The claim

Wages growth and job insecurity are looming as prominent issues in the election campaign, with the ACTU warning that Australia is at risk of morphing into an "Americanised economy" of low wages and poor job security.

ACTU secretary Sally McManus said that Australia had the "highest rate of temporary work in the OECD and the third-highest rate of insecure work".

Is this correct?

RMIT ABC Fact Check takes a look.

The verdict

Ms McManus's claim is not clear cut.



The most recent data compiled by the OECD puts the rate of temporary employment in Australia at 5.2 per cent of "dependent employment" (wage and salary workers).

This would place Australia among the lowest OECD member countries for its reliance on temporary workers (29th out of the 32 listed).

However, experts told Fact Check that the OECD's definition of "temporary employment" is narrow and doesn't capture Australia's casual workforce, which accounts for 24.7 per cent of all employees.

Including these workers would lift Australia's placing among OECD countries.

Even so, making international comparisons is problematic, experts warned.

This is because there is no formal or agreed legal definition of temporary employment; nor is there an international database that collects national employment figures in a consistent fashion.

Ms McManus also claimed that Australia had the third-highest rate of insecure work.

Experts told Fact Check that measuring job insecurity was difficult because it relied on subjective indicators, most of which were applied in employment surveys.

Also, the lack of a consistent international survey of insecure employment complicated comparisons between countries.

Essentially, measuring insecure work was not as straightforward as measuring something like unemployment.

Temporary employment, according to the ACTU

Fact Check contacted Ms McManus's office asking for the source of her claim and was directed to data contained in an Australian National University document that cited Australia's ranking of temporary employment among OECD countries for 2013.



Although the original source was the OECD.stat database, it is unclear what specifications were applied in calculating Australia's share of temporary employees.



Fact Check attempted to contact the author of the document, Professor Peter Whiteford, to ask how the figures were compiled.

However, he was believed to be overseas and could not be reached in time for publication.



Experts contacted by Fact Check were unable to determine exactly what data had been used.



However, in the case of Australia, they said it was highly likely that the data included casual and fixed-term contract employees.

What the OECD says about temporary employment

According to the OECD glossary, temporary employment is work conducted on a fixed-term contract; that is, by wage and salary workers whose job has a predetermined termination date, "in contrast to permanent work where there is no end-date".

In the case of Australia, temporary employment includes those employees for whom there is a "set completion date or event (fixed-term contract), or casuals (those without leave entitlements) where employment is expected to continue for less than 12 months with 'seasonal/temporary job/fixed contract' reported as the reason".

This definition excludes owner-managers of incorporated enterprises.

However, there are exceptions, according to the OECD, because although national definitions may "broadly conform to this generic definition" there may be some differences "depending on national circumstances".

Australia vs the OECD, according to the OECD

The OECD sources its data relating to Australia from the ABS Characteristics of Employment survey, which is conducted every August and measures the terms of employment for working-age Australians.

Included in this survey are workers who are employed on fixed-term contracts.

According to OECD data for 2017, Australia's share of temporary employment as a percentage of dependent employment (wage and salary workers) was 5.27 per cent.

By comparison, the top-ranked country was Chile, with 27.66 per cent of its workforce employed on a temporary basis.

This comparison does not place Australia above other OECD countries, as claimed by Ms McManus; instead, Australia would rank 29th, just after the UK's 5.72 per cent.

However, as previously noted, there is no internationally agreed definition of temporary employment.

The definition can vary according to the organisation assessing the data.

Differences can also occur in how data is collected and analysed.



The problem with the OECD data

Experts contacted by Fact Check agreed that the OECD definition of temporary employment was narrow.

This is because it does not include casual workers, which make up a large portion of Australia's workforce.

Professor Mark Wooden, of Melbourne University's Faculty of Business and Economics, told Fact Check: "In most countries, [temporary work] means fixed-term contracts, and in many OECD data collections that is all they measure.

"Thus, Australia looks very good, since the ABS [Characteristics of Employment survey] data the OECD uses suggests we do not have many temporary workers — but they are not including casuals."

Similarly, economist and University of Queensland Professor John Quiggin said: "There is no generally accepted international definition [of temporary employment].

"This reflects the fact that the legal arrangements under which people work differ from country to country.

"From what I can see, the OECD statistics for 2017 focus on employment contracts with a fixed expiry date, which are not common in Australia."

Professor Wooden added: "If you include both casual jobs and fixed-term contract jobs as forms of temporary work, then Australia will, I am sure, come out on top of the OECD."

But he warned that "making comparisons using the data is very difficult".

"There are no national surveys that measure [temporary employment] the same. So you are not going to get a strict comparability.

"We're not comparing like with like here."

Although Ms McManus was on the right path, he said "assessing this claim strictly is difficult due to lack of data".

"To actually say she has clear evidence that is incontrovertible for other countries [isn't] clear."



What is casual employment?

While the ABS does not have a set definition for temporary employment, it does define casual and fixed-term contract employees.

According to its Characteristics of Employment survey, casual workers are defined as those without access to leave entitlements (such as sick pay and other forms of personal leave), which usually only apply to those in permanent employment.

The Parliament of Australia, in a recent research paper, characterised casual employees within the parameters of Australia's awards and enterprise agreements, where "casual workers are paid a loading on top of their hourly wage — usually set at 15 to 25 per cent — as financial compensation for the lack of leave entitlements like annual leave, sick pay and carer's leave".

Casual employees are diverse in that they may be employed on a fixed-term contract or continue to work with the same employer for a longer period of time, depending on whether work is available for them.



ABS data on temporary employment

In August 2018, the ABS Characteristics of Employment survey found that 24.6 per cent of all employees were casual — that is, they were employed without leave entitlements.

By contrast, 75.4 per cent of workers were classified as permanent employees, who enjoyed paid leave entitlements.

As of August 2018, 5.2 per cent of working Australians were on fixed-term contracts, equal to the OECD's estimate of Australia's share of temporary employees.

Permanent and casual employees as a per cent of all employees





With paid leave entitlement (permanent) Without leave entitlements (casual) Employees on fixed-term contracts 2017 74.9 25.1 5.2 2018 75.4 24.6 5.2

Excludes owner-managers of incorporated and unincorporated enterprises (OMIEs).

Source: ABS, Characteristics of Employment

What is insecure work?

Much like temporary employment, there is no single definition for insecure employment, which complicates how it's measured and compared.

The OECD defines labour market insecurity "in terms of expected earnings loss associated with unemployment. This loss depends on the risk of becoming unemployed, the expected duration of unemployment and the degree of mitigation against these losses provided by government transfers to the unemployed".

However, this is just one definition.

Insecure work can also encompass a broad range of more subjective indicators such as unpredictability of income, inferior rights and entitlements, and irregularity of working hours, as well as poor representation and employment security.

"Insecure work … is a much vaguer concept," Melbourne University's Professor Wooden told Fact Check.

"There are also many different facets to security, [which] can be subjective and vary across individuals."

Jeff Borland, another Melbourne University Professor of Economics, said insecure work could be "used to refer to many different aspects of work".

"People use the term 'security' to cover many dimensions of what happens in the characteristics of the job people have," he said.

Dr Yashar Tarverdi, of Curtin University School of Economics, Finance and Property, said: "[Insecure work is] more of whether you are confident that you are going to get the same hours the next fortnight or you think that, although you have a fixed-term contract, your employer's going to fire you next year.

"So there are subjective measures that create insecure employment.

"Some of them are about your contracts and your whole contractual agreement, and some of them are about our economy."



What is non-standard employment?

According to the 2018 OECD report Job Creation and Local Economic Development, non-standard work is defined as being temporary or part-time work, as well as self-employment.

It is defined by what it is not, according to the OECD, and that is "full-time, dependent employment with a contract of indefinite duration, or what is generally considered the 'standard' work arrangement".

Although non-standard work can provide some workers with the opportunity for a more flexible work arrangement, it may also reduce employment stability, increase income volatility, and reduce access to training and opportunities for career advancement.

Does Australia have the third-highest rate of insecure work?

Fact Check contacted Ms McManus for the source of her claim and was directed to an OECD report, In it together: Why less inequality benefits all, which uses 2013 data to measure the rate of non-standard employment.

This was defined as including workers deemed part-time temporary or on a full-time temporary contract, as well as part-time permanent employees and the self-employed — where Australia is ranked third among OECD countries.

Professor Borland told Fact Check that the claim appeared 'to be using the term insecure work to mean non-standard types of work".

However, he cautioned that insecure work tended to be a subjective measure.

"There's [a lot] left out of what we might regard as security when we use that term [insecure work]," he said.

"For example, just knowing that people are doing non-standard work doesn't necessarily tell you about the probability of losing their job … [or] it may or may not correlate with the extent to which people have control over their hours or have variabilities in those hours."

"Insecure work … is not necessarily non-standard," Professor Wooden said.

"For me, insecurity is a subjective perception. So, one person in one job and another person in exactly the same job may feel differently.

"Some people have used them [non-standard and insecure employment] interchangeably.

"Insecurity is a much vaguer concept. Whereas, with non-standard and temporary employment, you can at least put definitions on those."

In assessing the claim, Professor Wooden told Fact Check: "If you mean we are the third-highest in non-standard employment, then that's measurable."

However, he added: "Once you move into measures of insecurity, you're not checking facts.

"This is your best source for the claim that we have a high level of non-standard employment.

"But it's not a [direct] measure of insecurity."

Principal researcher: Natasha Grivas

Sources

ABS, Labour force, Australia, February 2019



ABS, Characteristics of employment, Australia, August 2018



Geoff Gilfillan, Characteristics and use of casual employees in Australia, Parliamentary Library, January 19, 2018



Geoff Gilfillan, Trends in use of non-standard forms of employment, Parliament of Australia, December 10, 2018



OECD, Labour force statistics in OECD countries, January 2019



OECD, Temporary employment, 2017



OECD, Incidence of permanent employment, 2000-2017

