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This is a fairly standard, even reasonable, question; yet the answer these days is far from standard. Who we think people work for may not be the case. Where they work and who they are employed by may be two very different entities. As an illustration of the changing nature of the employment relationship in Australia witness the rise of labour hire firms and outsourced labour. Throughout the 1980s many companies adopted industrial relations strategies which resulted in cleaners, caterers and maintenance workers being sacked, with the work contracted out, or outsourced, to other companies. These companies employed cleaners, caterers and maintenance workers and contracted their services back to the companies. Sometimes the same workers were employed, sometimes not. In most cases the overall number of employees working was reduced. Shift to outsourcing In the 1990s the trend has continued, and the range of outsourced labour is not just restricted to blue collar or ancillary functions. Importantly, there appears to be a further shift with firms now outsourcing what would seem to be 'core business' and 'core workers'. For example, in the finance and telecommunications industries important, if not core, functions are outsourced to other firms. IBM runs Telstra's call centre, the Commonwealth Bank has outsourced its data processing to EDS. These companies then become the new employers, not always to the liking of the employees. Perhaps not surprisingly, the pattern emerged in the USA, but on a grander scale. For example, the employment agency, Manpower, which also operates in Australia, is the largest private employer in the United States, eclipsing General Motors, with 800,000 workers and 300,000 customers! A more devious approach to changing the employment relationship was seen most recently in the Patrick Stevedores group of companies. In this case the company contrived a situation which saw four companies become labour hire companies to another company in Patrick's group, Patrick Stevedore Operations. However, through corporate financial arrangements, the four labour hire companies had all their assets moved from them, their contract removed and the employees dismissed. Unions Alerted Fortunately this practice is not widespread, although there have been a couple of other examples of similar arrangements - the Gazal textile company in the 1980s and, more recently, the Cobar and Woodlawn mines disputes. The publicity the Patrick's action received should ensure that unions and employees are on the alert to such arrangements and that it does not become a standard company tactic. Changes to the law are obviously needed to guarantee this. But to return to the main theme, why do companies outsource? From a business perspective it allegedly has benefits, including reduced costs, greater flexibility, and the potential to draw on other firms with more expertise in specialist areas. There are disadvantages as well, these include the diminished control over a fragmented workforce and managing the complexities of co-employment and blending different groups of workers. Or are companies just interested in stepping away from their role as employers, and passing these responsibilities onto someone else? Which then raises the next question. How do the labour hire companies treat the workers on their books? On this question there is not much information available. ACTU opposition The ACTU in principle is opposed to contract and outsourced labour, but they also accept the current reality and so seek to ensure that the labour hire firms do not undercut award conditions. Many of the large labour hire firms provide award rates and conditions. But there are also unscrupulous labour hire companies that try to drive costs down by undercutting award rates. Be on guard for them. The outsourcing phenomena may be just another management trend whose time will pass. However, while it lasts, employees should realise the implications of different arrangements; in some cases it may be suitable, in others it may not. Whatever the future, be sure to know where you fit and who you work for.
Marian Baird is a lecturer in the Department of Industrial Relations, University of Sydney.
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