It's not my problem: The growth of non-standard work and its impact on vocational education and training in Australia

This report is a result of a study undertaken by the Australian Centre for Industrial Relations Research (ACIRRT) on behalf of the National Centre for Vocational Education and Research (NCVER) to investigate the implications of the increase in non-standard forms of employment for vocational education and training (VET).'Non-standard forms of employment' is the term used in this report to refer to casual work, working through labour-hire companies and work which is outsourced.

This report drew upon two major sources of data:

• published statistics on the growth of non-standard work and published research into the reasons for this growth as well as the business and training practices of organisations which use non-standard labour
• field research involving case studies of eight organisations in NSW, Victoria and Queensland using outsourcing, labour-hire and/or casual employment and individual life histories of 16 casuals, labour-hire workers and outsourced employees

The research found that only 58.8 per cent of the workforce is now employed as permanent employees; that is, on a 'standard' basis. This proportion falls to less than half if part-time workers are added. Most of the growth has been in casuals and contractor forms of employment. For example, between 1984 and 1999 the proportion of employees engaged as casuals rose from 15.8 per cent to 26.1 per cent. Between 1978 and 1997 the proportion of workers engaged as owner-managers of incorporated enterprises rose from 1.8 per cent to 5.6 per cent. Since the late 1980s the proportion of employees who received some form of VET has fluctuated. In 1989 80.2 per cent of employees reported that they had received some training, most commonly 'on the job'. In 1993 the proportion rose to 85.8 per cent before falling back to 80.2 per cent in 1997.

The disincentives to investing in training from the point of view of employers relate to cost. Labour-hire operators and outsourced service providers invariably state that they cannot afford to invest in training, given the tightness of margins, the competitive environment in which they operate, and the pressure to keep labour costs to a minimum.

The responsibility for training thus falls mainly on the employee, and yet they are faced with obstacles to training including the cost of training in an increasingly privatised market, an uncertain capacity to recoup the investment in training, the limited time availability and unpredictability of work commitments, and the lack of access to information and advice.

The key findings arising from the organisational case studies and life history interviews were that:

• When examining education and training issues associated with non-standard employment, most attention focussed on induction and 'near fit' training. No employers examined assisted with the acquisition of foundation skills. Where such training occurred it was entirely funded by either individuals or government.
• Many non-standard workers would prefer more ongoing and certain employment.
• Levels of non-standard employment appear to be rising because increased competitive pressure is forcing firms to cut costs in general and reduce fixed labour overheads in particular.
• Reducing fixed labour overheads is not simply a matter of increasing efficiency; it often involves shifting costs and risks onto the weakest party in an employment situation.
• The extent to which costs and/or risks are shifted to workers depends on their labour market position and how stable/durable relations are between the parties.
• Where skills are low and/or in abundance no training will be provided; where they are of a higher order and scarce, some training, primarily of a 'near fit' nature, may occur.
• Ultimately the level of training undertaken depends on the longevity of relations between the parties and the existence of institutional mechanisms to facilitate it.

As a result of the growth of non-standard work, there has been a shift in the balance of responsibility for VET in Australia. Employers using labour hire or outsourcing have tried to shift the burden of training onto the labour-hire firm or the outsourced service provider. However, these organisations are in turn trying to minimise any investment in training. At the same time the government's role in direct provision of generalist and comprehensive trade and vocational training has declined in favour of support for a training market and user choice.

In order to spread the responsibility for training more evenly, this report suggests that employer expenditure on training needs to be stimulated. Labour-hire operators and outsourced contractors need to be encouraged to make a greater commitment to training since they are the financial beneficiaries of the trend towards non-standard work. Possible ways of doing this include:

• introducing financial training incentives directed specifically at labour-hire firms and outsourcing service providers
• targetting employers who use non-standard workers to ensure they do not abdicate responsibility for training
• encouraging non-standard workers to fund their own training where this is possible (for example, for professional and managerial employees). Policy also needs to recognise that many non-standard workers work for such low rates of pay and such irregular hours that it is unreasonable to expect them to make much of an investment in training

It is clear that the VET sector needs to develop some means of responding to the training needs of the non-standard workforce. While the model of the portfolio worker may be applicable to some professionals with strong qualifications and skills which are in demand, this model does not meet the needs of non-standard workers with few qualifications, limited skills and limited opportunities. The case study evidence resulting from the research reported here points to the existence of a large proportion of the non-standard workforce in need of better information, greater assistance and more accessible advice regarding training options and opportunities. This is a segment of the workforce that the VET sector needs to target.

These are not issues which will be addressed by the emerging training market; rather, policy needs to promote the formation of innovative mechanisms that facilitate training opportunities in situations involving non-standard workers. Importantly, new funding arrangements need to be devised which will ensure that the major beneficiaries of non-standard employment (that is, employers and labour-hire firms) make a more significant contribution to the training and education of workers engaged as casuals or in labour-hire or outsourced situations.