Australia’s labour hire industry fulfills a crucial need in the marketplace, linking willing workers with firms that need them. According to the the Australian Bureau of Statistics, in August 2016, there were approximately 600,800 persons who had found their job through a labour hire firm/employment agency.

Manufacturing led all industries with 21 per cent of males having found their job through a labour hire firm/employment agency, followed by construction at 10 per cent. For females, 16 per cent of the health care and social assistance workers found their job through a labour hire firm/employment agency, followed by public administration and safety at 11 per cent.

Australia’s construction industry relies heavily on labour hire to find workers. According to Mateusz Jedrusek, managing director of labour hire firm Perfect Hire, two factors have caused a shortage of people starting in the construction industry in a labourer position and working their way up.

In Australia, the mining boom has taken away a large section of the construction labour force,” Jedrusek said. “In addition, in recent years there has been a focus on the younger generation moving towards white-collar jobs.”

Australia’s building boom has also created labour shortages, according to the Department of Employment. The 2016 report, Labour Market Research – Construction Trades, notes that “The labour market for the construction trades was tight in 2016, with nine of the 11 trades assessed by the Department in shortage nationally. Shortages and recruitment difficulties in these trades are more prevalent than at any time since 2008.”

Regional differences are apparent, with high demand in New South Wales for residential building, particularly high-density structures. Western Australia, the report states, “has been adversely affected by the winding down of investment in resource projects.”

In addition, the construction industry depends on migrant workers, as there are simply not enough Australians looking to work in the industry, Jedrusek said. the 457 visa program allows businesses to hire skilled foreign workers for a term of up to four years for positions that have a shortage of Australian workers.

Recent changes to the 457 Sponsorship Visa program discourage some migrant workers from coming to Australia, he noted.

“In April the government brought in radical changes to the 457 Sponsorship Visa, which prohibits it from being a direct pathway to gain permanent residency. This has already caused a dramatic decrease in migrant workers coming to Australia,” Jedrusek said.

Changes include a reduction in the number of occupations that qualify for the program, as well as limiting the term of the visas to two years. According to government statistics, there were 95,757 workers in Australia on primary 457 visas as of September 2016. Secondary visa holders (members of their family) totaled 76,430. Those numbers declined by 9.2 per cent drop in primary 457 visa holders compared to 2015.

Tightening the supply of labour will tend to increase wages. According to the Australian Bureau of Statistics, the mean weekly earnings for persons who found their job through a labour hire firm/employment agency was $1,334. For full-time workers the mean weekly earnings was $1,522, and for part-time workers it was $622. Unskilled labourers can earn from $20 to $30 per hour depending on prior experience, according to Jedrusek.

Costs for firms using labour hire workers are a bit higher than for regular employees, Jedrusek said, due to insurance and entitlements that are bundled together with wages. Payroll tax, public liability insurance, worker compensation insurance, and superannuation are mandatory additions to workers’ wages, in addition to training and personal protection equipment, where applicable. Wages can also vary greatly by skillset, market demand, and location, Jedrusek said.

Another challenge for the labour hire industry, Jedrusek noted, is a lack of regulation of labour hire firms in Australia.

“The main problem in the Labour Hire industry is there are a lot of rogue labour hire firms out there who abuse migrant workers. “They provide no training and no personal protective equipment for the workers,” Jedrusek said.

Rogue firms also send employees out on jobs with no on-site experience, no basic tool experience or knowledge, poor English and a poor attitude towards work quality, attendance, and safety. These firms may also neglect WHS Paperwork and Visa status checks, Jedrusek said.

Regulation of the industry is sparse, with Victoria, South Australia, and Queensland just in the last year calling for state-based licensing schemes for labour hire operators.