Abstract

There is considerable economic research into the determinants of Indigenous labour force status but little is known about demand for Indigenous labour arising from business sector and the relationship of Indigenous workers to their employers. Even less is known about Indigenous businesses, arguably because of an ongoing debate over what constitutes and Indigenous business. Supply Nation has adopted a definition based on whether Indigenous stakeholders have majority-equity in the business. Foley and Hunter (2013) have argued that this definition should be relaxed so as to include partnerships between Indigenous and non-Indigenous persons where Indigenous people still retain considerable control over the business operations. This debate matters because broader definitions of Indigenous business, based on self-employment data from the Census are associated with significantly higher rates of Indigenous employment than other businesses (Hunter 2013). This paper revisits this finding based on information provided directly by businesses on the nature of their business and the indigenous status of their workforce

This paper uses data from Industry Capability Network (ICN) Queensland that has collected basic business information on a large number of businesses that operate in that State. The database provides information on: whether indigenous people hold majority equity, whether a business is jointly ownership by Indigenous and non-Indigenous people (i.e., 50% equity), the number of indigenous and other worker, turnover and a rudimentary indicator of the industrial activity undertaken in the enterprise (in an ICN service called 'Black Business Finder'). By late 2013, ICN has collected up-to-date information on over 17,000 businesses in Queensland, with the majority of these providing valid information on the main variables used in the analysis. Most importantly, 183 indigenous businesses are included with around one third of which are partnerships where Indigenous people hold half the equity in the company. The ICN data provides a unique opportunity to analyse how Indigenous business differ from non-Indigenous businesses and explore potential heterogeneity in two main categories of Indigenous businesses.

The findings reveal that both definitions of Indigenous business have substantially better outcomes for Indigenous employment relative to those for non-Indigenous business. Accordingly, both policy makers and statistical collections need to carefully consider the definitions of Indigenous business used. The paper also documents that indigenous employment is concentrated in larger businesses in particular industry sectors. Non-Indigenous micro-businesses employ very few Indigenous workers and future research should explore why this is the case?

It is beyond the scope of the current research to resolve such issues, it is reasonable to speculate that there are at least three hypotheses to explain the observations in this paper. First, there may be fixed cost of hiring culturally diverse workers which works against smaller businesses employing Indigenous workers? Second, micro businesses have specific skill requirements that most Indigenous workers do not have-for example, small businesses need a flexible workforce with multiple skills to deal with challenges that may be meet by specialised professional staff in a larger organisation? Third, discrimination may be a more important problem in a small business as friction between staff, customers and staff and between management and staff are more likely to undermine the operation of the business. These are rather intractable issues, however in order to provide some insight researchers need to analyse data that links information on businesses and employees. The final section reflects on how the data provided by the ICN Gateway, or similar organisations, might provide a sampling frame to collect data on a representative sample of Indigenous and other businesses and their respective employees. 

Boyd Hunter is a Senior Fellow at the Centre for Aboriginal Economic Policy Research.