The costs of a casual job are now outweighing any pay benefits


Joshua Healy, University of Melbourne and Daniel Nicholson, University of Melbourne

Low wages growth has been a spectre hanging around the Australian economy for some time. In our series What We Earn we unpick the causes for this and why some workers might be feeling it more than others.


Workers aren’t being compensated as much as they should be for precarious work in casual positions.

One in four Australian employees today is a casual worker. Among younger workers (15-24 year olds) the numbers are higher still: more than half of them are casuals.

These jobs come without some of the benefits of permanent employment, such as paid annual holiday leave and sick leave. In exchange for giving up these entitlements, casual workers are supposed to receive a higher hourly rate of pay – known as a casual “loading”.

But the costs of casual work are now outweighing the benefits in wages.

Costs and benefits of casual work

Casual jobs offer flexibility, but also come with costs. For workers, apart from missing out on paid leave, there are other compromises: less predictable working hours and earnings, and the prospect of dismissal without notice. Uncertainty about their future employment can hinder casual workers in other ways, such as making family arrangements, getting a mortgage, and juggling education with work.

Not surprisingly, casual workers have lower expectations about keeping their current job. For example the Australian Bureau of Statistics (ABS) found 19% expect to leave their job within 12 months, compared to 7% of other workers. Casuals are also much less likely to get work-related training, which limits their opportunities for skills development.

The employers of casual workers also face higher costs. High staff turnover adds to recruitment costs. But perhaps the main cost is the “loading” that casual workers are supposed to be paid on top of their ordinary hourly wage.

Australia’s system of minimum wage awards specifies a casual loading of 25%. So, a casual worker paid under an award should get 25% more for each hour than another worker doing the same job on a permanent basis. In enterprise agreements, the casual loading varies by sector, but tends to be between 15 and 25%.

The practice of paying a casual loading developed for two reasons. One was to provide some compensation for workers missing out on paid leave. The other, quite different, motivation was to make casual employment more expensive and discourage excessive use of it. However this disincentive has not prevented the casual sector of the workforce from growing substantially.

Casual jobs aren’t much better paid

One approach in determining whether casual workers are paid more is simply to compare the hourly wages of casual and “non-casual” (permanent and fixed-term) employees in the same occupations. This can be done using data from the 2016 ABS Survey of Employee Earnings and Hours.

We compared median hourly wages for adult non-managerial employees, based on their ordinary earnings and hours of work (i.e. excluding overtime payments). If the median wage for casuals is higher than for non-casuals, there is a casual premium. If the median casual wage is lower, there is a penalty.

The 10 occupations below accounted for over half of all adult casual workers in 2016. In most of these occupations, there is a modest casual wage premium – in the order of 4-5%.

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The size of the typical casual wage premium is much smaller, in most cases, than the loadings written into awards and agreements. Only one occupation (school teachers) has a premium (22%) in line with what might be expected.

Three of the 10 largest casual occupations actually penalise this sort of work. And overall for these 10 occupations there is a casual wage penalty of 5%. This method of analysis suggests that few casual workers enjoy substantially higher wages as a trade-off for paid leave.

Taking a closer look involves controlling for a wider range of differences between casual and non-casual workers. One major Australian study in 2005 compared wages after taking account of many factors other than occupation, including age, education, job location, and employer size.

All else equal, it found that part-time, casual workers do receive an hourly wage premium over full-time, permanent workers. The premium is worth around 10%, on average, for men and between 4 and 7% for women.

These results imply that most casual workers (who are in part-time positions) can expect to receive higher hourly wages than comparable employees in full-time, permanent positions. However, the value of the benefit is again found to be less than would be expected, given the larger casual loadings mentioned in awards and agreements.

It seems that while there is some short-term financial benefit to being a casual worker, this advantage is worth less in practice than on paper.

A recent study, using 14 years of data from the Household, Income and Labour Dynamics in Australia Survey (HILDA), finds no evidence of any long-term pay benefit for casual workers.

The study’s authors estimate that, among men, there is an average casual wage penalty of 10% – the opposite of what we should see if casual loadings fully offset the foregone leave and insecurity of casual jobs. Among female casual workers, there is also a wage penalty, but this is smaller, at around 4%.

This study also finds that the size of the negative casual wage effect tends to reduce over time for individual workers, bringing them closer to equality with permanent workers. But very few casual workers out-earn permanent workers in the long-term.

Inferior jobs, but fewer alternatives

The evidence on hourly wage differences leads us to conclude that casual workers are not being adequately compensated for the lack of paid leave, or for other forms of insecurity they face. This makes casual jobs a less appealing option for workers.

This does not mean that all casual workers dislike their jobs – indeed, many are satisfied. But a clear-eyed look at what these jobs pay suggests their benefits are skewed in favour of employers.

Despite this, the choice for many workers – especially young jobseekers – is increasingly between a casual job or no job at all. Half of employed 15-24 year olds are in casual jobs.

The ConversationIn a labour market characterised by high underemployment and intensifying job competition, young people with little or no work experience are understandably willing to make some sacrifices to get a start in the workforce. The option of “holding out” for a permanent job looks increasingly risky as these opportunities dwindle.

Joshua Healy, Senior Research Fellow, Centre for Workplace Leadership, University of Melbourne and Daniel Nicholson, Research Assistant, Industrial Relations, University of Melbourne

This article was originally published on The Conversation. Read the original article.

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Three charts on: the incredible shrinking renewable energy job market


Paul Burke, Australian National University

This is the first piece in our new Three Charts series, in which we aim to highlight interesting trends in three simple charts. The Conversation

Australia is embarking on a transition from an electricity system that relies largely on coal to one that may one day be 100% renewable. Last week’s closure of the Hazelwood coal-fired generator was an important milestone on this path.

The development of the renewables sector has not, however, been a smooth ride.

Estimates released by the Australian Bureau of Statistics suggest that the number of direct full-time equivalent jobs in renewable energy activities has continued to fall from its 2011-12 peak. Over a period in which the Australian economy saw around 600,000 additional people get jobs, employment in the renewables sector has been going backwards.

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A small employer

The renewables sector is estimated to have directly provided only 11,150 full-time equivalent jobs in 2015-16. The Australian labour force exceeds 12.6 million people. The sector thus makes a small contribution to national employment, although one that is quite important in some local economies.

Around half of the jobs in renewables in 2015-16 were in installing (and maintaining) rooftop solar systems. Hydroelectricity generation provides 1,840 full-time equivalent jobs, a number that is likely to increase if pumped storage is to make a larger contribution to smoothing Australia’s electricity supply. Biomass provides 1,430 full-time jobs, and the wind industry around 620.

The fact that renewables is a small employer – especially once installations are up and running – is not a bad thing. If renewables were labour-intensive, they would be expensive.

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Up then down

The rise and then fall in renewables jobs is primarily a result of what has happened to installations of rooftop solar. The annual number of small-scale solar installations (PV and solar water heaters) skyrocketed over the four years to 2011. This rapid growth was spurred by generous feed-in-tariffs, rebates, and rules for federal government solar credits. There was also a national program to install solar panels on schools.

When these arrangements were curtailed, uptake fell. Annual installations of small-scale solar PV and water heaters are down by more than 60% from their peak. We are still installing a lot of new systems (more than 183,000 in 2016), but fewer than before. Employment estimates for small-scale solar closely track installation rates. The decline in employment in the wind energy sector is also worth noting.

The largest fall in renewables jobs has been in Queensland, a state that substantially tightened its feed-in-tariff scheme for rooftop solar in several steps from 2011 on. Queensland also holds the title of having Australia’s highest residential rooftop solar PV penetration rate (32%). South Australia is not far behind, at 31%.

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Ramping up large-scale renewables

Recent years of policy uncertainty and backtracking have not helped the rollout of large-scale renewables. The termination of Australia’s carbon price and downwards renegotiation of the Renewable Energy Target had chilling effects on investment.

Those events are now behind us. With continued reductions in the cost of renewables, brighter days for the sector appear to be ahead, especially if our governments get policy settings right.

We can expect particularly rapid growth in jobs installing large-scale solar PV. Just last week, for example, it was announced that South Australia is to have a large new solar farm.

Paul Burke, Fellow, Crawford School, Australian National University

This article was originally published on The Conversation. Read the original article.

The Snuggery: Turning Hugging into a Business


  1. In what can only be described as a novel approach to employment, Jacqueline Samuel has turned hugging into a business. What other ‘odd’ and ‘crazy’ ideas can be turned into a business – I’m sure someone out there is thinking about doing it if they haven’t already done so.

Article: Are Some Professions Off Limits to Christians?


The following article seeks to discuss the question of professions for Christians and whether any are off limits to Christians – what do you think? Are there some jobs that Christians simply shouldn’t do?

http://www.christianpost.com/news/are-some-professions-off-limits-for-christians-72017/

Plinky Prompt: The Most Important Thing I Learned This Year


Interesting, 01

This will be a lesson I should have learnt some time ago, but seemingly forgot. It’s a really simple lesson really, though apparently easily forgotten. Simply put – don’t over commit at work. Certainly, work to the appropriate level, not denying that – just don’t over do it. What I mean is, putting in a heap of extra hours doesn’t do your health any good – physically, mentally, etc. So keep the job in perspective and in balance with the rest of life.

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Plinky Prompt: Name One of the Best Decisions You’ve Ever Made


resignation

One of the best decisions I have made, if not the best, was to resign from my job after 20 years of work there. I moved on and now work in a lesser paid job – however, my health has improved across the board as a result and I am far happier now than I was back then. I no longer work the excessive hours and have more time to do my own thing. What’s not to like.

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Plinky Prompt: My First Job


My first job was working as a Handyman in a retirement village. I made my way up the ladder from Handyman to Leading Hand to Maintenance Manager. I worked in the same village for twenty years.

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