A digital illustration symbolizing the challenges and opportunities within Australia's temporary employment sector.

Unlocking the Wage Gap: What Temporary Work Really Pays in Australia

Reese Marlowe in Business & Economy August 2025 • 4 min read.

"New research reveals the hidden truths about temporary employment, casual work, and wages in Australia, challenging common assumptions and offering vital insights for workers and employers alike."

In today's rapidly evolving job market, temporary employment has become a significant feature of the Australian workforce. Terms like 'casual,' 'fixed-term contract,' and 'temporary agency' are now commonplace, but understanding the true economic implications of these roles can be complex. Are temporary workers truly at a disadvantage, or do some types of temporary work offer hidden advantages?

For years, the assumption has been that temporary work leads to a wage penalty. However, recent research is challenging this notion, revealing a more nuanced picture of the Australian labor market. This study digs deep into the wage gap, exploring the different types of temporary employment and how they affect earnings across the wage distribution.

This comprehensive analysis not only sheds light on the current state of temporary work in Australia but also provides valuable insights for employees and employers alike. Whether you're a worker considering a temporary role or an employer looking to optimize your workforce, understanding the dynamics of temporary work and wages is essential for making informed decisions.

Decoding the Australian Wage Landscape

A digital illustration symbolizing the challenges and opportunities within Australia's temporary employment sector.

The study, leveraging data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, examines the pay rates of various types of temporary workers compared to their permanent counterparts. The research specifically looks at casual employees, fixed-term contract workers, and those employed through temporary agencies, offering a detailed breakdown of wage disparities across different segments of the workforce.

One of the most striking findings is that the wage gap varies significantly depending on the type of temporary employment and where a worker falls within the wage distribution. Here’s a closer look at the key distinctions:

Casual Workers: Generally face a wage penalty at the lower end of the wage distribution. However, this can shift to a wage premium for higher-paid casual workers.
Fixed-Term Contract Workers: Tend to have hourly wage outcomes that closely mirror those of permanent employees.
Temporary Agency Workers: Often receive a wage premium, particularly those who are highly skilled and in high demand.

Interestingly, the study reveals that while casual employees may start at a disadvantage, the higher-paid ones actually experience a wage premium when compared to their permanent counterparts. At the other end of the spectrum, temporary agency workers are often rewarded with higher pay, reflecting the specialized skills and immediate expertise they bring to their roles. These are some of the factors contributing to the disparity: Skills and Demand: High-skilled temporary agency workers are often in high demand for specialized projects, justifying a higher wage. Compensating Differentials: The wage premium for temporary workers can be seen as compensation for job insecurity and lack of benefits like paid leave. Union Influence: The study found that union representation and minimum wages play a role in compressing wage differences at the lower end of the distribution.

The Future of Work: Navigating the Temporary Employment Landscape

The study underscores the need for a more nuanced understanding of temporary employment. By recognizing the unique factors that influence wages in different types of temporary roles, workers can make more informed career choices, and employers can develop fairer compensation strategies. Ultimately, bridging the wage gap and ensuring equitable opportunities for all workers will be crucial for building a stronger, more inclusive Australian economy.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.2139/ssrn.2934741, Alternate LINK

Title: The Structure Of The Wage Gap For Temporary Workers: Evidence From Australian Panel Data

Journal: SSRN Electronic Journal

Publisher: Elsevier BV

Authors: Inga Lass, Mark Wooden

Published: 2017-01-01

Everything You Need To Know

What are the key differences in pay between casual employees, fixed-term contract workers, and temporary agency workers in Australia, according to recent research?

The research indicates that 'casual employees' at the lower end of the wage distribution generally face a wage penalty. However, this shifts to a wage premium for higher-paid casual workers. 'Fixed-term contract workers' tend to have hourly wage outcomes that closely mirror those of permanent employees. 'Temporary agency workers' often receive a wage premium, particularly those who are highly skilled and in high demand. These findings challenge the assumption that temporary work always leads to lower pay.

What factors explain why temporary agency workers sometimes earn more than permanent employees in Australia?

Several factors contribute to the wage differences observed in temporary employment. High-skilled 'temporary agency workers' are often in high demand for specialized projects, justifying a higher wage. The wage premium for temporary workers can be seen as compensation for job insecurity and lack of benefits like paid leave, known as compensating differentials. Additionally, union representation and minimum wages play a role in compressing wage differences at the lower end of the distribution.

What data source was used to conduct the wage analysis of temporary workers in Australia?

The 'Household, Income and Labour Dynamics in Australia (HILDA) Survey' provides the data used to analyze the pay rates of various types of temporary workers compared to their permanent counterparts. This longitudinal study offers comprehensive insights into the economic and social well-being of Australian households, making it a valuable resource for understanding labor market dynamics.

What are the practical implications of these findings on temporary work and wages for workers and employers in Australia?

Understanding the nuances of temporary employment is crucial for both workers and employers. Workers can make more informed career choices by recognizing the unique factors that influence wages in different types of temporary roles ('casual employees', 'fixed-term contract workers', and 'temporary agency workers'). Employers can develop fairer compensation strategies by acknowledging the compensating differentials and skills that temporary workers bring. By bridging the wage gap and ensuring equitable opportunities for all workers, Australia can build a stronger, more inclusive economy.

What aspects of the temporary employment landscape in Australia were not covered in this research, and what further investigations might be valuable?

The study focuses specifically on 'casual employees', 'fixed-term contract workers', and those employed through 'temporary agencies'. It does not delve into other forms of non-permanent work such as zero-hour contracts or gig economy roles facilitated by digital platforms. Further research could explore the wage dynamics and employment conditions within these rapidly growing segments of the labor market to provide a more complete picture of temporary work in Australia. In addition, further research might explore how factors such as gender, ethnicity, and education intersect with temporary employment types to influence wage outcomes.