ACCR releases report on labour hire, contracting and outsourcing risks across ASX100

Australian listed companies remain "opaque" about their labour hire, contracting and outsourcing practices, report finds.

The Australasian Centre for Corporate Responsibility (ACCR) has launched “Falling through the cracks? Labour hire, contracting and outsourcing risks across the ASX 100.

According to the ACCR’s findings in the report, “Australian listed companies continue to remain opaque about their labour hire, contracting and outsourcing practices, leaving investors unable to assess the long-term viability of their workforce strategy.”

ACCR conducted a review of reporting by 37 ASX 100 companies in sectors including: airlines and airports, casinos, construction, mining, oil and gas exploration, property management, retail, utilities, supermarkets, and warehousing.

The report has found that less than half of companies publicly report on the total number of their labour hire and contracted workforce; very few companies define and describe their labour hire and contracted workforce; and  while all companies report some health and safety data, many fail to disaggregate this data for their indirect workforce.  The report also found that companies often use different reporting metrics to report on their direct and indirect workforces.

Dr Katie Hepworth, director of workers’ rights at ACCR, said that while statistical data on indirect employment in Australia is limited, it is clear that in some sectors, such as mining, construction, cleaning and agriculture, companies are outsourcing a staggering proportion of their workforce to external entities.

“A company’s workforce mix is material to its performance, and decisions by companies about how they structure their workforces will have long term impacts on company performance and shareholder value. If companies are relying on a large proportion of ‘indirect’ workers to operate, then information about these workers should be included in annual reporting.

“However, at the moment many companies are failing to provide investors and the public with even basic information about their workforces, such as the percentage of labour hire and contract workers in their total workforce,” said Hepworth.

“During the COVID pandemic, we have seen the risks of complex contracting and subcontracting arrangements materialise. Incidents where outsourced workers were not given correct training, adequate personal rotective equipment (PPE), and even minimum wages and conditions, all highlight the wider implications of ‘fissured’ workplaces.

“Decades ago, it might have been sufficient for companies in these sectors to simply report on their ‘direct employees’. The fact is now that many companies are using huge amounts of ‘indirect labour’ in their operations, and this is often done through complex arrangements.

“Responsible stewardship requires investors to understand how a company is managing its entire workforce, not just one segment of it. Investors must look beyond a company’s direct employees, to understand the entire mix of contract types and outsourcing models that companies are deploying in their business.

“This information is relevant legally, it’s relevant from a health and safety point of view, and it’s relevant in understanding whether a company’s workforce strategy will be sufficient in delivering long-term value for the company.

“Reporting should be sufficient to allow investors to ask questions about whether a company’s workforce strategy is based on low labour costs or maintaining and developing its human capital, and whether it will deliver long-term value for the company.”

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