If We Are to Work to 70, We Need to Rethink Work

As the Federal Government confirms its plans to increase the Australia’s retirement age to 70, Sue Richardson, Principal Research Fellow, National Institute of Labour Studies at Flinders University, looks at the changing character of the nation’s workforce in this piece published on The Conversation.

The norm of permanent full-time terms of employment is under serious challenge.

In Australia today more than one-third of employed people work on more variable terms – in particular as casuals (19%), independent contractors (9%), other self-employed (9%) and agency workers (about 3%). In total, 30% of people work part-time.

In addition to the policy-induced structural change in the economy, technological change and a shift to a service economy are some of the causes. These explanations imply that the shift away from permanent and full-time forms of employment is driven by changing employer needs (the demand side of the labour market), rather than by changing worker preferences.

Whatever the causes, the growth in flexible ways of working is a major development and there is a serious concern that precarious, or flexible, types of employment are inferior and workers would not choose them if they had reasonable alternatives.

The inferior dimensions of flexible work terms are argued to include job insecurity, variability in earnings, reduced on-the-job training, increased exposure to sexual harassment and workplace bullying, and a reduced capacity to exercise autonomy in how the work is done, which is damaging to health.

This view was neatly summarised by former Deputy Prime Minister Brian Howe, who led an ACTU-funded inquiry into insecure work, in a speech to the National Press Club in 2012 in which he said:

If there is one story that cuts right across our economy and its changes in the last 20-30 years, it is the story of the growth of insecure work. Increasing numbers of workers are engaged in work that is unpredictable, uncertain and that undermines what ordinary Australians need to feel secure in their lives and communities.

But is it correct to assume that most people want full-time and permanent work, and are forced by the lack of such jobs into less-preferred and harmful alternatives?

The Changing Character of the Workforce

In a generation, the male breadwinner model of the Australian labour market has been replaced by something much more complex.

Today, young men have more years of formal education, fathers seek greater time with their children, and the real earnings of men are higher and used to reduce work effort in later life, including in response to ill health.

Young women have greatly increased their levels of formal education, and combine later years of study with employment; marriage no longer reduces the paid work effort of women; and motherhood causes reduced paid work but usually not complete withdrawal from the labour force.

Both men and women have poorer health and substantially more disability (such as diabetes, asthma, mental illness, hypertension, obesity) in their 50s and 60s than did the previous generation. This development sits alongside a substantial extension of life expectancy at these ages, which in part explains the rising rates of employment (of both sexes) at older ages.

These two developments mean more people with some form of health limitation are seeking employment.

The combination of extended full-time study with part-time employment, the sustained and substantial increase in women’s employment, the extended lifespan combined with poorer health while still of working age, all combine to suggest that the standard offering of full-time permanent work is no longer the best fit for many people in the workforce today.

Employment needs have changed

The evidence so far suggests that women of all ages, and both young (student) and older men would welcome opportunities for employment that do not require unrelenting full-time engagement, and that were compatible with study, caring for family members, and declining health and energy.

These options could be provided by secure part-time work, and this has indeed been on the increase. But so have casual employment and other forms of more tenuous engagement.

Casual work has grown for some age groups more than others. ABS Labour Force Surveys, 1992 and 2011

More men at every age are working on casual terms: this growth is not just confined to either end of the working life. At every age, almost half of male casuals are working full-time, and this is a growing category of employment.

It is hard to argue that men aged 25-54 would choose to work on casual terms if a reasonable permanent option was available, especially since 37% of them are married with dependent children.

Casual employment for this group is concentrated among labourers and elementary sales persons, groups who are not likely to have a large set of job options. The concerns about insecurity of hours, employment and earnings arising from casual employment are especially pertinent for these men.

Again, the picture for women is different. Women have seen the same growth as men in casual employment among people under age 25 and over age 55. Many of both sexes are likely to be happy to work as casuals, as they study, manage health limitations or transition to retirement.

But in contrast to men, women aged 30-50 are less likely to be working on casual terms in 2011 than they were in 1992.

Australia is quite unusual in the extent of protections it offers to people who are employed on flexible terms, with a 20-25% wage loading for casual workers. Casual workers also have the same protection as other workers against unfair dismissal, discrimination, access to penalty rates and compulsory superannuation and (unpaid) compassionate and carer’s leave.

The idea that people typically are forced to take casual jobs from a position of disadvantage is not supported by the evidence – there are more women casuals in advantaged households than are in disadvantaged ones.

Research shows both men and women have higher wages than otherwise if employed part-time (10%) or on casual terms (5%), once proper account is taken of individual productivity characteristics.

Underemployed or Overworked

Employment on casual or contract terms, compared with being employed in a permanent full-time job, does not harm mental health. And partnered Australian women have higher life satisfaction if they work part-time rather than full-time.

If the alternative to casual and part-time employment is permanent and full-time, then we need to look more closely at how satisfied permanent full-time workers are. The main drawback of such jobs is the heightened risk of pressure to work long hours.

Today, men in permanent full-time jobs work an average of 44 hours per week, a quarter work 50 hours or more and 30% of men and 25% of women say they would like to work fewer hours than they do (taking account of the effect on their pay). This is a much larger group than the numbers of part-time workers who say they want more hours of work.

Econometric estimates find that working longer hours than is desired is both much more common and much more harmful to mental health and to job satisfaction than is under-employment.

There is a time in the lives of many people when they want full-time permanent employment.

This is especially true for men in their main earning years and women too, if they do not have young children. But there are also times in the lives of many people when they want less “consuming” forms of employment, to accommodate study, family needs, health limitations and phased retirement.

With a focus on family needs, the Sex Discrimination Commissioner, Elizabeth Broderick concluded that:

In terms of the workplace, there is still a fundamental mismatch between unpaid caring work and workplace structures and cultures … significant cultural change will not occur unless, and until, men start working differently – more flexibly.

The much greater diversity of the modern workforce is better suited by a variety of terms of employment, than by full-time (and long hours) permanent as the only option.

A longer version of this article first appeared in Volume 15, April edition of Insights magazine, published by the Faculty of Business and Economics, University of Melbourne. Special thanks to Insights editor, Associate Professor Geoff Burrows.