Avoid direct employment policy, says PC

Productivity Commission finds direct employment preference a retrograde step for the aged care sector.

The Productivity Commission’s final aged care employment report has found there is “little persuasive evidence” that a policy to preference direct employment over agency staff would benefit the sector it could even worsen outcomes, the authors warn.

Responding to the royal commission’s recommendation that aged care services have policies and procedures in place to directly employ workers rather than use contractors, the PC’s employment inquiry found that – in the context of the chronic staff shortages facing the industry – a policy to restrict agency work is “not a realistic option”.

“Having taken into account stakeholder views and considered the available evidence, the Commission’s overall assessment is that adopting a policy to further preference direct employment would be averse to the interests of older Australians, workers and providers, particularly under tight labour market conditions,” reads the report.

After all, as the authors note: “Where agency workers are used by approved providers of residential and home care, it is typically as a last resort for filling short-term staffing gaps or vacancies that cannot be filled otherwise, particularly in remote areas where workforce pressures are most acute.”

Source: Productivity Commission

A focus on indirect employment also comes with a high risk of distracting from the important challenges facing the sector, say the authors. Instead of focusing on employment models, the PC suggests the government should instead expedite the suite of quality and safety reforms that are planned or underway.

“These are likely to be more effective at managing risks inherent in the delivery of aged care services, irrespective of employment models,” say the authors.

Furthermore, the authors found that a policy to preference direct employment would reduce the care options for older Australians who are self-managing their care needs at home. “A policy preferencing direct employment would lead to worse outcomes for those consumers who value choice and control over how their care is delivered.”

While the home care sector has seen an increased use of independent contractors, the prevalence of agency workers in the residential aged care sector remains relatively low. Those that exist are mostly allied health workers with specialist skills such as physiotherapists and dental hygienists.

Source: Productivity Commission

All up, Australia’s aged care workforce comprises close to 435,000 workers – mostly personal care workers and nurses. Of these, agency workers and independent contractors account for less than four per cent of the entire care workforce.

Negative implications

As only a small fraction of workers in the aged care sector choose to work as independent contractors, the authors say a policy to preference or effectively mandate direct employment would most likely have negative implications for those workers by making them financially worse off.

“It is therefore likely that such a policy would lead to some workers to seek opportunities elsewhere, for instance the disability support sector, where there is no policy to preference direct employment,” caution the authors.

Indeed, preferencing direct employment could prove to be counterproductive as it would reduce the available labour pool in the sector. “Independent contractors can give providers a flexible and cost-effective way to temporarily boost their capacity to address fluctuations in service demand.”

Access to independent contractors also allows providers to meet bespoke service needs, say the authors. “In many cases it is not viable for providers to directly employ workers with the full range of skills and backgrounds that consumers may require at different points in time and in different locations.”

In conclusion, the 158-page report reads: “The Australian Government should not introduce a policy to preference direct employment in aged care as it would reduce choice and options for care for older Australians and, at the same time, limit the options for care workers who value self-employment and flexible work arrangements. Worse, it could lead to a smaller care workforce, to the detriment of care outcomes.”

Comment on the story below. Follow Australian Ageing Agenda on LinkedInX (Twitter) and Facebook, sign up to our twice-weekly newsletter and subscribe to our premium content or AAA magazine for the complete aged care picture.  

Tags: agency staff, featured, independent contractors, productivity-commission, workforce,

Leave a Reply

Your email address will not be published. Required fields are marked *