Contingent workforce - management and procurement

The Department of Industry, Transport for NSW and the Department of Education were not able to demonstrate that the use of contingent labour is the best resourcing strategy to meet their business needs or deliver value for money, according to a report released today by NSW Auditor-General, Margaret Crawford.

Contingent labour are people employed by a recruitment agency and hired by government agencies to provide labour or services on a short-term basis. Between 2011−12 and 2015−16, Government spending on contingent labour has increased from $503 million to $1.1 billion.

Due to the absence of workforce plans, the agencies were unable to demonstrate their use of contingent labour is the best resourcing strategy to address any skills gaps. Additionally, the Department of Industry and Transport for NSW have limited oversight of their contingent workforce. Information is incomplete, reports are onerous to produce and there is limited reporting to the agencies’ executive. None of the agencies routinely monitor nor centrally document the performance of contingent workers to ensure services are delivered as planned.

Together, these factors make it difficult for agencies to ensure contingent labour is engaged only when needed, at reasonable rates, and delivers quality services.

The Department of Education has introduced a new software system and a recruitment broker, together called ‘Contractor Central’, that have the potential to improve value for money. The new software enables staff to easily obtain real-time reports on their contingent workforce. The recruitment broker has the potential to better negotiate and benchmark pay rates. The Department of Education reported a net saving of $944,500 from August 2015−May 2016. The other two agencies are at different stages of implementation of Contractor Central.

The Auditor-General recommends that agencies carry out analyses of agency-wide business needs and skills gaps to understand how their business needs are best met using contingent workers or other recruitment options. In this analysis, agencies should specifically assess whether their long-term contingent worker engagements are the most economical and effective labour option. In addition, agencies should assess and centrally monitor the performance of their contingent workforce to ensure that services are delivered as contracted and with quality. 

Further information

Barry Underwood, Executive Officer, on 9275 7220 or 0403 073 664 and email