John Lloyd: contingent workers essential in public sector

By Stephen Easton

March 26, 2018

An increasingly optimistic view of the future of work is emerging, countering concerns about automation and workforce flexibility eroding opportunities for permanent employment.

A more positive take on how the fourth industrial revolution will change the nature of employment was strongly evident in the discussions at last Thursday’s Australian Information Industry Association conference on the subject, and in a speech by the Australian Public Service commissioner the following day.

It isn’t surprising that voices on the employer side of the equation are least worried about reduced demand for expensive human labour a result of technological change, and most enthusiastic about growing workforce flexibility.

“A basic misconception to dispel is the attitude that contingent work is neither desired nor beneficial. Many people prefer to work in this manner,” commissioner John Lloyd said at the National Public Sector Managers’ and Leaders’ Conference, according to his published notes.

“They embrace the independence, choice, flexibility and rewards it offers. Only a minority feels aggrieved or exploited because they find themselves in this segment of the workforce. The on-demand economy offers consumers greater choice while letting people work whenever and wherever they want.”

This is a fairly common view that conjures up happy millennials swanning around from cafe to part-time work using one smartphone app or another to manage their fun and exciting lifestyles. But is that reality?

Another side to being a millennial is being highly dependent on your baby-boomer parents, leaving university with a big debt and competing for a job against hordes of other over-qualified but under-experienced candidates, unable to borrow for a house because lenders are not impressed by anything less than permanent ongoing employment.

This was pointed out at the AIIA conference by Jan Owen, chief executive of the Foundation for Young Australians, which has done substantial research into the challenges facing millennials. Australia already has a very flexible labour market, she pointed out, with a rate of part-time work that is the highest in the OECD.

There are examples of professionals with strong qualifications and experience who fit the mould described by Lloyd but the basis for his claim that “only a minority” resent being part of the flexible on-demand workforce is unclear.

Owen’s view based on the foundation’s research was that “it is insecure, it is casualised, and it’s not something that they feel especially great about” — unless they are in the tiny minority of young entrepreneurs who manage to establish a billion-dollar tech start-up in their parents’ garage.

The ‘gig economy’ in the public sector

Lloyd was mounting a defence of contingent workers — the increasing use of which in the APS is currently being probed by the Joint Committee of Public Accounts and Audit — as a “long established facet” of the Australian economy. This flexibility that is so good for employers is evolving in new ways, he added.

“The contingent workforce has traditionally been understood to be essentially comprised of independent contractors and labour hire employees. Some would include non-ongoing and casual employees.

“However, it is being transformed by the digital economy and modern business practices. The contingent workforce now includes gig, peer-to-peer and platform workers and job marketplaces such as AirTasker, Uber, and Wonolo.”

As long as employers have championed the need for workforce flexibility, unions and groups advocating for society’s battlers have argued against it as an unwelcome erosion of the financial security that a permanent job provides those who have little else to do in the economy other than sell their labour.

Under-employment is growing as a direct result of the gig economy, according to Owen. She points out that while employers are gung-ho about flexibility, there is a need for more guidance about how a person can navigate this “non-linear world of work”.

Owen’s reading of international research tells her a 15-year-old today can expect to have up to 17 different jobs in five industries. How this can work for them, as well as for the organisations that employ them, is a largely unanswered question, but many believe a shift to life-long learning will be part of the answer.

Nonetheless, it is simply absurd for employers to maintain permanent staff whose skills they only need some of the time, in Lloyd’s view.

“The spread of contingent workers is highlighting a divide between employer and union strategies,” he said.

“Employers embrace the need to avail themselves of the services of on-demand workers. Many tasks are complex and/or intermittent and so it is a financial absurdity to employ on-going staff equipped for every role the firm requires.

“In contrast, the unions reacting to their falling membership urge extensive regulation of contingent workers in an attempt to protect the regulated labour market. They have a forlorn hope that the use of contingent workers will not be cost effective.”

The commissioner was firm that APS agencies must continue to have this option open to them. “Union attempts to limit that management prerogative must not be entertained. The inclusion of clauses restricting the rights of management to engage on-demand workers must be rejected.”

Negativity, the biggest risk

Speaking on a panel about the future of work in government at the AIIA conference, first assistant commissioner Kerryn Vine-Camp said the commission was “ramping up” its focus on how things are changing in the APS. Avoiding negativity is part of the plan.

“We’re actually quite excited because we think a lot of the jobs that become available will be very interesting,” she said.

“And it is very important to us as we go forward that we communicate that to all our staff across the service, and that we have very positive conversations around what the future looks like, because I think [negativity] is our biggest risk.”

The APSC is looking at this among a range of issues like what to do about the fact that 75% of APS senior executives will be eligible to retire in the next 10 years, as well as how to increase mobility within the public service and cross-pollinate with other sectors outside government.

Accompanying this is the shift to a more “activity-based” mode of work, Vine-Camp explained, where teams with less hierarchical arrangements can form to work on individual projects, sometimes across government, for shorter periods of time.

Some agencies are more advanced than others in terms of this flexible approach, she told the conference. As The Mandarin reported from another seminar last week, much more internal mobility is also necessary for a workforce based on mobile skills, rather than rigid structures with set positions to occupy. “Job families” and the way roles are designed around a simple and somewhat restrictive classification scale will also need to change.

Only about 2% of APS members moved agencies last year, and “changing that mindset” is high on the APSC agenda, she said, along with more active talent management, informed by successful private-sector programs that aim to attract or identify future leaders for special development.

Lloyd said the public service would continue to need some ongoing staff — people with broad capabilities, who would be attracted to careers that were financially rewarding, challenging and fulfilling.

Talent management should also be a consideration with on-demand labour hire, he added. There is a growing cohort of very specialised expert contractors who have valuable skills that are in high demand.

“The capacity to attract the best on-demand employees requires a review of our practices,” said Lloyd. “The innovators and most efficient workers can be hard to capture. They are often not found from traditional sources.

“Also, our contracting arrangements are generally overlaid with excessive red tape and detail. It would turn many innovative on-demand workers away. A regular refrain from many contingent workers is that government processes are so cumbersome that the work is neither attractive nor financially appealing.”

On the same panel as Vine-Camp sat Martin Hehir, a deputy secretary from the Department of Jobs and Small Business, which considers these issues in its own workforce as well as in the wider economy. He also likened the use of public service contractors to the concept of a gig economy.

“Certainly the concept of ‘gig’ in terms of doing pieces of work as opposed to being in a permanent structure, I think we do that now in the sense that we do use contractors for particular pieces of work,” said Hehir, who added a strong endorsement of having senior executives swap between agencies more often.

APS plan to work around organised labour

Lloyd is not a friend of the union movement, and he ended his speech explaining why he believes organised labour is simply putting the brakes on progress towards a new model that is more flexible and less hierarchical.

“Prescriptive enterprise agreements numbering 100+ pages do not sit well with modern empowered teams of workers,” he argued.

“Agreements like these often include extensive union consultation obligations that can slow, hamper or even prevent substantial workplace change. The identification of work found in agreements and awards typically reflects a hierarchical structure based on traditional remuneration and supervisory models.”

While he awaits more reform of the ever-changing legal framework for industrial relations, the commissioner sees “ample capacity to modernise” in the current system, by working around unions in five ways:

  • A premium is placed on effective direct employer – employee relations;
  • The engagement of contingent and on-demand workers;
  • The use of job marketplaces;
  • Common law contracts; and
  • Individual Flexibility Arrangements.

Lloyd also sees change coming to the simple public service classification scale where pay is based on seniority. He believes the employers of the future will offer “flexible reward structures more closely tied to individual and/or team performance” and this will attract the best workers.

He also sees private lives and work blending together, as employees take “career breaks or adjustments involving less hours devoted to work” or go back to studying multiple times.

These workers of the future will still have to pay for this lifestyle somehow, and it seems likely that a lot of employees will continue to value traditional permanent employment much more than employers.

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