Labour Hire vs Permanent Staff
What’s the Real Cost for Construction Businesses?
When timelines tighten and projects pile up, labour hire can feel like the easy choice. It’s fast, flexible and has no strings attached. But is it really the most cost-effective solution long term?
In 2024, over 416,000 Australians were employed through labour hire arrangements - about 2.8% of the workforce. While 81% of these workers were full-time, most didn’t receive paid leave, and many earned up to $4,700 less per year than their directly employed counterparts.
For construction businesses, labour makes up roughly 50% of the total cost of a project, with tradie wages in NSW rising 26% over the past decade. Post-COVID supply shortages and skilled labour gaps have pushed building costs up by 44% since 2019, forcing businesses to re-evaluate every dollar spent.
While labour hire can solve immediate gaps, it comes with hidden costs - like high turnover, inconsistent quality, reduced safety knowledge, and more admin time spent managing rotating workers. Many businesses don’t realise that labour hire agency fees can add 15 - 25% or more to hourly rates, affecting bottom line profit margins.
Hiring permanent staff, on the other hand, creates consistency and long term value. Yes, it’s a bigger upfront commitment, but it leads to better training outcomes, stronger culture, and less re-work. You’ll also have an invested team and long term players who want to stick around … they won’t leave you high and dry which will help to increase your crew’s retention rate.
Information sourced from HIA, ABS and the ACTU (Australian Council of Trade Unions)
