precarious employment and workers' compensation

International Journal of Law and Psychiatry, Vol. 22, No. 5–6, pp. 491–520, 1999Copyright © 1999 Elsevier Science LtdPrinted in the USA. All rights reserved

0160-2527/99 $–see front matter

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491

Precarious Employment and Workers’ Compensation

Michael Quinlan* and Claire Mayhew†

Introduction

Over the past two decades, the labor markets of industrialized countries haveundergone a number of significant changes (see Brewster, Mayne, & Tre-gaskis, 1997; De Grip, Hoevenberg, & Willems, 1997; Meulders, Plasman, &Plasman, 1996; Quinlan, 1998). These changes include a decline in permanentfull-time employment and median job tenure (for males), increased use ofshiftwork/nightwork, and a growth in self-employment, telecommuting, home-based work, part-time, multiple-job holding, and temporary employment (in-cluding workers supplied/leased by agencies or labor hire firms). These workarrangements were originally labeled as atypical or nonstandard work, butthese terms have been seen as gender-biased (these types of jobs were neveratypical for women) and misleading, given the significant proportion of theworkforce (upwards of 30%) now occupying these jobs in many industrializedcountries. In recent times, the terms

contingent work

or

precarious employ-ment

have been preferred because these emphasize insecurity/flexibility as acritical characteristic of these jobs.

Although some contingent workers are well-paid, the majority experiencelower pay and conditions than their counterparts in full-time permanent em-ployment, and there is evidence an increasing number are becoming trappedin these jobs (Dietz, 1996; Ferber & Waldfogel, 1998). The gap varies betweendifferent categories of contingent work and the nature of regulatory regimesoperating in particular countries, although formal entitlements do not always

*Professor and Head, School of Industrial Relations and Organizational Behaviour, University of NewSouth Wales, Sydney, New South Wales, Australia.

†Senior Research Scientist, National Occupational Health and Safety Commission and Research Associate,Industrial Relations Research Centre, University of New South Wales, Sydney, New South Wales, Australia.

The views expressed in this paper are those of the authors and not of the National Occupational Healthand Safety Commission.

Address correspondence and reprint requests to Michael Quinlan, School of Industrial Relations andOrganizational Behaviour, University of New South Wales, Sydney, New South Wales, Australia 2052;E-mail: [email protected]

492 M. QUINLAN and C. MAYHEW

capture the actual situation. Even in European countries with pervasive regu-latory regimes, groups of contingent workers (notably some teleworkers,homeworkers, and children) still fall between the gaps (De Vries, 1996; Huuh-tanen, 1997). Moreover, there are important, but often neglected, issues ofcompliance and underutilization of entitlements. For some countries at least,there is evidence the latter problems are compounded by lower union densityamongst contingent workers. They are overrepresented in smaller firms andworkplaces that are marked by inferior working conditions and lower compli-ance with employment regulations (Quinlan, 1999). In short, the labor marketof industrialized countries is becoming increasingly bifurcated.

Notwithstanding important intercountry variations and problems with com-parative statistics (such as different definitions of employment categories),there is clear evidence of a substantial growth in proportion of workforce en-gaged in precarious employment across the Organization of Economic Devel-opment (OECD). Amongst 21 OECD countries, the proportion of workersemployed part-time more than doubled between 1973 and 1995 (from an all-country average of 8.15% to 16.72% (Quinlan, 1998, p. 10). The average pro-portion of the workforce in 21 OECD countries holding temporary jobs expe-rienced a more modest increase from 9.48% to 11.15% between 1983 and1994, although statistical recording conventions in several countries (notablythe United States) mean these figures should be treated as an underestimate.Further, the OECD average for workers aged 16 to 19 years and holding tem-porary jobs increased from 31.08% to 42.25% in the same period—indicating asignificant growth for this group (Quinlan, 1998, p. 7). It is difficult to compileaccurate international data on average/median job tenure, self-employment,home-based workers, teleworkers, leased workers, and a number of other cat-egories of contingent workers. While there is broad agreement amongst re-searchers about what constitutes contingent/precarious employment (see forexample Polivka & Nardone, 1989 cited in Aronsson, 1998) particular catego-ries are only partly captured in the statistics of most countries. The specificitiesof employment, tax, and other legislation also affect the forms of precariousemployment in particular countries as well as the recording conventionsadopted by statistical agencies. Nonetheless, country-specific data and moregeneral studies confirm a growth trend (Brewster et al., 1997; De Grip et al.,1997; Meulders et al., 1996; Quinlan, 1998). A similar point can be made in re-lation to a number of key processes that have contributed to these trends, in-cluding downsizing, outsourcing, franchising, and the growth of small business.

Only comparatively recently have systematic efforts been made to investi-gate the impact of these labor market changes on patterns of occupational in-jury and disease. However, since 1993 a mounting body of international re-search has indicated that the growth of precarious employment has adverselyaffected occupational health and safety (OHS) (for a summary see Quinlan,1999). This included studies of particular work groups or practices like out-sourcing (Blank, Andersson, Linden, & Nilsson, 1995; Mayhew & Quinlan,1997, 1999; Mayhew, Quinlan, & Ferris, 1997; Rebitzer, 1995; Rousseau & Li-buser, 1997; Salminen, Saari, Saarela, & Rasanen, 1993), downsizing/work re-organization (Saksvik, 1996; Simpson, 1997; Vahtera, Kivimaki, & Pentti, 1998;Szubert, Sobala, & Zyci’nska, 1997) and small business (Eakin, 1992; Nichols,

PRECARIOUS EMPLOYMENT AND WORKERS’ COMPENSATION 493

1997). It also included more general comparisons of OHS indices betweencontingent and noncontingent workers (Aronsson, 1999; European Founda-tion for the Improvement of Living and Working Conditions, 1997a, 1997b;Francois & Lievin, 1995; Foley, 1998).

The expansion of precarious employment not only affects patterns of work-place injury and disease but also threatens to weaken existing regulatory re-gimes, including workers’ compensation systems (Quinlan, 1999). This aspecthas received less attention from researchers (for an exception see Plumb &Cowell, 1998, pp. 268–269), although it is the subject of an increasing numberof government reports (see Health and Safety Executive, 1996; Huuhtanen,1997; Synthesis Report, 1997; van Warden, den Hertog, Vinke, & Wilthagen,1997; Workers’ Compensation Board of British Columbia, 1997). This articleattempts to address this gap, drawing on published research, government re-ports, and hitherto unpublished quantitative and qualitative material from aseries of surveys of contingent workers we have undertaken since 1996. Theremainder of the article is divided into three parts. In the first part we examineempirical evidence on relationship between workers’ compensation and pre-carious employment. The next part of the article discusses how precarious em-ployment may also pose serious problems for the administration of workers’compensation, including claims handling and rehabilitation. The final sectionlooks at the implications of declining compensation coverage and utilizationfor official OHS statistics and prevention programs.

Precarious Employment and Workers’ Compensation Cover/Utilization: Some Australian Evidence

In most industrialized countries workers’ compensation coverage does notextend to every conceivable category of worker and there are also categoriesof workers for whom coverage is ambiguous. One example is self-employedworkers, who are largely excluded from workers’ compensation coverage inmany countries. Of probably greater importance but often overlooked is evi-dence of significant disparities in claims behavior amongst categories of work-ers who

are

formally covered by workers’ compensation. Research on the lastissue is fragmentary, but there is a body of evidence on the extent of nonclaim-ing for compensable injury. A number of U.S. studies (Cone et al., 1991; Leighet al., 1996; Stout & Bell, 1991; all cited in Committee on the Health andSafety Implications of Child Labour and others, 1998, p. 179) found that be-tween 30% and 60% of work-related fatalities are not incorporated in work-ers’ compensation records. A similar if not more pronounced pattern has beenidentified in relation to nonfatal injuries. Several studies suggest the problemis more pronounced for some types of injuries, for particular groups of work-ers, or where workers fear victimization/diminished job prospects (Biddle,Roberts, Rosenman, & Welch, 1998; Dembe & Boden, in press). Parker, Carl,French, and Martin (1994), for example, found 67% of eligible injuriesamongst adolescent workers did not result in workers’ compensation claims.

A number of Australian studies draw a connection between a reduced like-lihood of lodging claims and precarious employment. A study of 309 injuredworkers (randomly selected from 76 organizations on the basis of geographic


location, industry, and occupation) in Queensland revealed that 27% did notlodge workers’ compensation claims (James, 1993a, pp. 33–56). James foundunderreporting was highest amongst four categories of workers, namely thosewho were unskilled workers, occupationally mobile, self-employed, or geo-graphically isolated (James, 1993a, pp. 48–53). Later studies by James and oth-ers (James, 1993b; James, Papajcsik, & Wyatt, 1992; Mayhew & Quinlan, 1997;Mayhew & Wyatt, 1995) that compared work-related hospital admissions withworkers’ compensation claims identified a significant discrepancy with the lat-ter, substantially understating the level of serious injury, especially amongstbuilding and road transport workers. A U.S. study of builders reached similarconclusions, finding only 45.1% of hospital treatments resulted in workers’compensation claims (Zwerling, Miller, Lynch, & Torner, 1996).

It is more than coincidental that workers found least likely to lodge com-pensation claims are either directly identified as contingent workers or belongto groups (like recent immigrants and women) who are concentrated in pre-carious jobs. This pattern is reinforced by surveys carried out by governmentagencies. In 1993, the WorkCover Authority of New South Wales (hereafterreferred to as WorkCover NSW) commissioned the Australian Bureau of Sta-tistics (1994) to survey approximately 8,800 randomly selected employedpersons. The main findings of this survey were that, of the 8.3% reporting awork-related injury or illness in the previous 12 months, only 47% applied forworkers’ compensation. Of those not making a claim, about half (49.4%)failed to seek any treatment whatsoever, many presumably because the injurywas not regarded as serious (see Table 1). However, 50.6% of nonclaimantsdid seek treatment/support elsewhere. They utilized (see Australian Bureau ofStatistics, 1994, p. 7) an overlapping mixture of the national publicly fundedhealth care system or Medicare (43%), regular sick leave entitlements(39.6%), personal private health insurance (15.6%), and government social se-curity benefits (7.4%).

In short, this study revealed a significant gap in workers’ compensation in-surance cover. It also revealed that a considerable number of workers lacked aclear knowledge of their entitlements (other studies indicate similar uncer-tainty about claims procedures; see Stewart, 1994). Overall, 82% of employedpersons stated they knew they were covered by workers’ compensation but47% were not sure as to which system (state, federal, or other specifiedscheme) covered them. Those aware of their coverage had derived this knowl-edge from employers (43.9%); brochures, posters, and reading material(22.6%); unions (19.6%), discussions with friends (18.7%) and other (13.7%;see Australian Bureau of Statistics, 1994, p. 4). While no similar breakdown isavailable for those unclear about their entitlements, the Australian Bureau ofStatistics survey did indicate that uncertainty was especially pronouncedamongst non-English-speaking immigrant workers, especially those recentlyarrived groups from the Middle East and Asia (Australian Bureau of Statis-tics, 1994, p. 4, Table 1.3). Knowledge also varied significantly between differ-ent industries and occupations. Only 41% of those employed in forestry, fish-ing, agriculture, and hunting reported they were aware of their workers’compensation coverage, as compared to over 95% of workers in electricity,gas, water, communication, and public administration. In relation to occupa-


tional groups, uncertainty was greatest amongst sales and personnel services(10% were unsure of their coverage) followed by laborers and related un-skilled workers (8.5%). Uncertainty amongst retail workers would seem morethan coincidental with its propensity to employ young inexperienced workerson a casual part-time basis.

The Australian Bureau of Statistics survey also examined why a significantproportion of injured workers did not make compensation claims. As Table 1indicates, apart from minor injuries the primary reasons given by injuredworkers for not making a workers’ compensation claim were self-employed/not eligible (14.4%), did not think eligible (11.1%), fear of retrenchment(8.1%), concern at what others might think (2.9%) and not aware of workers’compensation (2.6%). Table 1 shows that these problems were more pro-nounced for female workers.

Overall, the Australian Bureau of Statistics study indicates a significantnumber of injured workers fail to make workers compensation claims and in-dustry and occupational status as well as ignorance and fear are importantcontributors to this. It provides at best partial evidence of a connection be-tween precarious employment and workers’ compensation coverage. How-ever, previously unpublished quantitative and qualitative data from a series ofsurveys of precarious workers undertaken by the authors between 1995 and1998 provide further insights. The surveys involved directly administered

TABLE 1New South Wales Injured Workers Who Did Not Apply for Workers’ Compensation and Reasons

They Did Not Apply, October 1993

Main reason fornot applying for workers’compensation

Males Females Persons

Number (inthousands)

Percentof

workersNumber (inthousands)

Percentof

workersNumber (inthousands)

Percentof

workers

Self-employed—not eligible 13.5 0.9 4.1

a

0.4 17.7 14.4Minor injury—

not necessary 39.5 2.7 24.8 2.2 64.3 52.3Not aware of

workers’ compensation 2.3

a

0.2

a

1.0

a

0.1

a

3.3

a

2.6

a

Afraid of possible retrenchment 5.2

a

0.3

a

4.8

a

0.4

a

10.0 8.1Did not think

eligible 7.3 0.5 6.3

a

0.6

a

13.7 11.1Concerned about

what othersmight think 2.0

a

0.1

a

1.7

a

0.2

a

3.6

a

2.9

a

Other 6.9 0.5 3.7

a

0.3 10.6 8.6All 76.7 5.2 46.3 4.2 123.0 100.0

a

Estimate is subject to sampling variability between 25 and 50%.

Source

: Australian Bureau of Statistics, 1994, cat. no. 6301.1, p. 7.


questionnaires to a total of 1288 workers in three states (Queensland, NewSouth Wales, and Victoria) and covering 14 different occupations (see Table2). One 1997 survey (called S1) involved 248 micro-business operators (ga-rage, café, and printery owner). A second survey involved 304 young casualworkers working for a large fast-food chain (S2); a third (S3) included 200home- or factory-based clothing workers; a fourth (S4), 331 self-employedsmall business operators in the building, cabinet making, and demolition in-dustry. The last survey involved 205 outsourced and nonoutsourced workers inthe childcare, hospitality, road transport, and building industry (S5). Most sur-veys were conduced in Queensland, but two large surveys (clothing and fast-food workers) were either largely or exclusively composed of workers in twoother states (NSW and Victoria). In two surveys, we included control groupsof non-contingent workers (although the sample size in one makes meaningfulcomparisons difficult). In each survey we asked the question “Are you cov-ered by workers’ compensation or a personal injury insurance policy? Respon-dents were then given a series of boxes to choose from. Some chose more thanone box so line totals in Table 2 sometimes exceed 100%.

Table 2 reveals significant differences between the groups in terms of theirknowledge of workers’ compensation cover. Overall, around 50% of theworkers surveyed believed they were covered by workers’ compensation,while 20% felt they had no formal entitlements to workers’ compensation orother form of entitlement (including private insurance cover). While signifi-cant in their own right, these generalizations mask significant variations be-tween different occupational groups. Of course it is important to objectivelymeasure the accuracy of this knowledge against formal entitlements. One pos-sible explanation is that these variations reflect differences in formal entitle-ments. While some groups surveyed might all be covered by workers compen-sation for others coverage depends on formal employment status andjurisdiction-specific definitions of what constitutes a worker. Unfortunately,making comparisons between reported knowledge and actual entitlements isnot always possible due to the ambiguous employment status and optionalcoverage provisions in relation to some groups. In some Australian jurisdic-tions, compulsory coverage applies to specific groups of self-employed work-ers, while other self-employed workers or owner/managers have the option ofvoluntary cover, private accident insurance, or nothing. The small businessowner/managers we surveyed (S1 and S4) relied on a mixture of workers’ com-pensation and private insurance but around 20% had no coverage whatsoever(probably an underestimate once some of the unsure responses are added in).In several jurisdictions, the situation is further complicated by recent changesin formal entitlements. In Queensland, for instance, compulsory coverage ofsome groups of self-employed workers and a voluntary option for others totake out workers’ compensation insurance was curtailed in 1997.

For groups where we can make definitive remarks our evidence casts doubton an explanation linking knowledge to variations in formal entitlements.Both factory- and home-based clothing workers are formally entitled to work-ers’ compensation. However, only 7% of home-based workers were aware ofthis, 13% were unsure, and more than 70% believed they were excluded fromcover. Indeed, clothing outworkers had the poorest knowledge of their


worker’s compensation entitlements of all occupational groups we surveyed.Amongst factory-based clothing workers, 59% correctly believed they werecovered, 26% were unsure, and 12% believed they were not covered (the lowfigures even for this group probably reflect the significant proportion of non-English-speaking immigrants employed in this industry). Although all fast-

TABLE 2Workers’ Compensation Knowledge of 14 Occupational Groups of Precarious Workers (

N

5

1,288)

None(%)

Workers’comp(%)

Insurancepolicy(%)

Notsure(%)

Other(%)

Noresponse

(%)

(1) Micro small businessowner managers (1997;

n

5

248)Garage (

n

5

73) 20.5 21.9 57.5 – – –Café (

n

5

70) 17.1 61.4 8.6 8.6 – 4.3News agent (

n

5

70) 17.1 44.3 18.6 7.1 5.7 8.6Printing (

n

5

35) 28.6 42.9 22.9 5.7 – –(2) Fast food young

casuals (1998;

n

5

304) 2 52 – 39.1 8.2 –(3) Clothing industry

(1998;

n

5

200)Factory (

n

5

100) 12 59 2 26 – 1Outworkers (

n

5

100) 72 7 2 13 – 4(4) Interventions

(1997;

n

5

331)Building constructions

(

n

5

150)15.3 19.3 70 0.7 1.3 –

Cabinet makers(

n

5

150)19.3 32.7 62.7 2 2.7 –

Demolishers(

n

5

31)19.3 19.3 58.1 – 3.2 –

(5) Subcontracting/outsourcing (1995) (

n

5

205)Childcare (

n

5

78)Employee 11.0 87.0 3.0 – – –Outsourced 51.0 – 49.0 – – –

Hospitality (

n

5

64)Employee 9.0 83.0 – – 9.0 –Outsourced 43.0 27.0 30.0 – – –

Transport (

n

5

32)Employee 12.0 88.0 – – – –Outsourced 27.0 27.0 47.0 – – –

Building (

n

5

31)Employee – 92.0 8.0 – – –Outsourced 11.0 6.0 78.0 – 6.0 –


food workers were covered by workers’ compensation, only 52% were clearlyaware of this. Most other fast food respondents fell into the not-sure category(39%), rather than believing they had other forms of coverage(8.2%) or had nocoveragewhatsoever (2%). Since over 95% of employees in this firm were youngcasual part-time workers (symptomatic of the industry) it was impossible to com-pare their knowledge against a noncontingent group of fast-food workers.

Comparisons between contingent and noncontingent workers were possiblefor our 1995 outsourcing study of employees and self-employed workers inchildcare, hospitality, road transport, and building (S5). Given the small cellsizes (especially for transport and building) the findings should only be treatedas suggestive but responses broadly conform to our other studies and the Aus-tralian Bureau of Statistics (1994) study. Between 83% and 92% of employeerespondents were aware they were covered by workers’ compensation, a find-ing not dissimilar to the Australian Bureau of Statistics study. Interestingly,none of the workers surveyed reported being uncertain as to their coverage.With regard to self-employed workers it is again, difficult to comment onthose reporting coverage under workers’ compensation (due to the legal com-plexities here) except to say that only amongst two groups (hospitality andtransport workers) did a significant minority of workers believe they had cov-erage. This point is reinforced by the large number, ranging from 30% of out-sourced hospitality workers up to 78% of building workers (all plumbers),who reported they were covered by private insurance. Equally important wasthe number of outsourced workers who reported having no coverage whatso-ever, especially amongst hospitality (43%) and childcare (51%) workers (Ta-ble 2).

Overall, our evidence indicates knowledge of workers’ compensation enti-tlements is problematic in some industries where contingent workers are con-centrated and that, where we are able to make comparisons, contingent work-ers are significantly more likely to report having no injury insurance coveragewhatsoever.

These observations are amplified when we turn to the qualitative data ofspecific comments made by workers interviewed. For example, in the fast-foodindustry survey (S2) we found many young casual workers incorrectly believedthat their entitlement to workers’ compensation depended on the degree ofthe injury sustained or whether they or the company were at fault. Typical re-sponses were:

Depends if fault of self, then no. But if work fault then work comp.would pay. (Young casual worker no. A14)

If it was [named store] fault then yes. But if I was being stupid, thenprobably not. (no. A35)

Depends on severity of injury. Only if burns were significantly high.(no. A83)

If you have to go to hospital. (no. B195)


If the fault is not yours. (no. B197)

Other young casuals believed compensation coverage depended on whetherthey were full-time employees or had been given a warning:

Only if you are full-time; not sure for casuals. (no. A28)

Depends on if I have been warned about it or not. If I have beentold and I get hurt then it is my fault. But if they haven’t told methen I get it. (no. B180)

Likewise, responses from both factory- and home-based clothing workersconfirmed a mixture of ignorance and fear, exacerbated by immigrant status:

Don’t claim; like job and no claim . . . never complain as no under-stand. What can do? Too late for me now at my age. (Factory-basednon-Anglophone worker with OOS; no. F188; age group 40–49 years)

I wish that I could have the entitlement for the workers’ compensa-tion; no payment for me. (Outworker no. 011)

As might be expected, injured self-employed workers and owner/managersplaced most reliance on a mixture of their own resources, private insurance,and Medicare (see S1 and S4). Amongst micro-business owner/managers (S1)the following responses were typical.

I don’t think we have a problem with health and safety here. . . . Idon’t know what I’d do if I couldn’t work . . . no insurance or work-ers’ compensation. (Garage owner/manager no. 25)

When I was burnt by steam went to doctor that bulk billed so Ididn’t have to pay . . . regularly take naprosyn tablets for back prob-lems . . . for years . . . visit the doctor every six months to renew theprescription. (Café and restaurant owner/manager no. 129)

Interviewees repeatedly complained that economic pressures forced themto avoid any form of insurance coverage and to continue working when injured:

When you are starting a new business you have to be as economicalas you can—things like insurance premiums are not a priority for meat the moment. (Garage owner/manager no. 63)

. . . taking painkillers continually for back . . . sore feet are fromstanding all day . . . part of the job. (Café owner/manager no. 123)

Cannot afford to get sick as permanently at work trying to break even—also who would make money then. (Café owner/manager no. 156)


Responses in the Interventions Study (S4) of builders, cabinetmakers, anddemolishers revealed similar dependence on self-help/family support, privateinsurance, and Medicare:

Short term, me—up to a few weeks. Long term—personal insurance(income protection). (Interventions builder no. B11)

Private insurance after first 2 weeks. (Interventions builder no.B151)

Depends. Probably Medicare. Have to be off a long time for insur-ance. (Interventions builder no. B140)

If I was off work for a long time—insurance and income protectionbut otherwise myself. (Interventions cabinetmaker no. C11)

Get what I can on Medicare and then myself until six weeks whenprivate insurance takes over. (Interventions cabinetmaker no. C111)

Medicare then myself (money I put aside). (Interventions demol-isher no. D1)

Unlike micro-business owners (S1), some of the Interventions respondents(S4) believed they were covered by workers’ compensation. However, like themicro-business owners’, economic pressures still made them reluctant to makeclaims and to continue working except for the most severe injuries:

Would depend on the type of injury. If serious—claim throughworkers. comp. With self-employed people if you have to take timeoff it has to be pretty bad. (Interventions builder no. B135)

If the injury required time off work (more than one month) thenworkers’ compensation, else family. (Interventions cabinetmakerno. C30)

Medicare would pay for the medication but I would pay for the timeoff myself. (Interventions cabinetmaker no. C88)

Don’t use the workers’ comp. for minor things. (Interventions de-molisher no. D28)

In sum, these quantitative and qualitative findings indicate that many work-ers in precarious jobs are ignorant of their workers’ compensation entitle-ments, are frequently reluctant to make claims, and are relying on othersources of support and treatment, most notably family members, the publichealth and social security system. If the findings are validated by further re-search it seems reasonable to suggest that as the precariously employed com-ponent of the workforce increases, these problems will compound. Nor are


these problems confined to Australia. Notwithstanding important institutionaland regulatory differences, there is mounting if still fragmentary evidence thegrowth of precarious employment is affecting the capacity of workers’ com-pensation regimes to achieve a number of central policy objectives. This in-cludes providing medical treatment and income protection to injured workersand ensuring employers meet the costs of work-related illness in their work-places. It also has implications for efficient and equitable administrative pro-cesses, including determining eligibility and entitlements, the ability of work-ers to lodge claims and the provision of rehabilitation. Finally, growing gaps inworkers’ compensation affect the value of claims data as driver in preventionand cost-containment policies. The remainder of this article will examine eachof the issues in turn, looking at policy responses in a number of countries andtrying to indicate preferable options. Although our analysis will by necessitybe generalized we will, where possible, give recognition to important institu-tional and regulatory differences between countries.

Precarious Employment and the Administration of Workers’ Compensation and Rehabilitation

There is growing international evidence that the growth of precarious em-ployment is adversely affecting the proportion of workers formally entitled toworkers’ compensation, the number who can utilize this entitlement, and thetreatment accorded to some categories of claimants (including issues of equityand access to rehabilitation). In the countries with which we are familiar, com-pensation coverage is forged on traditional legal definitions of paid employ-ment with a limited extension for other specified categories of workers beingachieved through special clauses or deeming provisions. The growth of precar-ious employment is rendering conventional boundaries, especially the com-mon law definition of employment (in countries with common law systems),increasingly problematic. Most notable is the proliferation of self-employedworkers and contractors, as well as workers whose status as contractors or em-ployees is ambiguous, such as many homeworkers and teleworkers. The ques-tion is not simply one of coverage, but also identifying who is the responsibleemployer and the latter issue extends to other groups of contingent workerswhere employee status may not be in question, notably leased workers/agencylabor. In most countries, temporary, part-time employees, and those workingin small business, are formally entitled to workers’ compensation. However, ina number of U.S. states (such as Pennsylvania and Connecticut) and other ju-risdictions, there are exclusions affecting casual workers, agricultural employ-ment, domestic service, homeworkers, and those employed in micro-smallbusiness (Florida Department of Labor and Employment Security, 1997;Goldsmith, 1998, pp. 389–390; Schmulowitz, 1995, p. 52; WorkCover NSW,1997). Beyond the question of formal coverage there is also the issue of un-derutilization by workers who are covered. Australian and U.S. evidence pre-sented in the last section suggested this is a substantial problem, and in thecase of Australia, a fairly strong connection can be drawn between precariousemployment and underutilization.


Omissions in coverage and underutilization represent a significant issue interms of the efficacy of workers’ compensation fulfilling its role as a safety netfor those injured at work. Over the past 5 years or so the issue of coverage hasbeen addressed in reviews of workers’ compensation in Australia, Canada, theUnited States, and Germany, if not elsewhere. A special briefing paper pre-pared for British Columbia Royal Commission into Workers’ Compensationby the province’s Workers’ Compensation Board (Workers’ CompensationBoard of British Columbia, 1997) placed particular emphasis on the problemsposed by the growth in “nontraditional” work arrangements, including inde-pendent contractors. Even so, the outcome of these reviews has not alwaysbeen to extend coverage to contingent workers and the equally importantproblems of utilization and equity have received far less attention.

In its review of workers’ compensation in Australia, the Industry Commis-sion (1994, pp. 90–94) found that coverage of groups of contingent workerswas partial, ambiguous, and inconsistent across different jurisdictions (in Aus-tralia, like the United States and Canada, workers’ compensation is principallya state/provincial matter). The report expressed concern at cost-shifting to thepublic health and social security system entailed in existing omissions and ob-served:

Under present arrangements, the trend towards “contracting out” ofspecialized tasks to small business will result in an; increasing pro-portion of the workforce being excluded from compulsory workers’compensation coverage. (Industry Commission, 1994, p. 93)

To remedy this, the Industry Commission (1994, pp. 93–94) argued that sub-contractors should be covered by compulsory workers’ compensation insur-ance, with the premium paid by the firm letting out the contract. These recom-mendations were never implemented although several state jurisdictions, suchas Tasmania (Tasmanian Joint Select Committee, 1998, pp. 36–37), have con-sidered extending otherwise narrow common law coverage via specific deem-ing provisions dealing with subcontractors. In Canada, Germany, and theUnited States some jurisdictions have amended their laws to clarify or extendcoverage to independent contractors or other categories of contingent worklike agency labor and homework (see Berreth, 1997, pp. 43–50; Whittington,1998, pp. 25, 27, 28; Workers’ Compensation Board of British Columbia, 1997,p. 17). In Germany, the term

fictitious

self-employed was introduced, but thepractical application of this law remains the subject of debate, which is hardlysurprising given that new working arrangements are, at least in part, a deliber-ate attempt at regulatory evasion (Reinhard & Jorens, 1999, p. 14). Govern-ment agencies in Australia and elsewhere have also produced guidance notesclarifying the compensation entitlements of specific categories of contingentworkers like clothing outworkers (WorkCover NSW, 1996). Unions have alsopressed for a broader definition of “worker” (Labor Council of New SouthWales, 1997, p. 9). Nonetheless, coverage of other groups like many childrenemployed in a myriad of tasks such as delivering newspapers remains ambigu-ous at best (International Labour Organization, 1998a). Further, in some juris-dictions, such as Queensland and the Northern Territory, coverage has actually


been curtailed on the grounds of administrative simplicity/cost containment(Tasmanian Joint Select Committee, 1998, pp. 36–37).

In addition to the safety-net aspect, there is also the question of administra-tive efficiency. Existing definitions can create severe administrative difficultiesnot simply determining eligibility but also precise status. In its briefing paper,the Workers’ Compensation Board of British Columbia (1997, p. 6) noted thatevery month the Assessment Board had to examine 5,000 to 6,000 applicationsfrom persons wanting to register as independent operators or employers to de-termine whether the applicants were an employer or a worker (the latter beingprecluded from paying assessments). The Workers’ Compensation Board ofBritish Columbia (1997) concluded:

The problem of distinguishing between contracts of employmentand contracts between independent firms will likely become morecomplex and controversial as the number of people in non-tradi-tional work relationships and other forms of contracting for servicesemerge. (p. 20)

Another administrative complexity has arisen in co-employment situationsin deciding who is the principal employer of some categories of contingentworkers, especially subcontractors and leased/agency workers (for subcontrac-tors cases see

Jones v. Lillibridge

3149 CRB-2-95-6 10 December 1996 and

Walton v. Hector Trucking

13 Conn Workers’ Comp. Rev. Op.239, 1835 CRB-1-93-9 13 April 1995). For obvious logistical reasons, the general policyadopted by agencies/legislators in the United States, Australia, and other ju-risdictions has been to locate responsibility for workers’ compensation cover-age with the labor agency. Even so, the employee or contractor issue often re-mains ambiguous and the diversity of leasing agreements (including highlyinformal arrangements) as well as exemption provisions in some laws still af-ford avenues for evasion and litigation. In Connecticut, for instance, compen-sation agency determinations on whether a worker/subcontractor was em-ployed of a labor hire firm or the leasing employer at the time of their injuryare regularly challenged (see

Velez-Ramos v. Labor Force of America et al

3070 CRB-4-95-5 25 November 1996, Connecticut Compensation ReviewBoard). Special provisions on subcontractors or short-term “lending” of work-ers, as well as variations in the task performed by firms involved in leasing ar-rangement (including the handling of remuneration) and the pattern of sub-contracting or leasing specific to a particular industry provide the considerablescope for complex legal argument (Anderson, 1999). In construction, for ex-ample, the limited duration of jobs and frequent movement by workers be-tween jobs and also between self-employment and employee status makes is-sues of eligibility and liability by no means straightforward (see

Covillion v.Plante Brothers Inc

, 3364 CRB-07-96-06 11 December 1997, ConnecticutCompensation Review Board). It can, indeed, readily lead to a tussle involv-ing the claimant worker, a firm, a labor agency and two insurance companies(see for example,

Minuit v. PDF Construction Company et al

, 3145 CRB-3-95-7,26 November 1996, Connecticut Workers’ Compensation Review Board). Theemployment of illegal immigrants in these and other contingent jobs provides


an additional level of complexity (see

Dowling v. Sol V Slotnik and DianeReverand

, 3062 CRB-4-95-5 and 3277 CRB-4-96-2 5 February 1997, Connecti-cut Workers’ Compensation Review Board).

The growth of labor supplied under leasing arrangements by specialistagencies (also known as labor hire firms) has also resulted in the outright eva-sion of workers’ compensation coverage by these firms as well as exploitationof ambiguities and manipulation of premium-ratings (see e.g., Workers’ Com-pensation Board of Queensland, 1994, pp. 30–31). Worker’s compensationagencies and private insurers use a variety of methods of classifying employers(according to industry and work activities undertaken) to determine premi-ums. However, it appears that irrespective of the method used the increase inagency labor, and outsourcing more generally, has expanded opportunities formanipulation. These practices include the deliberate misclassification of work(e.g., labeling plant operation as plant hire), underdeclaration of workforceand wages bills, “rolling over” companies with poor records, hiding workersundertaking hazardous tasks in another group (like clerical workers), failureto cover deemed employees or cash-in-hand payments and other illegal prac-tices. Growing union protests over these practices in New South Wales (for ev-idence of this see Labor Council of New South Wales, 1999 and “Correspon-dence, Secretary of Construction, Forestry, Mining and Energy to GeneralManager and Assistant General Manager,” 1999) led the Workers’ Compen-sation Advisory Council to establish a working party to consider remedial ac-tion. Similar problems have been identified in the United States. This includesmisclassifying workers (see AFL-CIO, 1999) and disguising the high-risk tasks(like asbestos removal) temporary workers are undertaking (see Florida At-torney General Office of Statewide Prosecution, 1997). In the most extremecase, it has been alleged that payroll laundering firms have been establishedwho claim the employees of other firms as their own in order to fraudulentlyminimize workers’ compensation and tax liability (Nakamura, 1995). A num-ber of U.S. state legislatures have amended their legislation to strengthen theonus on temporary help/labor hire agencies to take out workers’ compensa-tion coverageon behalf of the employees they supply (see Berreth, 1997, pp.44, 46), but it appears that neither this, nor compliance measures, have beenentirely effective.

Problems with agency labor highlight a more general problem. Growth ofsmall business, contractors, labor hire firms, and precarious employment cre-ates additional administrative problems in terms of enforcing comprehensivecompulsory insurance coverage amongst employers. Small business and con-tractors have long represented a problematic group in terms taking out work-ers’ compensation insurance coverage (Hopkins, 1994a, p. 81 and Phelan,1997, p. 6) and it is to be expected the scale of such problems will grow in tan-dem with the expansion of small business and contract arrangements. At thesame time, the increase in temporary and clandestine employment also createsopportunities for even large firms to understate their workforce and payroll(the usual basis for calculating workers’ compensation premiums). Problemsare liable to be most pronounced in industries like construction where precari-ous employment is the norm (for some fragmentary evidence on this, seeTurner, 1998). The overall scale of these problems is unknown and may vary


widely between countries with different regulatory arrangement. However,in the United States and Australia, recent publicized prosecutions suggestgrowing compliance concerns amongst workers’ compensation agencies (seeFlorida Attorney General Office of Statewide Prosecution, 1997; Florida De-partment of Labor and Employment Security, 1998; WorkerCover NSW,1997).

Other administrative problems, including several relating to determining le-gitimate claims and equity, warrant mentioning. Evidence already presentedindicates that precariously employed workers are less likely to be knowledge-able of their rights to compensation and more reluctant to make a claim, lest itjeopardize future employment and earnings. In countries like Australia andthe United States (see Hirsch, Macpherson, & DuMond, 1997) unions performan important but often unrecognized role, providing information on compen-sation entitlements, discouraging employer victimization, and arranging ex-pert evidence and representation in disputed cases (not to mention politicallobbying over coverage and benefits). However, in Australia and the UnitedStates, if not elsewhere, contingent workers are concentrated in weakly union-ized sectors and there are often greater logistical problems providing assis-tance even where these workers are union members.

Further, quite apart from issues of deliberate evasion by employers and un-derutilization, the growth of precarious employment will make it more diffi-cult to determine some categories of claims. Where part-time workers holdmultiple jobs simultaneously (increasingly the case; see Lettau, 1995), wherethey work from home or where they hold a succession of jobs, even relativelyuncomplicated trauma-based claims can be problematic (Reinhard & Jorens,1999, p. 14). With regard to exposure to hazardous substances, the problemsfor contingent workers with complex job histories will be manifestly greatergiven the difficulties workers’ compensation systems already have in address-ing occupational disease (Kerr et al., 1996; van Warden et al., 1997. See alsorecent U.S. initiatives in relation to workers employed by contractors in nu-clear weapon production). Given the proliferation of potentially hazardoussubstances in industrialised societies, the potential significance of this issueshould not be underestimated.

Increased evasion of compulsory insurance requirements and other formsof externalization pose potentially significant problems for the administrationof premium-ratings. Problems may be most acute where bonus/penalty-ratingsystems are used. These schemes are inapplicable to the growing number ofsmall businesses that are less able to predict injury risks (Industry Commis-sion, 1994, pp. 61–63). Further, outsourcing and more flexible work arrange-ments afford large employers opportunities to off-load risky activities or un-derreport injuries, as well as an increased incentive to contest or “massage”claims. These problems have received little consideration despite the growinguse of incentive premium rating across a number of countries.

Another problem relates to equity in claims administration. Roberts andYoung (1997) have argued that notions of procedural fairness are important tothe operation of workers’ compensation. For workers, such notions are af-fected by their perceived opportunity to influence outcomes, consistency indecision-making and the degree to which inexperience or uncertainty make


the process confusing or intimidating. Procedural fairness is more difficult toachieve in relation to contingent workers because, quite apart from bureau-cratic insensitivity, there is an increased potential for discriminatory practices.Workers on short-term contracts are in a more vulnerable position in terms ofhaving their claims disputed or having future employment prospects affectedby a costly claim due to employers making increasing use of compensation his-tory as a screening device (Morrison, Wood, & MacDonald, 1995, p. 6). Thereis a dearth of research on this issue. However, there is evidence that somegroups of workers concentrated in contingent jobs, notably women, Blacks,immigrants, and nonunion workers, are more likely to have claims contested,rejected, or receive a lower average pay-out (see Alcorso, 1989, pp. 58–62;Hemerik & Cena, 1993; Hirsch et al., 1997; Morrison, Wood, MacDonald, &Munrowd, 1993). For example, in a 1995 survey of 257 indigenous Australians(Aborigines and Torres Strait Islanders), virtually all of who occupied precari-ous jobs, found that over 60% of those injured had received no form of injurybenefit (Mayhew & Vickerman, 1996). The following responses were typical:

The employer’s attitude was that it was my problem and I believethis was because I was employed on contract work. (Indigenousworker no. 68)

Lack of union support or information regarding workers’ rights andentitlements. Lack of Aboriginal and Torres Strait Islander supportnetwork. Leads to feeling of being outcast and alone. (Indigenousworker no. 130)

I did not realize that I could get support for my injury because noone had ever talked about it at work. (Indigenous worker no. 180)

Although indigenous workers may represent an extreme case it is morethan likely that these problems will become more extensive in tandem with thegrowth of the contingent workforce. Changes to entitlements and coverage(formal and informal) may even magnify these effects.

As noted by Plumb and Cowell (1998, p. 268), the growth of precarious em-ployment also presents difficulties for the provision of rehabilitation services,an area given increased attention in many countries during the 1980s. Self-employed, temporary, or leased workers and those in small business find itmore difficult to utilize these services (contributing to the lower compensationcosts of small business.

Time for Business

, 1996, p. xviii). Even in large organi-zations, employment security is important to the rehabilitation process. Purse(1998b) argues that employment security provisions in relation to compensa-tion claimants not only protect worker rights but also control scheme costs byencouraging a more proactive approach to return to work/rehabilitation. Thegrowth of precarious employment limits the application of these provisionsand can even be used to question their retention. Unions efforts to combatthis, including pressing governments to make labor hire firms responsible forthe rehabilitation of workers they lease out (Labor Council of New SouthWales, 1997, p. 9), are partial remedies at best. By and large, these measures


do not address self-employed workers, home-based workers, workers in smallbusiness, or in workplaces being downsized. It is hard to see how governmentscan reconcile an emphasis on rehabilitation in the context of an increasinglyinsecure workforce.

Overall, workers’ compensation agencies have been slow to recognize letalone address these problems. Further, any efforts need to be balanced againstefficiency/cost-cutting reforms in a number of countries that have reduced en-titlements (via claim thresholds, time limits, injury/disease recognition, bene-fits, etc.), limit job-security protection, or increase cost shifting from businessand unhealthy forms of system competition (

eironline

, 1998; Purse, 1997,1998a, 1998b; Walters, 1996, p. 304; Weissman, 1997, pp. 22–26; Witmer, 1997).These changes appear to reverse a long-term trend to make compensation sys-tems more comprehensive and generous. In Sweden, for example, changes in-troduced in 1992–3 required employers to pay the first 14 days in relation toemployee sickness and tightened the definition of work-related disease (seethe article by Nachemson in this issue). Apart from direct restrictions onclaims, there is evidence (see Hirsch, 1997) that the generosity of benefits (orthe degree to which workers must “share” costs) affects the level of claims aswell as the use of medical care (see Durban, 1997).

The adverse effects of government policies just mentioned may be rein-forced by changes to employer and private insurer practices such as the in-creased use of managed-care models pioneered in the United States. Man-aged-care has been seen to promote more integrated and effective OHSprograms (see Nikolaj & Boon, 1998), but incentives to reduce costs do not au-tomatically translate into injury and disease reduction because there are otherways of reducing costs (see article by Dembe in this issue). Himmelstein andRest (1996, p. 23) argue that the application of managed care practices toworkers’ compensation has important policy-implications because, unlikeother areas of health care, doctors are involved in adjudicating compensabilityand the return to work. Pressures to reduce costs create potential conflict ofinterests that could affect decisions on eligibility, benefits and the timing of re-turn to work. Dembe (1998, p. 200) points to fears amongst workers, unions,and public health advocates that the introduction of managed care is part of a“broader employer-driven campaign to erode benefits, tighten eligibility crite-ria and weaken employee’s control over health care and compensation issues.”In other words, managed care may be an instrument by which employers ex-ternalize compensation costs and reduce worker discretion over one aspect oftheir employment conditions (for a more general critique of managed care seeHerzlinger, 1997). Dembe (1998) argues these effects may be mitigated by in-volving workers in scheme design and provider selection, requiring account-ability in contract provisions and via government oversight. However, the or-ganizational controls he identifies are voluntary and could not be introducedby union pressure alone. There is little evidence that appropriate regulatorycontrols are being devised and effectively implementing such controls is liableto be expensive. Again, practices like managed care are liable to disadvantagecontingent workers disproportionately because they are in a weaker positionto make claims or dispute unfavorable rulings. Irrespective of any strategic de-cision to drive down compensation costs via managed care, contingent work-


ers may also suffer where firms employing large numbers like labor hire agen-cies simply adopt a more aggressive approach to claims made by thiscomponent of their workforce (Labar, 1997).

Finally, the growth of precarious employment is liable to exacerbate hiddenindustry-subsidization or cost shifting in relation to occupational injury and ill-ness already found in many industrialized societies (Purse, 1998a). Those costsnot met by employers flow on—often in a gender-biased fashion—to the pub-lic health and social security systems, the taxpayer and the families of injuredworkers. In the United States, a 1991 study found that only 60% of those reim-bursed for workplace injury received workers’ compensation (National Insti-tute of Occupational Safety and Health, 1996, p. 9). In Australia, the IndustryCommission (1995, pp. 159–173) found there was a large net shifting of costsfrom employers and the workers’ compensation system onto the community(via Medicare, the social security system, the families of injured workers, etc.).The report (Industry Commison, 1995, pp. 392–393) estimated employers borearound 30% of total costs of occupational illness (mainly workers’ compensa-tion premiums), injured workers and their families bore around 30%, and tax-payers around 40%—a breakdown similar to other industrialized countries,such as Norway. In the case of serious injury, the estimated cost burden onworkers and the community was even greater (Industry Commission, 1995, p.102). Similarly, a study cross-matching workers’ compensation, hospital treat-ment, and welfare recipient records in British Columbia (Hertzman, McGrail,& Hirtle, 1999) revealed that between 1991 and 1997, 23% of workers’ com-pensation clients became clients of the welfare system and were the third larg-est group of claimants after single mothers and the unemployed. (This studyby Hertzman et al. is published in this issue). A study of Australia in the 1980scame up with an almost identical figure of 23.6% (Stewart & Doyle, 1988, p.8). Despite the vigorous debate about its cost burden on employers, workers’compensation represents only a fraction of the economic costs of occupationalinjury and disease (National Institute of Occupational Safety and Health,1996, p. 9).

This cost shifting results from several factors, including formal exclusions/restrictions (in terms of categories of workers, claim type, benefits, and pay-ment levels), limited recognition of occupational disease, uncertainty aboutclaims procedures and underutilization due to employment insecurity/fear ofvictimization amongst particular groups of workers. Formally excluded cate-gories include contingent workers like independent contractors—many in dan-gerous industries like construction, trucking, and agriculture—who often failto take out adequate private insurance (see Egger, 1997, p. 8; Bill 99, Statutesof Ontario, Ch. 16, 1997, §11; Mayhew, 1999; Workers’ Compensation Boardof British Columbia, 1997, p. 17). In at least some industrialized countries, thelong-term injured eventually move off workers’ compensation benefits ontosocial security, although women may be denied this residual support becausethey are employed part-time or are not deemed the primary breadwinner(Stewart & Doyle, 1988). The already-mentioned underutilization of workers’compensation, especially amongst vulnerable groups like indigenous workersand immigrants, also results in an increased burden on social security (Stewart,1991, pp. 27–9, 1994). In combination, cuts to workers’ compensation entitle-


ments and the growth of contingent work will cause a further cost shiftingaway from employers to workers. This, in turn, will create a series of labor andproduct market distortions. Although the impact of compensation costs onemployer behavior has been the subject of considerable ongoing debate (seee.g., Boden, 1995 and Durban, 1997), it is difficult to see how increased costshifting will enhance macroeconomic efficiency and injury prevention.

Of course, the ability of workers’ to transfer from workers’ compensation todisability pensions or other forms of social security will depend on regulatoryarrangements specific to each country. For example, while workers’ compen-sation and social security are quite separately administered welfare regimes incountries like the United States, Australia, and Canada, in a number of Euro-pean Union countries workers’ compensation has been integrated into the na-tional social security system (Reinhard & Jorens, 1999). This integrationwould seem to eliminate economic incentives driving cross-subsidizationwhere separate systems operate. However, it is important to note this counter-vailing effect may only be partial, at best, because in almost all of these coun-tries the level of payments for work-related injury exceed those of other cate-gories of claimant.

In most advanced industrialized countries, the publicly funded health caresystem picks up a substantial number of work-related injuries and diseasesthat fall through gaps in workers’ compensation. Despite claims that cost shift-ing also occurs in the opposite direction (i.e., from Medicare to workers’ com-pensation) available evidence for Australia indicates that the former far out-weighs the latter (see Industry Commission, 1994, pp. 160–165). This patternprobably applies to other industrialized countries, although the extent will de-pend on institutional arrangements. In the United States, the only advancedindustrialized country without a comprehensive public health insurance sys-tem, the situation is more complex. Injured workers in the United States donot have ready access to publicly funded health care, making this type of cost-shifting more difficult. In the absence of a comprehensive public health insur-ance system, employers have incorporated health coverage into employmentconditions, with these schemes usually being administered by a health man-agement organization (HMO). There have been suggestions that one conse-quence of this structure was to encourage a significant shifting of health carecosts to the workers’ compensation system (see Ducatman, 1986). Later stud-ies have questioned this contention (see Ducatman, 1991; Zwerling, Ryan, &Orav, 1991). Other researchers have pointed to circumstances where workersare left without either form of coverage (see Ramsay & Rosenstock, 1994).This appears to be a significant problem for contingent workers. Reliance onvoluntary health insurance in the United States has resulted in significant gapsin coverage that are especially pronounced in relation to low-income workers,part-timers, those in small business and other contingent workers (Bureau ofLabor Statistics, 1997; Chernew, Frick, & McLaughlin, 1997; Rhine & Ng,1998). The growth of the contingent workforce has undermined an alreadypartial form of protection, especially in a context where employers increas-ingly require an employee contribution (the growing contingent workforce hasalso affected access to employer-based pension benefits). Using U.S. govern-ment statistics, Nollen (1996, p. 573) found that, as compared to full-time


workers, a significantly lower proportion of temporary workers had formal en-titlements to paid vacation, paid holidays, life insurance, and health insurance(see also Bureau of Labor Statistics, 1997, Table 9). The gap was even widerwhen the proportion actually receiving such benefits was calculated (to saynothing of differences in the quality of benefits. See also Chernew et al., 1997).A recent survey by the Centre for Disease Control (1998) found that personswithout health care coverage were more likely to experience poor health andwere at greater risk of chronic disease.

In a number of countries, including the United States, Netherlands, Austra-lia, and Sweden, there has been a substantial growth in the number of work-ing-age people in receipt of disability pensions/benefits or sickness allowances(International Labour Organization, 1998b). The contribution of labor marketrestructuring to this growth (by widening gaps in workers’ compensation cov-erage, undermining return-to-work schemes, and discouraging the engage-ment of disabled workers) is unknown. However, predictions of this connec-tion were made more than a decade ago (Stewart & Doyle, 1988, pp. 19–25)and warrant serious investigation. There are grounds for suspecting precariousemployment is weakening workers’ compensation/rehabilitation regimes as amechanism for internalizing the costs of occupational injuries and disease (al-ready significantly underreported) to employers and as a relatively compre-hensive social justice safety net for injured workers and their families.

Precarious Employment, Claims Data, and Prevention

In addition to its effects on the administration of workers’ compensation,the growth of precarious employment has implication for prevention. Despitesome well-recognized limitations (see Backlund, 1988; Goldsmith, 1998; In-dustry Commission, 1995; Kerr et al., 1996; Wigglesworth, 1990), includingsubstantially understating occupational disease, in many countries compensa-tion claims represent the most comprehensive data on work-related illness andform the basis for official statistics used by governments and employers. In-deed, in countries like Canada (Witmer, 1997) and Australia the combinationof recent policies more closely integrating compensation and prevention agen-cies and the growing influence of risk management/loss control techniques ingovernment and industry has been associated with even greater reliance oncompensation data. In a worst-case scenario, the organizationally larger andincome-generating compensation “side” tends to drive prevention-side, deter-mining priorities and creating potential conflicts of interest, especially in rela-tion to the recognition of new types of injury or disease (Hopkins, 1994a,1994b; Quinlan, 1996). Even leaving this problem aside, the growth of precari-ous employment will exacerbate gaps in compensation-based statistics as wellas introducing other distortions. For example, reporting effects may mask ordistort the impact of factors such as firm size and workforce experience on in-jury rates revealed in compensation data (Wooden, 1998, pp. 354–355).

There is already some evidence of these problems. In one Australian juris-diction (New South Wales) a purported improvement in OHS performance inthe building industry was actually a statistical artifact caused by changes in the


level of evasion of compensation coverage amongst contractors (Hopkins,1994a, p. 81). Similarly, a study of the Swedish mining industry (Blank et al.,1995, p. 23) found that improved injury statistics over a decade were the resultof increased outsourcing because injuries to contractor workers were not re-corded under the mining industry but under the industry classification of thecontractor. Precarious employment takes different forms and is more exten-sive in some industries and occupations, hence calculating the aggregate ef-fects on occupational injury and disease statistics is difficult. However, it isworth noting that excluded/under-claiming categories of workers are found ina number of high-risk industries and occupations such as fishing, forestry,building, and road transport (Fosbroke, Kisner, & Myers, 1997, p. 461). A re-port by the National Occupational Health and Safety Commission (WorksafeAustralia, 1994) observed that “. . . the exclusion of self-employed persons islikely to have a marked effect on data for industries where self-employed per-sons are common, for example, Agriculture, Forestry, Fishing and Hunting,Construction, Road Transport. . . .” (p. xii). In some countries, such as Italy,the national register of occupational injuries and diseases covers self-em-ployed workers (with doctors being required to report) and in countries whereworkers’ compensation is incorporated into the general health care/social se-curity system the limitations in recording injury may be less apparent. How-ever, even in these systems a distinction has to be drawn (for statistical andpolicy purposes) between injuries and diseases that are work-related and thosethat are not. Given overlaps and ambiguities, there is always an element of ar-bitrariness in these distinctions and the growth of precarious employment in-creases such difficulties. The growth of home-based work is a case in point.

Some studies indicate that the growth of precarious employment causes adeterioration in OHS whilst simultaneously reducing the number of work-re-lated illnesses that are reported. An Australian survey of clothing workersfound home-based workers self-reported more than three times the number ofoveruse injuries (including chronic injuries) as did factory-based workers, butnot one outworker made a workers’ compensation claim and few even madeuse of the Medicare system (Mayhew & Quinlan, 1999). For other groups, likethe general category of temporary workers, reporting/coverage problems maynot be so powerful as to prevent workers compensation data at least partlycapturing the OHS effects of precarious employment. Using workers’ com-pensation data from Washington state in the period 1991–1996, Foley (1998)found a consistent pattern where claims frequency, claims cost, and lost work-days per worker amongst temporary workers was significantly higher than thatof permanent workers in the vast majority of industries. The difference wasmost pronounced in high hazard industries and we clearly need more researchof this type. However, coverage/underutilization will remain a major problemfor some categories of contingent workers, especially those in clandestine/in-visible jobs (home-based workers and children) or vulnerable groups like ille-gal or recent immigrants and adolescents (Alcorso, 1989, pp. 60–62; Stewart,1991, pp. 26–27). A U.S. report (Committee on the Health and Safety Implica-tions of Child Labour and Others, 1998, p. 179) argued young workers weresusceptible to not making compensation claims due to ignorance, fear, andemployer/peer pressures. It also argued the increased use of experience-rating


based incentives in compensation schemes exacerbated reporting problems byencouraging employers to adopt more aggressive approach to the filing andmanagement of claims (see also Boden, 1995, p. 199; Hopkins, 1994b, pp. 129–136; Hyatt & Kralj, 1995, pp. 95–106; Kralj, 1994, pp. 41–59).

Growing limitations in compensation statistics will also inhibit efforts tomeasure the economic costs of work-related illness. Although the indirectcosts of occupational injury and disease far exceed direct costs (Industry Com-mission, 1995), workers’ compensation claims still represent an important ba-sis for estimating the economic impact of occupational injury and disease. Incountries like the United States, Canada, and Australia neoliberal policies in-creasingly require regulatory agencies to justify new or even preexisting stan-dards through a regulatory impact assessment based on cost/benefit analysis.By further externalizing such costs, the growth precarious employment willdistort these calculations. Attempts to factor in the resulting distortion willalso be difficult. It would require an accurate ranking of work-related illnesscosts for each occupation (see Leigh & Miller, 1997) and sector specific knowl-edge of precarious employment and its effects on the reporting, incidence, andseverity of work-related injury and disease. In other words, the informationgap cannot be filled by simple extrapolation.

There are, of course, alternative sources of occupational injury and diseasestatistics including fatality and serious injury censuses, legislative reporting re-quirements, hospital admissions data, inspectoral records, surveys and epide-miological studies. In the United States, for example, there are no fewer thansix national data collection or surveillance systems on occupational injuriesand diseases (see Murphy, Sorock, Courtney, Webster, & Leamon, 1996).Sweden has a long-running extensive survey of living conditions covering em-ployed and self-employed workers. Detailed analysis of inspectoral activityprovides another source. In Germany, a scheme has operated since 1978whereby labor inspectors use a questionnaire to collect information on work-place fatalities, such as age, occupation, and firm size.

However, there are a number of reasons why judicious use of alternate datasources will, in most instances, only partly offset limitations in compensationdata. First, there are significant flaws in some of alternative data sets (Abra-ham, Weber, & Personick, 1996). For example, workforce survey data fre-quently use narrow definitions of paid employment or exclude significant cate-gories of workers such as those employed in small firms (International LabourOrganization, 1998a; National Occupational Health and Safety Commission,1998, pp. 29–33). Official surveys of the contingent workforce often ignoreOHS. The surveys conducted by the U.S. Bureau of Labor Statistics alsoadopt a narrow definition of contingent workers (focusing on jobs deemed tobe temporary and ignoring ongoing jobs where frequent turnover of incum-bents is the norm as in the fast-food industry (see Bureau of Labor Statistics,1997, p. 6). Further, in Australia (Mayhew & Wyatt, 1995) and the UnitedStates, if not elsewhere, there is evidence of widespread noncompliance withlegislative requirements to report serious injuries to OHS agencies, particu-larly but by no means exclusively amongst smaller firms. Equally, inspectoralreporting systems are limited by the restricted reach and priorities of inspec-torates (even in relation to fatalities there are liable to be substantial omis-


sions). We are not aware of large data sets that capture workers moving intoinformal and even clandestine employment arrangements, especially muchhome-based work. These problems might not be critical if the limitations ofvarious data sets tended to cancel each other out. However, it often appearsthat problems with one data set spill over to another in ways that are not im-mediately apparent. Examining evidence on experience-rating systems, Bodenargued financial incentives affected the reporting of injuries and hazards byboth employers and workers. He noted that U.S. employers who denied work-ers’ compensation claims “are also unlikely to report injuries to the BLS”(Boden, 1995, p. 199).

Second, most official data sets of which we are familiar suffer from moregeneral limitations. They either ignore employment status altogether, or pro-vide only a few categories like the self-employed/employee breakdowns usedin Australian and U.S. fatal occupational injury censuses. Further, the data isimplicitly or explicitly based on legal definitions of what constitutes a workerand standard employment relationship (including presumptions about pay-ment, hours and the age at which persons commence work). In the UnitedStates, for example, the U.S. Bureau of Labor Statistics (no date) calculates in-cidence rates on the basis of full-time workers employed throughout the year.Without denying the need for standardized measures that can be used in com-parisons we would argue that incidence rates taking account of different cate-gories of workers (according to hours worked and employment security) arealso needed. Further, even within the same country there is often a lack ofconsistency in definitions used for different data sets. In some instances thedefinition is specified in legislation (as in many workers’ compensation stat-utes) while other official data sets a more generic definition is used such asthat adopted by the agency responsible for labor statistics (the U.S. Bureau ofLabor Statistics and its equivalents in other countries). While agencies havestarted to survey contingent workers, their main workforce data sets (includ-ing OHS) continue to rely on definitional categories that presume full-timepermanent employment as the norm and largely overlook the more ambigu-ous arrangements that have been associated with growth of precarious em-ployment. Thus, the basis for collecting data provides little avenue for measur-ing the OHS effects of important labor market changes which have beenoccurring in many cases for over 20 years. Illustrating some of these points, arecent U.S. report on OHS amongst younger workers (Committee on theHealth and Safety Implications of Child Labour and Others, 1998) concluded:

Taken together, federal data sources and national and local surveyresearch provide a fair amount of information about teenagers whohave had jobs, where they work, and how much they work. How-ever, definitions and nomenclature often vary from source tosource, making it difficult to compare information, and little infor-mation is available about the extent of work by those aged under 15.Nor is there much information on subpopulations of young people,such as those who are disabled, poor or members of minoritygroups. Information on the quality of the work in which young peo-ple engage is also lacking. Finally, there is very little data on chil-


dren and adolescents who are illegally employed, either in violationof child labor laws or in illicit activities. (pp. 217–218)

Third, the issue here is not simply the availability of information but whatbodies of information are liable to be used. Although strategic use is made ofother data sources, in many countries workers’ compensation/accident insur-ance data remains the dominant source for employers, government agenciesand others (see, e.g., OSHA’s new Safety Pays and Hazard Awareness Advi-sor). Indeed, it is arguably becoming more important via the shift to neo-lib-eral policies promoting an economic incentive-based approach to OHS (see,e.g., Bailey, Jorgensen, Koch, Kruger, & Litske, 1995; Industry Commission,1995). This trend is associated with the growing use of risk management/losscontrol and cost benefit analysis to drive OHS policies at both organizationaland government level. These devices are usually underpinned by the mostreadily available measures of incidence and costs, namely workers’ compensa-tion claims data (Hopkins, 1994a). Historical and contemporary evidencequestioning the effectiveness of economic incentives afforded by workers’compensation and other mechanisms (like civil litigation) has been all but ig-nored, perhaps because current economic orthodoxies rely more on an ideal-ized notion of the market than substantive empirical debate (Dorman, 1997).

Overall, other data sets only partly offset omissions from workers’ compen-sation claims data caused by the expansion of precarious employment. Modi-fying these data sets to better capture omissions is liable to involve consider-able additional public expenditure and there is a question as to whethergenuinely comprehensive workers’ compensation schemes constitute a morecost efficient means of collating OHS data.

Conclusion

This article has sought to evaluate the impact of precarious employment onworkers’ compensation regimes. Though cognizant of important institutionaland regulatory differences, there is now evidence of problems affecting a num-ber of industrialized countries and not simply those where the growth of pre-carious employment has been most extensive (although the scale of the prob-lems may still vary considerably). In general, the growth of precariousemployment is eroding the coverage and effectiveness of workers’ compensa-tion and associated occupational health services. In particular, this trend hascreated administration difficulties, undermining coverage and compulsory in-surance objectives as well as weakening processes for making claims, ensuringequitable treatment of injured workers, and delivering efficient return-to-work and rehabilitation practices. There is also evidence of an externalizationof costs associated with occupational injury and disease as the medical treat-ment and income support for precarious workers who are injured is shifted fromthe workers’ compensation system to the public health and social security system.Further, the growth of precarious employment is undermining the value of work-ers’ compensation claims data to drive prevention at the very time a number ofcountries are placing greater emphasis on the compensation/prevention link.


Taken together these changes will place an increasing burden on public infra-structure, taxpayers, workers, and their families as well as making it more difficultfor governments to shape OHS policy and outcomes using conventional means.

How to solve these problems? Obvious solutions including those govern-ments are already adopting, notably expanding coverage by altering the defi-nition of “workers,” debarring some categories self-employment as fictitious,or using deeming provisions to identify the principal employer. These reme-dies are certainly valuable. Even so, their implementation has encountered aseries of practical difficulties. Perhaps most notably, the construction of newwork arrangements is at least partly predicated on a calculated evasion of reg-ulatory requirements driven by particular interest groups and facilitated by le-gal and management consultants. In terms of assisting workers with entitle-ments to make claims, unions have long performed an important role but insome countries at least (like the United States and Australia) contingentworkers are far less likely to be unionized and thereby have access to this help.In some Canadian jurisdictions, like Ontario, occupational health or occupa-tional health legal clinics (independent but partly funded by government) andthe Office of Worker Adviser (or its equivalent government agency in otherprovinces) provide an additional source of advice to injured workers. The ef-fectiveness of these or similar bodies in meeting the needs of contingent work-ers warrants careful consideration. Even if these measures are worthy of emu-lation they address only some of the raft of problems identified in this article.A more effective solution may lie in discouraging the further growth of precar-ious employment or, as in France, regulating to ensure they receive equaltreatment to permanent workers (which may have much the same effect).

At one level, problems identified in this paper should not be surprising. Wecan draw some parallels both between the growth of precarious employmentand the extensive use of casualized labor in many industrialized countries 100years ago, and in a more contemporary vein, the extensive informal labor sec-tor of developing countries in Asia, South America, and Africa. In the latterthe existence of widespread coverage and compliance problems in workers’compensation regimes (see, e.g., Fultz & Pieris, 1999) hardly elicits surprise.But that industrialized countries should be moving, even if only modestly, inthe same direction is far more controversial, especially amongst those whopresume an ongoing comprehensive welfare safety net without consideringhow and why this was constructed in the course of the 20th century.

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