Economic effects of changes to labour hire laws

A survey of MCA members by Deloitte Access Economics has revealed that labour hire workers (who may be permanent or casual) account for 11 per cent of the total minerals industry workforce, with 70 per cent living outside metropolitan areas.

Casual workers in mining had median weekly earnings of $1,609 in 2018 – more than 20 per cent higher than the median full-time worker across all industries ($1,320).

Deloitte Access Economics found that the three most important motivations for using labour hire workers and service contractors were:

• Maintaining operational flexibility
• Securing specialised skills, including planned maintenance shutdowns, specialised construction and high-quality rehabilitation
• Responding to upswings in commodity prices

Operational flexibility is crucial for mining because it is a price-taker on global markets and experiences larger swings in production and revenue than other major industries.

Labour hire gives producers flexibility to increase and decrease their workforces within short timeframes. This is not possible under standard enterprise agreements. Labour hire also provides a career entry path to new workers.

Similarly, service contractors offer flexibility – and enhance productivity – by providing labour, plant and equipment, safety systems and expertise. Provision of these inputs can enable new entrants to the mining industry to secure investment finance.

Deloitte Access Economics estimates that if mining companies were required to grant labour hire workers and service contractors the same pay and conditions as direct employees:

• Aggregate employment would decline (relative to where it would otherwise have been) by around 6,400 full-time-equivalent jobs per year over the period 2019 to 2031
• The economy would be smaller than otherwise by $15.3 billion in net present value terms, with the decline in annual GDP peaking at $2.8 billion in 2031

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