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Wage-cutting strategies in the mining industry: the cost to workers and communities

Mining Labour force Labour market Wages New South Wales Queensland

Importantly, the mining industry provides significant employment opportunities for regional Australians. But increasingly, the sector is relying on fly-in-fly-out (FIFO), or drive-in-driveout (DIDO) workforces, as well as contractual or casual labour – often procured through third party labour-hire firms – to staf their facilities. It is this trend, and its impact on local economies, that this report explores.

This report begins by providing a brief introduction to Australia’s mining economy. Australia’s mining sector employs over 230,000 Australians, and is thought to indirectly contribute over one million Australian jobs. As a proportion of GDP, mining is around 8 per cent of the Australian economy.

Part two then explores the important role mining plays in regional communities. Mining sector jobs typically pay higher than average paying jobs in the economy, delivering important economic dividends to the communities in which mining industry workers reside. Both during construction and development, and throughout the lifetime of a project, mining can contribute significantly to local economies. However, the trends identified in this report such as the increased rate of casualisation in the mining workforce, and the increasing reliance on FIFO and DIDO workforces is negating some of this economic contribution.

Part two also details the nature of labour-cost reduction strategies within the mining sector. An increasing reliance on casual workers and labour-hire has created a situation where many workers in Australia’s mining sector are missing out on basic workplace entitlements, such as sick or family leave. Because of these labour-cost reduction strategies, job insecurity has risen in the mining sector, undermining the sector’s value to individual workers, as well as the regional economies dependent on mining activity.

This report then identifies the value of mining to the regions. For every job in mining, 1.4 jobs are typically created in regional communities. However, the more remote mining operations are located, the more diminished this economic dividend is, as mining workers are typically FIFO or DIDO commuting from major cities or regional hubs.

In Part four, this report explores the economic impact of labour cost reduction strategies on two key mining regions: the Hunter region in NSW and the Bowen Basin in central Queensland. Collectively, it identifies a negative economic impact of up to $825 million in these two regions alone as a result of an increase in casualisation and labour hire in the mining sectors.

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