Future of Work and Workers - Senate Inquiry February 2018

Senate Select Committee on the Future of Work and Workers
                           Submission 92

Future of Work and Workers –
Senate Inquiry February 2018

Senate Select Committee on the Future of Work and Workers
                                        Submission 92

ABOUT JOBS AUSTRALIA
Jobs Australia is the national peak body which helps not-for-profit employment and community
services all over Australia to provide the best possible assistance to disadvantaged communities and
people. With our particular expertise in employment services, and because we are funded solely by
our members, we can advocate to government and others for what’s right and best in helping
unemployed people - with real insight and an independent voice.

We represent the largest network of not-for-profit employment-related community services in
Australia - with members ranging from small local community agencies to large national charities.

ABOUT THIS SUBMISSION
As employment services agencies Jobs Australia members provide street-level delivery of activation
strategies. We are therefore extremely interested in the intersection between social security and
labour market policy as these settings directly inform the programs our members provide to the
community. Our member organisations work with disadvantaged people needing the most assistance
to obtain career advice, develop language, literacy and numeracy (LLN) and foundation skills, engage
in training pathways, gain occupation-focussed skills and enter the labour market.
Jobs Australia members have direct experience and knowledge of the VET landscape as community-
based not-for-profit providers of training services. Our member organisations include Adult
Community Education (ACE) providers, Registered Training Organisations (RTOs), Group Training
Organisations (GTOs) and Indigenous and other community organisations that provide training
services for learners in urban, regional and remote areas of Australia. Many of these regions have
associated high unemployment and skills shortages. We therefore stress the importance of the
alignment between labour market policy and investment in skills development particularly as it
relates to the resources committed to the vocational training sector.

In addition, we are particularly interested in trends in the care workforce as we provide direct
industrial relations support to a large number of social services agencies from across Australia.

It is from this perspective that we respond on behalf of our members and our comments to this
Inquiry reflect the interests of Jobs Australia member organisations. We have grouped our responses
as issues under the most appropriate heading from the Inquiry’s Terms of Reference.

Jobs Australia Ltd. | 03 9349 3699 | ja@ja.com.au | www.ja.com.au   @Jobs Australia 2018            Page 2

Senate Select Committee on the Future of Work and Workers
                                        Submission 92

1.1   The future earnings, job security, employment status and working patterns of Australians;

Issue 1: Alignment between employment services outcome payment incentives
and casual / contract work

The labour market programs delivered by Jobs Australia members are important tools that prepare
and motivate disadvantaged job seekers for the jobs available primarily at entry levels of the labour
market. Employment services deliver labour market programs and are funded on a ‘payment-by-
results’ basis meaning their viability as organisations depends on being able to get job seekers into
sustainable jobs. The payments-by-results fees they receive are based on various calculations of
cumulative hours worked with no more than relatively short-breaks between jobs to count towards
an employment outcome.

As the labour market shifts so that there are fewer ongoing jobs, our members have noted it has
become increasingly difficult to achieve outcomes from existing cumulative hours formulas.
This suggests the need to evaluate the impact of contract and casual work on the viability of
employment services agencies and to review the payment-by-results formulas so that the
accumulation of hours worked on a casual and contact basis can be adequately counted towards
payments to employment services agencies.

Issue 2: Complexity of social security for independent contractors

In a similar vein to our argument in issue 1, there is a need for simplification of income reporting for
independent contractors. Currently independent contractors must complete six-monthly business
planning forecasts (profit and loss statements) in which they must calculate their projected income
from contract work to continue to receive social security benefits. The actual income accumulated
over the profit and loss period is used to calculate benefit entitlements. Independent contractors
with low incomes face many issues relating to the complexity of income reporting. They are
disadvantaged relative to job seekers reporting income from causal or permanent work where the
income they earn is spread only across the fortnight in which the earnings were earnt.

The interaction between the methodology for independent contractors to report earnings while in
receipt of social security payments needs to be reviewed for fairness and with a view to
simplification of the process. This is because these reporting processes may have a perverse
incentive on reporting income or getting contract work because of this complexity.

Issue 3: Inequality and unemployment

There is growing inequality in Australia, compounded by uneven distribution of work opportunities
In 2012 the Australian Workplace Productivity Agency (AWPA) invested considerable resources into
predicting economic scenarios and developing a strategy which aimed to increase workforce
participation from the current 65% to 69% by 2025. The findings of this future focused workforce
planning strategy remain valuable in the context of this Inquiry.

Jobs Australia Ltd. | 03 9349 3699 | ja@ja.com.au | www.ja.com.au   @Jobs Australia 2018           Page 3

Senate Select Committee on the Future of Work and Workers
                                        Submission 92

The key issues examined by AWPA included the drift towards high level skills requirements, the need
to increase productivity growth and workforce participation, the need to introduce innovation and to
lift foundation skills for long term unemployed people. Jobs Australia suggests the valuable insights
developed by AWPA be considered by the Future of Work Inquiry.

1.2   The different impact of that change on Australians, particularly on regional Australians,
      depending on their demographic and geographic characteristics;

Issue 4: Alignment of skills formation sector and employment services support

Regional Australia faces particular challenges as ongoing economic shifts continue to reshape
regional labour markets. There is a role for Regional Development boards to take a stronger lead in
planning for infrastructure development integrated with workforce skilling strategies in schools,
regional TAFEs and RTOs are required.

Furthermore, due to the scarcity of jobs in thin labour markets regional development initiatives
should be accompanied by workforce planning strategies aligned to the skills formation sectors
particularly secondary schools, regional TAFEs and RTOs.

Issue 5 Skills, employment and youth

The complexity of future labour markets for young people entering the workforce is a matter
requiring intensive scrutiny, particularly in regional Australia where there are acute labour market
issues.
The issues for regional Australia are compounded by the way in which young people are anticipated
to engage in work. The Foundation for Young Australians (FYA) New Work Order report series
provides useful information about the ‘portfolio’ strategies young people use to collect work
experience.
In the report the New Work Order the FYA says Australians should instead be building transferable
skills in one of seven job ‘clusters’. Three of these skill clusters, labelled by the report as ‘Carers‘,
‘Informers‘ and ‘Technologists‘, will be most in demand in coming years, according to the foundation.
These important observations about the way in which young people will engage with jobs in the
future should inform the Inquiry’s understanding of these complex matters.

Jobs Australia Ltd. | 03 9349 3699 | ja@ja.com.au | www.ja.com.au   @Jobs Australia 2018           Page 4

Senate Select Committee on the Future of Work and Workers
                                        Submission 92

1.3   The adequacy of Australia’s laws, including industrial relations laws and regulations, policies
      and institutions to prepare Australians for that change;

Issue 6: The not for profit community services workforce

Jobs Australia plays a role as a specialist employer association for employment services providers,
and also offers associate membership for not for profit community services employers across all
parts of the community sector. Our associate members include disability services, social welfare
services (eg homelessness, children and family), community development, community centres and
neighbourhood houses, community legal centres and community based childcare.
Jobs Australia represents about 1800 community services employers across Australia in all of the
above mentioned categories.
The workforce across the government funded community services sector is highly feminised and
overwhelmingly employed on award safety net pay and conditions. The sector is one of the fastest
growing parts of the workforce.
Government funding contracts for not for profit community services typically fund the employment
of workers on the basis of the relevant award rate of pay and on costs. As other industries have
engaged in enterprise bargaining delivering pay rates well in excess of the safety net, this has been
impractical in the community services sector, other than on a minor scale. Governments of all
persuasions at both state and federal levels typically will not fund enterprise bargained pay
increases.
The logical outcome of this approach to funding is that community sector wages become increasingly
uncompetitive over time, and employers face economic pressure to cut wage costs where possible.
This in turn undermines the recruitment and retention of skilled workers and contributes to higher
turnover of workers. The end result is inefficiency, and employers are prevented from adopting
more creative management strategies.
The wage pressure on the sector was partially relieved following the SACS equal pay case in 2012
when the Fair Work Commission awarded pay increases of between 23-45% over 9 years for care
workers. However, once the final instalment of the Equal Remuneration Order is paid in 2020, there
is no realistic mechanism currently available to prevent care worker wages from declining back to the
relative uncompetitive position that existed in 2011.
The transition to the National Disability Insurance Scheme (NDIS) provides a compelling case study of
the problems facing the community services workforce. The pricing assumptions during the
transition to NDIS have encouraged casualisation and deskilling of the disability support workforce.
This has been well analysed in the academic literature (for example, Macdonald, Fiona and Sara
Charlesworth (2016), “Cash-for-Care under the NDIS: Shaping Care Workers’ Working Conditions?”
58 Journal of Industrial Relations 627.)
The wages issue for the community services workforce neatly parallels the issues faced in other
industries where dominant players control the supply chain, such as the role of the major
supermarkets in suppressing wages growth and dampening prices for suppliers.

Jobs Australia Ltd. | 03 9349 3699 | ja@ja.com.au | www.ja.com.au   @Jobs Australia 2018          Page 5

Senate Select Committee on the Future of Work and Workers
                                        Submission 92

We note that Productivity Commission has previously examined this issue and recommended funding
at market rates (“Contribution of the Not-for-Profit Sector” Productivity Commission Research
report January 2010).
Any consideration of the future of work would be incomplete without considering how to enable
funded industry wide approaches to bargaining that would assist employers to recruit and retain
skilled workers, and manage their workforce more effectively.

Issue 7: Protections of minimum work standards for casual and contract
workers

Australia’s working conditions are based on many years of negotiated arrangements between
workers and employers. As more casual and contract-based jobs become the mainstay of future
forms of employment, it is important that consideration is given to worker protections including
appropriate remuneration, access to superannuation benefits, annual and sick leave entitlements.
Furthermore, the need for these protections in entry level roles is particularly acute, since workers
are paid at minimal rates and do not have access to representation or collective bargaining.
These risks require careful attention to ensure adequate protections and remuneration are provided
to all Australians through industrial relations law, regulation, policies and institutions.

Jobs Australia Ltd. | 03 9349 3699 | ja@ja.com.au | www.ja.com.au   @Jobs Australia 2018          Page 6