison Pennington, economist at the Centre for Future Work, explores what the energetic campaign in Victoria revealed about our unique system of dual governance and the potential for pro-active and progressive policy making. This commentary was originally published in New Matilda.

    The Victorian election: Are states filling the democratic void?

    A destructive and cynical politics is on the rise across the world with emergent right-wing populism a warning of what happens when people lose faith in political institutions.

    In Australia, the Coalition government has been characterised by ongoing austerity, the retrenchment of public resources and capability to the tune of billions of dollars, but complete paralysis on just about every other policy reform (most visibly including massive inconsistency on energy and climate policy). This has led to a democratic void in Australian society.

    Meanwhile, the recent victory of the Andrews Labor government on a bold social democratic platform of long-term investments in services, education and infrastructure projects (some with a 2050 completion date) gave Victorians a secure, positive vision of a more balanced, stable society – and voters endorsed that vision strongly.

    How is it that these two wildly different scenarios of political life can exist alongside each other?

    Many commentators have explained the Victorian election result as a mere by-product of the Coalition’s ongoing crisis (with subsequent warnings about the future of the federal Liberals). But this suggests Victorians were motivated by cynicism alone. In reality, Victorians rallied enthusiastically around a constructive, hopeful vision of State-level policy-making. Indeed, since federation, Australian communities and regions who have identified needs and desires unmet by the Commonwealth, have often turned to the state level of governance to get things done.

    The unique organisation of governance in Australia, featuring a Commonwealth composed of somewhat independent States and Territories, has preserved a realm of Australian democracy distinct from the national level of affairs. At a time of deep cynicism with federal politics, the Victorian election result shows that States can fill the democratic void left by dysfunction and tribal politics at the Commonwealth level, strengthening Australian democracy and saving it from the worst of cynical politics we see emerging elsewhere (such as Trumpism in the US).

    Where does the legitimacy of this State-based democracy come from? Despite losing (or handing over) many of their powers to the Commonwealth over time, States still retain power to administer the key public goods that Australians most value: like education, health care, civic services, and culture. These are the functions of government that people will energetically defend when they are undermined.

    While the Australian constitution allocates responsibility for big-ticket public programs like healthcare and education to the States, the Commonwealth retains powers to raise the bulk of the revenue needed to fund these expensive services. This means States operate in a contradictory financial bind: always dependent on the federal government to honour the financing of essential services that the States are constitutionally bound to provide. This gives enormous economic and political power to federal governments— a power play that has been repeated many times over Australia’s history.

    For example, a recent attempt by the Commonwealth to undermine the funding of public goods under the ‘spend within your means’ mantra was mounted in 2016, when Malcolm Turnbull and Scott Morrison tried to shift responsibility for raising revenue for public services to States. This was done without relinquishing any of the Commonwealth’s income and corporate taxation powers – all the while overseeing billions of dollars in cuts in healthcare and education in the federal Budget.

    But the constitutional and financial bind faced by State governments has gained particular significance in recent years, as decades of ‘small government’ policies wound back public services in favour of highly-subsidised private models have come to a head. Publicly-subsidised private markets in aged care, disability care, healthcare, education, VET and childcare have all been proven failures: both in the quality of services delivered, and in the standards of employment for those doing the work.

    Recent polling by the Australian Institute shows that 64 per cent of Australians want an increase in public spending funded by tax revenue from wealthy individuals and high-turnover businesses. Australians value government provision of public goods, even more than personal income tax cuts. The failure of federally-backed market experiments within spheres of life where Australians demand a proactive and productive government role, has left the political field wide open – and States are in prime strategic political terrain to fill that space.

    State action is applauded in the face of Commonwealth inaction. For instance, amidst recent turmoil in federal energy and climate policy, the Victorian, SA and ACT governments have proactively invested in renewable energy industries. And State governments in Victoria, SA, ACT and QLD have found innovative work-arounds to protect workers from new exploitative labour practices, despite the dominance of the Commonwealth in the jurisdiction of labour law: including labour hire licencing schemes, mandated minimum pay and safety conditions, and a new inquiry just launched into on-demand ‘gig’ work and its implications for the Victorian economy.

    The Victorian election results provide another clear insight into what Australians value and what they will tolerate. They confirm that Australians care about a fair society – underpinned by the public provision of healthcare and education (including a revamped TAFE sector), new infrastructure, action on renewable energy, and employment conditions that allow Australians to live a decent quality life.

    With the Andrews government’s pledges for sizeable investments in all of these endeavours ratified so strongly by voters, it shows that the failure of Commonwealth policy and politics can be mitigated by popular, publicly-minded campaigns at the State level.

    A future federal government could build on the example set by the Victorian election. It could use its much stronger policy and fiscal levers to charter a course that addresses the growing labour market power imbalances, restores the billions cut from hospitals, schools and housing, prepares our economy for a renewable energy future, and delivers a comprehensive program of tax reform.

    But until that decisive break with the failed austerity and cynicism of recent federal politics, the Victorian election results confirm that in the meantime, States can step firmly into the breach. They can and must continue to function as a key site for the expression of Australians’ demands for a more equal, inclusive, participatory society, with a proactive role for government in delivering public goods.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • “Permanent Casuals,” and Other Oxymorons

    “Permanent Casuals,” and Other Oxymorons

    by Jim Stanford

    Jim Stanford

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    Recent legal decisions are starting to challenge the right of employers to deploy workers in “casual” positions on an essentially permanent basis. For example, the Federal Court recently ruled that a labour-hire mine driver who worked regular shifts for years was still entitled to annual leave, even though he was supposedly hired as a “casual.” This decision has alarmed business lobbyists who reject any limit on their ability to deploy casual labour, while avoiding traditional entitlements (like sick pay, annual leave, severance rights, and more). For them, a “casual worker” is anyone who they deem to be casual; but that open door obviously violates the intent of Australia’s rules regarding casual loading.

    Here is a commentary from Jim Stanford, Director of the Centre for Future Work, discussing the implications of these decisions for the mis-use of casual work.  The commentary was originally published on the Ten Daily website.

    Time to rethink reliance on casual work

    Casual work has become a pervasive feature of Australia’s labour market. Until the 1990s, almost all workers, even part-timers, had permanent jobs with reasonably predictable schedules and access to normal work-related entitlements (like paid holidays and sick time). But then employers became obsessed with achieving “flexibility” in hiring. Flexibility sounds like a good thing, but in practice it meant granting employers more freedom to disemploy their workers, with no notice and no severance costs. The downside for workers is lack of certainty in rostering, poor job security, and no access to paid leave. That makes it impossible to make major purchases, plan child care, or take family holidays.

    At last count, around 25 percent of paid employees in Australia (or over 2.5 million workers) were employed on a casual basis. The incidence of casual work has grown noticeably since 2012, when the mining investment boom ended and the overall labour market weakened. Casual work has grown fastest in full-time positions, and among male workers. For young workers (under 25), casual work is especially ubiquitous: 55 percent work casual.  OECD data indicates that Australia now has the highest incidence of temporary work of any industrial country.

    Because it is so common, casual work has become “normalised” in the eyes of employers and policy-makers.  For example, Craig Laundy, former Commonwealth Minister for the Workplace, endorsed casual work enthusiastically this year, saying it is “a completely appropriate way for many businesses and many employees to conduct their relationship.”  Even business lobbyists admit that most casual staff actually work regular and predictable schedules.

    With this normalisation, many industries in Australia now rely on casual work as a permanent, core feature. Instead of using casual workers to meet temporary or seasonal fluctuations in demand, thousands of employers tap a permanent pool of casual workers to meet ongoing staffing requirements. Workers can be stuck on casual status even if they work regular shifts, for years at a time.

    In theory, employers pay a price for this super-flexibility: Australia’s casual loading rules require a 25 percent wage penalty to be paid to casual workers: compensation for lack of access to paid sick leave and holidays, and for the insecurity and instability attached to casual work. In practice, many employers do not pay this wage premium – effectively “hiding it” in lower base wages, or else evading it entirely (especially for young and foreign workers who do not understand the rules). But even if they do pay casual loading, employers should be prevented from abusing casual work as is now commonplace. After all, the inherent insecurity of casual work imposes a cost on workers and their families – a cost that grows if that insecurity is permanent.

    A series of recent legal decisions, however, is now challenging the assumption that casual work can be normal, legitimate and universal. Three particularly important cases could force employers to rethink their reliance on casual staffing:

    • A Federal Court judgment has ordered a labour hire company to pay retroactive annual leave to a mine driver who worked casual for several years, even though he was assigned to regular shifts. Employers complain this ruling somehow amounts to “double-dipping:” they claim that paying the 25 percent casual loading somehow entitles employers to deny paid holidays and other normal rights, even to long-term staff. That assumption has now been refuted.
    • The Fair Work Commission has decided to harmonise evening and Saturday penalty rates between casual and permanent workers in the retail sector. Until now, casuals were denied penalties of up to 25 percent of base wages for those shifts, compared to permanent workers. Now the penalties for casual workers will be raised to the same level as for permanent staff (although, perversely, the Commission is also in the process of cutting penalty rates for all workers on Sundays and holidays).
    • Another Fair Work Commission ruling affecting 85 different modern awards affirmed the right of casual staff to request conversion to permanent status after working regular shifts for a year. Employers can turn down those requests, but only if they would result in major changes in the applicant’s hours of work, or are otherwise “unreasonable.”

    Employers are pushing back hard against these precedents – and they seem to have the ear of the federal government. Business lobbyists predict billions in back payments arising from the annual leave decision, and are demanding legislative changes to avoid those costs. Kelly O’Dwyer, Minister for Jobs and Industrial Relations, has promised to investigate the idea. Some business groups are even proposing a brand new category of “perma-flexi” workers, who would receive a (smaller) wage loading for accepting casual status for years at a time. Anxious to preserve this highly profitable staffing practice, business leaders seem oblivious to the oxymoron inherent in their proposal for permanent casual work.

    Business complaints about the costs of treating casual workers fairly ring hollow. The 25 percent casual loading system was never intended as a carte blanche: that is, a kind of “permit” that granted employers permission to keep workers in perpetual insecurity, denied access to basic security and regular entitlements. Employers who used casual workers only where originally intended – that is, in temporary or irregular shifts – can continue to do so without significant extra costs.

    However, while promising, these recent decisions do not fully address the misuse of casual work. Casual workers should have broader options to convert to permanent status after shorter periods (say, six months) in a regular position.  And the application of casual employment rules (which deny termination pay and notice of dismissal to workers, as well as access to paid leave) should be restricted to carefully-defined and genuine situations of temporary or volatile demand.

    Nevertheless, these recent decisions are an important recognition that employers have been abusing this form of employment. And they are a wake-up call to employers, who should now think hard about reducing their reliance on casual staffing – and get back to creating steady jobs that workers (and their families) can count on.


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    IR Bill Will Cut Wages & Accelerate Precarity

    by Alison Pennington in Jacobin

    The Morrison government has proposed sweeping changes to labour laws that will expand unilateral employer power to cut wages and freely deploy casual labour. Together, the Coalition’s proposed changes will accelerate the incidence of insecure work, undermine genuine collective bargaining, and suppress wages growth. Impacts will be felt across the entire workforce – casual and permanent workers alike.