Construction, Forestry, Mining and Energy Union

Mining & Energy Division’s

Victorian District Branch

Submission to the

Victorian Inquiry into the Labour Hire Industry and Insecure Work

January 2016

This response has been prepared and submitted on the basis that it is a public document.

Submitted to: Professor Anthony Forsyth

RMIT University Graduate School of Business & Law

By email: labourhire.inquiry@ecodev.vic.gov.au

Submitted by: Geoff Dyke Tel: 03- 5134 3311Fax: 03-5134 7058Email: gd14cfmeu@tpg.com.au

EXECUTIVE SUMMARY

Labour Hire and casual work are currently being used within the Victorian Mining and Energy

Industries in three main areas:

1. For major maintenance outages of generating units and mining equipment.

2. For casual and seasonal employees in the mobile earthwork plant equipment industry

within the mines.

3. For casual employees in the Security and Emergency Services Industries in filling

relief positions in permanent shift rosters.

Each of these areas presents negative impacts on workers, their families, community and the

Industry. Additionally, there are some particularly concerning practices used by power

companies, Labour Hire companies and contractors; specifically:

A preference for casual labour over permanent labour where there is permanent full-

time work available.

Under-utilization of pools of casual employees that are held captive.

Over-utilization of temporary maintenance labour in preference to permanent in-house

labour.

We assert that Labour Hire and casual employment within our industry results in poorer OH&S

outcomes and increased risk, restraint in trade of labour, lower wages and conditions,

unreasonable stress on families, loss of community participation and citizenship, scarcity of

apprenticeships and traineeships, locally depressed business conditions and stagnation of

population growth.

The CFMEU Mining and Energy Division Victorian District Branch recommends that

government considers each of the issues raised, with a view to constructively improving

outcomes for insecure workers, their families and the community.

OVERVIEW

The Construction, Forestry, Mining and Energy Union - Mining & Energy Division - Victorian

District Branch (CFMEU) welcomes this opportunity to provide a submission to the ‘Victorian

Inquiry into the Labour Hire Industry and Insecure Work’. Our submission is in addition to, and

supports both the national CFMEU and Victorian Trades Hall Council submissions.

THE CFMEU

The CFMEU is a registered union at both federal and state levels in Australia and has over

120,000 members organised into three divisions:

Construction and General Division;

Forestry and Forest Products Division; and

Mining and Energy Division.

MINING & ENERGY DIVISION - VICTORIAN DISTRICT BRANCH

The CFMEU, through its Victorian Mining and Energy District Branch, is the dominant union

within the power generating and coal mining industries in Victoria. We represent about 85% of

all workers within the power stations and brown coal mines in Victoria, including those at:

Hazelwood power station, Yallourn power station, Loy Yang ‘A’ power station, Loy Yang ‘B’

power station, Newport power station, AGL Hydro power stations and open cut, brown coal

mines at Yallourn, Morwell and Loy Yang. Additionally we represent the Stawell Gold mine and

contractors within the Security, Emergency Services and Mobile Earthmoving Plant industries.

Our union feels well qualified to make this submission because we are based in Morwell at the

centre of the Latrobe Valley and our officials, members, families and community have all dealt

with the impacts of industry restructuring, privatisation and the constant push to eliminate

permanent jobs and replace them with casual, part-time and insecure jobs.

LATROBE VALLEY’S RECENT HISTORY

The restructuring and privatisation of the Victorian Electricity Industry in 1990s resulted in a

drastic drop in employment within the power industry, associated construction and maintenance

work within the Latrobe Valley. Employment in the Latrobe Valley power industry during this

time of restructuring and then privatisation dropped from 10,800 directly and permanently

employed persons to less than 2,000 persons, directly and permanently employed.

Since this period, there has also been a virtual cessation of the previous continuous construction of

major coal fired power stations in the Latrobe Valley. As a result another thousand or more jobs in

the construction industry and the companies servicing them has also gone. A single dominant

employer in the form of the State Electricity Commission of Victoria has not only been replaced

by many new private power companies but these private power companies have in turn

outsourced and contracted out many significant parts of their businesses.

These large private power companies, who are generally multinationals, play off power industry

contractors against one another on price, which in turn puts additional pressure on the wages and

conditions offered by independent contractors. A recent example is one private power company

asking all of its contractors and suppliers to cut their price by 22% or face the future loss of their

contracts. Most refused of course but this shows the immense pressure that private power

companies can bring to bear on smaller independent contractors.

In most cases, power industry contractors have shown a distinct preference for casual, part-time

and insecure jobs. This is most evident in the Security and Mobile Earthmoving Plant industries

but is also significant during power station major maintenance outages; with nearly the entire

workforce numbering between one and three hundred are engaged on a casual or labour hire basis

for the 1-2 month maintenance outage. It is not only temporary work where this preference is

shown because a contractor performing permanent maintenance work recently elected to make

twenty permanent maintenance workers redundant while still keeping casuals workers under its

employ.

We submit that the following can be attributed as consequences of labour hire, insecure, casual,

part-time jobs and underemployment and that this inquiry should examine all of these

issues/effects:

A net region population loss or depressed population growth.

Higher unemployment levels & withdrawals from the labour force.

Lower family incomes &/or negative impacts on family life.

Limited or non-existent apprenticeship and traineeship outcomes.

Depressed local business conditions.

Weakened community participation and citizenship.

Less than optimal Occupational Health & Safety outcomes.

Less than optimal health outcomes.

Less than optimal productivity/labour market outcomes.

Reduced employee pay and conditions.

Restraints in the trade of labour

This submission will briefly outline our view on all the above points; however, we would like to

point out a lack of resources, time and most importantly access to accurate information prevent

this submission from being far more authoritative in nature.

A NET REGION POPULATION LOSS OR DEPRESSED POPULATION GROWTH.

Since 1996, the Latrobe Valley region has experienced a major decline in population due to poor

job opportunities, with the region continuing to experience depressed population outcomes in

comparison with other areas. An obvious reason for population loss was the dramatic decline in

job opportunities associated with privatisation, but casualization and labour hire have also had

significant impacts.

After privatisation the Latrobe Valley region was left with a large pool of skilled workers without

permanent employment. Many of these workers either left our region to seek other permanent

employment or took up casual/labour hire positions performing shutdown work during major

maintenance outages. This shutdown work is intensive while it is going but generally infrequent

and this has led to these workers chasing shutdown work across Australia, in between their major

outage work in Victoria.

In addition, as a consequence of the drop in local workers, many of the casual/labour hire

employees who perform work on major maintenance outages in the Latrobe Valley now come

from interstate. This influx of temporary workers has led to a further loss of job opportunities

within our region due to the significant transient workforce operating within the Latrobe Valley

region, further affecting our local economy and its population outcomes.

HIGHER UNEMPLOYMENT & WITHDRAWAL FROM THE LABOUR FORCE

Insecure, casual and part-time and underemployment are often all terms synonymous with the

labour hire and contract industries. Our experience is that most casual/labour hire workers are

engaged by contractors to work considerable less than their full capacity, often having long

periods between engagements. This leads to casual/labour hire workers experiencing regular

periods of unemployment and sometimes withdrawing from labour force participation for

extended periods out of frustration.

LOWER FAMILY INCOMES &/OR NEGATIVE IMPACTS ON FAMILY LIFE

Because casual/labour hire workers are often utilized well below their full capacity they generally

have lower incomes than comparable permanent employees. In industries with very low hourly

rates, such as Security, this can lead to workers earning less than if they were on unemployment

benefits. These workers are the working poor, with our union often having to reduce their union

fees because they can’t afford them.

The exception to this would be casual/labour hire workers performing work on major maintenance

outages who work excessive hours over a short period of time. These workers often work six

twelve hour days per week (72 hours per week) followed by a rest day. This pattern of work has

an obvious detrimental impact on family life, with the parent deprived of time to properly interact

with their family, especially when major outages generally run for up to eight to ten weeks. If

these workers chase major outage work interstate then this family and social impact continues on

almost indefinitely.

In the Mobile Earthwork Plant Industry Labour Hire/casual employees are often engaged on a

seasonal basis. This means that during good weather the Labour Hire company/contractor will try

to get as many productive day light hours as possible. These workers will often work 9-10 hour

days, 6 days per week on a continuous basis. We also know of instances on major projects and

coal loading operations where casual workers have been worked continuously in excess of 54

hours per week for several years without any leave break. The only way these casual workers

can get a break with their family is to quit their employment and then go to the bottom of a

waiting list when they return seeking work.

Those casual workers who are underutilized also experience financial stress when they are not

working and are held captive waiting on a phone call. This means they can not plan any family

activities because if the phone rings and they are not available, the Labour Hire

company/contractor puts a black mark against them and they are less likely to be called in future.

These workers also have a great deal of difficulty in getting approval for loans due to the

fluctuating nature of their income.

LIMITED OR NON-EXISTENT APPRENTICESHIP & TRAINEESHIP OUTCOMES

Labour hire and contracting companies are skills takers not skills makers. They rely almost

exclusively from sourcing trained/skilled/qualified workers from what was previously a pool of

workers trained at public expense. As this pool of skilled workers diminishes, because of our

aging workforce, contractors seek further casual/labour hire workers from outside our region

rather than engaging apprentices or trainees. Some of the reasons for this are because private

power companies want work completed in very tight time frames and some of it is because the

lack of continuity of work.

In stark contrast to the past, very few apprenticeships or traineeships are available in the industries

that we cover, with only about two dozen apprentices/trainees employed for about 2000 workers.

Where apprenticeships or traineeships do occur they are generally employed by the core or host

companies and not by the labour hire or contracting companies themselves.

DEPRESSED LOCAL BUSINESS CONDITIONS

The Latrobe Valley region’s business communities were devastated as a result of the restructuring

and privatisation of our and other regional industries in the mid 90’s. The economic impacts of

this is still most evident in the towns of Morwell and Moe, which are ranked in the top ten

percent of Australia’s most disadvantaged towns. There were some signs of economic recovery

in the late 90’s, however this recovery has stagnated in Morwell and Moe as the labour

hire and the contracting industries grew and permanent employment was replaced with

insecure, casual and part-time jobs or underemployment.

WEAKENED COMMUNITY PARTICIPATION AND CITIZENSHIP

Active and worthwhile community participation or citizenship is difficult, if not impossible, for

casual or labour hire workers because they work irregular days, excessive hours or have to live

away from home to travel interstate for work. There is little quality time for them to spend in the

community and the irregular work patterns precludes participation in sporting teams. Our clubs,

organisations and sporting bodies have all experienced significant drops in participants caused by

changed work patterns brought on by the labour hire and contracting industries.

LESS THAN OPTIMAL OCCUPATIONAL HEALTH & SAFETY OUTCOMES

We submit that there is persuasive evidence to suggest that OHS outcomes in the labour hire and

contracting industry are, on average, considerably poorer than in other industries, particularly in

the higher risk area of blue-collar labour hire. The excessive hours worked in some cases in the

Mobile Earthwork Plant Industry and Major Outage Maintenance mentioned earlier obviously

introduce a significant fatigue element that can’t be ignored but there are also other factors.

Whilst the OH&S Act 2004 mandates a duty on the labour hire or contract agency, and the host

company, to provide a safe and without risk to health workplace for workers, it is our submission

that this labour hire or contracting arrangement often fails to achieve this by taking short cuts.

In our experience host companies often enter into these arrangements partly to attempt to remove

themselves from their OH&S responsibility. For example, a private generator is currently seeking

to outsource an arduous task of bunker lancing to labour hire contractors on the premise that this

activity presents an OH&S risk to its own aging workforce. The private generator appears to have

little OH&S concern for any older workers engaged through Labour Hire. That is of course, if it

doesn’t discriminate by secretly telling the contractor to only use younger workers.

We believe job security is a fundamental ingredient to maintaining a safe workplace and to

prevent long-term injuries to workers health. Workers engaged in insecure, casual and part-time

work often find it difficult to fulfil their duties as employees under the Act and stay in

employment. If casual workers raise genuine OH&S issues to their employer they are often

‘black banned’ and not offered further work because they are seen as trouble makers.

We submit that labour hire and contract workers often do not report injuries, or delay the reporting

of an injury or hazards as a result of job insecurity, and that this often leads to working with an

injury or in a hazardous situation. We further submit that workers engaged in casual, insecure and

seasonal work who report injuries, particularly injuries that are significant injuries or cause long-

term health damage (spine, nerve, vibration and lung injuries) fail to be re-employed and are left

to deal with their injury or health damage financially unaided. This practice also avoids the injury

or health damage being properly recorded and denies the worker his rights under a proper Return-

To- Work process.

We believe that labour hire and contracting workers also experience higher injury rates than

permanent workers because they are subjected to changing workplaces and hazards, without

adequate training and instruction. It is our experience that in the Mobile Earthwork Plant industry

a lot of casual and temporary hires who come directly from the farming sector. The farming

sector has notoriously poor OH&S outcomes in Victoria because its workers are generally self-

employed, poorly regulated, lack education in OH&S and have a strong mindset on production

in their own financial self-interest.

Unfortunately, although these ex-farm workers possess good mobile plant skills they also bring

the farm OH&S culture with them. For example, they regard clean and hygienic crib room

facilities in which to eat their lunch as an unnecessary luxury rather than a necessary requirement.

Likewise there is a tendency to improvise to avoid delaying production rather than to take a

slower more safe method.

We recommend that the Victorian Workcover Authority should conduct specific research to

examine the OH&S outcomes in the labour hire and contracting industries, as compared to those

within the permanent workforce. This should be done in conjunction with the establishment of an

industry wide data base that is aimed at identifying casual/labour hire workers and improving the

OH&S performance within this sector

LESS THAN OPTIMAL HEALTH OUTCOMES

We submit that there is evidence to suggest that the health outcomes of workers in the labour hire

and contracting industries are, on average, considerably poorer than in other industries.

Casual/Labour Hire workers tend to change employers more often and there appears to be a lack

of ongoing workplace health monitoring, such as regular hearing testing. We recommend that the

upon establishing a registrar of workers in this sector, the Victorian Workcover Authority should

conduct a health study of casual/Labour Hire workers as compared with the permanent workforce.

LESS THAN OPTIMAL PRODUCTIVITY/LABOUR MARKET OUTCOMES

The myth that labour hire, casual and part time work provides much needed flexibility to workers

is quickly exposed when it is understood that the most sought after type of employment is

permanent. We believe that most workers will do almost anything to get and keep permanent

work.

Contractors and Labour Hire companies always attempt to keep a few ‘permanents’ on their books

and use these workers as ‘carrots’ to the casual and part-time workers. These ‘permanents’ are

picked by the employer as workforce and OH&S ‘representatives’ and generally ‘behave’ to the

bosses liking in order to keep their permanent job status. This undoubtedly leads to a compliant

workforce; however, it does not engender independent or innovative thinking.

Casual/Labour Hire workers experience a great deal of underutilization or are often moved around

from site to site, negatively impacting on the consistency in the job, knowledge of the work site,

work practices and safety systems and knowledge of organisation structure/supervision. These

labour hire or contract relationships are often described as a triangular relationship between the

worker, the labour hire or contract agency and the host but in our experience they are barely a two

way relationship because the host company distances itself from any responsibility of relationship.

REDUCED EMPLOYEE PAY AND CONDITIONS

Casual/Labour Hire workers generally have inferior rights and entitlements under their Enterprise

Agreements because they have little say in their negotiation and private power companies tend to

squeeze their contractor employer financially. To cut cost, Labour Hire companies and

contractors tend to shed any entitlements that are not essential or would put them above the

National Employment Standard minimum.

This reduction in conditions and entitlements is then further impacted by the influx of

casual/temporary farm workers, who have grown up on low wages and poor conditions, who

believe even basic industry wages and conditions are overly generous.

When an Enterprise Agreement is put up by the Labour Hire company/contractor a great pool of

underutilized casuals are given the same voting rights as permanent works. While intuitively it

may sound fair all workers get a vote, how is it fair that a casual worker in the Security Industry,

who has only worked 6 shifts in the past 12 months and can work elsewhere, gets the same vote as

a permanent worker who must work under those pay and conditions day in day out? In the

Security Industry there could be up to 3-4 casuals to make up a full time equivalent position

and their underutilization makes them willing to accept even the smallest of salary increases.

In addition, casual/Labour Hire workers often work under a different Enterprise Agreement with

inferior conditions to that of the permanent employees from host power companies. For example,

in one case, a host power station company has had a Labour Hire employee backfilling permanent

positions on a temporary basis for a continuous ten year period, yet this Labour Hire employee

only gets paid half the hourly rate and gets much lower rates of pay when overtime is worked.

RESTRAINTS IN THE TRADE OF LABOUR

Labour Hire and Contracting companies tend to deliberately maintain excessively large pools of

casual/seasonal workers on their books. This is very easy for them to do in an area like the

Latrobe Valley that has experienced such a dramatic reduction in employment within its

region. The motivation for this is to underutilize casual labour to keep them poorer and hungry

for work. This

is the major mechanism of abuse that Labour Hire/contracting companies use against their

workers in the Latrobe Valley.

By way of example if they discover that one of their workers has dared take up employment with

another company that worker is taken off their books, either temporarily or permanently, as

punishment. This ‘black listing’ of casual employees is a restraint of trade but they are too scared

to speak up in case they never work again. This practice also prevents workers from seeking

temporary work with other contractors, who may pay higher wages, acting to keep wages and

conditions within the industry artificially low. This effect is directly verifiable by comparing an

excavator driver wages in the Latrobe Valley to one in the Hunter Valley.

The same tactic is employed by Labour Hire and Contracting companies to keep OH&S

representatives and union delegates under their direct control. If either make any issues for the

company, they are also ‘black listed’ indefinitely or until they comply.

This tactic also explains the strong preference for casual/labour Hire employees by contractors,

even in situations where it does not make any sense. By way of example; using casuals to fill

relief positions in rotating shift rosters in the Security Industry, where the hours required

exceed a worker’s full time equivalent hours. In theory the cost of a either a permanent or casual

employee in this situation should be roughly the same, yet most employers display a definite

preference for engaging a number of casual employees instead of one permanent, despite

reasons explained previously not always being as productive. In this case control of management

over its employees appears to take preference over labour productivity.