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The role of non-traditional work in the Australian labour market

Commission research paper

This commission research paper was released on 25 May 2006.

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  • Key points
  • Media release
  • Contents

Around 3.3 million people were engaged in 'non-traditional' work in 2004, representing approximately one third of all employed people. Overall, this number had grown since 1998, but non-traditional work's share of the total workforce remained largely unchanged.

  • Casual employment is the largest non-traditional form of employment (1.9 million in 2004 or 20 per cent of all employed persons). Growth was rapid between 1998 and 2001, but has slowed since, resulting in a stable share of the employed population.
  • Self-employed contractors (0.8 million in 2004), fixed-term employees (0.6 million) and labour hire employees (0.3 million) are less common forms of non-traditional work. Their total number grew between 1998 and 2001, but has subsequently levelled off. Their combined share of the total workforce fell between 2001 and 2004.

There are significant differences between non-traditional workers:

  • Some, like fixed-term employees, closely resemble ongoing employees in many respects, such as education and skills. Casuals, by contrast, are typically less skilled.
  • Fixed-term employees, and students and mothers employed as casuals, mostly declare themselves to be satisfied with their employment circumstances. Prime working age males, a small proportion of all casual employees, are often recorded as less satisfied.

Non-traditional work is mostly a temporary or transitory experience, except for a few groups of casual employees, such as women with children. For many people who are not currently employed, non-traditional work provides a means of gaining employment and a stepping stone to ongoing employment.

  • There is merit in encouraging those outside the labour force to seek non-traditional work, if they cannot obtain ongoing work. However, particular attention should be paid to 'at risk' groups, so that they do not revert to unemployment or exit the labour force.

For one in four families, non-traditional work is the main source of wage income. Such families are found in all income deciles, indicating that reliance on non traditional work for wage income is not synonymous with low family income.

  • Families which receive most of their wage income from non-traditional work tend to be less reliant on wage income than other families. Their income is supplemented by government transfers (lowest two deciles) or non-government, non-wage income (other deciles). This suggests that any wage differentials between traditional and non-traditional workers are only partly reflected in total income differences between their families.

Whether non-traditional work is associated with lower worker wellbeing needs to be assessed in relation to the personal circumstances of individuals in particular socio demographic groups, and over the course of time.

About one third of Australian workers are employed as casuals, fixed-term employees, self employed contractors or labour hire employees, according to a report released by the Productivity Commission . The largest group is casual workers (20 per cent of all employed persons), followed by self-employed contractors (8 per cent).

Contrary to popular wisdom, the share of non-traditional work in the total workforce has been relatively stable in more recent years, with non-traditional work growing broadly in line with the overall number of employed persons.

The Commission Research Paper - The Role of Non-Traditional Work in the Australian Labour Market - builds on the Commission's previous research into labour markets (including social dimensions).

The Commission used a number of data sources, including the expanding Household, Income and Labour Dynamics in Australia (HILDA) survey, to look at different dimensions of non-traditional work, including job satisfaction and transitions between different forms of employment.

Non-traditional workers are a diverse population and most generalisations are unwarranted, according to the Commission. Casual workers tend to be young, still in education and work part time. Fixed-term employees are as skilled as ongoing employees and tend to work full-time. Self-employed contractors are typically of prime working age and work long hours. Labour hire employees share many characteristics of ongoing employees but do not remain in this form of employment for very long.

Many non-traditional workers express high levels of satisfaction with their jobs. One clear exception is casual male workers with dependants.

For those who are unemployed or out of the labour force, non-traditional work provides a means of gaining employment and, for many, a stepping stone to ongoing employment.

Foreword, Acknowledgments, Abbreviations, Glossary

Key points
Prevalence and growth of non-traditional work
Characteristics of non-traditional work
Non-traditional work and labour market transitions
Non-traditional wages and family income

1 Introduction
1.1 What makes some work non-traditional?
1.2 Why is non-traditional work of policy interest?
1.3 What research questions are addressed in this paper?

2 Identifying non-traditional workers
2.1 The prevalence and growth of non-traditional work
2.2 Casual employees
2.3 Fixed-term employees
2.4 Self-employed contractors
2.5 Labour hire workers
2.6 Conclusion

3 What are the reasons for the existence of non-traditional work?
3.1 Demand for non-traditional work
3.2 Supply of non-traditional work
3.3 Summary of factors explaining non-traditional work

4 The characteristics of non-traditional work
4.1 Does the prevalence of non-traditional work change with the age of a worker?
4.2 Do forms of employment differ by gender?
4.3 Geographical variations
4.4 Do forms of employment vary between occupation and industry?
4.5 Do hours worked per week differ between forms of employment?
4.6 Is there a relationship between education and form of employment?
4.7 Job satisfaction of non-traditional workers
4.8 Job satisfaction of casuals
4.9 Other characteristics of self-employed contractors
4.10 Summary

5 The role of non-traditional work in labour market transitions
5.1 Labour market transitions of people of working age
5.2 Employee labour market transitions
5.3 Concluding comments

6 Casual employment: stepping stone or trap?
6.1 Introduction
6.2 For whom is casual employment a stepping stone?
6.3 For whom is casual employment a persistent state?
6.4 Who is at risk of reverting to non-employment?
6.5 Policy implications

7 The contribution of non-traditional work to family income
7.1 Introduction
7.2 How important is non-traditional work for families?
7.3 Where are 'non-traditional wage families' positioned in the distribution of family income?
7.4 Do the components of family income differ between non-traditional and traditional wage families?
7.5 Concluding comments

8 Summary and conclusions
8.1 Prevalence and growth
8.2 Characteristics
8.3 Transitions
8.4 Household income
8.5 Avenues for further research

Appendix A Calculating the prevalence of non-traditional work
A.1 Self-identified casuals
A.2 Fixed-term employees
A.3 Self-employed contractors
A.4 Labour hire workers

Appendix B Detailed data on non-traditional work

Appendix C Work and retirement decisions of older Australians
C.1 Why might those considering changing their employment before retirement prefer non-traditional work?
C.2 How did those who changed their employment to transition to retirement, change it?
C.3 Why return to work from retirement?
C.4 Why might the timing of a person's retirement decision be influenced by the availability of non-traditional work?

Appendix D Modelling transitions from casual employment
D.1 Data source
D.2 Modelling approach
D.3 Results