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Self-Employed Contractors in Australia: Incidence and Characteristics

Staff research paper

This paper by Matthew Waite and Lou Will was released on 27 September 2001. The paper analyses the incidence of contractor-type employment and the characteristics of people working as contractors. It focuses on the group of employed persons known as independent contractors by Australian courts, as earners of personal services income by the Australian Tax Office and as self-employed contractors by researchers.

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Self-employed contractors have become more common in Australia over the past 20 years. In August 1998, 10 per cent of employed persons, or 844 000 individuals, worked as self-employed contractors.

A staff research paper by Matthew Waite and Lou Will, Self-employed Contractors in Australia: Incidence and Characteristics, presents an analysis of self-employed contracting in Australia. The analysis covers all self-employed contractors, including dependent and independent contractors.

The study found that self-employed contractors are a diverse group. They are employed in all industries and occupations. However, they are largely concentrated in Construction (25 per cent of self-employed contractors in August 1998), Property and Business Services (20 per cent) and in the occupational category of Tradepersons (27 per cent).

In August 1998, 25 per cent of self-employed contractors were dependent contractors. They represented 2.6 per cent of employed persons, or 215 000 individuals. Dependent contractors are a diverse group, but have demographic and employment characteristics more like those of employees than do independent contractors.

The study is the latest in a series conducted by the Productivity Commission into non-traditional employment.

Background Information

Patrick Jomini (Assistant Commissioner) 03 9653 2176

Leonora Nicol (Media, Publications and Web) 02 6240 3239 / 0417 665 443

Preliminaries
Cover, Copyright, Contents, Acknowledgments, Abbreviations and explanations, Glossary, Key points

1 Introduction
1.1 Which contractors are the focus of this research?
1.2 The relevance of contracting to policy formation
1.3 Research questions addressed in this paper
1.4 Structure of the paper

2 Legal tests of employment status
2.1 Why is employment status debatable?
2.2 Employment law tests
2.3 Recent legal approaches to dependent contracting

3 Previous evidence on contracting
3.1 Contractors in regular ABS labour force data
3.2 Evidence on contracting from annual ABS surveys
3.3 Evidence from AWIRS
3.4 Evidence from other sources
3.5 Summary

4 FOES evidence on contracting
4.1 The Forms of Employment Survey (FOES)
4.2 Identification of self-employed contractors in the FOES
4.3 Identification of dependent contractors in the FOES
4.4 Which estimate is to be preferred?
4.5 Summary of dependent contractors in the FOES

5 Characteristics of self-employed contractors


5.1 Bivariate analysis of the characteristics of self-employed contractors
5.2 Multivariate analysis of dependent versus independent contractors

6 Conclusions

APPENDICES

A Employment types in ABS data

B Multivariate results

References