Casual work scheme a stalking horse for Albanese?

Victorian Premier Dan Andrews. Picture: Ian Currie.

Last week the Victorian Labor government announced a new scheme, the Victorian sick pay guarantee.

Operating initially as a pilot for two years, it will provide up to five days’ sick and carer’s leave pay for eligible casual and contract workers, to be paid at the rate of the national minimum wage, which is currently a tad over $20 an hour.

Initially the scheme will be funded by taxpayers. It is estimated to cost about $250m a year. After two years the scheme will be reviewed with an intention of employers footing the bill, perhaps by way of a levy, thereafter.

Introducing the scheme on Labour Day, Victorian Premier Daniel Andrews used shrill language to outline the proposal.

“Insecure work is completely and utterly toxic,” he said. “It’s incredibly difficult for people who don’t know when their next shift is coming, wait most nights for a text message about whether they have a shift the following morning. It’s incredibly difficult to plan, it’s incredibly difficult to make ends meet, and it’s incredibly difficult to keep yourself and your loved ones healthy.”

Rousing stuff but these points, while politically helpful to federal Labor, have nothing to do with the rationale for the scheme. And, let’s face it, the Victorian scheme is simply undertaking the groundwork for a possible federal scheme that would cover all casual and contract workers in the country.

Let us not forget that the Victorian government under premier Jeff Kennett referred the state’s industrial relations powers to the federal government a quarter of a century ago. Notwithstanding Labor being in power in Victoria for most of the subsequent years, there has been no attempt to take back those powers.

So when the Victorian government commissioned the inquiry into the Victorian on-demand workforce – that is, the gig economy – in 2018, it was really setting out a blueprint for a federal Labor government to impose a suite of restrictions on the gig economy through the industrial relations system. There is very little the Victorian government can do on its own.

So does the sick pay guarantee have any merits? It’s always worth returning to the basic facts to assess what problems are being addressed and whether such a scheme would do that.

During the height of the Covid-19 pandemic, there may have been a time-limited rationale for the taxpayer footing the bill for workers’ sick pay to discourage workers from attending work while potentially infectious.

Of course, this did not apply only to casual workers; permanent workers who had exhausted their sick pay also fell into the same category.

Fast forward to this year and it’s no longer possible to use this justification for the scheme, particularly as casual workers are typically paid a 25 per cent leave loading that more than compensates them for the lack of paid sick and carer’s leave. In effect, these workers are prepaid their leave entitlements.

If one does the maths, the 25 per cent pay premium more than compensates these workers for the lack of entitlements. Indeed, there is a sizeable chunk that can be regarded as a financial return for the insecure nature of the work.

When it comes to the prevalence of casual and contract work, the numbers are telling. For more than 20 years there has been no noticeable shift in the proportion of the workforce that holds casual jobs. The proportion of the workforce that are contractors has shrunk and the incidence of fixed-term jobs is small – 2 per cent to 3 per cent.

There is also the point that many casual jobs provide reasonably predictable shifts, something that is valued by workers and employers. In fact, the data suggests more than 50 per cent of casuals work regular hours.

Notwithstanding Andrews’ rant about insecure work being utterly toxic, the survey findings on job satisfaction simply do not bear this out. With the exception of men in full-time casual jobs – and there are relatively few of them – levels of job satisfaction among casual workers are essentially the same as other workers, namely permanent full-time and part-time workers. Where casual workers can control their hours of work, their job satisfaction is higher again.

So what will the Victorian scheme do? Many casual and contract workers are likely to register for the scheme, it being a potential windfall that their employers won’t need to fund initially. It may well result in more sick and carer’s leave being taken, which may or may not be a good thing.

But here’s the curious thing: it may well encourage casual workers to stick with their casual status since they will continue to earn the casual premium and could receive close to $800 in addition – a nice little earner, in other words. It may actually deter some casual workers from applying to convert to permanent status – which is their right under the Fair Work Act after 12 months of employment.

The bigger danger of the scheme will arise if employers are asked to fund the leave entitlements notwithstanding already paying the casual pay premium.

How this payment arrangement would work out is anyone’s guess. Were a per-head levy imposed – a certain dollar amount for every casual worker – this would be highly damaging for businesses that employ many casual workers working just a few hours a week.

But a per-hours of work levy would carry very high compliance costs, particularly for businesses facing seasonal demand. The total hours of casual workers can vary from day to day and week to week.

But either way, the scheme in effect would be a tax on casual jobs. The fact casual jobs exist because they suit the requirements of the workplace and the preferences of workers – think here students and some working women – is something the politicians in Spring Street deliberately ignore.

The real issue here is that the Andrews government is keen to secure a federal victory for Labor and is happy to support Labor’s campaign in several ways.

The idea of a jobs summit floated by federal Labor leader Anthony Albanese is surely bizarre in the context of 4 per cent unemployment and widespread workers shortages. But the insecure jobs narrative, which has been around for some time in a flimsy form, is difficult for Labor simply to drop, in part because the trade unions remain opposed to casual work given the reluctance of casual workers to join up.

The hope for Victoria is that, come the end of the two-year trial period, sounder thinking will prevail and the scheme will be quietly dropped. But, then again, as Ronald Reagan accurately stated: “The closest thing to eternal life on earth is a government program.”