What difference does labour choice make to farm productivity and profitability in the Australian horticulture industry? A comparison between seasonal workers and working holiday makers

Overview
The productivity and cost of labour have considerable impacts on farm profitability, especially in the labour intensive horticulture industry.

In this study, commissioned by the World Bank, we compared the labour productivity of seasonal workers employed under the Australian Government's Seasonal Worker Programme (SWP) and working holiday makers, and the implications for farm profitability - using a survey, wages data and interviews with employers participating in the SWP. It builds on a previous ABARES study, by including analysis of the non-wage labour costs and factors that may influence growers' decision-making about labour choices.

Key Issues

• The productivity of seasonal workers was higher than that of working holiday makers for the farm businesses in the study. Seasonal workers were 20 per cent more productive than working holiday makers for fruit picking tasks. Seasonal workers who returned to the farm had higher average productivity as they required minimal induction and training in subsequent seasons. • The non-wage labour cost related to seasonal workers was 2.3 times higher per hour worked than for working holiday makers, and was strongly influenced by requirements under the SWP such as recruitment, administration processes and training. However, the direct monetary benefits of hiring seasonal workers is likely to at least cover the higher non-wage labour costs and hence deliver a profitability gain. • This study found that in addition to the direct monetary benefits associated with different labour sources, growers recognised the reliability of seasonal workers as beneficial and a key risk management strategy during labour intensive harvest periods. Working holiday makers provide for greater labour flexibility at short notice. It was common for growers to employ seasonal workers and working holiday makers in a complementary fashion where seasonal workers formed the core of the workforce and working holiday makers were employed casually as needed. • The study suggests the relatively higher productivity and other benefits of accessing seasonal workers warrant further promotion of the SWP in the Australian horticulture industry. It also suggests that further streamlining the recruitment process and other SWP requirements for approved employers could increase the attractiveness for farmers to participate in the program.