How labour hire will drive Australia’s economic recovery

June 17, 2020 Ami Price-Gagnon No Comments

Over the past decade many businesses have increased the ‘on-demand’ workforce to help manage unpredictable or surging demand, execute on specialty tasks, or quickly adapt to market conditions. This type of workforce consists of contractors, freelancers, labour hire, casuals and temporary workers and is increasingly being used for strategic reasons, such as supplementing internal talent capabilities or increasing the flexibility and responsiveness of the workforce. You’ve probably been hearing about them more lately as many news reports point out that they slip through the cracks of JobKeeper criteria. Labour hire workers in particular have been confused because unclear definitions on whether they’re a “direct employee” or because their worksite qualified for JobKeeper but their Labour Hire employer didn’t.

However, while many on-demand workers were part of the first round of COVID cost reductions, they just might be the employment booster Australia needs for economic recovery. We already know about the industries that are in demand right now – namely call centres, delivery workers, farmhands, nannies, counsellors, minors and supermarket staff. This article explores why on-demand work may grow over the next year beyond the buzz of businesses reopening, and what employers need to consider to be prepared.

Drivers for growth

Customer expectations may lead to higher demand

If you’ve been reading our previous articles – which we know you all have – we anticipate that the experiences of COVID-19 and lockdown will have lasting impacts on customer behaviours and and expectations (see The seven characteristics of the new customer post-pandemic). One key point was that hygiene awareness won’t be going away with 77% of consumers stating they will be more hygiene conscious, so there will be increased pressure to create more virus-resilient atmospheres. This means organisations will have to be hyper vigilant in their approach to cleaning, making hygiene practices overtly visible to consumers and staff, creating more opportunities for labour hire cleaning services.

Another trend that should stick around is the increase in delivery services. This is partially due to businesses experimenting with delivery-based products during lockdown and finding success. For example, many have cultivated  ‘experience in a box’ offerings, such as this DIY ceramics service which will pick-up your homemade creations, fire them up in their kiln, and drop them off again. Similarly, Michelin-star restaurants are delivering their famous dishes but with at-home assembly required. Consumers have come to enjoy the high quality and variety being delivered, and new products will continue as long as demand does. Pair this with the marked spike in online shopping (Ecommerce sales are about 40% higher for the week of May 26-June 1, compared with its pre-pandemic benchmark week in Feb) and work for delivery drivers will be aplenty.  

Unknown demand will make employers hesitant to hire more permanent workers

Navigating the unknown due to COVID-19 is the new norm, and we’ve been able to practice planning for an uncertain future. While it’s been difficult for many businesses to forecast their demand (unless there are clear capacity restrictions), we have come to identify methods of better responding to demand: learning quickly, and welcoming temporary and flexible workers. Benefits of the on-demand workforce are that they’re quick to recruit, but also quick to let go, as work can often be terminated with a shorter notice period than permanent staff and with zero redundancy. In May this year, Gartner released a report highlighting the growth of contingent (on-demand) work, stating 32% of organisations are replacing full time employees with contract workers for greater workforce management flexibility and to save on cost.

Decline in international workers leaves jobs to be filled

Backpackers won’t be travelling on working holidays visas for a while, so sadly, we won’t be exposed to as many travel tales and enthralling accents while ordering our flat white at our favourite local cafe. Cafe owners will have to turn to local talent, as will fruit farms, construction companies, and other businesses that often attract travellers. Permanent Residency and other forms of working visas have also slowed significantly, impacting the whitecollar workforce as well. Large companies known for an international employee base such as global tech firms, consulting firms and recruitment agencies will have to focus more on Australian talent than recruiting from a global pool, so the labour hire industry may have more engineering, human resources and project management work coming through. 

Employee preferences leaning towards greater flexibility

Even before COVID-19 there had been buzz about employees craving greater flexibility in work locations and hours. A study in the UK found that Indeed job postings that mentioned flexible work had an average of 30% more applicants. The great news is that improved flexibility doesn’t need to come at the detriment of productivity, and it can even improve it, as per a study by Microsoft Japan that saw productivity climb 40% after reducing hours by 20%. It is often difficult to break from norms and business-as-usual, but now that employers have experienced offering flexible work options out of necessity, the path has been paved for offering them permanently. Society is also feeling the knock-on benefits of flexibility, as the Victorian government is encouraging non-traditional start and end times to avoid public transit congestion. 

How businesses can prepare

As just about every piece of content mentioning COVID-19 will tell you: the change we’re experiencing is unprecedented. In fact, the number of times the word ‘unprecedented’ has been Googled worldwide increased 10x the norm in late March 2020 (though I can’t help but wonder how much it would have been Googled in the 1920s if Google existed). 

Source: Google Trends data

When the world is changing businesses need to reevaluate assumptions and processes that used to seem obvious. In the context of this article, there will be many businesses that never considered offering employee contracts that deviated from permanent, predictable hours until now. As a quick guide, we’ve provided four key things to think about if you may have an opportunity to involve the on-demand workforce as you ramp up your business in the coming months.

Automated, comprehensive onboarding

With companies like Woolworths hiring 20,000 jobs across Australia to provide “maximum workforce flexibility”, it’s more important than ever to reduce manual handling. This will help reduce errors, reduce repeated work, and save significant time overall. It’s also worth taking time to make sure the onboarding is fulfilling the intended result. This will look different for many businesses, but it may involve a quiz on key takeaways, multiple levels of checks and approvals, or an excellent first impression of employee culture. In all cases you can also solicit feedback and continuously improve the process.

Measure the right things often

With so many unknowns it’s very possible to get the first few rosters wrong as businesses reopen. You should be well-prepared with key metrics that you can review weekly, or even daily, so that you can respond quickly. For example, if the only things you measure are labour cost and revenue, you may miss important signs such as customer satisfaction and workplace cleanliness. Best practice is to determine your expectations of ‘what good looks like’ beforehand, and then measure continuously to see how you’re tracking towards your target state.

Design the on-demand employee experience

For those who are used to only having permanent full-time staff, there may be a bit of a learning curve in defining processes with less-traditional role types. This includes reporting, rewarding, engaging and communicating with employees. If you find your talent through a labour hire business they will likely have some helpful resources for you to implement processes quickly. Some basic material for getting started can also be found on the Fair Work and LegalVision sites.

Understand the talent pool

With Australia’s recent spike in unemployment we know there are job seekers, but the difficulty is in matching the right people to the right roles. A particular challenge is that many people may not have the direct work experience that you’re looking for, so you may need to reconsider your selection process to better identify transferable skills, perhaps by avoiding industry jargon and asking behaviour-based questions instead of experience-based ones. It will also be particularly important to provide a good candidate experience, even for those who are not hired, as you may need to reconnect with the talent pool again soon.

Conclusion

With multiple factors increasing the need for an on-demand workforce there will be mass amounts of work that require the same skillset. In this scenario the whole system will be more efficient with participation of a party specialised in the logistics of casual workers, hence, the labour hire industry.

Many of the high growth areas already involve capabilities that labour hire is well-known for, such as cleaning and delivery services. However, there will be new work categories that now need to be managed in bulk such as supermarket staff and mental health counsellors, so there are potential areas for labour hire companies to expand in. It’s also possible that labour hire companies may find themselves playing a strong advisory role in the logistics of an on-demand workforce. If companies are dabbling in the casual pool for the first time they will be more comfortable working with labour hire professionals that can provide guidance on norms and options.

The labour hire industry is in a unique position to share knowledge on non-traditional methods of work – a topic that the world is craving and embracing – and therefore has an opportunity to shape the way Australia rebuilds the workforce.

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