Aussie Business Groups Say Federal Labor’s Workforce Reforms Will Have Ramifications for Economy

Construction workers work on a building in Melbourne, Australia, on May 28, 2021. (William West/ Getty Images)

Business groups that oppose federal Labor’s proposed “same job, same pay” labour-hire laws say the proposal would contribute to workforce shortages, increased food prices, and the winding back of working conditions.

Under the Fair Work Amendment (Same Job, Same Pay) Bill 2021, all workers employed through labour-hire companies will receive the same wage as employees employed directly. Employers may also face the prospect of more than $4 million in fines if they are found to breach workplace laws, such as incorrect employer records and consultation over rosters.

In a submission (pdf) to the government’s consultation paper, the Business Council of Australia (BCA) warned that the proposed reforms would deliver “significant, complex, confusing, and unproductive changes” to Australia’s workplace relations system.

“Labour hire represents a legitimate model which many businesses use to access essential labour. It enables them to meet fluctuating demands, acquire skills and expertise that they may not have within their own workforce and because they may not have in-house recruitment expertise necessary to quickly source labour to meet demands,” the statement reads.

“It will fail to recognise that many host employer arrangements have evolved to reward the skills and experience of a long-standing workforce, and this recognition will be undermined if those arrangements are applied to external workers without those attributes. There is an innate unfairness in these reforms.”

Meanwhile, Employment and Workplace Relations Minister Tony Burke said while some companies have legitimate uses for labour hire, particularly with a seasonal and surge workforce, some other companies are deliberately using “cowboy” labour-hire firms to exploit casual workers “in order to undermine job security and undercut wages.”

“They’re using a loophole, which the former Liberal and National government ­refused to close, which is causing a race to the bottom on wages,” Burke said.

Union Body Says Employers Caught Out Pushing Wages Down

The Australian Council of Trade Unions (ACTU) has said that employers have been caught using labour-hire to push down wages.

“Two people working alongside each other doing the same job should get the same pay. It is hard to get simpler or fairer than that,” ACTU secretary Sally McManus said, reported The Australian.

“Some big businesses have used labour hire as a way of driving down wages and have used loopholes in the laws to do this. Big business is upset that this has been exposed.”

According to the bill’s explanatory memorandum, labour hire providers that profit from wage arbitration where lower-cost labour is sourced have “distorted the labour market and undermined the enterprise bargaining system.”

“The wage arbitrage business model has given rise to substantial worker exploitation and inequities, leading to the introduction of statutory labour-hire licensing systems in Queensland, Victoria, South Australia and the ACT.

“Many labour-hire companies do the right thing, so there are workers in the industry who are paid their legal entitlements, including, where applicable, the casual loading. This means in some instances these workers are paid more than their directly employed counterparts.”

However, Ai Group—Australia’s peak national industry association—said in its submission (pdf) that the proposed laws “represent an unfair attack” on labour-hire businesses that comply with workplace laws and that provide legitimate labour-hire services.

“Thousands of small and medium-sized businesses that supply services to larger businesses would be forced to increase the remuneration they pay to their employees in order to comply with the ‘Same Job, Same Pay’ requirement. This would substantially increase their costs,” Ai Group said in its statement.

“It would be naïve to assume that these businesses would be able to fully recoup those cost increases from their clients through charging higher prices for their services.”

Similar concerns were also echoed by the Australian Resources and Energy Employer Association (AREEA), which said in a submission (pdf) that the proposed legislation would “see operations close, jobs lost, regional communities adversely impacted, and state and federal tax and royalty revenues forgone.”

“It is unrealistic to expect labour-hire arrangements to operate with insurmountable levels of red tape, defeating the purpose of engaging labour hire in the first place, being flexibility and choice.”

Business Chief Say Proposal Sends Wrong Message

Meanwhile, BCA chief executive Jennifer Westacott said that while Australia is at a time where businesses need to innovate and have the flexibility to grow, the proposed bill “sends the wrong message.”

”To keep delivering better living standards and revenues to government, businesses need the capacity to scale up, change course and do new things,” Westacott said, reported The Australian Financial Review (AFR).

“As it’s being proposed, Same Job Same Pay would make rewarding workers who work hard or choose to upskill more difficult.

“It could also put pay rises at risk by undermining enterprise bargaining.”

Additionally, AREEA’s chief executive Steve Knott has accused the government and ACTU of introducing the “Marx-inspired ‘same job, same pay’ policy,” which demonises labour hire employers, reported The Australian.

Knott said labour-hire employees in the energy and resources sector typically earn more than $130,000 annually.

“The campaign slogan focus here has been to perpetuate the myth that well-paid labour hire employees are somehow disadvantaged and seek to give unions a relevant platform with such workers,” Knott said.