Labor leader Bill Shorten has bowed to union demands and will promise 2.6 million casual workers an easier pathway to permanent employment, as part of a widening overhaul of Australia's industrial relations system that has drawn warnings from nervous business leaders.

Mr Shorten will announce on Wednesday he will legislate to give casual workers an easier pathway to permanency if Labor is elected, as his plan to make it more expensive to hire skilled foreign workers draws the wrath of employers.

Opposition Leader Bill Shorten, talking to workers at the Volgren bus facility in Perth, will make it easier for casual workers to become permanent. Credit:Alex Ellinghausen

"Too often, long-term casual work is used as a mechanism to pay workers less, deprive them of leave, and make them easier to sack," he said.

Employers are wary of any approach that would create red tape or interfere with their ability to employ casuals in industries with fluctuating demand, such as retail and hospitality.