Labour hire provides businesses with fast and flexible access to a casual employment workforce for industries characterised by volatility in demand and outputs, including seasonal patterns. The following excerpt from the Queensland Government’s ‘Inquiry into the practices of the labour hire industry in Queensland’ highlights the benefits employers may experience by choosing a workforce management solution for their business.
3.3 The consequence of labour hire employment
Labour hire’s perspective
Labour hire employment serves an established and important part of employment strategies across a number of sectors, helping firms to address a range of economic and business challenges and outsource key tasks to streamline their services and boost productivity. The availability of casual employment through labour hire may also be valued by some employees who prefer the flexible arrangements such employment offers, or who are seeking a greater variety in terms of the types of roles they are engaged to perform. Further, labour hire workers can help to provide a boost to regional economies as a result of the flow-on effects of spending and engagement in the broader local community.
Key benefits of labour hire arrangements for workers, businesses, the community and the economy include:
- Horticultural industry’s demand for labour is tied inextricably to its harvesting cycles, such that the number of workers required at any one time can vary significantly. Submitters also highlighted that the home building industry is prone to volatility in output, with activity in home building including renovations in real terms changing from over $19 billion in 2007-08 to less than $14 billion in 2012-13 and then increasing to more than $18 billion in the current financial year. In such circumstances, labour hire workers can be used to meet industry labour demand and protect employers against the adverse labour market impacts of industry or economy-wide shocks.
- Employers can outsource the time-consuming recruitment process of assessment, selection and engagement to human resources specialists, for more cost-effective and efficient hiring processes and potentially, access to higher quality candidates.
- Labour hire agencies can facilitate job matching and labour hire specialisation, which improves labour market functioning. For example, submitters noted that many small businesses may not generate sufficient work to carry specialised skilled workers as permanent employees, but may engage labour hire workers for specialist projects as a sensible business response to the environment in which they operate. Labour hire organisations act as aggregators of the employment opportunities created by these fluctuations, providing an efficient market mechanism to match supply and demand for labour.
- For some workers, labour hire arrangements may be preferred because they provide greater flexibility in hours of work or work contract duration; provide a path to other employment, and / or ongoing employment; or provide access to a greater variety of work and thereby an opportunity to gain skills and experience in an industry where they may not otherwise have been able to secure employment. HIA and CCIQ noted that non-permanent work arrangements are often negatively cast as “insecure” in a way that fails to appreciate the heterogeneity of personal employment preferences.One labour hire operator also stated in a confidential submission to the inquiry that it estimates that approximately 20 to 30% of its employees go on to gain full-time employment over a twelve-month period, while Master Electricians Australia emphasised the important role of labour hire arrangements in supporting apprentices to obtain a greater breadth of experience while working to meet their requirements.
- Labour hire arrangements can allow host employers to reduce some operating costs, such as payroll tax, costs of compliance with labour regulations and internal human resources costs. This can help to deliver important cost savings that can improve business productivity and sustainability, and prolong prospects for competitive operations. Resources industry stakeholders advised, for example, that the engagement of labour hire operations has helped to reduce the unit costs of the coal sector by an average of 28%.The QRC submitted that where managing such productivity improvements under an enterprise bargaining agreement would have been a difficult and lengthy challenge, the use of labour hire has delivered these benefits in a highly responsive manner, without compromising on safety.
- In helping to sustain business operations, labour hire-related productivity improvements can also have significant flow-on effects on employment in regional communities and across related industry supply chains, including supporting existing direct hire jobs. The QRC and Master Electricians Australia emphasised that in the midst of a downturn in mining, labour hire arrangements may enable companies to continue to operate in regional areas where they may otherwise have had to close down, arrangements emphasised that a closed mine has no employment opportunities for directly, helping to sustain employment opportunities and continue to contribute to regional economic growth.
- Labour hire can also ease the management of risks associated with employment related expenses and liabilities and reduce administrate burdens.
Finance and Administration Committee, Parliament of Queensland, Inquiry into the practices of the labour hire industry in Queensland (2016) 12.
Text in bold has been highlighted by Workplace Central.