Australia’s surprisingly secure workers

Writing in the SMH this morning, Labor MP Tanya Plibersek says:

…job insecurity is bad for workers’ health. Fran Baum from Flinders University followed the fate of Mitsubishi Motors workers who faced losing their jobs. Their health was clearly affected by the insecurity. These new work laws, which make it easier to sack workers, may contribute to worse health in companies that threaten to make use of the new provisions. Employees in companies with fewer than 100 employees can now be sacked for any reason, or no reason; and companies with more than 100 employees can be sacked for anything as long as it’s called an “operational reason”.

I’ve no doubt that the prospect of losing one’s job is stressful (I remember election night in 1998…), and sustained stress can contribute to poor health. The issue that interests me here is whether the new industrial relations laws will contribute to job insecurity in any significant way. One of the curious things about the modern labour market is that the rise of a large, easily sackable casual workforce has not had the effects on job security that many people suppose.

Indeed, despite casualisation, and despite the impending WorkChoices legislation, when Roy Morgan Research did its survey on job security late last year it found the highest level of perceived job safety since it started asking the question back in 1975 – 83%. Morgan doesn’t disaggregate its data by employment type (its strength is a 30 year time series) but other surveys have, and consistent with Morgan’s aggregate result they find that the difference in job security perceptions between casual and permanent workers is much lower than we might have anticipated.

For example, in the 2005 Australian Survey of Social Attitudes, 46% of casual workers and 49% of permanent workers said that they did not worry at all about losing their job. Taking those who worried ‘a little’ as reasonably secure, overall 73% of casuals and 83% of permanent workers felt secure in their jobs. In the HILDA survey (pdf) respondents were asked to give a percentage chance of losing their jobs in the next 12 months. On average, permanent workers thought they had an 8.5% chance of losing their jobs, and casual workers 13.2%.

It’s not obvious that official work contract status in itself produces even these modest differences in job security perceptions, given that casuals are disproportionately represented in occupations where labour demand fluctuates. That is, they are employed as casuals because they are in jobs that are inherently less viable, rather than casual status itself producing a significant amount of additional insecurity. If your employer is losing money your job is at risk regardless of your permanent status, as the Mitsibushi workers were; if your employer is doing well and you are performing OK you will be reasonably secure, even if you are a casual.

It follows from this that WorkChoices in itself probably won’t add much to job insecurity, which is primarily a product of the laws of supply of demand, and not the laws of the nation.

14 thoughts on “Australia’s surprisingly secure workers

  1. “46% of casual workers and 49% of permanent workers said that they did not worry at all about losing their job.”

    Could this be because not only is it now more common to lose your job, but it is also easier to find another one if you do.

    The modern workforce is a lot more flexible and a lot of people change jobs every 2-3 years.

    So when people say “Im not worried about losing my job” they could mean “There’s a chance I could lose my job but if I do I can easily get another one just as good”.

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  2. Yobbo – The retrenchement rate trended down between 1992 and 2004, and I suspect it is still doing so, though a couple of weeks ago the ABS mysteriously postponed the release of the data that will tell us. So it is not more common to lose a job than in the past. I will have to double-check, but I am pretty sure that average length of job is stable as well – increased job turnover is another of the labour market myths.

    Morgan also has a question on whether another job could be found quickly – 62% say that they could find another job quickly, which interestingly is not at peak levels – there are 7 years since 1975 when it has been slightly higher.

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  3. I think you need to differentiate between fear of being sacked versus actually being sacked better, which you seem to have done up until the last paragraph. With a good scare campaign, workchoices could certainly increase the former even if did nothing to the latter.

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  4. Andrew, I agree with your point that casual jobs often arise in those parts of the economy that are inherently more volatile than others – so this may explain the minor differences in results. But there may also be a degree of self-selection in the responses. Perhaps permanent workers have higher job security expectations and are more risk averse than casual workers, which makes permanent workers inclined to be more pessimistic in making predictions about their job security? In other words, perhaps the real difference in job security is greater than it appears?

    If the rationale for WorkChoices is to encourage employers to take on new workers on the basis that employers have the option to sack those that don’t work out, presumably there should be an increase in the risk of retrenchment (other things – eg the strength of the economy – being equal), even if this is only marginal.

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  5. Conrad – I expect WorkChoices would influence answers to questions about general trends in job security, since on that people would draw on what they have heard in the media. But my general analysis of these things suggests that where people can rely on their own experience they do that, so WorkChoices won’t have much affect on questions about the respondent’s own situation. On the other hand, as Rajat points out, all other things being equal WorkChoices should increase both hirings and firings – the big caveat being the ‘all other things’ will be far more influential than changes at the margins.

    Rajat – I agree, there could be self-selection going on.

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  6. The constant quest for better ways to do things and produce more, which continually raises living standards, means we cannot go on with the same workers doing the same jobs. Job security policies help some existing workers, but at the expense of reducing the flexibility and efficiency of the economy as a whole, reducing living standards for all and inhibiting the creation of new jobs for other workers. Job security laws make it risky to hire new workers, leaving other workers unemployed. For the working population as a whole, there is no net increase in job security, it just concentrates insecurity on

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  7. There’s no effect yet. The insidious nature of the casualisation of the workforce is such that when things are good (as they are now) people tend to be much more optimistic about the future (extrapolation from the immediate past).

    Watch what happens when the economy tanks in a couple of years as the commodities boom busts. The workforce law changes have been, pure and simple, crafted with an eye to making sure the big employers in Australia are allowed to quickly shunt off their workforces when things are tight. Great for the employer, not so great if you just got shunted off.

    All we really see now is the creation of marginal utility jobs that are much more tenuous than they currently appear. Add to that the incredible reliance of the Australian population on social security payments (a trend accelerated by the conflicted and increasingly shifty federal government) and you have a double disaster in the making: a population that can’t survive by work alone with a government that can’t afford to pay the welfare subsidies it has created. The irony? The welfare subsidies (family payments, childcare subsidies etc) exist because companies haven’t created full time jobs that pay enough for a family to survive.

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  8. David – Though it’s never been illegal to sack people, and every recession has seen a spike in job losses regardless of IR system. In 1992, 6.4% of the workforce was retrenched (compared to 2.7% in 2004). It’s no fun to be sacked, but a moot point as to whether the overall employment situation is made better or worse by added restraints on firing. Arguably, postponing hard decisions merely creates crises that threaten a company’s viability.

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  9. Job security? What’s that?

    Jobs tend to be insecure, and vulnerable to poor management. There was a time from the late 1940s to the early 1980s where government and other large organisations ran labour-intensive staffing policies that encouraged managers to shift troublesome employees sideways rather than punt them into the chill winds of unemployment. Not everyone in the workforce then enjoyed these conditions, but many did. That time has passed, and not only was Tanya P not in the workforce then, but it is notable that she is not explicitly promising the employees of Australia a return to the school-to-retirement job under a future Labor Government of which she may be part.

    Is the position of a worker who is acutely aware that his/her ongoing employment, career and economic security depends on the employer’s efficiency and market performance any less/more secure than that of a person blithely indifferent to such matters, who assumes that they will drift onward and upward without too much effort on their part?

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  10. Dear Andrew

    Respectfully, you either struggle with analysis or are quite clever in conflating unrelated issues. You assume a correlation between casualisation and job security, but there is no causative link. It is a much more tenable argument to suggest that perception of job security is a function of perceptions of the economic situation (and probably the levels of micro-economic reform). The economy has been going well for a long time and micro economic reform virtually stopped with the election of the Howard Government, providing a higher sense of job security. The (slow) casualisation of the workforce is unlikely to be a factor at all in this outcome, but you assume it to be central.

    You make a similar error when noting that just under half of all employees ‘don’t worry about losing their job’. This is statistically open to interpretation, and given the figures and the recent history of employment, it is probably more a statement regarding Australians and their propensity not to worry, rather than your interpretation that these people feel secure in their job. Either way, a statisitcally inconclusive outcome appears to have been ‘spun’. An alternative reading of those statistics is the scary proposition that more than half of all workers are worried about job security, and the really frightening thing is that regualr employees are just as uncertain in their employment future as casuals.

    Then start to analyse that a lot of casual employment is undertaken by people who have no intention of having a ‘career’ in that field and are just working their way through uni, acting, whatever, and they really don’t give two hoots about job security.

    You are then left with the original statistics, which are interesting, your cherry picking a few which starts to look like damned statistics, and your analysis, which just looks like ‘spin’.

    Nice try though. A lot of people might buy it.

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  11. Andrew – I think you misread the post. I was starting out with the hypothesis in Tanya P’s op-ed that there is a relationship between legal employment status and subjective feelings of job security, which is intuitively plausible. However, based on the evidence of little difference between workers I concluded, like you, that other factors are more important – though we do not agree on those other factors.

    One factor I did not mention in the post – it’s a post in itself – is that workers are much more likely to believe that they might be sacked than the objective statistics warrant. For example, at the end of 2003 20% of the workforce in Morgan’s poll thought they might be sacked, but in the following year less than 3% of workers were in fact sacked. Double that because some workers may have felt they had no choice but to quit, and we are still way short of the subjective concerns. Rather than Australians having, as you suggest, a propensity not to worry, in this instance they worry too much.

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