The government’s Working Future employment white paper outlines plans to create a more “inclusive and dynamic” economy by addressing underemployment and underutilisation, boosting productivity and scoping out a plan to address skills challenges.

There is no doubt that 2023 will go down as a year of major workplace legislative change, as the Albanese government continues to implement its employment and industrial relations reform agenda.

We’ve seen changes to flexible working requests, the use of fixed-term contracts, pay secrecy clauses, multi-bargaining agreements, an expanded parental leave scheme and implementation of the Respect@Work recommendations – all of which were just part of the first tranche of industrial relations reform.

Read HRM’s checklist for recent and upcoming IR changes. 

And, just a few weeks ago, Tony Burke, Minister for Employment and Workplace Relations, announced more proposed IR changes, including a national approach to criminalising wage theft, permanent pathways for casual workers and stronger protections for gig workers.

These proposed changes (the Closing Loopholes Bill), have since been pushed to February 2024, following calls from the Coalition and independent senators not to rush what has been described as “extraordinarily complex” legislation.

But this hasn’t stopped the government from pushing forward with more announcements. Earlier this week, Treasurer Jim Chalmers released the government’s employment whitepaper, Working Future, which aims to create a more “dynamic and inclusive” economy by building off other key government work, including the Universities Accord, the National Skills Agreement, the national migration and gender strategies and, as mentioned above, large-scale industrial reforms.

In a press conference in South Australia earlier this week, Chalmers said, “It’s all about helping more Australians make the most of the big changes underway in our economy.”

The Working Future white paper includes 70 policies that have already been implemented, 80 which are in progress and 31 that are proposed for the future. It is the result of a year’s worth of work in the lead up to and following the 2022 Jobs and Skills Summit.

A new definition of full employment

According to the white paper, the government’s objective is to provide “good, secure, fairly paid jobs for everyone who wants one, without having to look for too long” – and without adding to inflationary pressures.

It believes the current definition of ‘full employment’ is too narrow to set the Australian economy up for success. It wants to see “sustained and inclusive” full employment – the former to see a sustainable level of unemployment consistent with stable inflation, and the latter to better utilise underrepresented groups and remove barriers to paid work.

Despite a low unemployment rate, Chalmers wants to see policies that acknowledge and respond to rates of underemployment and underutilisation of talent. 

Around one million Australians would like to work more hours, but can’t access them (meaning they are underemployed), and the amount of talent currently being underutilised is likely significant.

For example, working-age Australians living with disability are more than twice as likely to be unemployed compared to those without disability. The employment gap for Aboriginal and Torres Strait Islander people and non-Indigenous people hasn’t narrowed in 30 years. And secondary earners, usually women, are often disincentivised from engaging in paid work due to childcare costs.

The most recent ABS labour force statistics show that while the unemployment rate remained at 3.7 per cent, underemployment has increased to 6.5 per cent (compared to 5.8 per cent in February) and underutilisation increased to 10.2 per cent (compared to 9.4 per cent in February). See graph below for a ten-year comparison.

Minister for Social Services Amanda Rishworth announced that the government has started some work to better utilise often-forgotten cohorts.

“We’ve started working with employers to look at some of the barriers and also the opportunities to employ someone with caring responsibilities, or indeed someone with disabilities.”

She also unveiled new inclusion measures, which are outlined in the Working Future white paper, including allowing pensioners to accumulate salaries up to $11,800 before their pension payments are impacted, which is a $4000 increase from the existing scheme. If the legislation is approved, these changes will come into effect from January 2024.

“This is not forcing anyone to work longer. However, what it provides is that those pensioners that do want to work, [will] be able to do more work before their pension is [affected].” 

Rishworth also announced an extension of the ‘nil rate period’, which allows those on income support to take up short-term work arrangements without fearing that their social security benefits (i.e. concession cards or childcare support) will be removed. 

The nil rate period currently covers three months for workers, and will soon be doubled to six months.

Increasing underutilisation rates could also be attributed to workers’ skills not matching up with the requirements of their job. AHRI’s most recent Quarterly Work Outlook report found that one in five respondents felt their employees were not proficient enough to perform their roles.

Speaking to this data, AHRI CEO Sarah McCann-Bartlett said, “It’s promising to see four in ten employers say that training investment will increase at their organisation over the next 12 months, but it’s crucial that more organisations make this a priority, as Australia’s future prosperity will be built upon a skilled workforce that helps our nation to remain globally competitive.”

The Working Future white paper lists the measures it’s committing to in order to address “structural sources of underutilisation”, including:

• Improved education
• Improved migration and regional planning systems
• Improved employment services
• Affordable childcare
• Affordable housing.

Another critical area of focus will be on upskilling workers in high-growth sectors. More on that in a moment.

Meeting Australia’s skills needs

The government has set aside $9.1 million to define the scope of a National Skills Passport, which would help employees more easily communicate their skills across jobs, sectors and institutions. 

Because workers are less likely to be employed with one organisation for a long period of time these days, it’s difficult for many to keep an efficient and up-to-date record of their employment history and qualifications. A passport system, similar to the ‘My Health Record’ system for medical information, would allow for an easy and reliable way for candidates to demonstrate their worth to potential employers.

“You can list where you went to school, what your qualifications are, TAFE qualification, university qualification, microcredentials, workplace learning – all in one place,” said Home Affairs Minister, Clare O’Neil.

In an article for The Conversation, researchers at Flinders and Edith Cowan University say their research suggests a skills passport could help foster trust between employers and their people.

“Besides showing relevant information about potential candidates in a standardised, unbiased manner, skills passports verify qualifications,” they wrote.

“Since 2015, Australia has had a ‘unique student identifier‘ for all vocational students. This is a unique reference number made up of ten numbers and letters and [it] tracks students’ learning and qualifications… In many ways, the national skills passport is a natural extension of the unique student identifier.”

 “Australia’s future prosperity will be built upon a skilled workforce that helps our nation to remain globally competitive.” – Sarah McCann Bartlett, AHRI CEO

This passport would be developed with input from employer groups, unions and the tertiary education sector to ensure it will be of high value to employers.

The government also plans to offer more skilled migration pathways, and is said to be releasing further detail on this strategy in the coming weeks. However, it notes that migration is not a substitute for investing in upskilling Australians – it’s a complementary factor that can contribute to productivity growth.

Promoting productivity and sustainable wage growth

Real wage growth can be achieved in a variety of ways: by boosting national productivity levels (Australia’s productivity rate is at a 60-year low point, and we’re currently falling short of our OECD counterparts); promoting labour mobility and job switching; effective wage-setting institutions; and tackling the gender pay gap.

Another important booster will be investments in high-growth areas.

The Working Future white paper suggests investing in and bolstering the renewable energy (expected to grow by 30 per cent by 2033), digital (expected to grow by 21 per cent by 2033) and care and support sectors.

These three sectors alone have the potential to add 213,000 jobs to the economy by 2023, so the government says strategic workforce planning in these areas is critical.

The care sector in particular has grown exponentially over the years. In 1966, care workers accounted for just 2.5 per cent of the workforce. Today, they account for ten per cent, and this number is expected to grow by 22 per cent by 2033 in line with Australia’s ageing population.

The government says investment in pay and working conditions will be crucial for the care sector, as retention issues are persisting. For example, 59 per cent of personal care workers spent less than three years working in the sector. 

The government’s recent 15 per cent interim wage boost for aged care workers was its first step in supporting the sector to retain these valuable workers.

Enhancing education systems

Nine out of ten jobs required for the future will require post-school education and training, and the government suggests that half of these will need to come from the VET sector.

“If you finish school, you earn 30 per cent more than if you don’t,” says O’Neil.

At the 2022 Jobs Summit, 180,000 fee-free VET and TAFE places were announced. Since then, that number has risen, reaching 215,000 as of this year with plans to offer an additional 300,000 spots in 2024.

However, the government’s white paper suggests we can’t simply offer more places in these vocational training programs; we need to fundamentally rethink how they are delivered.

That could look like universities and TAFEs working closer together to create ‘Centres of Excellence’.

“We need to see a much greater collaboration between the two tertiary sectors – the VET sector and universities working closer to provide the skills that workers need, that businesses are crying out for, that our economy demands,” said Brendan O’Connor, Minister for Skills and Training, at the South Australian press conference. 

The white paper also says the government will aim to financially support university students to complete their practical studies, particularly teachers and nursing students.

“I hear story after story from students who tell me they get put in [an] almost impossible position where they’ve got to choose between the part-time job that they need to pay for the rent and to pay for food, and the unpaid prac that they have to do to finish their course and get their qualifications,” said Jason Clarke, Minister for Education, at the press conference.

Business community’s response to the Working Future white paper

McCann-Bartlett says the white paper’s focus on upskilling workers to increase Australia’s productivity is essential. However, she cautions that while “increasing TAFE funding is critical, it needs to be complemented by incentives for employer investment in people management skills”.

“This would help to address the specific on-the-job training needs of employers and improve the quality of people management in Australia, which is an understated cause of Australia’s productivity challenges,” she says.

CEO of the Business Council of Australia Bran Black says the proposed policy levers will “drive a more dynamic economy, creating greater resilience, higher productivity and sustained wages growth, and improved living standards”.  

“While Australia’s labour market is close to full employment, the past decade was the slowest for productivity growth in 60 years.

“Productivity, high wages and economic growth are driven by unlocking the creativity and ingenuity of people. We strongly support the focus on skills in the white paper and, in particular, the commitment to lifelong learning and the scoping work for a skills passport to make it easier for employers to hire people, and for potential employees to showcase their skills.” 

Innes Willox, CEO of the national employer association Ai Group, says while he believes the government’s recent workplace relations agenda is “deeply problematic”, he welcomes its focus on productivity levels, describing the white paper as “an important blueprint” to equip us for the future.

“The white paper shifts the focus on dealing with our ailing productivity performance up a gear by treating the issue as a national challenge,” he says.

“Accelerating the establishment of Centres of Excellence is further good news. There is little time to waste in getting on with high quality, relevant and industry led skill development.”

There’s plenty more to unpack in the Working Future white paper. Read the full details here and let us know what you think about the proposed policy pillars in the comments below.

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