Use of labour hire and contract workers in Australia

There has been some debate over the past two decades as to whether Australian businesses and organisations in the public sector have increasingly been resorting to the use of labour hire workers and contract workers to meet their labour needs rather than employing workers directly. This paper seeks to shed light on trends in the use of labour hire and contract workers in Australia to satisfy employer demand for labour, as well as the characteristics of these types of workers. The data shows labour hire arrangements have been a feature of the Australian economy for several decades, but they account for a relatively small and stable percentage of the workforce. Labour hire workers are defined as employees that found their current job through a labour hire firm or employment agency and are paid by the labour hire firm/employment agency.

Findings include that: (1) the use of labour hire employees in Australia increased steadily between the mid-1990s and just prior to the impact of [Coronavirus Disease 2019] COVID-19 in March 2020; (2) numbers of labour hire workers fell sharply as shutdowns imposed to limit the spread of the virus began to negatively impact upon the labour market and have only recovered modestly since; (3) casual employees were much more likely to lose their jobs at this time and a substantial proportion of labour hire employees are employed on a casual basis; (4) agencies in the public sector are more likely to use employees on fixed-term contracts than businesses and organisations in the private sector although there are signs of a slight fall in the rate of their use by the public sector between 2016 and 2022 (down from a 11.2 per cent share of public sector employees to 9.2 per cent); and (5) data gaps still exist for labour hire employment in Australia, particularly in relation to the industries that are more likely to use labour hire employees.

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