International Perspectives on Temporary Work and Workers (Routledge Studies in the Modern World Economy)

International Perspectives on Temporary Agency Work

The rise of temporary work has been staggering in developed countries across the globe. The lower costs of employing temporary workers are clear to see, but what is the impact of this phenomenon on economies, and what is its impact on workers themselves? These questions, among many others, are examined thoroughly for the first time in this book. The contributors to this volume consider the nature of temporary work, the status of the temporary worker and the multinational development of the temporary work sector from differing perspectives. With an international group of expert contributors, and under the crack editorship of John Burgess and Julia Connell, this book has achieved an impressive feat – it is readable, breaks new ground and has implications for professionals across the world as well as being of clear interest to economists and business students. John Burgess is an Associate Professor at the University of Newcastle, New South Wales, Australia. Julia Connell is an Associate Professor in the Graduate School of Business at the University of Newcastle, New South Wales, Australia.

Routledge studies in the modern world economy

1 Interest Rates and Budget Deficits A study of the advanced economies Kanhaya L. Gupta and Bakhtiar Moazzami 2 World Trade after the Uruguay Round Prospects and policy options for the twenty-first century Edited by Harald Sander and András Inotai 3 The Flow Analysis of Labour Markets Edited by Ronald Schettkat 4 Inflation and Unemployment Contributions to a new macroeconomic approach Edited by Alvaro Cencini and Mauro Baranzini 5 Macroeconomic Dimensions of Public Finance Essays in honour of Vito Tanzi Edited by Mario I. Blejer and Teresa M. Ter-Minassian 6 Fiscal Policy and Economic Reforms Essays in honour of Vito Tanzi Edited by Mario I. Blejer and Teresa M. Ter-Minassian 7 Competition Policy in the Global Economy Modalities for co-operation Edited by Leonard Waverman, William S. Comanor and Akira Goto 8 Working in the Macro Economy A study of the US labor market Martin F. J. Prachowny 9 How Does Privatization Work? Edited by Anthony Bennett 10 The Economics and Politics of International Trade Freedom and trade: volume II Edited by Gary Cook 11 The Legal and Moral Aspects of International Trade Freedom and trade: volume III Edited by Asif Qureshi, Hillel Steiner and Geraint Parry

12 Capital Markets and Corporate Governance in Japan, Germany and the United States Organizational response to market inefficiencies Helmut M. Dietl 13 Competition and Trade Policies Coherence or conflict Edited by Einar Hope 14 Rice The primary commodity A. J. H. Latham 15 Trade, Theory and Econometrics Essays in honour of John S. Chipman Edited by James C. Moore, Raymond Riezman and James R. Melvin 16 Who Benefits from Privatisation? Edited by Moazzem Hossain and Justin Malbon 17 Towards a Fair Global Labour Market Avoiding the new slave trade Ozay Mehmet, Errol Mendes and Robert Sinding 18 Models of Futures Markets Edited by Barry Goss 19 Venture Capital Investment An agency analysis of UK practice Gavin C. Reid 20 Macroeconomic Forecasting A sociological appraisal Robert Evans 21 Multimedia and Regional Economic Restructuring Edited by Hans-Joachim Braczyk, Gerhard Fuchs and Hans-Georg Wolf 22 The New Industrial Geography Regions, regulation and institutions Edited by Trevor J. Barnes and Meric S. Gertler 23 The Employment Impact of Innovation Evidence and policy Edited by Marco Vivarelli and Mario Pianta 24 International Health Care Reform A legal, economic and political analysis Colleen Flood 25 Competition Policy Analysis Edited by Einar Hope 26 Culture and Enterprise The development, representation and morality of business Don Lavoie and Emily Chamlee-Wright

27 Global Financial Crises and Reforms Cases and caveats B. N. Ghosh 28 Geography of Production and Economic Integration Miroslav N. Jovanovi´c 29 Technology, Trade and Growth in OECD Countries Does specialisation matter? Valentina Meliciani 30 Post-Industrial Labour Markets Profiles of North America and Scandinavia Edited by Thomas P. Boje and Bengt Furaker 31 Capital Flows without Crisis Reconciling capital mobility and economic stability Edited by Dipak Dasgupta, Marc Uzan and Dominic Wilson 32 International Trade and National Welfare Murray C. Kemp 33 Global Trading Systems at Crossroads A post-Seattle perspective Dilip K. Das 34 The Economics and Management of Technological Diversification Edited by John Cantwell, Alfonso Gambardella and Ove Granstrand 35 Before and Beyond EMU Historical lessons and future prospects Edited by Patrick Crowley 36 Fiscal Decentralization Ehtisham Ahmad and Vito Tanzi 37 Regionalisation of Globalised Innovation Locations for advanced industrial development and disparities in participation Edited by Ulrich Hilpert 38 Gold and the Modern World Economy Edited by MoonJoong Tcha 39 Global Economic Institutions Willem Molle 40 Global Governance and Financial Crises Edited by Meghnad Desai and Yahia Said 41 Linking Local and Global Economies The ties that bind Edited by Carlo Pietrobelli and Arni Sverrisson 42 Tax Systems and Tax Reforms in Europe Edited by Luigi Bernardi and Paola Profeta

43 Trade Liberalization and APEC Edited by Jiro Okamoto 44 Fiscal Deficit in the Pacific Region Edited by Akira Kohsaka 45 Financial Globalization and the Emerging Market Economies Dilip K. Das 46 International Labor Mobility Unemployment and increasing returns to scale Bharati Basu 47 Good Governance in the Era of Global Neoliberalism Conflict and depolitization in Latin America, Eastern Europe, Asia and Africa Edited by Jolle Demmers, Alex E. Fernández Jilberto and Barbara Hogenboom 48 The International Trade System Alice Landau 49 International Perspectives on Temporary Agency Work Edited by John Burgess and Julia Connell

International Perspectives on Temporary Agency Work

Edited by John Burgess and Julia Connell

First published 2004 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004. © 2004 editorial matter and selection, John Burgess and Julia Connell; individual chapters, their contributors All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-57908-9 Master e-book ISBN

ISBN 0-203-33718-2 (Adobe eReader Format) ISBN 0-415-31694-4 (Print Edition)

Contents

List of figures List of tables Notes on contributors Foreword Acknowledgements List of abbreviations 1 International aspects of temporary agency employment: an overview

xi xii xiii xvi xix xx

1

JOHN BURGESS AND JULIA CONNELL

2 Cycles of contingency: the temporary staffing industry and labour market adjustment in the U.S.

24

JAMIE PECK AND NIK THEODORE

3 Temporary agency work in the EU: an overview

37

ALEX DE RUYTER

4 Temporary agency labour in the UK

54

CELIA STANWORTH AND JANET DRUKER

5 New employment patterns: agencies and agency workers in the Netherlands and Denmark

72

ERLING RASMUSSEN, JELLE VISSER AND JENS LIND

6 Temporary employment: the situation in Canada

91

GORDON BRIAN COOKE AND ISIK URLA ZEYTINOGLU

7 Agency temporary work and government policy in contemporary Japan KAZUMICHI GOKA AND ASUKA SATO

112

x

Contents

8 Temporary agency work in Australia (Part I)

129

IAIN CAMPBELL, IAN WATSON AND JOHN BUCHANAN

9 Temporary agency work in Australia (Part II): motivation, dynamics and prospects

145

RICHARD HALL

10 Agencies, agency workers and atypical employment in New Zealand

164

ERLING RASMUSSEN, JENS LIND AND JELLE VISSER

Index

179

Figures

2.1 7.1 7.2 10.1

TSI employment change (annualised) and the business cycle, 1970–2001 Trend of numbers of dispatched workers Annual earnings of regular/irregular employees Atypical employment in New Zealand 1987–2002

33 118 120 167

Tables

1.1 1.2 1.3 2.1 3.1 3.2 3.3 3.4 5.1 5.2 5.3 5.4 6.1 6.2 6.3 6.4 6.5 6.6 7.1 7.2 7.3 7.4 8.1 9.1 10.1 10.2

The main features of the standard employment model compared with characteristics of temporary employment Temporary work and workers: characteristics across selected countries Temporary agency employment regulation in 2001 Modes of growth and changing TSI-labour market relations, 1970s–90s Temporary agency work in the EU, 1999 Characteristics of agency work and workers in the EU, 1999 Reasons for the use of TWA workers in the EU Regulation of TWAs Part-time, flexible and temporary agency work in selected countries Employment by sector and type of contract in 1997 Number of temping agencies, Denmark Unemployment benefit compensation rates Temporary help agencies: advantages and disadvantages Temporary employees in Canada Temporary employees in Canada: proportion of temporary workers by type – regional differences Temporary employees in Canada: seasonal vs. non-seasonal regional differences Selected Canadian workers by organisational category Temporary work: issues relevant to Canada Employees by form of employment Classification of employment patterns Distribution of dispatched workers by gender Types of work performed by dispatched workers Distribution of employees among different types of employment, November 2001 Employer assessments of the advantages of outsourcing Agency workers: evaluations of temporary work Attitudes among entrepreneurial workers

4 9 13 30 39 40 45 47 75 78 80 83 95 97 98 99 101 107 113 114 119 120 135 152 172 173

Contributors

John Buchanan is Deputy Director (Research), Australian Centre for Industrial Relations Research and Training (ACIRRT), University of Sydney. His major research interests are the demise of the classical wage earner model of employment, management determinants of labour productivity and the role of the state in nurturing new forms of multi-employer coordination in the labour market. John Burgess is an Associate Professor in the Newcastle Business School, University of Newcastle, Australia. He is also Assistant Dean (Research) and Director of the Employment Studies Centre, Faculty of Business and Law. He has held visiting appointments at the University of Warwick, University of Cardiff and University of Galway. Research interests include contingent employment arrangements, gender and work, and labour market policy. Iain Campbell is currently employed as a Senior Research Fellow at the Centre for Applied Social Research (CASR), RMIT University. His research interests include labour restructuring, changing working-time patterns, casual and temporary employment, labour regulation and work-life balance. Julia Connell is an Associate Professor at the Newcastle Graduate School of Business, Australia. She is also Deputy Director of the Employment Studies Centre and Assistant Dean, International at the University. Other than contingent employment arrangements research areas include studies investigating organizational and individual effectiveness – organizational culture, organizational change, management style, learning and skill development within various workplace settings and situations. Gordon Cooke is a PhD candidate in the Human Resources and Management Program at the MGD School of Business, McMaster University, Hamilton, Canada. His primary research interest is in the relationships between non-standard work arrangements and worker and organizational outcomes.

xiv Contributors Alex de Ruyter is a lecturer in economics and industrial relations in the Birmingham Business School, at the University of Birmingham, UK. His research interests include non-standard employment, health sector restructuring and European Union macroeconomic policy. Janet Druker is Professor of Human Resource Management and Head of the Business School at the University of East London, London, UK. Her research interests include HRM in the construction industry, reward management and employment relations in non-standard work. Kazumichi Goka is Professor of Social Policy in the Faculty of Economics at Kanazawa University, Japan. He is the author of the book Koyo no Danryokuka to Rodosha Haken, Shokugyo Shokai Jigyo (Japanese) [Employment Flexibility and Private Employment Business]. Richard Hall is Senior Research Fellow and Deputy Director at ACIRRT (the Australian Centre for Industrial Relations Research and Training) at the University of Sydney. He has published widely in the fields of labour relations, human resource management and labour market analysis. In addition to temporary agency work his research interests include knowledge management, the effects of technology at work, the future of work, skills and training, work organization and the labour process. Jens Lind is an Associate Professor at the Department of Social Studies and Organisation, University of Aalborg, Denmark. He has written on unemployment, trade unions, labour market policy, flexibility and collective bargaining (see: http://www.socsci.auc.dk/~jlind). He is on the editorial board of Transfer. Jamie Peck is Professor of Geography and Sociology at the University of Wisconsin-Madison. He is author of Work-Place: The Social Regulation of Labor Markets (Guilford, 1996), Workfare States (Guilford, 2001) and numerous articles in the area of labour-market restructuring and policy, welfare reform, urban political economy and theories of regulation. Erling Rasmussen is a Senior Lecturer in the Department of Management and Employment Relations, The University of Auckland, New Zealand. He has written on comparative employment relations in New Zealand. He is also a former policy advisor to the New Zealand government. Recent publications can be found on: www.employment.org.nz; http://staff.business.auckland.ac.nz/erasmussen. Asuka Sato is a PhD candidate in the Graduate School of Socio-Environmental Studies at Kanazawa University, Japan. Her research interests include a comparative study on non-standard employment between Japan and the US.

Contributors xv Celia Stanworth is a Reader in Work Futures at the University of Greenwich Business School, London, UK. Her particular research interests are technology and work and the non-standard workforce. Nik Theodore is Assistant Professor of Urban Planning and Policy and Director of the Center for Urban Economic Development at the University of Illinois, Chicago. His research focuses on labour market restructuring, urban inequality, contingent work and employment policy. Jelle Visser is a Professor of Empirical Sociology and holds the Chair of Sociology of Labour and Organization at the University of Amsterdam, where he directs the Amsterdam Institute for Advanced Labour Studies (AIAS). He has held teaching positions at a number of universities and he has worked as consultant for many international organizations. Ian Watson is currently a Senior Research Fellow at the Australian Centre for Industrial Relations Research and Training (ACIRRT) at the University of Sydney. Ian’s current research interests are in the areas of labour market restructuring, wage inequality and unemployment. He was one of the authors of Australia at Work: Just Managing (1999) and Fragmented Futures: New Challenges in Working Life (2003). Isik Urla Zeytinoglu is Professor of Management and Industrial Relations at the MGD School of Business, McMaster University, Hamilton, Canada. Her PhD is from the Wharton School, University of Pennsylvania, USA. She is an author and co-author of books and articles on the topics of non-standard employment issues and women, work and occupational health.

Foreword

‘Labour flexibility’ has become a catch-cry for employers and governments around the world in recent years. One means by which this is achieved is the hiring of temporary workers through employment agencies which specialize in providing this service. This timely collection of research essays examines the growth of temporary agency employment in seven OECD countries, as part of a broader trend towards non-standard employment arrangements. While the countries selected for analysis share some common features, they vary in terms of the extent and nature of temporary employment arrangements, the degree of labour regulation, the types of industrial structures and systems of national governance. Nevertheless, in all countries, the proportion of the workforce engaged in temporary agency employment is growing; the workers are less protected, are paid lower wages, receive less training and have fewer legal rights than permanent workers doing similar jobs. The development of temporary agency employment has implications for the future nature of work, the integrity of national income tax and social security systems and the roles of trade unions in providing representation and collective bargaining for such workers. The growth of temporary agency employment over the past decade or so has occurred within the context of a more general shift, in most OECD countries, from full-time, ongoing employment for five days each week to more insecure employment arrangements which involve uncertain and irregular hours without security of tenure. Nevertheless, it takes various forms in different regions of the world. In Europe, there has been steady growth albeit from a small base. There was a four-fold increase during the 1990s in Denmark, Spain, Italy and Sweden. In Germany, and the Netherlands, the rise in temporary agency employment has been linked to government-funded job initiatives for the long-term unemployed. A different pattern has been observed in the United States where the temporary help industry has grown in a sporadic but, at times, spectacular fashion – with a 53 per cent increase predicted by the year 2006. The kinds of work covered by temporary agency employment vary considerably between countries and over time. In the past, it was strongly

Foreword xvii related to seasonal labour markets, such as agriculture and hospitality, or areas in which there was uneven demand, such as building and construction. But there has been recent growth in the public sector and professional areas, such as teaching, nursing and IT services. It is estimated that the largest growing segments in the future will be in technical and professional occupations. It has been observed that the frontiers of temporary agency employment have expanded as more services have been developed and the process of ‘intermediation’ between the worker and employer has become more complex over time. Another phenomenon which is noted in this book is the rise of international temporary employment agencies. Some of the most prominent agencies, such as Manpower, Randstand and Adecco, offer services around the world and are part of the growth and influence of multinational enterprises. Yet there is also considerable diversity. At one extreme is the large multinational temporary work agency, such as Adecco, which provides a comprehensive range of services from traditional HR functions to job search and placement facilities. At the other end of the spectrum are small local firms which offer cheap labour ‘at call’ to perform basic functions. The complexity of employment arrangements within firms, created by contracting in/contracting out/sub-contracting activities creates ambiguous employment relationships between the employer and the employing organization. Not surprisingly, temporary workers are often confused about their actual employer. This also creates legal problems in regard to the employment relationship. The phenomenon of temporary agency employment and its expansion raised numerous questions for future research, which are canvassed in this book. These include their future growth, their relationship with national systems of employment regulation, the limits of the use of agency workers, the representation of agency workers by unions and professional associations and the quality of work offered by temporary employment agencies. There are also broader social issues raised by these developments. Professor Tom Kochan at MIT has argued that a new ‘social contract’ at work is required which will set out ‘the mutual expectations and obligations that employers, employees and society at large has for employment relationships’. He argues that a new set of norms are required that ‘holds us all accountable for adding value at work and providing work that is a productive, meaningful life experience’. Yet it is difficult to see how this can be achieved in a world where the mutual obligations which may once have existed between the employer and employee are increasingly ambiguous or non-existent. What is required is a re-conceptualization of the rights and obligations of both workers and employers in a world of work, where employers and governments are seeking to individualize the employment relationship and reduce the protections previously afforded to workers under labour law and collective agreements. Just as corporate collapses have led to a reconsideration of the adequacy of corporate governance,

xviii Foreword the loss of job security and dilution of workers’ rights should generate pressure on governments to re-examine how temporary agency employment is regulated. As the editors of this volume correctly point out, the future challenge is to balance economic efficiency and competition with equity in employment. Professor Russell Lansbury University of Sydney

Acknowledgements

We thank the University of Newcastle Research Grants Committee for supporting a conference on temporary agency employment held at Newcastle in February 2002 and for supporting our research on temporary agency employment. We thank the conference participants (many of whom became contributing authors) for their ideas, support and enthusiasm. In organizing the book we relied heavily on the editorial assistance of Kate Flint and Jana Lindstrom-Dube. Thanks also to Terry Clague and Robert Langham at Routledge for their ongoing support and encouragement. Finally, the support of Tessa, Peter, Alex, Laura and Jonathan was crucial in finishing this project.

Abbreviations

ABS ACIRRT ACSESS ACTU AIG AMWU AWIRS CBI CBS CIETT CPRN DA DIR DH&S DTI EBA EES EIRR ELFS EPL EU FCU FIET FSU FVD HR ICT IES ILO IMF

Australian Bureau of Statistics Australian Centre for Industrial Relations Research and Training Association of Canadian Search, Employment and Staffing Services Australian Council of Trade Unions Australian Industry Group Australian Manufacturing Workers Union Australian Workplace Industrial Relations Survey Confederation of British Industry Centraal Bureau Voor de Statistik (Statistics the Netherlands) International Confederation of Temporary Work Businesses Canadian Policy Research Networks Association of Danish Employers Department of Industrial Relations Danish Commerce and Services Association Department of Trade and Industry Enterprise Bargaining Agreement European Employment Strategy European Industrial Relations Review European Labour Force Survey Employment Protection Laws European Union Federated Clerks Union of Australia Federation of Commercial, Clerical, Professional and Technical Employees Finance Sector Union Association of Temping Agencies in Denmark Human Resource Information and Communication Technology Institute for Employment Studies International Labour Office International Monetary Fund

Abbreviations xxi IRS LFS NACAB OECD OH&S REC RCSA TSI TUC TWA WERS

Industrial Relations Services Labour Force Survey National Association Citizens Advice Bureau Organisation of Economic Cooperation and Development Occupational Health and Safety Recruitment and Employment Confederation Recruitment and Consulting Services Association Temporary Staffing Industry Trades Union Congress Temporary Work Agency Workplace Employee Relations Survey

1

International aspects of temporary agency employment An overview John Burgess and Julia Connell

Introduction and aims The aim of this book is to examine temporary agency employment within an international setting. The various chapters examine the importance and growth of the temporary agency sector, the factors contributing to that growth, the characteristics of temporary agency workers, the jobs they perform, the conditions associated with temporary agency work and its regulation across seven countries. Temporary agency employment is placed within the context of a shift towards non-standard employment arrangements with consideration of the conceptual and measurement issues that are important when considering cross-country studies. The eight countries included in this book are the UK, the Netherlands, Denmark, the USA, Canada, Japan, Australia, New Zealand and the European Union [EU] (in general). In a broader context temporary agency work is also considered in terms of its implications for the nature of work, including remuneration and security, as a means for improving the job matching processes of the labour market and in relation to national taxation and social security systems. Why were those particular countries selected for analysis? First, they represent a broad geographic spread of Organisation for Economic Cooperation and Development (OECD) economies. As such, encompass different industrial structures, different phases of the business cycle and different systems of national governance. Second, those countries exhibit different degrees of labour regulation, from the relatively extensive regulations in Denmark and Japan to the loosely regulated arrangements in the USA, the UK, New Zealand and Australia. Third, these countries provide variation in terms of the extent and nature of temporary employment arrangements. For example, a relatively high incidence of casual employment exists in Australia and a relatively high incidence of temporary agency employment in the Netherlands, while there is a low incidence of temporary agency employment in Canada and New Zealand. So can anything be learnt from cross-country comparisons of the temporary agency sector? Institutions, regulations, the macroeconomic

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John Burgess and Julia Connell

context, patterns of labour demand, the skill composition of the workforce, workforce demographics and the geography of work differ across the countries covered in this volume. However, there are some emerging developments that are worth noting from the start. Specifically, it appears that temporary agency employment is growing, albeit from a low base. It also emerges that temporary agency employment falls disproportionately on certain demographic groups in the workforce, is subject to fewer protections and labour regulations and is less organised than other forms of employment. Temp agency workers also receive less pay than the equivalent permanent workers and less employer funded training. By its very nature, temp agency employment arrangements have the potential to render the employment relationship ambiguous and with it the assignment of employment rights and responsibilities. The growth in temporary agency employment poses obvious challenges for trade unions, and ironically, it is not without its problems for the management of user organisations. It also appears that there are societal implications that emerge from the expansion of such employment arrangements. These range from the integrity of the income taxation system through to the self-funding of retirement incomes. This chapter provides an overview and summary of the discussion within the remainder of the book. Discussion focused on the idiosyncratic nature of the temporary agency industry and the reasons for its apparent growth across the selected countries. The structure of the book is outlined together with a brief review of each of the following chapters. Consideration then turns to areas for further research and analysis before the presentation of the conclusions.

Temporary agency work: the context Over the past two decades employment arrangements have shifted from full-time ongoing employment with set working hours over five days a week, towards arrangements that are less than full-time, are not ongoing and/or involve irregular and unsociable hours. Hence, a significant labour market issue in all developed countries is the growth of non-standard forms of labour. Rasel and Appelbaum (1998, p. 31) consider that nonstandard work ‘is the absence of a regular, full-time, employer–employee relationship’ and includes independent contractors, contract workers, parttime workers, the self-employed, ‘on call’ workers, temps and day labourers. The international growth in non-standard and contingent employment arrangements has previously been catalogued (Rodgers and Rodgers 1989; Standing 1999; Felstead and Jewson 1999; Zeytinoglu 1999). The standard employment model has evolved through collective action, political action and the perceived need for the provision of regular, ongoing and regulated employment arrangements within the community. This model underpins the construction of many national tax and welfare

International aspects 3 systems and is also embodied in underlying systems of family organisation and social reproduction – hence its strong association with the male breadwinner model of work and family (Baird and Burgess 2003). The male breadwinner model has been undermined through the growing involvement of women in the workforce, changes in the demographic structures of families and through legislation that recognises the rights to access work for women. At the same time the standard employment model has been breaking down through the growth in part-time and temporary work, through the growth in ambiguous forms of employment arrangements, through organisations subcontracting and outsourcing labour, and as work has become more geographically mobile and online. As a consequence, non-standard employment arrangements are gradually becoming the norm in many countries. This has been supported in many cases by a policy belief that reduced regulations over employment are required to improve the functioning of the labour market, reduce unemployment and improve national competitiveness (OECD 1994). Table 1.1 highlights the main characteristics of the standard employment model in comparison with those of temporary employment. As highlighted in Table 1.1, temporary work represents a considerable departure from the standard employment model in many respects. The work is irregular and unpredictable. It may involve multiple employers, multiple engagements and multiple workplaces. It is difficult to collectivise and in many cases the assignment of responsibilities attached to employment is difficult to ascertain. In some instances temporary employment overlaps with clandestine activity associated with the evasion of taxation and social security laws, immigration and labour regulation laws. In the past, temporary agency employment has been related to seasonal production arrangements (e.g. agriculture, hospitality), uneven production arrangements (such as stevedoring), situations of excess labour supply and considerable employer discretion over employment (e.g. day labour in building and construction) and situations of labour shortage and very specialist labour skills (e.g. teaching, nursing, IT services). It appears that such employment arrangements are slowly spreading across all sectors, including the public sector, and across all occupations. In part, it seems to be driven by employers needs to reduce labour costs and avoid labour regulations and obligations associated with being a direct employer. Other drivers include the desire to improve matching of labour supply and demand and the requirement of insourcing specialist skills. Moreover, the increase in temporary working is supported by; an ongoing excess of labour supply in many countries (as in Japan over the past decade, see Chapter 7), those who have a preference for short-term and irregular employment arrangements (such as students and tourists) and by those who can sell specialist skills in an auction market to the highest bidder. In concert with the requirements of temp workers (generally referred to as temps from now on), and the firms that employ them an international

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Table 1.1 The main features of the standard employment model compared with characteristics of temporary employment Components of work

Standard employment model

Temporary employment model

Duration of work

Full-time work – sufficient Generally limited, short term, work to generate a minimum unpredictable. Ranges from at income call workers to fixed term contracts.

Labour force status

Employee status – attaching rights and obligations to each party through an explicit or implied employment contract

Full and part-time workers. Includes employees and ownaccount workers, employed and unemployed – special programs for training and workfare.

Entitlements

Expectation of ongoing and predictable employment – in turn attached to rights associated with termination, holidays, sick leave and other statutory benefits

Reduced entitlements due to limited duration of employment, often insufficient to meet qualifying conditions for entitlement access.

Location of work

Assigned and regulated workplace that offers appropriate and safe working conditions

Not confined to one location – may have multiple locations – will change with each engagement.

Regulation

Formal agreement covers work, working conditions and remuneration. Employer satisfies legal obligations re taxation, social security, OH&S

Differs across countries. Associated with reduced regulation and limited regulation.

Representation

The right to collective organisation and voice; the right to withdraw labour

Lower rates of unionisation. Difficulties associated with recruitment, protection and organisation.

Engagement

Single engagement with one employer

May have simultaneous or multiple engagements. Tend to have multiple engagements over the year.

industry has emerged that provides a range of job placement, job search, job matching, training and HR services across all sectors. On the high streets of many countries the same temp agencies appear with regularity – Kelly, Manpower, Randstad and Adecco. These agencies offer employers the opportunities to outsource many of their traditional HR functions and offer job seekers job search and placement facilities. In some countries the temp agency sector has been supported by governments through their out-

International aspects 5 sourcing of public employment programs, the privatisation of utilities and the outsourcing of many administrative functions (see the Netherlands, chapter 5). As outlined in many of the chapters in this book – employment arrangements have become more fragmented and complex as organisations attempt to reduce labour costs, improve inter-temporal labour use patterns and limit the overheads associated with employment through ‘flexible’ employment arrangements.

Flexibility, more flexibility and temporary agency employment Flexibility has been hailed as the panacea for achieving greater organisational competitiveness, efficiency and effectiveness (Connell and Burgess 2002; Michie and Sheehan 2001) as increasing numbers of employers search for a workforce that can respond quickly and easily to change. Temporary working is also said to provide flexibility for the temporary worker who is said to comprise ‘a new race of “permanent temporary employees” seeking greater balance between work and home’ (Laabs 1998). Although, as McClure (1996) argues, it is not as if temps have suddenly decided that they want more flexibility in their lives but this has, in fact, come about as a result of downsizing trends and of the temp agencies’ aggressive marketing of temporary work to employers. Watson et al. (2003) argue in a similar vein that the growth of temporary employment has not emerged due to increased turbulence in the labour market, or due to employee preferences, but as a result of employers seeking greater flexibility in hiring and deploying labour. McClure (1996) upholds that just as the exchange floor provides a fluid, efficient forum for clearing the market for stocks, gold and pork bellies, the temp industry is becoming a clearing house for the buying and selling of labour skills to provide workers ‘at call’ usually for short-term placements. Behind the discussion of temporary employment, including agency employment, is the concept of labour flexibility (Standing 1999). One of the attractions or advantages of temporary employment for organisations is its potential labour flexibility attributes. These include: numeric flexibility – the ability to be able to adjust labour supply in the short term; functional flexibility – the ability to be able to adjust the supply of skills in the short term; intertemporal flexibility – related to both the above, the ability to match labour supply with demand in the short term even though demand may fluctuate over the day, the week and the season; labour cost flexibility – the ability to adjust labour costs in the short term; labour regulatory flexibility – the ability to utilise employment arrangements that reduce the scope and application of labour regulations, and/or reduce trade union representation at the workplace.

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The implications of utilising temporary workers over the long term are not known in terms of organisational effectiveness, although Michie and Sheehan-Quinn (2001) cite their own and a number of other studies that examined firms’ innovation activities, growth and employment and found that the use of certain types of flexible work practices had negative effects on measures of firm performance. As a result, they argue that improved productivity and competitiveness is based on quality and high value added, requiring investment in people, rather than the contrary. Not surprisingly, organisations are reluctant to invest in the skill development of workers taken on for short-term engagements – indeed, such workers, including temps, are expected to come fully trained (Connell and Burgess 2001). Nonetheless, as previously stated, much of the organisational strategy for employing temporary workers appears to be aimed at cost cutting and achieving greater flexibility. The consequences for the earnings and career development of temporary workers is that they tend to be limited – although contracting organisations may occasionally recruit temporaries to fill the shrinking pool of permanent positions. Earnings also depend on each individual’s skill levels and/or ability and motivation to gain more skills at their own expense and in their own time.

Measurement, international comparisons and incidence of temporary employment In 2002 approximately 12 per cent of workers in the OECD were considered to be temporary workers (OECD 2002). While being a temporary worker means different things in different countries, the binding condition of temporary employment is its short duration and hence its insecurity. The measurement of temporary employment across countries can be complex and confusing for several reasons. First, there may be no common terminology as to what exactly constitutes temporary work. Second, there may be no available data on temporary work since it may be subsumed into some other employment classification such as part-time work. Third, temporary work captures many diverse employment arrangements that may not be satisfactorily captured by national workforce frameworks and measurement procedures (Campbell and Burgess 2001). Where estimates for temporary employment are available there are further complications that need to be considered. First, whether the data refers to all workers. An employee count is likely to lead to an understatement of temporary work since contracting, subcontracting and agency work are often associated with ambiguity within employment arrangements and confusion over the identification of the employer and employee. Second, whether the count covers all jobs or only primary jobs. If primary jobs only are counted then additional jobs, many of them temporary, will be excluded and again the count of temporary jobs will be understated. In the case of agency employment, workers may have multiple registrations across agencies and

International aspects 7 be holding several assignments at any one time (Connell and Burgess 2002). Third, if a spot count of temporary jobs is undertaken, this understates the extent of turnover in that category. Comparing year on year figures omits the significant turnover of temporary jobs and the considerable flow between them, as highlighted by the OECD (2002, p. 136). The short duration of temporary jobs means that over a year there is a high turnover of such jobs. In general, the turnover of assignments and workers within the temporary sector is high, and at any one time the total number of jobs hides the dynamics of an industry that is built on many short-term assignments, some of which are measured in terms of hours and days. In comparison with standard employment arrangements it would be expected that over any one year the number of temporary jobs would match, if not surpass, the number of standard jobs in many countries. By its nature, temporary employment is associated with churning of the labour market, often in selected industries and occupations, especially those that have seasonal production arrangements, uneven demand patterns over the day or week, with specialist skills that are required occasionally and to fill in for expected and unexpected labour absences. The OECD (2002) report suggested that there was a growing share of temporary employment in Belgium, Italy, Canada, Germany, Portugal, Sweden, Finland, France, Japan and the Netherlands while some countries demonstrated a declining share of temporary employment – the USA, Greece and Luxembourg. The overall OECD trend was of a growing temporary employment share from 10 to 12 per cent of total employment over the 1990s. There is, however, a vast range in the temporary employment share, ranging from 3 per cent in Luxembourg to 33 per cent in Spain. Furthermore, the composition of temporary employment is uneven across countries. For example, in Korea and Mexico seasonal employment is the predominant temporary employment type, and in France and Canada it is fixed-term contracts that are most common. Overall, the official concepts are imprecise and not uniformly applied across countries. Any data must be viewed with some skepticism with respect to its accuracy and comparability through time and across countries. Notwithstanding the conceptual and measurement problems there still appears to be more temporary jobs and temporary workers across the OECD while the activity and visibility of temp agencies is also increasing.

The characteristics of temporary workers and temporary jobs Temporary jobs are present in all occupations and in all industries, although the composition and characteristics of temporary workers differ greatly across countries, occupations and industries. Temporary jobs are no longer segregated into seasonal industries – such as agriculture and

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hospitality – or into those occupations such as clerical work where temps were required as fill in to cover for workers who were on holiday or sick leave. Indeed, temporary work has become characteristic of many professions (teaching, nursing, medicine) making its way into the public sector via subcontracting arrangements or through the contracting out of services across all tiers of government (Conley 2002; Fairbrother et al. 2002). The majority of temporary workers tend to be young, unskilled and female (OECD 2002) in keeping with the flexible employment arrangements associated with caring responsibilities or attachment to secondary and tertiary education. Some sectors such as agriculture, hospitality and construction require a pool of unskilled and semi-skilled labour to meet the seasonal demand for labour. It is not surprising, therefore, that temporary workers have a high representation in small businesses that do not have an articulated internal labour market and are dependent upon shortterm external access to skills that are not available within the business (OECD 2002). The very nature of temporary work generally means that such employment is usually less protected or less collectivised, as compared to permanent employment, and also has fewer non-wage benefits attached to the job. The OECD (2002) also established that temporary jobs pay less than those comparable with permanent employment arrangements. One other important feature of temporary jobs is that they may be constructed and financed as part of a government program to shift people from unemployment and other forms of welfare support into paid work. In this case temporary jobs may be used to offer work experience and on the job training for those who would otherwise have difficulties in accessing vacancies. This feature of temporary work is especially important in the Netherlands (see Chapter 5 in this volume). Table 1.2 compares characteristics of temporary work and workers across selected countries.

Temporary agency employment: ambiguous, growing and global The nature of the employment relationship is being reconstructed through temping as employers and temporary workers become agency customers and the agencies become intermediaries in a triangular market relationship. The agencies intervene as intermediaries offering placement for workers and filling orders for labour from client organisations. Fround, Johat and Williams (2001) explain that the frontiers of the temp industry have expanded as more services have been developed and as the process of intermediation becomes more complex and refined over time. Specialisation in the temporary agency industry has developed in terms of occupations and industries serviced, forms of employment services provided, and the workers employed. The US Bureau of Labor Statistics estimates that there were more than 2.9 million people employed as temps in 1998

International aspects 9 Table 1.2 Temporary work and workers: characteristics across selected countries Characteristics of temporary work and workers

Across selected countries

Gender

Females 12.2%; males 10.5%. Very high female incidence in Belgium, Finland, Japan, the Netherlands, Portugal, Spain. High male incidence in Mexico and Turkey.

Wages

Temps receive lower pay than permanent employees after controlling for supply and demand characteristics. For EU estimated to be about 15%.

Fringe benefits

Temps are more likely to be excluded from benefits in those countries where there is no legislated guarantee access to benefits – e.g. the USA, Australia, Canada.

Age

Young workers 25%. High incidence of young workers (15–24 years) – very high for Austria, Germany, Mexico, the Netherlands, Spain, Sweden.

Job tenure

Across the OECD 57% of temps have a job tenure of less than 12 months, 11% of temps have a tenure of more than 5 years. For permanent workers 13% of workers have tenure of less than 12 months and 59% have a tenure of more than 5 years.

Educational attainment

Related to low attainment. 16% for low educational attainment workers.

Training

Temporary workers receive less employer-provided training than permanent workers across the EU.

Industry

22% in agriculture.

Occupation

15.3% of unskilled workers. 7.7% of white collar workers.

Establishment size

There is an inverse relationship with14.4% of workers in small establishments (less than 20 employees).

Source: derived from OECD 2002.

with a 53 per cent increase projected by the year 2006 with the largest growing segment being in the technical and professional sectors (Davidson 1999). Nevertheless, while temporary agencies continue to pursue growth strategies, often based on small margins, there is a limit to sustainability in an industry with few barriers to entry and relatively undifferentiated services (Fround et al. 2001). All temporary agencies, for example, provide a spot market for labour on tap. Although temping, flexi-staffing and labour hire are different terms they can all be applied to employment arrangements mediated through an agency that supplies workers to contracting

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organisations. Such arrangements are not new. What does appear to be new, however, is that employment brokerage is extending beyond traditional occupations and sectors of employment and that brokerage is only one of several services offered by temporary employment agencies. Concurrently, a growing and internationalised temporary agency industry has evolved over the past two decades to provide employers, large and small, public and private, with temporary labour and ancillary employment services. Consequently, more complex inter and intra firm relationships have facilitated both complex and ambiguous employment arrangements (Rubery et al. 2000). The complexity of business and employment arrangements is increasing through contracting in, contracting out and subcontracting measures and through the vertical disintegration of larger organisations. What are the characteristics of the temp industry? As with temporary employment itself, the temporary agency industry is characterised by its diversity, rather than its homogeneity. The diversity applies to the size and scale of operations, its ownership and motivation, the type and range of services provided, the industries and occupations serviced and the locality of the operations. At one extreme there are the large multinational businesses providing a comprehensive range of business services, including job matching, while at the other there are the small local operators who offer cheap labour ‘at call’. In between there are a vast terrain of diverse providers and services (Druker and Stanworth 2001), including an apparent growing demand by the public sector for job matching and outplacement services. In some European countries (Storrie 2002) temporary agency employment has expanded considerably, albeit from a very small base. Storrie (2002) highlights a fivefold increase over the 1990s in Denmark, Spain, Italy and Sweden. In some countries, such as the Netherlands and Germany, the rise in temporary agency employment has been linked to government funded job initiatives for the long-term unemployed (OECD 2002). This has also provided an impetus for agencies in Australia where job search and job matching services were privatised (Burgess 2003). In the USA the temporary help industry has grown in a sporadic and at times spectacular fashion, over the past two decades (Golden 1996; Peck and Theodore, this volume, Chapter 2). It is recognised as being one of the fastest growing industries in the US economy with growth being found in manufacturing, trade, construction, insurance and finance (Ono and Zelenev 2003). In most countries the temporary agency employment sector appears to count for fewer than 3 per cent of total employment despite this picture of rapid growth. The growth has been from a very low base, but it has been persistent. It has also been found in countries with tight labour markets, such as Ireland and the USA, and in countries with relatively high unemployment rates such as Spain and Germany. It has also been found to

International aspects 11 expand in the context of excess labour supply and increasing unemployment (e.g. Japan, Australia) and in the context of high job growth and labour shortages (the USA). Its record of growth over the past decade appears to defy the business cycle, though in the USA its expansion has diminished through market saturation and declining opportunities (see Peck and Theodore, Chapter 2). So while it is not that significant in the overall context of employment, this growth cannot be ignored. While being a minor component of the workforce in most countries the temp agency sector is of greater importance in terms of job turnover. While there are relatively few jobs at any one time it is through time that the significance of the sector grows. Many additional jobs will be filled through agencies. Also, the number of agency jobs is only one measure of the diverse activity of agencies. At any one time the number of workers on agency lists and the number of multiple agency job holdings is likely to exceed the count of primary jobs held by agency workers.

The regulation of temporary employment Employment regulation can range from the full spectrum of lightly regulated and unregulated in the USA, to the closely regulated as in Germany and to the prohibited, such as in Greece. Reasons for employment regulation include: to standardise employment status for taxation, equity, safety, immigration and social security purposes; to prevent exploitation of workers; to ensure that labour codes and rights are applied across the workforce, regardless of the nature of the employment contract; to standardise the contract and conditions of employment. In Europe there has been much debate regarding the regulation of temporary work. Regulations have been proposed for both fixed-term work (Murray 1999) and temporary agency work (Storrie 2002). In general, the approach has been to ensure that the working conditions of temporary workers are equivalent to permanent workers and that temporary work is genuinely temporary, through regulation of the duration and frequency of temporary employment contracts (EIRR 2002). In the case of temporary employment agency arrangements, regulation may be required of the agencies to uphold business regularity codes (e.g. competition, safety, solvency, company codes). In addition, there may be a need to legally establish the employment relationship and identify what party has the duties and responsibilities of the employer. The EU has issued the directive European Union on Working Conditions for Temporary Workers (2002). This directive intends that temporary workers will no longer be subject to discrimination due to the nature

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of their employment contract. Specifically, ‘a temporary worker may not be treated worse, in terms of basic working conditions, than a comparable worker who is defined as a worker in the user undertaking in an identical or similar job’ (EU 2002, p. 12). Nonetheless there are two possible exemptions to the principle. The first concerns temporary workers who have a permanent contract with an agency and the second (and this could be a major problem with the directive) is as follows: A restriction can be made if there is objective justification for a difference in treatment. This is the case when circumstances dictate that a temporary worker is in a different situation from a normally comparable worker and cannot therefore be treated in the same way. (EU 2002, p. 12) Regulations can apply at a number of different levels with respect to temporary employment arrangements. The main levels of regulation concern: the agencies; the contract of employment for agency workers; and employment conditions associated with agency employment. Storrie (2002, p. 7) catalogues the regulation of temporary work agencies across the EU (see de Ruyter, Chapter 3). Regulation can cover official authorisation or registration, the posting of financial guarantees to protect employment benefits, the involvement of social partners, annual reporting obligations and limitations on the scope of activities and sectors of operation. In Australia, there is no national regulation of temporary work agencies. Those regulations that do exist are confined to the State jurisdiction. Employment agents must be licensed in all states and territories except Victoria, Northern Territory and Tasmania. Licensing involves an application for licensing; that is, filling in a form and paying an application fee. Without the caveats and limitations on operations found in much of the EU, Australian non-regulation of temporary work agencies stands alongside Sweden, the UK, New Zealand and the USA. The Japanese system of placement known as ‘dispatching’ is idiosyncratic but imposes strict conditions on the use of temporary workers. Though, as Goka and Sato (Chapter 7 this volume) demonstrate, these regulations are being diluted as unemployment expands and the share of standard employment declines. Many rights and obligations associated with employment follow from determining the nature of the employment arrangement, namely who is the employee and who is the employer. As already stated, in the case of the triangular relationship associated with temporary work, this is not

International aspects 13 clear-cut. For example, in the EU the nature of employment status associated with agency employment is not consistent across a number of criteria such as: identification of the employer; whether the employee has a contract of employment; the possibility for self-employed (independent) employment; and regulation of the employment contract. The situation in Australia and New Zealand is broadly similar to that of the UK and the largely unregulated temporary hire sector in the USA (Peck and Theodore, Chapter 2). There has been an absence of regulation, there is confusion over status within the temporary work sector and there are no exclusions with respect to temporary agency employment arrangements. Table 1.3 compares employment regulation across the countries included in this volume. What is apparent from Table 1.3 is that in some countries (Canada, Australia, the USA, New Zealand and the UK) long-term temporary hires are allowable and ongoing renewal of temporary contracts is possible. That is, temping may become ongoing and permanent but often without the security or employment benefits associated with permanent employment. This is in contrast with the apparent strict regulations of the temporary employment contract in such countries as Japan, Denmark and the Netherlands where limits are placed both on the duration of temporary employment contracts and the number of times a contract may be renewed. Of course one should also consider the regulation of standard employment arrangements. However, countries with relatively few regulations over standard employment and a falling trade union density (e.g. Australia, the USA) have experienced temporary agency employment growth. Table 1.3 Temporary agency employment regulation in 2001 Country

Sectoral limitations

Limitations Maximum on reasons duration for hire of hire

Maximum renewal

Total duration

Australia Canada Denmark Japan The Netherlands New Zealand The UK The USA

No No No Yes No No No No

No No No No No No No No

No No Yes Yes Yes No No No

No No Yes Yes Yes No No No

Source: derived from OECD 2002, p. 176.

No No No Yes No No No No

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The same applies in countries where standard employment is extensively regulated and the workforce is collectivised (e.g. Denmark and Sweden).

Organisation of the book – the following chapters In Chapter 2, Peck and Theodore investigate the temporary staffing industry (TSI) in the United States over a period ranging from the 1970s–2002. They argue that this industry has enjoyed explosive growth since the 1970s, during which time the market for temporary labour became increasingly complex and diverse. Rather than focus, as has typically been the case, on the wider labour-market effects of this sustained expansion in temporary employment, this chapter explores patterns and processes of industrial restructuring in the TSI itself. This reveals a powerfully recursive relationship between evolving TSI business practices, the industry’s strategies for market building and extension, and labour market outcomes. Peck and Theodore point out that the sector has grown through a series of qualitatively differentiated phases of development or ‘modes of growth’ rather than in an unmediated way. This somewhat idiosyncratic industry – which has been a conspicuous beneficiary of growing economic instability – has through the past three decades restructured continuously through a period of sustained but highly uneven growth. Consequently, it has proved to be remarkably inventive in its efforts to extend the market for contingent labour, but at the same time has encountered a series of (possibly structural) obstacles to further expansion in its domestic market. This chapter provides an insight into the development of the temporary staffing industry and sets the context for subsequent chapters. Since the origins of the industry can be found in the USA the industry is becoming globalised – one way the limits imposed through market saturation in the USA can be overcome is through international expansion. It follows that the TSI’s ‘regulatory presence’ is now an undeniably prominent one in the US labour market, even as business conditions in the sector itself remain somewhat volatile. The ready availability of the ‘temp option’ in the contemporary US job market, and the large numbers of workers who (repeatedly) cycle through temporary job slots, both speak to the far-reaching effects of temp agencies on employment and hiring norms, despite the fact that the relatively modest stock count of temporary employees (approximately 3 million in 2002) might suggest otherwise (see Gonos 1997; Kalleberg 2000; Vosko 2000; Peck and Theodore 2001). In Chapter 3 De Ruyter examines the rise of TWAs within the EU. He found that across EU countries agency workers tend to be lower skilled than regular employees and to work in less safe conditions. By implication, according to the neo-liberal view, one would expect countries with a high rate of temporary employment to have lower unemployment rates. However, the evidence for this at an aggregate level across the EU is rather weak. For example, it is notable that Spain, the country with the

International aspects 15 highest incidence of temporary employment in the EU throughout the 1990s, has the highest unemployment rate. Evidence surveyed in this chapter suggests that while agency workers do not appear to be performing core duties within the workplace, they are being increasingly used to fill short-term positions providing the firm with a degree of flexibility. While supply-side factors can explain the growth of agency workers in areas of some sectors such as nursing, it is apparent that demand-side factors are, in general, the driving force behind the growth of agency work. Across most EU countries regulations on the use of agency workers are minimal. Thus, it is possible that those employers currently using fixed-term workers for flexibility reasons will switch to using agency workers, providing further impetus for the growth of agency work. To the extent that lack of regulation permits the use of substandard forms of employment, the use of TWAs will continue to increase. With the stalling of the EU Agency Workers’ Directive after the passing of the Temporary Workers’ directive, it remains to be seen whether firms will switch from using temporary workers to utilising agency workers. In Chapter 4 Stanworth and Drucker explore the role of commercial agencies, employers’ use of agency labour, and the regulatory context of temporary working within the UK. Explanations for the recent growth in agency labour use in the UK have been linked to the increasingly uncertain competitive situation there where commercial employment intermediaries supplying agency labour play a crucial part in meeting employers’ fluctuating demands for human resources. Commercial agencies are seen as providing entry points to the labour market and a way out of unemployment. Conversely, industry growth, through aggressive marketing and lobbying, is criticised as leading to worker disadvantage and insecurity. Another debate centres on whether growth in this market signals a distinct break with the past or simply a continuance of well-established resourcing policies by employers in the UK. Stanworth and Druker outline circumstances whereby the large and ‘reputable’ commercial agencies seek to promote a distinct and ethical image to clients and to the government, by emphasising concern for the people they hire out, and their links with representative bodies such as trade unions, in order to distance themselves from disreputable agencies. They portray themselves as important employment intermediaries, enabling labour markets to operate more efficiently, and thus reducing unemployment. By sophisticated marketing, sponsorship and lobbying, they seek to avoid increased regulation of the industry (see the discussion by de Ruyter in Chapter 3) and dispel pressure for any further extension of employment rights to temps. In this regard up until now they appear to have been very successful. For trade unions, the organisation and effective representation of temporary workers remains problematic. In the UK the Trade Union Council’s agency workers’ campaign demonstrates an inability to turn the

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tide of insecure labour use. Reliance on European legislation to radically improve the rights of temps may also prove a chimera, given the compromises that may be necessary to achieve agreement. Despite recent legislative changes in the UK that have given the temporary agency workforce some limited employment rights and protections previously denied to them, they still sell their labour on inferior terms. New employment rights are only as effective as their enforcement, and avoidance of payment of holiday pay by some less reputable agencies demonstrates likely difficulties. Besides job insecurity, and the unpredictability of employment, temps in the UK are also typically subject to inferior pay and conditions compared to permanent employees. In Chapter 5 Rasmussen, Lind and Visser discuss agency work in the Netherlands and Denmark. Although the Netherlands has been in the forefront of agency working it has not been possible to gain a comprehensive overview of the roles and functions of agencies and agencies’ workers until quite recently. The authors evaluate the reasons why those countries have experienced particular growth patterns, what the impact has been in terms of protective mechanisms and worker outcomes, and whether the national growth patterns are likely to continue. It is concluded that there has been a strong underlying upward trend in agency work in both countries although the level differs considerably. In the Netherlands there has been unusually high levels of agency work while Denmark has experienced lower levels. It is suggested that there is a link between the employment relations framework and employer and worker evaluations of different forms of atypical employment. For example, the different ‘weight’ of various forms of atypical employment can be aligned with cost and effectiveness outcomes for both employers and workers, whereby they evaluate and adjust to the various options. Although this is clearly an area where more research is necessary, the authors provide some interesting perspectives on these matters. Chapter 6 by Cooke and Zeytinoglu focuses on the temporary work situation in Canada where there has been a steady increase in temporary employment for more than a decade. In Canada this form of work now represents 12 per cent of total paid employment. Typically, temporary positions assume one of two forms: casual or fixed-term employment, with terms arranged directly by the employer or facilitated by temporary help service (THS) agencies. Well-known, agency-facilitated assignments continue to represent only a small share of temporary work in Canada with those in Atlantic Canada, and/or those in fishing, forestry and other seasonal industries more likely to experience temporary work. In terms of worker categories, females, young workers and those in small organisations are more likely to be in non-permanent jobs. The use of temporary employment alongside permanent employment is viewed from a dual labour market theory perspective. In this chapter the impacts of government policies and programs are discussed, as well as the role of unions.

International aspects 17 Several issues relevant to temporary employment in Canada are reviewed, as are implications for Canadian workers. An industrial relations systems framework is used to assess the environmental influences that affect employment conditions in general, and the growth of temporary work in particular. Chapter 7 by Goka and Sato reports on the concerted use of what is referred to in Japan to as ‘irregular workers’ (temporary workers) as a response to recession and declining competitiveness. Goka and Sato point out that since the collapse of the ‘bubble economy’ in the beginning of the 1990s, Japan has been struck by recession, which has, in turn, had serious effects on the labour market and the labour management system in Japan. As a result, this has led to many employers embarking on cost-cutting measures, such as reducing regular workers, and replacing them with irregular ones, including temporary agency workers. Accordingly, the number of unemployed and irregular employees has increased rapidly in the Japanese labour market in recent years. Moreover, it seems apparent that the current government and business community intend to utilise irregular workers to reduce labour costs and to absorb some of the unemployed persons into the workplace. Goka and Sato argue that this increase in the number of irregular employees will pose difficulties for the Japanese economy. Specifically, as most irregular employees usually earn much less than regular ones, the replacement of regular employees with temporary dispatched workers means an increase in the ratio of low-wage earners among all employees. This situation will, they predict, lead to a reduction in consumer spending and personal consumption in the domestic economy, circumstances which are likely to prolong the current depression by delaying economic recovery in Japan. Chapter 8 by Campbell, Watson and Buchanan seeks to pave the way for an analysis that can adequately grasp both the common features and peculiarities of the Australian case of temporary agency employment. The chapter begins with a basic profile of temporary agency work in Australia, before moving on to examine the different forms of employment found within agency arrangements. A subsequent section looks more closely at what temp agencies do and how their activities have evolved from what the authors refer to as moving from supplementation to substitution. The chapter reviews the advantages of this type of employment arrangement to the user firms beginning with Gonos’ (1997) influential suggestion that temporary agency work in the United States offers user firms the advantage of ‘access to labour without obligation’. Campbell, Watson and Buchanan conclude by suggesting that although temporary agency work in Australia is a heterogeneous phenomenon, there are aspects that arouse concern and demand a careful regulatory response. Hall, in Chapter 9 concentrates on the growth of temporary agency work arrangements known as labour hire in Australia. He argues that

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labour hire has been one of the most dramatic aspects of the more general proliferation of non-standard employment over the past decade. As a result, this chapter explores some of the key stimulants of the labour hire industry in Australia by examining the range of employer motivations that appear to drive what is fundamentally a demand-side phenomenon. On the basis of this analysis and assessment the chapter then considers the future prospects for the industry in terms of emerging legal and policy responses. In the final chapter Rasmussen, Lind and Visser explore temporary work issues in New Zealand. They argue that the extensive reforms of the New Zealand ‘experiment’ have facilitated an extension of atypical employment patterns. Over the last twenty years, New Zealand has experienced more economic and social deregulation than any other OECD country going from quite a ‘closed’ economy to being one of the most deregulated OECD economies in less than a decade. In common with many of the other countries featured in this book there appears to have been a steady growth pattern of temp work regardless of business cycles. This growth has been fuelled by organisational restructuring, the emphasis on flexibility and lean staffing, as well as the small size of many New Zealand organisations. Rasmussen, Lind and Visser point to temporary work agencies becoming ‘strategic partners’ with their client companies implying that many temp agencies have developed an intimate and long-term relationship with their client companies providing extensive consultative and advisory services (particularly when there are no dedicated human resource management staff). In summary, Rasmussen, Lind and Visser maintain that the continuous tension between flexibility and protection makes it necessary to incorporate a public policy dimension in the debate, especially given the lack of regulation surrounding agencies and agency work in New Zealand. They argue that the commercial and academic interest in agency work has so far not been matched by a similar interest in the public policy dimension.

Future research directions In many countries temporary work and the temporary agency sector is likely to continue growing from its current low base. As a result of the discussion provided in this book several areas are identified for ongoing research: Can temporary jobs become permanent jobs? While agencies can improve job matching there remains the fundamental question as to whether those in temporary work and who desire a permanent job can realise this ambition (Buchteman and Quack 1989). Under what conditions is temping likely to lead to a regular job for those who desire permanent work?

International aspects 19 Can the temp agency sector just grow and grow? What, if any, are the limits to the growth of the temporary agency sector? While Peck and Theodore discuss this in the context of the USA it is clear that the industry has become internationalised and is expanding across many countries. The extremes of the business cycle offer opportunities for the industry which, to date, has been innovative and adaptive to the needs of job seekers and employing organisations. Furthermore, the sector has benefited from the privatisation and outsourcing activities of governments across the OECD. Can agency workers be organised and collectivised? Is agency work suited to individual and non-union contracts, or can it be included in the umbrella of collective agreements? It is conceivable that agency employment is a means for de-unionisation and moving employment outside of collective agreements. Trade unions are challenged in recruiting and representing workers who have short-term engagements with different organisations. Do national employment regulation systems adequately address agency work? Is the locus of responsibility as the employer associated with the agency or the contracting organisation? Should agency workers be equated with employees in terms of conditions and protection associated with work or are there reasons for making agency work an exception? Conversely, is the rise of agency work a manifestation of the excessive regulation of standard employment arrangements? Or, alternatively, does it represent the failure of regulations to adequately address emerging forms of employment? To what extent does agency employment improve the working of the labour market? Is there evidence that agencies can reduce frictional unemployment and improve the job matching prospects of those at risk from unemployment? Agencies per se will not solve unemployment or be a substitute for effective macroeconomic and labour market programs. However, they may provide marginal improvement to the matching process in the labour market. Are there limits to the use of agency workers? Why not have a workforce of agency workers? There are limits in terms of the provision of specific skills, the retention of key workers, the generation of organisational identity and commitment and dealing with the costs of high turnover. Somewhere between the advantages of labour flexibility and the need for key workers and a committed workforce there is a limit to the application of temps. Is temporary agency employment substandard employment? Is there a danger that certain groups of workers will be trapped into a cycle of insecure employment, low pay and few entitlements? Temp agency employment covers the full spectrum of skills, pay rates and industries. To

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generalise tends to miss the contrasts and heterogeneity of this type of employment. However, it is important to note that there is the potential for it to become an ongoing cycle of marginalisation within the labour market. Broader implications of temporary employment? What of the broader implications of temporary employment for workforce insecurity, patterns of national saving and self-funded retirement arrangements? Temporary jobs by their very nature are insecure and in turn militate against savings and self-funded retirement. In the context of an ageing community scenario facing many OECD economies (OECD 2001), the growth in temporary employment arrangements can only exacerbate the problem of under-saving and growing dependency rates.

Conclusion It is evident from the chapters included in this volume that temporary work has increased over the past decade and is likely to continue to do so for the foreseeable future. One of the drivers of the increase in temporary working has been identified as the requirement for business to have labour flexibility. While this can work two ways, with temps also needing flexibility due to lifestyle, education or other needs, there is evidence that substantial numbers of temps may prefer to have permanent contracts instead. The highly paid, highly skilled, professional temps do not feature strongly in these chapters. On the contrary, it is primarily the middle-tolow skilled, who may find permanent work through temporary placements if they are fortunate. US evidence is fairly clear that necessity and need drive many people into temporary work arrangements, with low income and welfare support important characteristics for many workers in temp jobs over all stages of the business cycle (Wiens-Tuers and Hill 2002). In Japan the growth in dispatching is a clear response to depressed business conditions and the lack of vacancies in standard jobs. Another theme highlighted in many chapters has been the role of the temporary agency as a ‘strategic partner’ with the client companies. This implies that the agencies have a longer-term relationship with client companies than they may have previously enjoyed and appear to be offering a range of human resource functions beyond just recruitment and selection. It is notable, however, that many temp agencies do not offer anything beyond basic training to the temps on their books. This means that flexible employment arrangements may be detrimental to long-run economic performance if they are associated with the under-valuation of training investment (see Arulampalam and Booth 1998). With these workforce developments come new challenges for policy makers. Regulating work becomes difficult if the nature of the employment contract and the employment relationship is ambiguous. Similar concerns are raised with respect to the taxation of labour income and to social

International aspects 21 security contributions associated with work. It also becomes more difficult to construct a career and determine where job skills and training will be generated in the absence of a structured internal labour market (Connell and Burgess 2001). For organisations, there are cost and labour use advantages associated with contingent employment arrangements. However, there is also a downside in terms of accessing specific skills, dealing with high labour turnover and possibly not having employees who identify with, or are loyal to, the organisation (Ward et al. 2001). The challenge for the future is to balance economic efficiency and competition with equity in employment. As pointed out earlier, it appears to be evident that employers, governments and various agencies are seeking to decrease their obligations to employees by shifting the onus on to individuals to take more responsibility for a range of work-related matters. If this is to be the pattern for the future, we argue that it is imperative that governments regulate to introduce supportive mechanisms for temporary workers such as the recently introduced EU directive on temporary working.

References Arulampalam, W. and Booth, A.L. (1998) ‘Training and Labour Market Flexibility: is There a Trade-Off?’, British Journal of Industrial Relations, 36(4): 521–536. Baird, M. and Burgess, J. (2003) ‘Gender, Employment Benefits and Industrial Relations in Australia’, IIRA World Congress, Berlin, September. Buchtemann, C. and Quack, Z. (1989) ‘Bridges or Traps? Non Standard Employment in the Federal Republic of Germany’, in G. and J. Rodgers (eds) Precarious Jobs in Labour Market Regulation. International Institute for Labour Studies, Geneva, pp. 109–149. Burgess, J. (2003) ‘Reviewing the Model Behind the Job Network’, Australian Journal of Labour Economics, 6(2): 223–236. Campbell, I. and Burgess, J. (2001) ‘Casual Employment in Australia and Temporary Employment in Europe’, Work, Employment and Society, 15(1): 171–184. Conley, H. (2002) ‘A State of Insecurity: Temporary Work in Public Services’, Work, Employment and Society, 16(4): 725–737. Connell, J. and Burgess, J. (2001) ‘Skills, Training and Workforce Restructuring in Australia’, International Journal of Employment Studies, 9(1): 1–24. Connell, J. and Burgess, J. (2002) ‘In Search of Flexibility: Implications for Temporary Agency Workers and Human Resource Management’, Australian Bulletin of Labour, 28(4): 272–283. Davidson, L. (1999) ‘Temp Workers Want a Better Deal’, Workforce, 78(i10): 44–48. Druker, J. and Stanworth, C. (2001) ‘Partnership and the Private Recruitment Industry’, Human Resource Management Journal, 11(2): 73–89. European Industrial Relations Review [EIRR 339] (2002) Temporary Work Proposal, April, pp. 33–35.

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European Union (2002), European Union on Working Conditions for Temporary Worker, EU Council Directive, 99/70/EC. Fairbrother, P., Paddon, M. and Teicher, J. (2002) ‘Corporatisation and Privatisation in Australia’, in P. Fairbrother, M. Paddon and J. Teicher (eds) Privatisation, Globalisation and Labour, Federation Press, Sydney, pp. 1–22. Felstead, A. and Jewson, N. (1999) Global Trends in Flexible Labour, Macmillan, London. Fround, J., Johat, S. and Williams, K. (2001) ‘Unsustainable Advantage: An Activity Analysis of the US Staffing Industry and its Business Models’, SASE Conference, University of Amsterdam. Golden, L. (1996) ‘The Expansion of Temporary Help Employment in the US, 1982–1992: A Test of Alternative Economic Explanations’, Applied Economics, 28: 1127–1141. Gonos, G. (1997) ‘The Contest Over Employee Status in the United States: The Case of Temporary Help Firms’, Law and Society Review, 31(1): 81–110. Kalleberg, A. (2000) ‘Non Standard Employment Relations: Part-time, Temporary and Contract Work’, Review of Sociology, 26: 341–365. Laabs, J. (1998) ‘Global Temps Fill the Workforce Void’, Workforce, 77(10): 60–66. McClure, L. (1996) ‘It’s Only Temporary Work in the New U.S. Economy’, Multinational Monitor, 17(11): 14–18. Michie, J. and Sheehan-Quinn, M. (2001) ‘Labour Market Deregulation, “Flexibility” and Innovation’, Cambridge Journal of Economics, 27(1): 123–143. Murray, J. (1999) ‘Normalising Temporary Work’, Industrial Law Journal, 28(3): 269–275. OECD (1994) The Jobs Study, Paris. OECD (2001) The Employment Outlook, Paris. OECD (2002) Employment Outlook, Paris. Ono, Y. and Zelenev, A. (2003) ‘Temporary Help Services and the Volatility of Industry Output’, Federal Reserve Bank of Chicago Review, 27(2): 15–28. Peck, J. and Theodore, N. (2001) ‘Temped Out? Temporary Employment Regimes and the Production of Contingent Labour’, Conference of the Society for the Advancement of Socio Economics, Amsterdam, June 28–July 2. Rasel, E. and Appelbaum, E. (1998) ‘Non Standard Work Arrangements: A Challenge for Workers and Labour Unions’, Social Policy, 27(2): 31–37. Rodgers, G. and Rodgers, J. (1989) Precarious Jobs in Labour Market Regulation, International Institute for Labour Studies, Geneva. Rubery, J. Earnshaw, J., Marchington, M., Cooke, F. and Vincent, S. (2000) ‘Changing Organisational Forms and the Employment Relationship’, Proceedings from the Conference for the Advancement of Socio Economics, London School of Economics, London. Standing, G. (1999) Global Labour Flexibility, Macmillan, London. Storrie, D. (2002) ‘Temporary Agency Work in the European Union’, European Foundation for the Improvement of Living and Working Conditions, Dublin, [Online]. Available: www.eurofound.eu.int. (Accessed 10 May 2002). Vosko, L. (2000) Temporary Employment: The Gendered Rise of a Precarious Employment Relationship, University of Toronto Press, Toronto. Ward, K., Grimshaw, D., Rubery, J. and Benyon, H. (2001) ‘Dilemmas in the

International aspects 23 Management of Temporary Work Agency Staff’, Human Resources Management Journal, 11(4): 3–21. Watson, I., Buchanan, J., Campbell, I. and Briggs, C. (2003) Fragmented Futures, New Challenges in Working Life, The Federation Press, Liechhardt. Wiens-Tuers, B.A. and Hill, E.T. (2002) ‘How Did we Get from Here to There? Movements into Temporary Employment’, Journal of Economic Issues, 36(2): 303–312. Zeytinoglu, I. (1999) Changing Work Relationships in Industrial Countries, John Benjamins Publishing, Amsterdam

2

Cycles of contingency The temporary staffing industry and labour market adjustment in the U.S. Jamie Peck and Nik Theodore

Introduction: the business of temping The temporary staffing industry (TSI) in the United States has enjoyed phenomenal growth during the last three decades, aided in large part by a climate of deregulation that has allowed employers to expand their use of contingent workers. By the close of the 1990s, the TSI was viewed as being among the more conspicuous New Economy success stories—an industry that would enjoy fast growth during recoveries, yet was ideally positioned to weather recessions. This supposedly acyclical industry quickly became the darling of stock market analysts, in the process generating needed investment for the TSI while also bestowing on it a new-found legitimacy. The rapid growth of the TSI seemed to signal the maturation of flexible labour market strategies which were reckoned to be immune to business cycles threats and protected from rising wage pressures by virtue of their very rationale—cost-containment staffing strategies based on the provision of workers on an as-needed basis. During recoveries, employers would increase their use of temp workers as a low-cost means of expanding capacity. As the economy slowed, it was thought, employers would maintain their use of temps as a nearly risk-free, counter-cyclical staffing strategy. But as became evident during the 2001 recession, when the TSI lost more than 540,000 jobs in the slowdown, the TSI is far from recession-proof. This chapter explores the cyclical and temporal dynamics of the TSI, focusing on the ways in which the industry has married, under changing circumstances, its ongoing imperatives of growth while constantly pushing at the boundaries of the market for contingent labour. This analytical characterisation helps to explain the unique trajectory of the TSI, which combines significant growth potential with a marked vulnerability to cyclical downturns. In contrast to industry narratives that tell a story of almost effortless expansion in response to growing demands from both workers and managers for employment flexibility (see Peck and Theodore 2002), the reality of TSI growth in the United States is both more prosaic and more complex. Fundamentally, the overall size and reach of the temp market is structured by the regulatory ‘costs’ associated with the ‘main-

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stream’ employment relation, with highly-regulated labour markets inducing more employers to use the ‘temp option’, thereby expanding business opportunities for the TSI. Because the labour market as a whole in the United States is already relatively flexible and lightly regulated by international standards, the scale of the temp market is somewhat constrained. Moreover, low barriers to entry, a reliance on volume-based growth, and downward cost pressures within the TSI have greatly restricted the scope for sustained value-adding strategies and non-price forms of competition, rendering most segments of the temp labour market vulnerable to commodification. In this chapter we examine the phases of growth of the TSI, focusing on the period since the early 1970s when temp employment first took off in the United States. It is argued that while many features of the TSI business model and indeed many of the characteristic practices of the industry have remained largely unchanged, the internal structure of the sector and the nature of its relationships with the wider economy have been transformed over the past three decades. Rather than focus, as typically has been the case, on the wider labourmarket effects of this sustained expansion in temporary employment, we instead explore patterns and processes of industrial restructuring in the TSI itself. This reveals a powerfully recursive relationship between evolving TSI business practices, the industry’s strategies for market building and extension, and labour market outcomes, as the sector has grown not in an unmediated way but through a series of qualitatively-differentiated phases of development or ‘modes of growth’. This somewhat idiosyncratic industry—which has been a conspicuous beneficiary of growing economic instability—has through the past three decades restructured continuously through a period of sustained but highly uneven growth. In so doing, it has proved to be remarkably inventive in its efforts to extend the market for contingent labour, but at the same time has encountered a series of (possibly structural) obstacles to further expansion in its domestic market.

Business cycles and business strategies Although a handful of pioneer agencies had been operating since the 1920s, the TSI only began to take shape as an identifiable business sector after the Second World War when the early corporate players, such as Kelly and Manpower, were founded. The business concept that would later come to define the TSI originated around this time with a series of haphazard forays into employee ‘renting’ or ‘leasing’, sometimes as a sideline function in accountancy companies, law firms, and office equipment suppliers (Moore 1965). The fledgling temp service would supply workers to a business client, the latter assuming responsibility for supervision and daily management at the worksite, while the agency—as the de jure employer—would handle wages and payroll deductions.

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The early growth of the TSI was predicated on the demand for clerical workers, deployed for the most part to supplement the regular clerical workforce, to cover busy periods, or occasionally to meet specialist needs. In the early 1960s, it was estimated that as much as 90 per cent of the volume of trade in the industry was in the clerical sector, though around this time agencies were branching out into industrial operations as well. Needless to say, this was not, nor has it since been, merely a ‘passive’ process of labour-market intermediation, but instead agencies have been actively engaged in exposing, making, and growing the market for temporary labour (see Peck and Theodore 1998, 2001; Ofstead 2000). In the early years, sales teams promoted the utilisation of agency-mediated temporaries among business clients, while supplies of temporary workers were secured through local press ads and suburban recruitment events. Alongside aggressive marketing and public-relations campaigns, representatives of the TSI have also used lobbying and legal strategies to defend the (somewhat fragile) regulatory ‘advantages’ of temporary working in the United States (see Gonos 1998). This has centered on the regulatory ambiguity around the ‘triangular’ employment relations of temping (see Gottfried 1992; Vosko 2000; Mehta and Theodore 2002): as long as the temp agencies retain their (questionable) legal status as the employers of temporary workers, their business clients are able variously to evade or parlay the regulatory responsibilities and costs associated with direct employment. Together with the benefits of quantitative flexibility that accrue to employers (the opportunity to employ staff as needed and with no ongoing employment obligations), this ‘regulatory advantage’ has been crucial to the establishment and maintenance of an intermediated temporary labour market in the United States. Predictably, perhaps, the industry’s successive waves of expansion and diversification have been led by its major corporate players. Kelly was the first agency to establish a multi-regional structure, while Manpower was as early as the 1950s attempting to diversify out of clerical and into industrial temping. None of these markets were there for the taking, but instead had to be painstakingly constructed. In the early 1960s, there were reports of branch and office closures, as the industry repeatedly pushed up against the limits of what in many ways was an immature and underdeveloped market. And while the industry experienced fairly strong growth by the 1960s, it did so from a very modest base and at rates that look anaemic in comparison with more recent trends. Between 1961 and 1971, total TSI employment rose by 16 per cent, from 130,000 to 150,000. So it was only in the macroeconomically turbulent 1970s, in the context of the industry having previously secured a favourable regulatory settlement in the courts, that the takeoff occurred: TSI payrolls grew by 166 per cent during 1971–81, only to surge by a further 206 per cent between 1981 and 1991, then by another 278 per cent in the period 1991–99. On the basis of this growth trajectory, it is difficult to escape the conclusion that something of

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a transformative shift occurred in the character of the industry’s relationship with the macroeconomy—or in its markets—during the 1970s. Even though industry leaders like Kelly had since the 1950s been talking about clients’ use of ‘stabilised staffing’ strategies, in which firms would temp out peripheral workforce functions while protecting the core (Business Week 1961), these would not become commonplace until the 1970s and 1980s (see Gannon 1978; Mangum et al. 1985). Although the underlying causes remain hotly disputed, the period since the 1970s has been one in which flexibility strategies of all kinds, but particularly in respect to labour utilisation, have been markedly ascendant. Temporary staffing agencies are purveyors of at least three forms of labour flexibility—first, temporal flexibility, needed to accommodate daily, seasonal, and cyclical fluctuations in the quantity of labour inputs required; second, functional flexibility, a means of accessing specialist skills and capacities on a selective and discontinuous basis; and third, regulatory flexibility, reflecting the imperative to liberalise, deinstitutionalise, and deregulate the traditional employment relationship. In this context they have been almost uniquely placed to ride the wave towards a more flexible economy. While certainly exacerbated by recessionary downturns, these flexibility trends are also undeniably secular in character, and together must be considered to be the fundamental underlying sources of the temp industry’s exponential growth in the period since the 1970s. Reflecting different demand conditions in each of its major markets, the temp industry has constructed and sold a range of distinctive ‘flexibility packages’. In the process, it has repeatedly sought to elaborate the basic business model of the staffing agency and to find new ways of extending its markets. Early on, a relatively simple business model was established, based on high-volume placements in routine clerical and industrial positions. These methods were honed in core markets before subsequently being rolled out to other parts of the country (Theodore and Peck 2002). So in the late 1950s and early 1960s Manpower, for example, pushed out from its base in the Midwest primarily through the sale of local franchises across the country, while Kelly pursued a similar strategy through licensing agreements, the two companies expanding their sales volumes almost five-fold during the period 1957–63. The industry expanded steadily during the 1960s, with hundreds of small agencies joining the large corporate players in the job-rich metropolitan centres. But this was not simply a story of uninterrupted expansion. For payrolls in the industry actually shrank—by more than a fifth—in the year 1970–71 as the wider economy slipped into recession. Trading peripheral labour services, the TSI was systemically prone to sharp cyclical downturns. At the start of the 1970s, then, the TSI was a small, cyclically vulnerable sector. Its primary role in the wider economy was to cover employment shortages during periods of peak demand in the clerical sector, while trading into mostly peripheral (and recession-sensitive) employment fields

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in manufacturing (see Gannon 1978). This business configuration exposed the TSI, more than many industries, to business-cycle effects, short-term movements in the economy tending to produce amplified effects in the temp sector. More precisely, the temp business became established as a kind of leading indicator of overall economic activity; the first to experience a downturn in orders as the economy slowed, temp agencies would also typically be the first to experience a turnaround as economic activity began to pick up again. So while TSI employment and payroll both slumped sharply in the recession of 1970, they recovered just as quickly in the ensuing upswing. During the turbulent 1970s, in fact, ‘[s]evere economic cyclicality was a major force behind temporary staffing’s growth [given that the use of temps] offered an alternative means to obtain necessary personnel without incurring the long-term costs of traditional employment arrangements’ (Silber 1997, p. 3). So, while business-cycle fluctuations impacted the TSI more severely than most, such fluctuations were also, paradoxically, very much part of the sector’s raison d’être. Portraying this as a phase of ‘externally driven’ expansion, Silber (1997, p. 3) has observed that over the course of the 1970s, ‘the industry had grown but the nature of service offerings had not changed much’. The 1970s represented the beginning of three remarkable decades of expansion in the TSI. The first of these decades was significant not simply for the explosive growth rates that were recorded, but more fundamentally because a qualitatively distinctive mode of growth had been established. What changed—decisively—in the 1970s was the nature of the temp sector’s relationship with the wider economy. It had become clear by the 1960s that a temp market based on covering regular staff absent on vacation, or on medical or maternity leave, was limited in size and—more importantly—offered little in the way of growth potential. The TSI began the 1970s with the same business model—based on the servicing of short-term and stop-gap staffing needs—but was to find that, in an increasingly turbulent labour market, new business opportunities would soon be opening up. The TSI proved to be very well positioned to take advantage of the upside effects of a cyclical and insecure job market, exploiting new markets created by macroeconomic uncertainty. Managers’ growing reluctance to commit to long-term employment contracts created new markets for temp services. Increasingly, temporary workers were recruited as part of a wider strategy to control employment costs and to extend hire-at-will/fire-at-will contract conditions, rather than simply as fill-ins. Although the attractiveness of recruiting temps on a ‘no obligations’ basis was certainly growing at the time, talk of a fundamental transformation in employment practices—or in the TSI itself—remained premature. Annualised TSI employment growth was just 4.9 per cent in the upswing of 1970–73, which while stronger than the service sector as a whole (4.2 per cent) and manufacturing (0.1 per cent) was hardly spectacular. Indeed, agencies placed barely more than 200,000 temps per day in

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1973. But another downturn was beginning and the TSI’s fortunes were to change. Following a modest shake-out in the 1973–75 recession, the subsequent upswing of 1975–79 saw the temp workforce grow at an annualised rate of 23.7 per cent, more than three times the rate of servicesector employment growth and almost six times the rate of manufacturing employment growth. The TSI, in effect, was becoming a beneficiary of economic instability and the erosion of standard employment contracts. Still buffeted by movements in the macroeconomy, the temp industry had nevertheless finally established its own growth trajectory. In Table 2.1, the 1970s are characterised as a phase of ‘disorganised growth’. It was disorganised in the sense that the TSI was responding only reactively to expanding—but still substantially unpredictable—market opportunities. The principal dynamics of growth were external to the industry itself (Silber 1997), macroeconomic circumstances having bestowed upon it both a market (for no-obligations workers) and a rationale (quantitative flexibility) that in many respects were new. Alongside the long-established and steady market for clerical fill-ins, a new and volatile market for short-term employees had emerged. During this time, markets came to the TSI, rather than the other way around, and industry payrolls—which ballooned five-fold during the 1970s—grew strongly on the back of buoyant demand. If the 1970s was the decade when the TSI first learned how to ride—and profit from—the business cycle, this did not mean that negative cyclical effects could be somehow held in abeyance. On the contrary, the ‘disorganised’ growth model of the 1970s in many ways deepened the exposure of the temp sector to cyclical shocks, a situation clearly evidenced in the turbulent 1979–81 period, when an abrupt downturn followed by a short-lived recovery resulted in the industry shedding 35,000 workers (8 per cent of the 1979 temp workforce). Strikingly, though, the subsequent two-year recession of 1981–83 revealed that—for the first time—the TSI had found a way to sustain employment growth even as the economy slowed. This implied that the temp sector had come to perform more than simply a ‘shock absorber’ function, and instead that it was beginning to establish an ongoing role within a restructuring economy (see Peck and Theodore 2002). This significant moment marked the beginning of a second, qualitatively distinctive phase of TSI expansion, characterised in Table 2.1 as a period of ‘developmental growth’. Entering its second decade of extensive growth, employment levels and revenues were both ramped up throughout the 1980s: a 9 per cent annualised employment growth rate, achieved during the recession of 1981–83, was superceded by 15 per cent annual growth during the long upswing of 1983–90. The major corporate agencies having now established integrated branch networks, the TSI started to take shape as a genuinely ‘national’ industry. From this base, the industry’s push into growing clerical and professional markets, augmented by a small but not insignificant manufacturing

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Table 2.1 Modes of growth and changing TSI-labour market relations, 1970s–90s

‘Disorganised growth’ (1970s)

TSI structures and strategies

Labour market reorganisation and restructuring

Initial phase of market-led, externally-driven growth (from a small base) Passive-extensive growth, based on unimpeded penetration of latent markets, opened up by economic cyclicality and business uncertainty From temporary cover to temporary employment Focus on clerical market Kelly Girl ethos

Onset of deindustrialisation and rising unemployment Growing feminisation of the workforce associated with the expansion of services employment Wage stagnation Growing instability and insecurity in employment

‘Developmental Emergence of market-making growth’ (1980s) strategies Active-extensive growth, based on aggressive colonisation of new occupational, sectoral, and geographic niches From temping to payrolling Focus on professional and enlarged clerical markets Professionalisation of temping

Climate of labour market deregulation and the restoration of managerial discretion Emergence of systemic wage inequality Opening up of government markets De-unionisation Structural expansion of contingent work

‘Destructive growth’ (1990s)

Greenspan boom: full employment and wage stagnation Corporate downsizing and systemic labour market insecurity Further racialisation of lowwage labour markets Manufacturing rebound Ongoing market liberalisation Normalisation of neoliberal labour regulation

Saturation of high-volume markets/commodification Active-intensive growth, based on zero-sum competition within maturing markets From payrolling to strategic staffing Focus on manufacturing market; maintenance of professional and clerical markets Bifurcated labour force – displaced executives and undocumented day labourers

market, became increasingly aggressive. This structural expansion was certainly aided by the general climate of deregulation during the Reagan years, while more concretely, the TSI also benefited from the opening up of certain public-sector markets for the first time (Estevão and Lach 2000). Although the cyclical segment of the temp market, acquired during the 1970s, was still important, it had also become clear that some occupational niches were becoming ‘temped out’ on a continuing basis. Here were the

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first signs that employers were beginning to use staffing services in a strategic fashion, rather than simply to meet transitory and short-term needs. As industry analysts Lewis and Molloy (1991, p. 7) described this shift: ‘Temporary help, which had its roots in fill-in replacements for vacationing or ill employees [was now being] mobilised to enhance and reinforce [a] leaner workforce’, resulting in a deepened and widened demand for ‘no strings attached’ workers across a range of occupations and industries. An outcome of these processes of expansion and diversification was an increasingly heterogeneous temp market. At the start of the 1980s, the clerical segment of the industry represented 39 per cent of the temp workforce, with professional placements accounting for an additional 26 per cent. Despite strong growth in the ‘core’ clerical market, by 1990 it represented less than one third of total temp placements, rapid expansion in ‘new’ sectors like healthcare, governmental markets, and in some technical and professional fields, leading to an increasingly complex and diversified sector. This pattern of growing diversity, moreover, may have reduced the cyclical vulnerability of the TSI as a whole. In this context, Parker (1994, p. 26) contends that, ‘[o]ver time, employment and other economic barometers of the temporary help industry have grown less sensitive to changes in the business cycle’, a statement supported by Segal’s (1996) econometric analysis, which revealed a dampening of business-cycle effects over time. Indeed, it would seem that the initial pattern of exaggerated cyclical volatility was first ameliorated during the 1970s and early 1980s, before being superseded by a trajectory of cyclical and secular growth. In Silber’s (1997, p. 5) view, the 1980s were significant for the industry, not because there was any major internal transformation in TSI business practices or competitive strategies, but because this still fundamentally reactive sector was beginning to benefit from a series of structural and contextual changes in the U.S. economy and from associated shifts in managerial behaviour. Strong GDP growth coupled with intensifying international competition created an environment in which cost-suppression motives, combined with a determined search for enhanced workplace flexibility, became paramount. And these conditions strongly favoured the further, structural expansion of demand for temporary workers. Having achieved compounded annual employment growth rates of 14 per cent during the 1980s, the TSI experienced only a modest slowdown in its growth rate in the early 1990s recession, and again, sustained actual employment increases even during the recession itself. The robust recovery that followed presaged a further structural shift in the industry’s role in the wider economy. Through the 1990s boom, not only did the temp industry experience continued strong growth, but the character of its product market also changed. This period was associated with a marked shift towards more planned and strategic utilisation of temporary staffing services by business clients, coupled with a more proactive, market-building approach on the part of agencies (Silber 1997). Although the TSI would be posting a further

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round of record growth rates—with sales surging from $15.6 billion in 1990 to $64.3 billion in 1999 (Brogan 2000)—the industry was at the same time encountering serious obstacles to its market-extension strategies. In the terms of Table 2.1, this marked a shift from a ‘developmental’ mode of growth to a phase of ‘destructive growth’. During this phase, the number of agencies operating in the U.S. skyrocketed, as thousands of small, locally owned businesses were enticed by the combination of low startup costs and lucrative market opportunities. Between 1995 and 2001, the number of agencies in the United States ballooned from less than 15,000 to 21,700, a growth rate of 50 per cent (Brogan 2001). The rapid entry of new players into the industry saturated high-volume markets, driving down margins in the process. Furthermore, the relatively simple business model pursued by agencies both large and small offered few opportunities for corporate reinvention. So while the 1990s were the decade when the TSI matured in terms of service offerings and business strategies, it also was the period in which the TSI experienced its greatest instability and threats to continued expansion. These were brought on by the limits of the standard business model based on high-volume placements and intense, zero-sum competition within maturing markets (Theodore and Peck 2002). The TSI experienced not one but two trajectories of growth during the 1990s. Emerging from the recession at the beginning of the decade, temporary employment grew at an average annual rate of 17 per cent. But after 1995, the TSI’s growth rate slumped by half, to 8 per cent per annum, before stalling altogether just prior to the recession that began in March 2001. This flattening of the TSI growth profile in the second half of the 1990s reflects the fact that, for all its expansionary momentum, the staffing sector began to run up against the limits to its established growth strategy. In turn, these reveal a great deal not only about the internal dynamics of the TSI but also its changing relationship to the wider economy. While the industry achieved some measure of success in its push up market into better-paying and more highly-skilled occupational niches, beyond the conspicuous successes of a small number of specialty firms, the overwhelming majority of agencies continue to rely on the traditional model of high-volume, low-margin growth. Yet as the abrupt collapse in the TSI market in 2000–01 illustrated, the industry has certainly not slipped the leash of the business cycle. In the period between the early 1970s and 2000, the sector’s relationship with the business cycle has changed (Figure 2.1), reflecting its trajectory of increasingly robust growth, coupled with successively improving downswing performance. In terms of employment growth, the TSI consistently outperformed the manufacturing and services sectors, posting remarkable expansions in the long upswings of 1974–79 (74.1 per cent), 1982–89 (153.6 per cent), and 1991–97 (140.0 per cent). This supports Segal and Sullivan’s (1997) assertion that the TSI remains—in the context of a well-established secular growth pattern—a cyclically-sensitive sector: in contrast to the

Upswing 1970–73

Downturn 1973–75

Disorganised growth

Upswing 1975–79

Cyclical decline

Downturn 1979–80

Upswing 1980–81

Downturn 1981–83

Source: Bureau of Labor Statistics.

Upswing 1983–90

Downturn 1990–91

Upswing 1991–2001

Downturn 2001

Destructive growth

Total employment

Steep cyclical decline

Temporary employment

Countercyclical growth

Developmental growth

Figure 2.1 TSI employment change (annualised) and the business cycle, 1970–2001.

⫺20

⫺15

⫺10

⫺5

0

5

10

15

20

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cyclical swings in overall employment, which since the early 1970s have been in the region of ⫺2 per cent during recessions and ⫹4 per cent in upswings, TSI employment has demonstrated considerably greater volatility, fluctuating by ⫺8 per cent and ⫹30 per cent across the cycle. This suggests that at least a certain proportion of the TSI has continued to perform the role of a cyclical buffer vis-à-vis the wider economy, expanding more sharply in upturns—when temporary employment tends to precede the upturn in aggregate employment by 3–6 months—but by the same token also tending to lead the macroeconomy into recessionary periods. In the 1991–93 upturn, for example, the growth of temporary employment accounted for fully one-third of aggregate job growth in the first year of the upturn and, across the first two years of the recovery, one-fifth of aggregate job growth (Segal 1996; Segal and Sullivan 1997). Conversely, the economic slowdown that began in the TSI during the Q4 2000 before being officially declared a recession in March 2001 saw TSI employment levels fall sharply, especially in the manufacturing sector. After registering its all-time peak in employment in April 2000, the TSI led the country into another recession, shedding some 547,000 jobs in the period to April 2003 (BLS 2003). In the opening months of the recession, temporary employment losses accounted for nearly 40 per cent of all job cuts nationwide. Between the official start of the recession and its conclusion in November 2001, the TSI lost nearly 310,000 jobs. In this context, the TSI has ceased simply to ‘respond’ to cyclical shifts in the labour market. Increasingly, it has begun to recursively shape the cycle itself, at least in terms of patterns of labour-market adjustment. It has been argued, for example, that in efficiently matching workers with vacancies and in increasing the speed at which positions are filled, the TSI has brought about a measurable improvement in labour-market flexibility, such that the ‘natural rate of unemployment’ was reduced by 0.4 percentage points during the 1990s, when the burgeoning market for temporary labour accounted for fully one half of the aggregate reduction in unemployment (Katz and Krueger 1999). Jobs in the TSI sector accounted for 8.1 per cent of nonfarm employment growth in the United States during the period 1991–99 (Brogan 2000), meaning that one in every 12 new jobs created during the ‘Greenspan boom’ was filled by a staffing agency. An implication is that the TSI is beginning to assume quasi-structural roles in the operation of the labour market. Not only, then, is the TSI sector growing in size, the regulatory functions it performs at different points in the business cycle have been changing. It follows that the TSI’s ‘regulatory presence’ is now an undeniably prominent one in the U.S. labour market, even as business conditions in the sector itself remain somewhat volatile. The ready availability of the ‘temp option’ in the contemporary U.S. job market, and the large numbers of workers who (repeatedly) cycle through temporary job slots, both speak to the far-reaching effects of temp agencies on employment and hiring

The temporary staffing industry in the U.S.

35

norms, despite the fact that the relatively modest stock count of temporary employees (approximately 3 million in 2002) might suggest otherwise (see Gonos 1998; Kalleberg 2000; Vosko 2000; Peck and Theodore 2001).

Conclusion While it may still be appropriate to claim that TSI markets are ‘very sensitive to the business cycle, rising and falling with the state of the economy’ (Kalleberg 2000, p. 346), it is perhaps more accurate to say that while the TSI remains a cyclical industry to some extent, it is certainly no longer cyclical in the way that it once was. For the TSI, a pattern of systemic cyclicality—in which the industry was mainly oriented towards a buffer function on the margins of the mainstream economy—has progressively given way over the past three decades to a new pattern of systemic flexibility—as the industry has diversified in terms of both market composition and functional relations, offering a range of flexibility packages to an expanded and heterogeneous client base. The close integration that has occurred between TSI market growth strategies, the reorganisation of work systems and corporate structures, and the processes of competitive and regulatory restructuring in the labour market means that this supposed epitome of the contingent economy has, paradoxically, itself now become something of an institutional fixture in the labour market as well as growth industry in its own right.

Acknowledgements We are grateful to Chirag Mehta for assisting in the data analysis and for countless discussions of the themes presented in this chapter. This research was supported by grants from the Ford Foundation and Rockefeller Foundation. This chapter is based on the article, ‘The Temporary Staffing Industry: Growth Imperatives and Limits to Contingency’, published in Economic Geography 2002, Vol. 78 No. 4, pp. 463–493, with permission of Clark University.

References BLS [Bureau of Labor Statistics] 2003, Current Employment Statistics, http://www.bls/cgi-bin/surveymost (Accessed 4 August 2003). Brogan, T. W. 2000, Thriving in a Dwindling Pool of Available Workers: ASA’s Annual Analysis of the Staffing Industry. American Staffing Association, Washington, DC. Brogan, T. W. 2001, Scaling New Heights: ASA’s Annual Analysis of the Staffing Industry. American Staffing Association, Washington, DC. Business Week 1961, ‘Temporary hiring climbs up the ladder’, Business Week, July 15:47–54. Estevão, M. and Lach, S. 2000, ‘The evolution of demand for temporary help

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supply employment in the United States’, in F. Carré, M. A. Ferber, L. Golden, and S. A. Herzenberg (eds), Nonstandard Work: The Nature and Challenges of Changing Employment arrangements. Industrial Relations Research Association, Champaign, IL: 123–144. Gannon, M. J. 1978, ‘An analysis of the temporary help industry’, Labor Market Intermediaries, Special Report No. 22, National Commission for Manpower Policy. Washington, DC: 195–225. Gonos, G. 1998, ‘The interaction between market incentives and government actions’, in K. Baker and K. Christensen (eds), Contingent Work: American Employment Relations in Transition. Cornell University Press, Ithaca, NY: 170–191. Gottfried, H. 1992, ‘In the margins: flexibility as a mode of regulation in the temporary help service industry’, Work, Employment and Society, 6:443–460. Kalleberg, A. L. 2000, ‘Nonstandard employment relations: part-time, temporary and contract work’, Annual Review of Sociology, 26:341–365. Katz, L. F. and Krueger, A. B. 1999, ‘The high pressure labor market of the 1990s’, Working Paper #416. Industrial Relations Section, Princeton University, Princeton, NJ. Lewis, W. M. and Molloy, N. H. 1991, How to Choose and Use Temporary Services. American Management Association, New York. Mangum, G., Mayall, D., and Nelson, K. 1985, ‘The temporary help industry: a response to the dual labor market’, Industrial and Labor Relations Review, 38:599–611. Mehta, C. and Theodore, N. 2002, ‘Paying the price for flexibility: unemployment insurance and the temporary staffing industry’, Working USA, 6:84–110. Moore, M. A. 1965, ‘The temporary help service industry: historical development, operation, and scope’, Industrial and Labor Relations Review, 18:554–569. Ofstead, C. M. 2000, ‘Temporary help firms as entrepreneurial actors’, Sociological Forum, 14:273–294. Parker, R. E. 1994, Flesh Peddlers and Warm Bodies: The Temporary Help Industry and Its Workers. Rutgers University Press, New Brunswick, NJ. Peck, J. and Theodore, N. 1998, ‘The business of contingent work: growth and restructuring in Chicago’s temporary employment industry’, Work, Employment and Society, 12:655–674. Peck, J. and Theodore, N. 2001, ‘Contingent Chicago: restructuring the spaces of temporary labor’, International Journal of Urban and Regional Research, 25:471–496. Peck, J. and Theodore, N. 2002, ‘Temped out? Industry rhetoric, labor regulation, and economic restructuring in the temporary staffing business’, Economic and Industrial Democracy, 23:143–175. Segal, L. M. 1996, ‘Flexible employment: composition and trends’, Journal of Labor Research, 17:525–542. Segal, L. M. and Sullivan, D. G. 1997, ‘The growth of temporary services work’, Journal of Economic Perspectives, 11:117–136. Silber, J. M. 1997, The Temporary Staffing Industry: Evolving Toward the Professional Services Model. Gerard Klauer Mattison, New York. Theodore, N. and Peck, J. 2002, ‘The temporary staffing industry: growth imperatives and limits to contingency’, Economic Geography, 78:463–493. Vosko, L. F. 2000, Temporary Work: The Gendered Rise of a Precarious Employment Relationship. University of Toronto Press, Toronto.

3

Temporary agency work in the EU An overview Alex de Ruyter

Introduction One of the more controversial areas of labour market change in recent years has been through the resurgence of temporary employment in the European Union (EU) over the last 20 years. Temporary employment is a heterogeneous category of employment that includes fixed-term, casual and agency work; and can include both wage earners and the selfemployed. In this chapter, developments in temporary agency work across the EU are examined. Employment agencies constitute a heterogeneous category of organisations; including out-placement agencies, contract labour agencies, and agencies for the recruitment and placement of foreign workers (ILO 1994, pp. 12–13). It should be noted that in this chapter it refers to work through private employment agencies, through which the individual has a contract of employment (usually temporary). Thus the worker, the temporary work agency (hereafter referred to as the TWA) and the user firm are typically linked by a triangular arrangement under two types of contract: a temporary (fixed-term) contract between the worker and the TWA, and an assignment contract between the TWA and the purchaser enterprise (ILO 1994, p. 15; Burgess and Connell 2002, p. 2). Under this definition, the worker is legally employed by the TWA, with the purchaser enterprise taking on an ancillary role, mainly that of supervision and health and safety. The employee status of many agency workers however, is not always determinate (Caire 1989, p. 194), and in actuality depends upon the regulatory structure found in EU states. If the relationship between an agency worker and the purchaser enterprise is not one of employment, then the agency worker might not be covered by most employment laws (Forde 1997, p. 6). In some areas of dispute, e.g. in the UK for occupational health and safety, or discrimination, both bodies could be responsible, or neither – making it difficult for TWA workers to get redress in such cases (Hegewisch 2002, p. 5). Thus, work with TWAs can be highly precarious and intermittent, as evidenced for the United Kingdom (UK). Only 13 per cent of UK

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temporary agency workers could claim continuous tenure of more than two years (Hegewisch 2002, p. 5). The spectrum of agencies can range from large worldwide organisations through to small local outfits that are barely distinguishable from subcontractors. At the extreme end, work with agencies can be highly informal and clandestine (as with the practice of subcontracting), as with illegal immigrants for example, whose status precludes them from social security benefits and enables unscrupulous employers to evade social security contributions (Mendoza 2000). The rise of TWAs has been one consequence of the externalisation of non-core operations by many firms over the last 30 years (ILO 1994, p. 9). The dramatic rise of agency work at an international level was reflected in the fact that a labour hire firm, Manpower, claimed to be the largest private employer in the world, with some 2.1 million temporary workers worldwide during 1999 (Storrie 2002, p. 27). Manpower originated in the US in 1948, and opened its first offices in the UK in 1956, and France in 1957. The increasing use of agency workers in the EU is reflected in the fact that Manpower claims France to be its largest market, with the UK in third place (Manpower 2003). Other large agencies such as Randstad, originate from within the EU: Randstad claims it has the largest market share in the Netherlands and is also highly active in the United States and Germany (Randstad 2003).

Extent and growth of TWAs Estimates of the number of TWA workers in the EU can be problematic, given the differences in definitions used across member states. Data must generally be obtained from national sources, as the European Labour Force Survey (ELFS) does not distinguish between agency workers and fixed-term contract employees. It has been a rapidly growing sector, with the number of TWA workers in most member states doubling, or even quadrupling since 1992. In Italy for example, industry figures suggest a 40 per cent increase in the worker turnover through TWAs over 2001 figures, at some 900,000 (EIRR 2003, p. 29). Table 3.1 provides a breakdown of the extent and growth of temporary agency work in the EU as at 1999. Evident from Table 3.1 is that France had the highest number of TWA workers, at 623,000 during 1999. The UK and the Netherlands also make significant use of TWAs. As a percentage of total national employment, however, the Netherlands appeared to be the most intensive user of TWAs, with TWA workers accounting for 4 per cent of total Dutch employment, relative to the EU average of 1.2–1.4 per cent (Storrie 2002, p. 28) (see Chapter 5 for further discussion). TWA workers also accounted for a relatively high proportion of total employment in France (2.7 per cent), Luxembourg (3.5 per cent) and the UK (2.1 per cent if UK 1 is used) in the same period (Storrie 2002, p. 28). A further examination of the characteristics of TWAs and agency workers is presented in Table 3.2.

Temporary agency work in the EU

39

Table 3.1 Temporary agency work in the EU, 1999 Agency workers

Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxembourg The Netherlands Portugal Spain Sweden The UK (1)

24,277 62,661 18,639 15,000 623,000 243,000 0 9,000 31,000 6,065 305,000 45,000 109,000 32,000 557,000

The UK (2)

254,000

EU total (the UK 1) EU total (the UK 2)

2,080,642 1,777,642

Share of Growth all agency workers in the EU (%) 1.2 3.0 0.9 0.7 29.9 11.7 0.0 0.4 1.5 0.3 14.7 2.2 5.2 1.5 26.8

100.0 –

Quadrupled since 1992 Doubled since 1992 Five-fold increase since 1992 From 11,000 in 1996 Rapid growth Doubled since 1992 – Moderate recent growth Very rapid recent growth Doubled since 1992 Doubled since 1992 Doubled since 1995 Five-fold increase since 1995 Rapid recent growth Three-fold increase since 1992 – –

Source: Storrie 2002, pp. 28, 31; National figures from national statistical bodies. Notes UK (1) based on a government report that includes self-employed and multiple job-holders (agency work as second job). UK (2) from LFS. Data on total employment from ELFS: can differ from national definitions. The Netherlands LFS data excludes those working less than 12 hours per week. Spanish data presented as flows, not stocks (Storrie 2002).

The turnover of TWA workers is quite rapid: for example, in Spain during 1999, 43.6 per cent of TWA contracts were for one month or less (Storrie 2002, p. 45). Hence, it is important to distinguish between stock and flow measures of TWA work (OECD 2002, p. 136). A gender breakdown of TWA workers demonstrates that the overwhelming majority of agency workers in the EU are men – only in Scandinavian countries are a majority of agency workers female (OECD 2002, p. 31). This is perhaps related to the industry sectors that agency workers are predominantly found in – it is notable that industry and construction are the main areas of utilisation for TWAs across the EU. This is particularly evident for Ireland, which had experienced a lengthy construction boom within relatively tight labour market conditions (Burgess and Connell 2002, p. 7). In Scandinavian countries, health and services are more important users of TWAs, hence the higher female share. Also notable is that in the UK, the financial sector is a key user of TWAs,

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Table 3.2 Characteristics of agency work and workers in the EU, 1999 Country

Age

% Female

Sector

Austria

n/a

16

Belgium

Average 30, under 25 – 46% n/a

41

Average 32, under 25 – 19% Average 29, under 25 – 28% Getting older Average 32, under 25 – 37% – n/a

78

51% industry and construction 65% industry and construction 23% industry and construction 27% health care 27% clerical Mainly services 22% clerical work 58% industry and construction

Denmark

Finland France Germany Greece Ireland Italy

70

30 22 – n/a

Average 30, under 25 – 40% n/a

38

The Netherlands

Average 27, under 25 – 52% Getting older

49

Portugal

Average n/a, under 25 – 38% Average 27, under 25 – 51% Average n/a, under 30 – 45%

40

Luxembourg

Spain Sweden The UK

Average 32, under 25 – 31% Getting younger

25

43 60 47

50% industry and construction – 80% industry and construction 63% industry and construction 53% industry and construction (30% construction) 33% industry and construction

Other

46% are workers with the lowest level of skills –

Many foreign workers Very even sector distribution Many students, 40% in parental home

43% industry and construction 40% industry and construction 12% industry and construction Health sector significant 26% industry and construction 29% financial services Much clerical work

Source: Storrie 2002, p. 31.

accounting for 29 per cent of TWA work, while in the Netherlands 40 per cent of TWA workers were students who lived with their parents. An examination of age shows that agency workers are relatively young, with the average age in EU countries between 27 and 32, while ELFS data for 1999 and 2000 reveals that 41 per cent of those in temporary jobs were aged under 21 (Burgess and Connell 2002, p. 7). Furthermore, there is evidence to suggest that foreign workers are overrepresented in the ranks of temporary employees, including agency workers. An Organisation of Economic Cooperation and Development

Temporary agency work in the EU

41

(OECD) (2001) analysis indicated that the temporary employment of foreigners was becoming more widespread in the EU during the 1990s. In the UK in 1998, 40,800 persons were ‘working holidaymakers’. In contrast, in France and Germany the vast majority of foreign temporary workers in 1998 were seasonal workers (OECD 2001, p. 172). However, such employment diverges into two distinct skill categories. There are those individuals in industries where there are skill shortages such as health, Information and Communication Technology (ICT) and education; here governments often enacted measures to attract such workers as EU economies grew in the 1990s (OECD 2001, p. 171). However, there are also foreign workers in low-skilled industries – where agency work is far more likely to be clandestine and involve illegal immigrants. Evidence from the Netherlands (EIRR 2002, p. 27) indicates that many TWAs provide illegal foreign workers for employers, and the illegal status of such workers precludes them from many employment benefits and results in substandard working conditions. Estimates of the number of illegal workers are difficult to obtain – in the Netherlands alone there could be between 46,500 and 116,000 such individuals (EIRR 2002, p. 27). These workers are typically found in low-paid occupations for which it is difficult to recruit Dutch workers, such as construction, transport, catering, cleaning and agriculture. It is an industry sector pattern that is generally repeated across other EU countries (OECD 2001, p. 175). Thus, the evidence above generally suggests that agency workers are largely employed in low-skill jobs that can serve as entry to the labour market, but provide no guarantee of a bridge to permanent work (as with the unemployed for example). Felstead et al. (2001, p. 49) utilising SCELI data, find that temporary workers in the UK appear to be less skilled than their permanent counterparts. Employee surveys and case studies reinforce the image of the agency worker as being less skilled than regular employees. A recent paper from the European Foundation for the Improvement of Living and Working Conditions (2002, p. 10) found that those on a temporary agency contract across the EU were more likely to engage in repetitive work and have less control over the pace of their work than fixed-term contract or regular employees. Agency workers were also more likely to work in uncomfortable positions, or experience vibrations and noise while undertaking their tasks (European Foundation for the Improvement of Living and Working Conditions 2002). Further, Goudswaard and Andries (2002) found that temporary workers across the EU (including agency workers) were less skilled and received less training. They were also less likely to have a stable basic salary, or regular work hours or autonomy and control over days off than permanent employees (European Foundation for the Improvement of Living and Working Conditions 2002, pp. 31–8). While the data for these findings has been aggregated and can conceal national and industry sector differences, the general picture is one of

42 Alex de Ruyter agency workers being used to fulfil peripheral, low-skill duties within organisations.

Why has TWA use grown across the EU? Much of the theoretical literature on temporary employment has focused on the flexibility advantages it offers employers (Remery et al. 2002; Korpi and Levin 2001). In this context, on the demand-side increased competition and changes in the nature of production necessitate the need for companies to more readily adjust their workforce to changing demand. The mid to late 1990s were a period of economic growth in the EU, which in turn enabled many workers to adjust their expectations and seek better jobs. The OECD (2001, p. 185) argued that this created labour shortages in unattractive low-skill industries. On the supply-side, such labour shortages and the desire for flexibility have been accommodated by rising female participation across many EU countries, and as seen, an increase in the number of temporary (including foreign) workers during the 1990s. In countries such as the UK, the public sector was subject to fiscal stringency throughout the 1980s and 1990s and large-scale privatisations occurred. This was demonstrated through policies such as outsourcing and created conditions ideal to the growth of TWAs (Gray 2002). In some cases of contracting out, subsequent employment through agencies has been clearly to the detriment of wages and conditions of workers concerned (see Chapter 4 for further discussion). Domestic workers at Hillingdon Hospital in London for example were required to work for lower wages and forego pension rights, sick pay and penalty rates when work was contracted out to an agency in 1995 (fHUMAN 1997, p. 8). Managers faced with the need to improve the bottom line have also increasingly turned to using temporary workers across areas such as nursing and teaching. Perversely, the increased emphasis on market discipline has resulted in high quit rates that in turn have led to staff shortages across occupations such as social work and teaching (Conley 2002) – positions which could often only be filled through the use of agency workers: many of them foreign in origin (OECD 2001). The use of agency workers has also been found to be associated with increased job insecurity, with the 1998 Workplace Employee Relations Survey (WERS) revealing that only 56 per cent of permanent workers in firms that use agency workers felt secure, as opposed to 66 per cent of permanent workers in firms where no agency workers were used (Cully et al. 1999, p. 168). Indeed, temporary workers such as agency workers are ideal for ‘flexibility’ as they can easily be dispensed with when their presence is no longer required. Conversely, permanent employees, who are covered under a greater range of employment legislation, are more difficult to dismiss. Thus, as Korpi and Levin (2001, p. 128) note, according to this (neo-liberal) perspective, the presence of a large body of permanent

Temporary agency work in the EU

43

employees with a high degree of employment protection in EU countries makes employers reluctant to hire, thus generating high unemployment across EU countries. In this context then, the growth of TWAs across Europe can be seen as resulting from employers seeking to evade employment protection laws, in order to achieve labour flexibility. The neo-liberal argument in turn has had a strong influence in policy circles, with the OECD for example in its 1994 Jobs Study, calling for the ‘reform [of] employment security provisions that inhibit the expansion of employment in the private sector’ (OECD 1998, p. 171). In practice this has meant reducing the scope of employment protection legislation, and legislating to extend the scope of TWA activity across EU countries, or alternatively removing constraints on TWA activity. European Union governments, trying to reduce unemployment, have for the most part acceded to the neo-liberal argument. Thus, in nearly every EU country over the last 10 years, governments have enacted legislation to enable TWAs to operate more extensively (see the next section for a description of TWA legislative developments across EU countries). Indeed, as at 2003, Greece is the only country in the EU to prohibit TWA activity. The push for flexibility is evident at the EU level, with the European Employment Strategy (arising from the 1997 Lisbon Jobs Summit) formulated largely on the basis of neo-liberal thinking (Seferiades 2003). The European Employment Strategy (EES) stipulates entrepreneurship, i.e., policies to reduce non-wage labour costs (which can include reducing the scope of Employment Protection Laws (EPL)) – particularly for low-wage workers and SMEs; and adaptability, i.e., the promotion of flexibility (Seferiades 2003, p. 191, emphasis in original) as key objectives for member countries to pursue. EU member countries are required to submit National Action Plans to the Commission for scrutiny as evidence of progress with the EES (Seferiades 2003). With the predominantly low-wage, low-skill Thatcherite economies of Eastern Europe scheduled for EU entry in 2004, the pressures to implement a neo-liberal agenda within the EU will only increase. The neo-liberal argument, however, is questionable when it is subject to empirical validation. By implication, according to the neo-liberal view, one would expect countries with a high rate of temporary employment to have lower unemployment rates. However, the evidence for this at an aggregate level across the EU is rather weak. It is notable that the country with the highest incidence of temporary employment in the EU throughout the 1990s, Spain, had the highest unemployment rate (OECD 1999). Further, OECD (1999, p. 74) analysis suggests that there is little, if any correlation (R2 ⫽ 0.001), for a link between the strictness of employment protection laws (EPL) and the extent of overall temporary employment across OECD countries. There is some evidence of a correlation (R2 ⫽ 0.11) between EPL strictness and the extent of youth temporary employment (OECD 1999). However, it must be noted that this correlation pertains to

44 Alex de Ruyter all forms of temporary employment (casual, agency, fixed-term etc.), a correlation which itself could conceal differences between different categories of temporary employment. In addition, employment change and the growth of non-standard employment mean that the relevance of many of the indicators used to ‘measure’ EPL strictness could now be questionable (Bertola et al. 2000). This only serves to demonstrate that aggregate analysis can reveal little to nothing about the actual pressures that shape the decision to use TWAs in the workplace, and more importantly, what the experiences of TWA workers are over time. Industry survey data (Burgess and Connell 2002, p. 7) indicates that flexibility is an important factor in whether to use TWAs, as shown in Table 3.3. From Table 3.3 it is apparent that ‘seasonal fluctuations’ and ‘unexpected peaks’ account for 44 per cent of the responses as to why TWAs are utilised. Similarly, for the UK only, the 1998 WERS (Cully et al. 1999, p. 37) found that short-term cover (59 per cent) and adjusting the size of the workforce in response to demand (40 per cent) were the most commonly cited reasons for using TWAs. It is also not clear whether cost is an important factor in using TWAs. Gray (2002, p. 662) cites UK Labour Force Survey evidence that agency workers earn more per hour than other temporary staff (except plant and machine operators and male clerical workers). In general male temps and those aged over 22 earn less per hour than permanent employees, but females and youth earn more (Gray 2002). Some correlation of TWA worker numbers with the business cycle is also evident in some countries, with Boockmann and Hagen (2001) reporting that the number of TWA workers appeared to vary pro-cyclically for the old West Germany. However, the OECD (2002, p. 136) argues that it is not yet possible to distinguish between business cycle effects and the secular rise in TWA worker numbers on TWA growth. These findings suggest that the ability to adjust worker numbers in the face of varying demand is an important reason for using TWAs. However, it is notable that ‘recruitment’ and ‘regular work’ (i.e. core duties) only accounted for 15 per cent of responses in Table 3.3. Thus, while TWAs provide the enterprise with a high degree of numerical flexibility, it is not apparent that TWA workers are being used to undertake core duties in the workplace, in effect to replace permanent employees. The fact that ‘specialised tasks’ only accounted for 4 per cent of responses in Table 3.3 indicates that TWA workers appear to be relatively low skilled. It could be argued then, prima facie, that TWA workers are being used to carry out short-term low-skilled tasks, and form part of a growing, inferior, flexible, secondary sector of workers largely exempt from EPL (Bertola et al. 2000). The International Labour Office (ILO 1994, p. 35) argued that rising unemployment across EU countries could have assisted the growth in temporary agency work, in that high unemployment had forced an

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Table 3.3 Reasons for the use of TWA workers in the EU Reason Leave replacements Seasonal fluctuations Unexpected peaks Recruitment Uncertain growth Specialised tasks To do regular work for another reason To do regular work cheaper Total

% 27 23 21 11 9 4 3 1 100

Source: CIETT 2000.

increasing number of job seekers to look for work further afield and hence resort to private work agencies. In this respect the following statement (ILO 1994, p. 15) is of interest: They [temporary work agencies, or TWAs] are also increasingly sought out by workers, especially by first-time job seekers; while they still value full-time employment, these workers see TWAs as a means of gaining a foothold in the labour market as a necessary preliminary to obtain a stable job. Explicit in this statement is the assumption that employment with temporary work agencies can constitute a bridge to permanent employment for a considerable number of workers, who are thus ‘choosing’ to work for TWAs. It is not apparent however, why workers would increasingly perceive TWAs as a means of securing access to a stable job. One of the sources cited for the ILO study (1994, p. 22) was a 1982 French study carried out by the ‘profession’ (assumedly a TWA or representatives thereof) on the motives and behaviour of agency workers. The nature of this study aside, there is no a priori reason as to why this should be the case on a general level. Indeed, this argument is difficult to substantiate without being able to ascertain the experiences of TWA workers over time. Storrie (2002, p. 60) presents findings from a 1999 industry survey (cited in CIETT 2000) of the experiences over time of a panel of agency workers in Germany, France, the UK, the Netherlands and Spain (who account for over 90 per cent of EU TWA workers). The findings suggest that there is some evidence of TWAs acting as a bridge to permanent employment. Of those working for a TWA in the first half of 1999, 12 per cent subsequently obtained an open-ended job with the client company, while a further 18 per cent obtained an open-ended contract with another company. However, it is also notable that the majority of TWA workers in the first

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Alex de Ruyter

half of 1999 were employed (67 per cent) 12 months previously, suggesting little recruitment from among the unemployed (although this may conceal inter-country differences among the respondents). While agency work can serve as a bridge to permanent employment, it is not clear that this is likely for a majority of agency workers, with 36 per cent of TWA workers still working for agencies 12 months later, and an additional 13 per cent employed on a temporary contract (Storrie 2002). Thus, some TWA workers are used for probationary purposes. Certainly, agency employment provides distinct advantages to firms as the agency worker bears all the risks when employers are screening them for potential permanent positions (Forde 2001, p. 635). However, it appears that other TWA workers are used to provide short-term flexibility for the firm in adjusting to varying demand and the absence of regular staff. Indeed, such agency workers can be used for ‘repeat assignments’ with the same client when demand rises again, as case study evidence from the UK indicates (Forde 2001, p. 636). The use of agency work in this manner thus provides distinct advantages over temporary contracts, for which the employer must usually provide entitlements to the worker such as sick leave (Forde 2001). In summary, whether the use of TWAs can be attributed to the presence of strict EPL across EU countries seems questionable from the evidence presented to date. Even in the complete absence of strict EPL, TWAs are still being utilised, as their presence in the highly deregulated UK labour market demonstrates. Rather, the evidence appears to suggest that structural conditions, namely, the nature of product demand facing a firm, the degree of skill required for the job and any disutility of work involved in performing the tasks required, are the key determinants of whether to use TWAs. In this situation, it is the absence (or alleviation) of the regulatory framework that has allowed TWAs to thrive and grow. In situations where firms were prevented from using TWAs, they would be forced to use other labour adjustment mechanisms, such as overtime, or extra time for part-time employees. The next section examines the nature of the regulatory framework governing TWA operations across EU countries.

The regulation of TWAs As TWA work typically represents a hybrid comprising an employment contract with the agency worker and a commercial contract with the user firm (Storrie 2002, p. 1), the regulation of TWAs can be complex. This has been noted with the ambiguities in many countries pertaining to the employment status of TWA workers. Agency workers are defined as having an employment contract with the TWA in all countries of the EU, except for the UK and Ireland (Storrie 2002). In the UK, agency workers can be employed by the agency or user firm. However, an amendment

Temporary agency work in the EU

47

arising from the Employment Relations Act 1999 aims to clarify the status of TWAs as employers. In Ireland, the organisation that pays the wages is considered to be the employer, thus obscuring whether the agency or the user firm is the employer. However, the user firm appears to have far more extensive obligations to the agency worker than in other EU countries, including liability for unfair dismissal (Storrie 2002, p. 8). As stated earlier, it has been argued that the growth of TWAs in the EU represents one example of how the regulators of European capitalism have attempted to balance the conflicting needs of employers and workers. This inherent tension can be seen in the legislation of national governments to enable the use of TWAs. Under pressure from bodies such as the International Monetary Fund (IMF) and the OECD, employer organisations and neo-liberal academic commentators, EU governments successively embarked on legislative change during the 1990s that legalised the status and extended the scope of TWA activity. From Table 3.4 it is notable that TWA employment was illegal in Greece, Italy, Spain and Sweden in the late 1980s. By 1999 TWA employment was illegal in Greece

Table 3.4 Regulation of TWAs Types of work for Restrictions on which TWA number of employment is legal renewals Scale 0 to 4 a

Austria Belgium France Germany Ireland The Netherlands The UK Greece Italy Portugal Spain Denmark Finland Sweden

Late 1980s

Late 1990s

3 2 2.5 2 4 3 4 0 0 1 0 2 4 0

3 2 2 3 4 3.5 4 0 1 2 2 4 4 4

■ ■

Yes/no Late 1980s

Late 1990s

Yes Yes Yes Yes No Yes No – – Yes – Yes n/a –

Yes Yes Yes Yes No Yes No – Yes Yes Yes No No No

■ ■

Maximum cumulative duration of temporary work contracts Months Late 1980s

Late 1990s

No limit 2 24 6 No limit 6 No limit – – 9 – 3 n/a –

No limit 15 18 12 No limit 42 No limit – No limit 9 6 No limit No limit 12

Source: OECD (1999, p. 62) Note a Scored 0 if TWA employment is illegal, 1 to 3 depending upon the range of restrictions and 4 where no restrictions apply.

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only. In countries where TWA employment was already legal in the late 1980s, legislative changes saw extensions on the maximum duration of TWA contracts and an easing of the restrictions on the number of renewals. This has run concurrent with EU measures to regulate nonstandard employment and ensure that all employees have access to fundamental employment rights, irrespective of the nature of their employment contract. In response to the growth of temporary employment (including TWAs), the EU recently issued a directive granting temporary workers the same rights as permanent employees. Namely, ‘a temporary worker may not be treated worse, in terms of basic working conditions, than a comparable worker who is defined as a worker in the user undertaking an identical or similar job’ (cited in Burgess and Connell 2002, p. 8). However, temporary workers who have an open-ended contract with an agency were exempt. In addition, restrictions on employment benefits could occur if the user firm can argue that the TWA worker is in ‘a different situation from a normally comparable worker and cannot therefore be treated the same way’ (Burgess and Connell 2002, p. 8). Burgess and Connell (2002) argue that comparability could be a major problem for temporary workers seeking equal treatment, as many temporary workers are relatively low-skilled, so finding comparable positions could be difficult. The directive clearly provides employers with a means to evade giving equal benefits to temporary workers, and thus should only be seen as a first step towards regulating the conditions of agency workers. This directive was translated into national law in 2002 (Druker 2003, p. 6). The EU has since tried to formulate an Agency Workers’ Directive, to give agency workers similar statutory rights to regular employees. However, at the time of writing (July 2003) the Directive appears to be frozen, held up by a seemingly unlikely alliance of the International Confederation of Temporary Work Businesses (CIETT), employers, and four national EU governments – with the UK Blair government leading the charge (Druker 2003, p. 3; see also Druker and Stanworth in this volume). Druker (2003) argues that in contrast to the Temporary Workers’ Directive, which affected a wide range of employers, the Agency Workers’ Directive faced specific opposition from a peak body, and has in turn encouraged the leading agencies to adopt more sophisticated lobbying techniques. The issue of comparability is problematic when it comes to agency workers as there could be situations where no comparisons with a host company can be made – as when an agency supplies all the workers for one client firm for example (Druker 2003, p. 10). A situation of strict comparability could also entail constant changes of terms and conditions for an agency worker as they move from one client firm to another – which would also pose problems for the agency worker as well as the agency (Druker 2003). With the current EU presidency of the Berlusconi government and expansion to the East due to take place in 2004, it would seem

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that the opportunity for further EU legislative developments is diminishing (Druker 2003). Regulations governing TWA use then are still primarily determined at national level. As will be seen, these vary widely in terms of defining agency work; who constitutes the employer; and what benefits TWA workers are entitled to. The material following briefly outlines the principle regulations governing TWA workers across the major EU countries (excluding Denmark, the Netherlands and the UK, which are discussed in other chapters). Of the countries examined, it should be noted that in France, Germany, Italy and Spain, TWAs are forbidden to engage in related activities such as recruitment and subcontracting (Storrie 2002, p. 6). •

France TWA activity is monitored at the level of the regional Labour Inspectorate, who require the TWA to guarantee that worker payments are covered in case of financial insolvency (Storrie 2002, p. 5). TWAs may not operate in public administration (Storrie 2002, p. 10).

•

Germany TWAs are regulated and monitored at a federal level, and must provide regular reports detailing their market activities. Similar to France, the TWA is also required to provide a guarantee of payments to workers in case of bankruptcy (Storrie 2002, p. 6). TWAs may not operate in the construction sector (Storrie 2002, p. 10).

•

Greece As at 2003, there are no regulations on TWA activity in Greece, as TWAs are illegal. This provides a marked contrast to the incidence of the self-employed without employees, for which Greece has the highest level in the EU (Goudswaard and Andries 2002). Many of these employees are effectively surrogate employees and work in agriculture. The similarity to agency workers is evident in their ambiguous employment status and significant exclusion from most employment benefits.

•

Ireland In contrast to France and Germany, agencies are not required to guarantee worker payments in the case of insolvency. They must keep records of their activities, but there is no obligation to report to regulators. TWA licences can be renewed annually (Storrie 2002, p. 6), and they may operate in all sectors (Storrie, 2002, p. 10).

•

Italy TWA licences are issued by the Ministry of Labour and can become indefinite after two years. The TWA must provide financial guarantees

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Alex de Ruyter to workers in case of insolvency (Storrie 2002, p. 6), but they may operate in all sectors (Storrie 2002, p. 10). Recent Italian government legislation (July 2002) has expanded the scope of activities TWAs may operate under, with the introduction of staff leasing. Under this practice, employers will be able to hire staff from TWAs on a fixed-term or open-ended basis. However, the workers involved would remain employees of the agency (EIRR 2003, p. 29). The legislation also enabled TWAs to enter the job placement market (EIRR 2003).

•

Spain Licences are initially issued for three years, after which they can be of infinite duration. The TWA must also provide annual financial guarantees to regional and/or national regulatory bodies (Storrie 2002, p. 6). Similar to France, TWAs may not operate in public administration (Storrie 2002, p. 10).

Implications of TWA growth While TWA employment is not significant in its extent, the rapid growth of TWA use in the last decade does draw attention to the need to consider the implications of TWA use, both for TWA workers, and the wider EU economy. While TWA work is not widespread in the EU, it is a rapidly growing form of employment and is indicative of a growing proportion of the workforce who are denied standard employment benefits. There is a clear link between rising job insecurity and the increasing number of workers who lack standard employment benefits (De Ruyter and Burgess 2003). With agency workers the lack of clear employment status can preclude them from employer pension schemes, which can compound the insecurity such workers face as they contemplate retirement, or even trying to obtain a loan from the bank. This has been recognised by the EU, which has proposed extended employee rights to agency workers in the Agency Workers’ Directive. The use of TWAs also entails costs for employers, with UK evidence from the 1998 WERS (Cully et al. 1999, pp. 285–6) suggesting that the use of agency workers is associated with higher voluntary staff turnover. Clearly such workers have far less loyalty to the workplace they find themselves in, and to the agency. This is commensurate with the tenets of Organisational Justice theory (De Ruyter and Waring 2003), which argues that worker perceptions of injustice can result in reduced performance and discretionary or organisational citizenship behaviour. This in turn can lead to increased expenditure on recruitment and training than would otherwise take place among firms that utilise agencies. The commission an agency attracts for its services is also a non-wage labour cost that would otherwise be avoided with regular employees. However, agency work continues to be exempt from EU directives

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granting temporary workers access to the same employment entitlements as permanent workers. Some countries, such as the Netherlands, have extensive regulations pertaining to the use of agency workers (covered under a collective bargaining agreement and eligible for permanent paid employment with the agency after six months’ tenure – even if the agency cannot obtain them a placement; see Van Velzen 2003). However, across most EU countries regulations on the use of agency workers are minimal. Thus, it is possible that those employers currently using fixed-term workers for flexibility reasons could switch to using agency workers, providing further impetus for the growth of agency work. To the extent that lack of regulation permits the use of substandard forms of employment, the use of TWAs appears likely to increase.

Conclusion This chapter has examined the rise of TWAs within the EU. It was found that across EU countries agency workers tend to be lower skilled than regular employees and tend to work in less safe conditions. Evidence surveyed in this chapter suggests that while agency workers do not appear to be performing core duties within the workplace, they are being increasingly used to fulfil short-term goals which provide the firm with a degree of flexibility. While supply-side factors can explain the growth of agency workers in areas of some sectors such as nursing and IT, it is apparent that demand-side factors are in general the driving force behind the growth of agency work. With the stalling of the EU Agency Workers’ Directive after the passing of the Temporary Workers’ Directive, it remains to be seen whether firms will switch from using temporary workers to utilising agency workers.

References Bertola, G., Boeri, T. and Cazes, S. 2000, ‘Employment Protection in Industrialised Countries: The Case for New Indicators’, International Labour Review, 139(1):57–72. Boockmann, B. and Hagen, T. 2001, ‘The Use of Flexible Working Contracts in West Germany: Evidence from an Establishment Panel’, Discussion Paper 01-33. Centre for European Economic Research, Mannheim. Burgess, J. and Connell, J. 2002, ‘Temporary Agency Work: Conceptual, Measurement and Regulatory Issues’, Employment Studies Centre Discussion Paper, University of Newcastle, Australia. Caire, G. 1989, ‘Atypical Wage Employment in France’, in G. Rodgers and J. Rodgers (eds) Precarious Jobs in Labour Market Regulation: The Growth of Atypical Employment in Western Europe. International Labour Office, Geneva. Conley, H. 2002, ‘A State of Insecurity: Temporary Work in the Public Services’, Work, Employment and Society, 16(4):725–37.

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Cully, M., Woodland, S., O’Reilly, A. and Dix, G. 1999, Britain at Work: As depicted by the 1998 Workplace Employee Relations Survey, Routledge, London. De Ruyter, A. and Burgess, J. 2003, ‘Growing Labour Insecurity in Australia and the UK in the Midst of Jobs Growth: Beware the Anglo-Saxon Model’, European Journal of Industrial Relations, 9(2):223–43. De Ruyter, A. and Waring, P. 2003, ‘Propagating the Unfair Dismissal Myth: Comparative Employment Protection Law Developments in Australia, Italy, South Korea and the UK’, Paper presented at the International Employment Relations Association Conference, University of Greenwich Business School, London, 8–11 July. Druker, J. 2003, ‘Employment Agency Workers and Employment Standards: Regulation and Liberalisation in Europe’, Paper presented at the International Employment Relations Association Conference, University of Greenwich Business School, London, 8–11 July. European Foundation for the Improvement of Living and Working Conditions 2002, ‘Quality of work and employment in Europe: Issues and Challenges’, Foundation Paper No. 1, February. EIRR (European Industrial Relations Review) 2002, ‘Labour Market; The Netherlands: Union Champions Rights of Illegal Workers’, European Industrial Relations Review, July(342):27–8. EIRR (European Industrial Relations Review) 2003, ‘Italy; Legislation: Labour Market Reforms are Finally Approved’, European Industrial Relations Review, March(350):28–9. Felstead, A., Ashton, D. and Green, F. 2001, ‘Paying the Price for Flexibility? Training, Skills and Non-standard Jobs in Britain’, International Journal of Employment Studies, 9(1):25–60. fHUMAN 1997, ‘UK Flexploitation and Resistance Beyond Waged Labour’, Position paper for 2nd Intercontinental Meeting for Humanity and Against Neoliberalism, 25 July–2 August, Spain. http://www.eco.utexas.edu/Homepages/ Faculty/Cleaver/wk1flex.html (Accessed on 28 September 2003). Forde, C. 1997, ‘Temporary Employment Agency Working: Issues and Evidence’, Paper presented to the 15th International Labour Market Conference, University of Edinburgh, 25–27 March. Forde, C. 2001, ‘Temporary Arrangements: The Activities of Employment Agencies in the UK’, Work, Employment and Society, 15(3):631–44. Goudswaard, A. and Andries, F. 2002, ‘Employment Status and Working Conditions’, European Foundation for the Improvement of Living and Working Conditions, Mimeo. Gray, A. 2002, ‘Jobseekers and Gatekeepers: The Role of the Private Employment Agency in the Placement of the Unemployed’, Work, Employment and Society, 16(4):655–74. Hegewisch, A. 2002, ‘Temporary Agency Work: UK (National Report)’, European Foundation for the Improvement of Living and Working Conditions, Dublin. www.eurofound.eu.int (Accessed on 28 September 2003). ILO [International Labour Office] 1994, ‘The Role of Private Employment Agencies in the Functioning of Labour Markets’, Report from the International Labour Conference 81st Session. International Labour Office, Geneva. Korpi, T. and Levin, H. 2001, ‘Precarious Footing: Temporary Employment as a

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Stepping Stone Out of Unemployment in Sweden’, Work, Employment and Society, 15(1):127–48. Manpower 2003, ‘Company Overview’, http://www.manpower.com/mpcom/ content.jsp?articleid=33 (Accessed 1 October 2003). Mendoza, C. 2000, ‘African Employment in Iberian Construction: A Cross-Border Analysis’, Journal of Ethnic and Migration Studies, 26(4):609–34. OECD (Organisation of Economic Cooperation and Development) 1998, Economic Outlook, Organisation for Economic Cooperation and Development, Paris, no. 63. OECD (Organisation of Economic Cooperation and Development) 1999, Employment Outlook, Organisation for Economic Cooperation and Development, Paris. OECD (Organisation of Economic Cooperation and Development) 2001, Employment Outlook, Organisation for Economic Cooperation and Development, Paris. OECD (Organisation of Economic Cooperation and Development) 2002, Employment Outlook, Organisation for Economic Cooperation and Development, Paris. Randstad 2003, ‘Facts and Figures’, Randstad Operating Companies, www.randstadholding.com/uk/pages/home/ (Accessed 1 October 2003). Remery, C., van Doorne-Huiskes, A. and Schippers, J. 2002, ‘Labour Market Flexibility in the Netherlands: Looking for Winners and Losers’, Work, Employment and Society, 16(3):477–95. Seferiades, S. 2003, ‘The European Employment Strategy Against a Greek Benchmark: A Critique’, European Journal of Industrial Relations, 9(2):189–203. Storrie, D. 2002, ‘Temporary Agency Work in the European Union’, European Foundation for the Improvement of Living and Working Conditions, Dublin. www.eurofound.eu.int (Accessed on 28 September 2003). Van Velzen, M. 2003, ‘Building on Flexibility, Training for Construction: A Comparison of Training Arrangements for Flexible Workers in the Dutch and American Construction Industries’, Paper prepared for the 13th World Congress of the International Industrial Relations Association. Berlin, Germany, 8–13 September.

4

Temporary agency labour in the UK Celia Stanworth and Janet Druker

Introduction The growth of market-mediated employment relationships during the 1990s, and the erosion of the internal labour market model, is well documented (see for example Lovering 1990; Cappelli 1995; Rajan et al. 1997). Recent research confirms a strengthening of this trend in the UK (Purcell and Purcell, 1999; Cully et al. 1998). Linked to the continuing retreat from traditional ‘standard’ employment patterns is the growing use of certain types of non-standard labour. Interest in the use of a more ‘contingent’ or insecure workforce (Christensen 1998; Heery and Salmon 2000) is said to be growing more rapidly in Europe than the USA (Manpower 1999), where the market may be maturing. One form of insecure work that grew in the UK in the 1990s is temporary agency work, which has seen a threefold increase since 1992 (LFS various dates). Agency temporaries now represent a significantly larger proportion of the entire temporary workforce: from 7 per cent in 1992 to 17 per cent in 2001 (Druker and Stanworth 2001). The UK recruitment industry employers’ body, the Recruitment and Employment Confederation (REC), estimates the number of agency ‘temps’ to be around 900,000 (People Management 1999). A more reliable figure may be from a Department of Trade and Industry (DTI) survey, in 1999, which estimated the number of temps at around 557,000 (Hotopp 2000). The discrepancy may be due to the industry counting the total number of people signing on at agencies throughout the year, conflating those signing on for permanent as well as temporary posts, whereas the DTI figure is a ‘snapshot’ identifying only ‘temps’ working during one week. The commercial agency industry turnover is £13 billion per annum, with 15,000 agency branches in the UK (Money Programme, 25 April 1999). Temporary agency work is one form of a triangular employment relationship that moves away from the more ‘typical’ contract with a single employer (Cordova 1986). It is a way of selling labour power that dates back at least to the nineteenth century and the Industrial Revolution. However, its recent resurgence has prompted polarised debates. There are

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those, such as the present UK government, who argue that intermediaries, such as commercial agencies, serve a useful purpose by meeting the fluctuating needs of work organisations, as well as workers’ preferences, in the current competitive economic climate. Against that, there are those who highlight the ambiguous employment status of ‘temps’, which causes difficulties in ensuring compliance with limited legal obligations, leading to the exploitation of vulnerable workers by unscrupulous commercial agencies and employers (NACAB [National Association Citizens Advice Bureau] 1997; TUC [Trades Union Congress] 1999a, 1999b). Another major debate arising from the growth in agency work is whether it represents a distinct break with the past, or a continuance of long-established employer rationales. Purcell and Purcell (1999) discerned a move, by larger, well-known firms, towards more strategic use of agency labour (in call-centre operations for example), through business-to-business cost-driven formal contracts, in order to create a ‘permanent’ periphery of temporary workers. A national survey by the Institute for Employment Studies (IES 1996), in contrast, reported that, by and large, employers were still using agency workers primarily for more ‘traditional’ reasons in an ad hoc manner. For example, to access particular skills, as cover for sickness, holiday or maternity absence, or to cope with increased seasonal labour demand (see also Sly and Stillwell 1997; Cully et al. 1999). The Department of Trade and Industry estimates that around 80 per cent of the market is small-scale, through local contacts, and the rest is accounted for by large-scale commercial supply contracts (DTI interview 1999). There is no doubt that the bulk contract segment of the market has grown, but the ‘traditional’ or supplementary (Vosko 2000) part of the market may also be expanding. This chapter explores the three parties to this employment relationship; commercial agencies; employers who use their services; and, the temporary agency workforce. In addition, it discusses the position of the current Labour government and the trade unions. A number of issues are raised drawing on both secondary and primary research.

Methodology The chapter draws on research into agency work undertaken at the University of Greenwich. This involves a multi-method approach, which to date, has included a national postal questionnaire survey of 183 companies, a series of twelve face-to-face interviews with HR managers in client organisations, and eight focus group interviews with office temps throughout mainland Britain. In addition, semi-structured interviews with various levels of management within well-known agencies have been carried out, as well as several observation visits at branch level, and a number of interviews and meetings with social partners and stakeholders in the sector. These include the industry body Recruitment and

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Employment Confederation, the Department of Trade and Industry, and trade union officers.

Employment agencies in the UK The major companies in the commercial recruitment industry are competing strategically for what they consider to be a growing market both in Europe, and globally. In parallel with the increased use of agency labour in the UK are developments in Europe (Blanpain 1999), where controls on the operation of commercial agencies are loosening in several countries. The Netherlands, for example, has seen an increase in the use of agency temps, in a context of regulated liberalisation (see Chapter 5), and in Italy, commercial employment agencies have recently been legalised. The Single European Market, with rights to free movement of labour and business, enhances opportunities for transnational employment agencies to develop their markets. The UK employment agency market is diverse, with a few major players, a small number of well-known medium-sized agencies, wellestablished niche providers, and a large number of small firms. Unlike other European countries, a few major players do not dominate the UK market. The large companies operating in the UK tend to be subsidiaries of multinationals, with the two largest, Manpower and Adecco, vying for market share in Europe. Manpower, a US company, claims to have 1.9 million temporary workers in 61 countries in 2002 (Manpower 2002). Adecco currently has 6,000 Branches in 60 countries and dealing with four million ‘temporary associates’ each year (Adecco 2002). Both companies report growth since 1999 in terms of international coverage and temporary placements. There are also many smaller agencies in the UK, which sustain a base on an industrial/sectoral, occupational, regional or local basis. The number of agencies has grown during the 1990s, following the abolition in 1994 of statutory registration requirements under the 1973 Employment Agencies Act. A Mintel survey (1998) also found that larger branch agencies were expanding their geographical reach by opening new outlets, in the North of England and in Scotland. The Recruitment and Employment Confederation tends to represent the small- and medium-sized firms in the UK market. The larger enterprises, such as Manpower, tend to exert pressure in the market in their own right. The industry as a whole is united in favouring self-regulation, and opposing moves towards more agency worker rights and employment protection. Both the industry body and the large companies are keen to be represented as legitimate players in the contemporary labour market. The big companies, such as Manpower and Adecco, are anxious to promote a respectable, ‘soft’ human resource (HR) image. For example both Manpower and Adecco signed up to recognition agreements with various trade unions, especially where temps are performing work for

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blue-chip unionised companies, to ensure that “things are above board” (IRS [Industrial Relations Services] 1998, p. 4). Furthermore, both companies sponsored the TUC’s campaign to improve information about employment protection rights for agency workers (TUC 1999b), and ensured this collaboration received wide publicity. Manpower also sponsored a series of presentations on human resource management organised by the Chartered Institute of Personnel and Development, the UK’s professional body. The large companies distance themselves in the press from the bad practices of some employment agencies seeing themselves as industry leaders “in raising standards of service for user companies and for temporary workers” (TUC 1999b). Manpower emphasises the fact that it ‘employs’ its workers and provides certain fringe benefits and Adecco’s commercial director was quoted in 1999 as saying: “Our people are our main assets – aside from moral responsibility, there are sound commercial reasons for ensuring that they have appropriate terms and conditions” (People Management 1999:15). Yet proposals to clarify the employment status of agency workers and to improve their rights at work are controversial within the industry, with reports of abuse in less reputable agencies being rife (NACAB 1997; TUC 1999a).

Commercial recruitment agencies and the labour market The unemployed tend to make some use of commercial agencies (Hepple in Blanpain 1999) and the current government encourages them to sign on with agencies as part of their job-searching activities but agency work is not a route out of social exclusion unless workers have marketable skills. Agency Branches tend to cluster where a good supply of jobs is available, and are not set up to help the most disadvantaged (Fin 1992). Only a minority of unemployed people seek work through commercial agencies compared to the large numbers who use the State Employment Service. An IES study (1996) found agencies “very cagey about offering the unemployed to their clients” (p. 79). Our survey and interviews emphasised the importance of hiring high-quality staff closely matched to client requirements, who would be ‘up and running’ immediately. This was perceived to be a quality lacking in the previously unemployed (IES 1996). Temps are unlikely to be given anything besides basic training while on assignments (CBI 1994), so that temping would not enable the unemployed to gain necessary skills. Only standard training is given by commercial agencies, and some agencies charge for this service. Agency workers need to have pre-existing skills, for example in software packages, to be assigned with a minimal amount of assistance (fieldwork interview with specialist agency 1998). One reason for the increased use of temporary agencies is the ‘churning’ at the edges of the labour market, and the greater use by employers of

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temporary contracts at points of entry. A relatively high number of agency workers are seeking permanent work but are unable to find it (Sly and Stillwell 1997), and in Spring 1996 more than half (57 per cent), were seeking permanent placements. In our Branch interviews, we found that even in affluent areas of England, with a buoyant labour market, there were agency temps seeking, but not finding, permanent jobs. Several of the firms we interviewed agreed they only offered the ‘best’ temps permanent posts, and the IES study (1996) found that about half of firms surveyed had given temps permanent posts in the last three years, but this did not imply that large numbers of temps were involved. One HR manager we interviewed offered short-term contracts to highly rated temps, but only if they proved themselves were they eventually offered a permanent contract. Ward et al. (2001) reported that temps often found it difficult to ascertain the criteria they needed to fulfil in order to obtain permanent rather than temporary work. The role of agencies as ‘gatekeepers’ to permanent work appears to be a minor one, with far more workers kept on the margins of the labour market than moving to the mainstream. Agency temps are earning commission for the agency every hour they labour, but once they become permanent this income stream is, of course, lost. Private agencies are in business to make profits, and therefore tend to cluster where there is a good supply of jobs and suitable temps. They tend to place the young – the most popular age band was 16–24 years representing 15 per cent of temps in 1996 (see Sly and Stillwell 1997) – and those who are easily placed because of their up-to-date skills. The primary target of the agencies is new, young entrants to the labour market, including students who now typically need to seek paid work in order to study. Agencies attempt to ‘cream off’ the higher status vacancies (Fin 1992; Gregg and Wadsworth 1994) and to accommodate clients’ priorities and inevitably also sometimes their stereotypes (Fin 1992). Clients are becoming ever more discriminating in their choice of temporary agency workers (Mintel 1998), making it increasingly unlikely that disadvantaged groups such as the long-term unemployed and those lacking in skills will be able to access the labour market through these channels.

Strategic contracts A group of the largest commercial agencies, generally the global players in the UK, focus on winning large-scale contracts to provide temps to large firms. This growth of ‘strategic’ resourcing has been highlighted in the UK by Earl (1995), Purcell and Purcell (1999) and also by Mintel (1998). These business-to-business contracts are focused on cost-minimisation, and are of fixed duration to supply and manage large numbers of workers. There is no doubt this is an area of market growth in the UK, and a source of high volume new business, albeit with slim profit margins (Forde 2001).

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Sectors developing this form of strategically resourced temps tend to be financial services, telecommunications firms, utilities, IT and pharmaceuticals (Purcell and Purcell 1999). Ward et al. (2001) researched two case firms with bulk contracts, in financial services, and in telecommunications. Temping was an important port of entry, but the criteria for temps’ moves into permanent work were vague and unspecified. Financial and nonfinancial benefits associated with permanent employment were also denied to them. In both cases, technological innovation allowed the spatial restructuring of work, and the development of generic skills: the new centres that subsequently resulted were staffed by agency workers. Continual technological change also encouraged employers to use agency labour, as future labour demand was unpredictable. However, in the longer term, performance was unlikely to be enhanced by widespread use of temps, because of high attrition rates, and management problems. In one case, a retail bank, it was reconsidering its resourcing strategy, by converting some of the agency workers onto permanent contracts. One of our case companies was also a large retail bank, with a commercial contract to a household name agency. The agency workforce was divided into ‘core’ temps undertaking routine clerical jobs, entitled to some fringe benefits through the agency, and ‘temps’, doing very low status jobs often of short duration, who were not. Core temps could spend their entire career with the bank, but progress into permanent jobs was a rarity. There were problems over differential pay rates between permanent and temp workers, and a perceived commitment deficit among both types of temps. However, if share value and headcount reductions continue to take precedence over being a ‘good’ employer (Ward et al. 2001), these contracts will continue to operate despite the management problems generated. There was an interesting development related to the negotiation of contracts with agencies, supporting Purcell and Purcell’s thesis that use of agency staff, at least in large enterprises, is based on hard resourcing decisions (1999). Agency managers we interviewed reported that in contract negotiation, human resource specialists were losing power to the purchasing and procurement function. This resulted in a much more hard-line cost-driven approach. Human Resource specialists had a greater interest in quality, whereas procurement had few such concerns.

Employers’ use of agency labour The growth in employers’ use of agency workers can be linked to wider economic factors. The Workplace Employment Relations Survey (WERS) found that 28 per cent of UK employers were currently using agency workers, but over 50 per cent had used them in the last five years (Cully et al. 1999). The use of agency labour has traditionally tended to fluctuate procyclically and increase as economies move out of recession, since hired

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labour can quickly cover firms’ increased demand for labour (Casey 1988). In periods of recession, traditional agency labour use tends to decline. Since 1992 the UK economy has been in a sustained economic recovery situation, but with no marked overheating or economic ‘boom’. If recovery is not strong, and output volatility is commonplace (TUC 1999a) employers may rely more heavily on temporary workers because they cannot guarantee a long-term demand for labour (Sly and Stillwell 1997). Conversely, the threat of future recession deters employers from hiring temps, and agencies track economic forecasts because of their likely effect on the client base (fieldwork interview with specialist agency 1999). The Greenwich survey of client firms found most expected no change in their use of temps in the near future, but where change was anticipated, the balance was generally downwards. This could be related to the timing of the survey – November 1998 – when there were gloomy predictions about the UK’s economic prospects. Labour Force Survey figures show that temporary jobs account for at least a third of new engagements, and a large proportion of jobs taken by new entrants to the labour market are temporary. Some commentators interpret this as an indication of instability at the edges of the labour market (Sly and Stillwell 1997), with employers using temporary jobs instead of permanent jobs as ‘ports of entry’ to organisations (Ward et al. 2001). This development indicates a more permanent change in the use of agency labour by employers, with agency workers substituted for, rather than supplementing, permanent staff. Because of uncertainty, competition and resource constraints, organisations in both the public and private sectors are anxious to minimise ‘headcount’ and demonstrate cost-containment, and recruitment ‘freezes’ – the substitution of temporary labour is one way to ensure this. Two client firms we interviewed had unrealistically low headcount budgets, and hired more and more temporary agency labour, often on a long-term basis. Costs could be hidden on the balance sheet, and gave the illusion of increased productivity (Christensen 1998). Employers can also avoid legal commitments deriving from standard employment contracts, and use agency labour to buffer employed staff in uncertain times. Some of the large retail banks in the UK have union agreements protecting their permanent staff from lay-offs, and use large numbers of agency workers as a result (Ward et al. 2001). Agency workers can be hired for very short periods, and can be rejected by the hiring organisation if unsatisfactory with no fear of litigation (Pfeffer and Baron 1988). Such workers are paid by the hour, and have no other claim to benefit from the organisation as a consequence of their employment. Large-scale agency contracts or entire sites managed by agencies may be attractive to employers because they can avoid the day-to-day ‘hassle’ of managing agency staff (Peck and Theodore 1998). For the industry, such arrangements increase market share, and also offer opportunities for positive publicity, as many of the contracts are with ‘blue-chip’ companies.

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Technological change Transformational changes in work organisations, particularly in the service sector, occurred in the 1990s facilitated by communications and information technologies, but primarily driven by the need to cut costs and remain competitive. The development of call centres accounts for some of the increase in the temporary agency workforce in the UK and has offered the commercial agencies a big opportunity to increase their markets. The sector with the highest rate of usage of temporary workers is now the financial services sector (Sly and Stillwell 1997). Downsizing during the 1990s due to the closure of retail bank branches has been accompanied by the growth of cheaper telephone banking, and restructuring is set to continue. Call centre operations tend to use substantial numbers of temporary workers (BIFU1 1996). The International Federation of Commercial, Clerical, Professional and Technical Employees (FIET 1996) estimated that more than half of all Europe’s call centres were located in the UK, and they account for two per cent of the UK workforce. Purcell and Purcell (1999) also identified bluechip companies who hire the entire call centre workforce through agencies such as Manpower. The Marketing Director of a large, specialist office agency (where call centres were not mainstream business) revealed that 15–20 per cent of new projects involved setting up call centres (1999). There are a number of types of call centres that create different patterns of demand for agency workers. One type is staffed entirely by agency workers. Examples are British Telecom call centres set up by Manpower on greenfield sites (IRS 1998), where all workers are provided by the agency, creating a large ongoing volume of temporary workers. Another type is where most call-centre workers are permanent, but labour turnover and absence levels are high, and temporary agency staff are hired to ‘topup’ and provide cover. There is also the short-term call centre, entirely staffed by temps, creating a demand for jobs of short duration. Our employer interviews revealed that a high demand for agency workers might be linked to the introduction and early stages of call centre innovations when risks are high. Two firms, in energy and financial services, used large numbers of agency workers to set up centres, but moved to more permanent staffing once they were well established. In terms of IT, software development and the near-monopoly of Microsoft products have also offered the commercial agencies new markets to exploit. Office jobs have become more generic in nature, and increasingly technical and professional occupations involve familiarity with software packages, and thus become more readily transferable between employers.

The agency workforce Reliable figures for the extent of the agency workforce are hard to find, and a recent Department of Trade and Industry (DTI) survey called into

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question the reliability of Labour Force figures (Hotopp 2000). The Labour Force Survey (LFS) tends to find a roughly equal split between men and women in this workforce, but the DTI survey found 70 per cent of temps were male. The occupational spread of temps tends to reflect the labour market as a whole, but the largest proportions of temps are in IT and computing, manual, office work and driving. Our own survey indicated there was an increase in the use of agency staff in accountancy and management, and the WERS national survey found growth in professional temping (Cully et al. 1999). The supply of teaching staff is another expansion area for commercial agencies, which are recruiting teachers from countries such as Jamaica, Canada and Australia especially in London and the south-east where teacher shortages are most acute. More than 50 per cent of temps in the UK are looking for permanent positions according to Sly and Stillwell (1997). Obviously, for a majority of this workforce, temping is not a first choice. Conversely, there are occupations, such as IT, where there is clear worker preference for seeking work through an agency (Harvey and Kanwal 2002).

Accommodating worker preferences in the IT sector There are certain ‘shortage occupations’ in the UK where the existence of a seller’s market has led to an increase in the demand for agency labour. The IT sector has a tradition of agency usage (Harvey and Kanwal 2000), and the threat of computer breakdown at the turn of the new century (the so-called ‘Millennium Bug’) led to inflated pay rates for IT specialists. Many of our survey firms reported a recent increase in demand, and one firm had, in desperation, trawled all the major IT specialist agencies in the UK with disappointing results. Here the supply side arguments for agency work are evident: workers who cannot be contained within a firm’s internal labour market because they can better dictate terms from without (Lovering 1990). Though the excessive demand for IT workers slackened somewhat after the Millennium problem was defused, IT is still a shortage occupation in the UK. A household name IT software company reported that they could use two IT employees for every one recruited, with the added problem of employees being poached by competitors once they were trained. They considered the only restriction on agency temping was that temps did not receive training when on assignment, and there is a pattern in the industry of returning to conventional employment intermittently to update skills (Harvey and Kanwal 2000). Overall the evidence in the IT labour market supports the hypothesis that the use of temporary agency workers is higher where there are skills shortages in occupational labour markets (Pfeffer and Baron 1988).

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Trade unionism and collective representation In the UK context, there is a low density of union membership among temporary agency workers. A trade union officer we interviewed suggested a figure of around 5 per cent, but there are no reliable figures. Temporary workers are difficult to recruit and retain and union officers would regard the process as an unrewarding one. Unions traditionally opposed agency working and in general made little attempt to organise such workers in the past. The exception is where workers are recruited to a workplace or sector, for example in manufacturing, which is well organised. For example, Manpower sustained a trade union closed shop for its drivers in the 1970s. In the US there is a positive relationship between the increased use of agency working and union decline (Golden and Appelbaum 1992). Union officials are well aware of the inherent threat to unionisation represented by the growth of agency labour. Collective agreements have been negotiated between the two largest agencies – Manpower and Adecco – and trade unions, notably the Transport and General Workers Union, the Communication Workers Union and the financial services union, Unifi. These are primarily concerned with having access to workers for recruitment purposes and formal recognition (IRS 1998). However, such agreements do not result from the existence of high levels of unionised workers within agencies, but from the existence of large numbers of agency workers alongside unionised employees (Purcell and Purcell 1999; BIFU 1996; IRS 1998). Agreements tend to confirm the right of the union to organise and represent the interests of agency workers. They provide minimal coverage of substantive issues and reassert the importance of legal compliance. There are references to equality of employment opportunity, health and safety and holiday entitlements. On the critical issue of pay parity between temps and company employees the agreements are likely to be silent, and discounted union dues for agency workers reflect temps lower wages and the limitations on what the union can do for them (IRS 1998). The agreements provide some assurance that the agency is not working against the union’s interests. The union appears to be a ‘partner’ with the agency protecting the workers’ interests while creating occasional opportunities for union recruitment. The interest of the agency is to preempt a potential source of opposition and to demonstrate that they are concerned with fair dealing. The agreements represent a low cost, low-risk way to market themselves to unionised companies. The agencies’ largest clients are highly valued by them, and are also those most likely to have a unionised workforce (Cully et al. 1998). Consequently, there is no point in resisting unions, because agreements carry no real costs or consequences for the agency. They can reach agreement with any number of unions in accordance with diverse client interests, knowing that basic pay, for

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example, at the time of writing, remains the province of the agency and the client to negotiate, not the union. There is little direct evidence in the UK that employers are using agency labour to avoid unionised workforces, and in law agency workers must not be used to break strikes. But their lack of trade union representation is an advantage to employers, who can avoid unions on new greenfield sites staffed by agency workers. Another example, which illustrates the de facto position of agency workers during industrial action, was the one-day BT call centre strike in 2001, where temps were not legally allowed to take industrial action, as they were not included in the strike ballot, because they were not employees of the company.

Future regulation Agency workers are considered a lower cost option to employers overall (despite commission payments) because they incur fewer benefits than permanent workers, and have access to few employment rights. Traditionally in the UK the ambiguous employment status of temps has been one of disadvantage compared to conventional employees, with no rights to pay parity with the permanent workforce, to company benefits or to employment protection. A TUC survey found about half of temps were paid less than employed staff (BBC News website 2002). There are no time limits on temp assignments and no rights to ‘permanence’. Temps are covered by health and safety, discrimination and other basic statutes, and are nominally entitled to State benefits such as maternity pay and statutory sick pay. In reality these are difficult for temps to claim (BBC News website 2002). Since the change of government in the UK in 1997 a process of limited employment regulation has been set in train. National Minimum Wage legislation, the Working Time regulations and the 1999 Employment Relations Act, all give new employment rights to workers, including agency workers. The most immediate increase in the costs of agency workers to clients was a result of the implementation of the European Working Time Directive in the UK in 1998. This established rights to paid holidays – a novel entitlement for most agency temps. Currently there is a right to four weeks paid leave per year. These provisions apply to all workers, including temporary agency workers who had no such rights in the past. Employers now bear the cost of holidays with pay that (in the case of reputable agencies) have been passed on to them. One agency estimated that this represented an increase of 10 per cent (interview with Marketing Director 1999). Some agencies avoided the issue and did not pay holiday pay, but cut the hourly rate paid to temps and added back notional holiday pay (Money Programme 1999; TUC 1999a). This regulatory avoidance has since been challenged by several legal judgements.

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In March 2002 the European Commission indicated that future European Union regulation for agency workers would include equal pay and equal rights to fringe benefits such as pensions. This was opposed by the UK employers’ body, the Confederation of British Industry, but also by the Labour government. Both argued that too much regulation of the agency workforce would destroy jobs in the economy. The government stated: Agency workers are entitled to a fair deal, but we would want to check the detail of any proposed directive to make sure it was compatible with UK practice and the need for flexibility. (Financial Times 2002, p. 4) At the time of writing there is disagreement about the qualifying period before agency workers are covered by the proposed regulations. The UK government, employer organisations and the Recruitment and Employment Confederation are advocating longer qualifying periods of up to one year, that would have the effect of greatly reducing the proportion of agency workers covered by the law. The UK government’s position is that, on the one hand, it is committed to the implementation of a floor of basic rights for all workers in accordance with the European Union’s social policies. But, on the other, it is also anxious not to alienate the agency industry and employers’ organisations, which oppose any rise in the cost of agency labour. At the time of writing, discussions on a future directive on agency work are ongoing. Domestic proposals for legislative changes in the regulation of the commercial agency industry were outlined by the Department of Trade and Industry several years ago (DTI 1999). The industry is relatively unregulated at present with no licensing system, and few entry barriers. The proposals are designed mainly to clarify the contractual relationship between temp and agency, outline the information provided to workers and client firms, and limit fees charged when a temp becomes ‘permanent’ (temp-toperm fees). The new regulations “seek to promote labour market flexibility” (Hotopp 2000:458) and as such are seen as a ‘light touch’, not designed to undermine the industry.

Case example: office temps in the UK Group interviews with office temps, placed by a national specialist agency, give some insights into the experiences of these workers, and modify the typically over-simplistic and polarised argument as to whether temping is either a matter of choice or constraint. The caveat must be made that office temping could be considered to be a ‘better case’ scenario in terms of occupations where temps are found. Specifically, the work is relatively pleasant and safe, the hourly rates of pay, even in

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routine clerical roles, tend to exceed the minimum wage, and the market for these workers in the UK is relatively buoyant. The main areas involving choice in temping involved the ability to combine it with travel, study, accommodating partner’s situations, but only rarely as an alternative career path. At least some of the office temps interviewed had chosen to sell their labour through an agency as a ‘temp’ rather than opt for a permanent job. Temping as a positive lifestyle choice was made typically by women, and a few men, in their twenties, who were unmarried and without children. They combined office temping with world travel, which they often felt was addictive. Temping offered some degree of control over when and where they worked, and some were using it to finance world travel over several years. Another small group, all female, was using temp work to accommodate a partner’s job situation. One had a partner who worked abroad a good deal, and another’s partner was currently working in the USA but had uncertain job prospects. They reported that temping facilitated a balance between their work and non-work lives, though objectively they could be considered as trailing partners, reinforcing their subordinate position in their personal lives by disadvantageous employment relationships. A third group who professed to have ‘chosen’ office temping work was composed of students working their way through higher education. Some worked full-time and studied in the evenings, others temped part-time and attended college on specific days of the week. Another pattern was working for the agency during vacations. This group is part of the growing band of working students in the UK, which now exceeds one million. With the decay of maintenance grants and the advent of tuition fees and student loans, student workers offer a rich new source of supply for office temping agencies. The vast majority of the 50 temps encountered in this study saw temping only as a short-term option, and only one or two could be categorised as ‘career temps’ where there was a relatively long-term relationship with agencies, and an element of career progression while temping. Here again there was an element of choice in operation. Temps who had a lot of temping experience became more assertive in their dealings with the agency and with client firms, and by moving from junior posts to personal assistant assignments enjoyed commensurate pay and status improvements. Among the temps interviewed, however, it must be stressed that career temping was a rarity. In terms of the advantages of temping, the development of personal attributes such as self-reliance, confidence and sociability through the experience of temping figured strongly. Temps felt that their competencies were being developed, not formally, but through their experience of work in a variety of settings. Being marginal members of the workforce in the assigned firm, they had to be enterprising and self-reliant. There was also a

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high degree of satisfaction with the agency currently being used by the temps, and many of them had experience – sometimes negative – of other office agencies. Respondents in this study generally felt the current agency represented their interests to the client firms, and was not overly allied with them. One finding we did not expect was that the agency overcame age discrimination among older workers trying to re-enter the labour market after redundancy. Direct job applications from older workers were ‘binned’, according to older temps, but the agency could successfully sell their skills to clients. The elements of flexibility and choice offered by temping work must be set against the price paid at one and the same time by the interviewees, in terms of the transitory nature of the assignments, their marginal position in their assigned firms, their lack of employment rights and generally poor pay levels. Agency temping contracts are subject to regular renewal (often on a weekly basis) in the UK and temps do not accrue rights to claim unfair dismissal. This means that temps could never be sure how long an assignment would last, even where it was said to be for up to three years in the first instance. This was especially hard where the assignment was congenial and the temp held out hopes of it becoming permanent. One described this as being ‘axed brutally’. Assignments could never be guaranteed to dovetail with temps’ needs, and periods between assignments were unpaid. The marginal nature of the temps’ position is evident in their treatment by some clients, and reinforced by the lack of legal protection. Organisations were often unprepared for their arrival, and some were thoughtless in their exclusion of temps from aspects of office life. Despite being sent to ‘emergency’ situations, they were often not given the resources to start work and be effective straight away. Exclusion from social events was common. One example was where the temp was required to staff the empty office while the rest enjoyed a seasonal party. Consequently temps on assignment often sought out others in the same position, as a support mechanism. Pay was an issue that was raised without prompting in all the group interviews. Though the temps praised the agency for developing good relationships, pay was often felt to be inadequate, and the mechanisms for increasing it to reflect job development within an assignment unlikely. Pay could increase as temps moved from junior assignments through to more responsible posts, but the extent of progression was limited and the pay differential not high. The temps also deplored their lack of employment rights. Absence of rights to paid public holidays (such as Bank holidays), lack of sick pay, and loss of earnings when attending medical appointments were all raised. In terms of solving work problems, office temps attempted to resolve them with either the agency or the client with no independent assistance. They professed no strong interest in collective representation, and none had been approached to join a union, though

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some worked in unionised workplaces. Ultimately they used ‘exit’ rather than ‘voice’ to resolve their problems.

Discussion and conclusions In this concluding section, we return to the two fundamental questions. First, does the recent growth of temporary agency work presage longerterm and far-reaching labour market change, or is it merely reflecting current economic conditions? Second, are agencies facilitating flexibility and choice, or merely exploiting weaker segments of the labour market? Regarding the first question, the 1990s witnessed a change in employers’ decisions in terms of the development of a contingent workforce, but these decisions will continue to be influenced by macroeconomic factors. Economic recovery has been sluggish compared to earlier recoveries and this, coupled with intense competition and rapid technological change, may tend to favour agency temporary labour use. The overall size of the temporary segment of the UK labour market is small, in absolute terms, at just over 7 per cent, and only a sustained upward trend would support the thesis of more radical labour market change. In addition, sustained performance of the industry in a recession would be required in order to demonstrate a paradigm shift. There is consensus that cost-driven agency use through contracting is a growth area, and this explains some of the recent increase in the use of agency labour. This is a significant development in labour resourcing, a break with past patterns in the UK. However, our findings, and those of other surveys, contradict the contention that there has been a diminution of the traditional rationales for agency use. Traditional reasons for agency usage are likely to continue to be important in the future. Our contention is that both supplementary and substitutive agency use has grown. In terms of the second issue, agencies are in the labour market on a commercial basis and most agencies focus on the longer-term and less volatile placement opportunities. Because clients are highly selective, it is less likely that the most disadvantaged groups such as the long-term unemployed or unskilled will successfully use this channel to find work. This case study of office temps demonstrates that there are also limited, but important freedoms available to some of these workers, in terms of world travel, academic study and work-life balance. Temping also enabled older workers to find office work, in an occupational area still beset by ageism and sexism. But the role of private agencies in facilitating movement from temporary to permanent jobs also appears to be minor, with many agency workers kept on the margins of the labour market for longer periods than in the past. Agency work thus facilitates labour market entry for a growing number of UK workers, but on a disadvantaged basis compared to conventional employees. Despite recent legislative changes in the UK that have given the tempo-

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rary agency workforce some limited employment rights and protections previously denied to them, they still sell their labour on inferior terms. New employment rights are only as effective as their enforcement, and avoidance of payment of holiday pay by some less reputable agencies demonstrates likely difficulties. Besides insecurity, and less predictability of employment, temps are also typically subject to inferior pay and conditions compared to employees. For trade unions, the organisation and effective representation of such workers remains problematic. The TUC’s agency workers’ campaign demonstrates an inability to turn the tide of insecure labour use. Reliance on European legislation to radically improve the rights of temps may also prove a chimera, given the compromises that may be necessary to achieve agreement. The large and the ‘reputable’ commercial agencies are seeking to promote a distinct and ethical image to clients and to the government, by emphasising concern for the people they hire out, and their links with representative bodies such as trade unions, in order to distance themselves from disreputable agencies. They portray themselves as important employment intermediaries, enabling labour markets to operate more efficiently, and thus reducing unemployment. By sophisticated marketing, sponsorship and lobbying, they are seeking to avoid increased regulation of the industry and dispel pressure for any further extension of employment rights to temps. In this regard up until now they appear to have been very successful.

Note 1 BIFU was a banking union that merged with staff associations from Barclays and National Westminster to create a new financial sector trade union called Unifi.

References Adecco 2002, www.adecco.com (Accessed 23 November 2002). BBC News website 2002, Rights for Temporary Workers, www.bbc.co.uk/hi/ english/business (Accessed 18 February 2002). BIFU 1996, Calling Me, Calling You: Developments in Telephone Banking, BIFU, London. Blanpain, R. (ed.) 1999, ‘Private Employment Agencies’, Bulletin of Comparative Labour Relations, 36, Kluwer Law International, London. Cappelli, P. 1995, ‘Rethinking Employment’, British Journal of Industrial Relations, 33(4):563–602. Casey, B. 1988, Temporary Employment, Policy Studies Institute, London. CBI [Confederation of British Industry] 1994, Flexible Labour Markets – Who Pays for Training?, Confederation of British Industry, London. Christensen, K. 1998, ‘Countervailing Human Resource Trends in Family-Sensitive Firms’, in K. Barker and K. Christensen (eds), Contingent Work: American

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Employment Relations in Transition, ILR Press/Cornell University Press, Ithaca and London. Cordova, E. 1986, ‘From Full-Time Wage Employment to Atypical Employment: A Major Shift in the Evolution of Labour Relations?’, International Labour Review, 125(6) November/December:641–657. Cully, M., O’Reilly, A., Millward, N., Forth, J., Woodland, S., Dix, G. and Bryson, A. 1998, The Workplace Industrial Relations Survey – First Findings, DTI/HMSO, London. Cully, M., Woodland, S., O’Reilly, A. and Dix, G. 1999, Britain at Work: As Depicted by the 1998 WERS, Routledge, London. Druker, J. and Stanworth, C. 2001, ‘Partnerships and the Private Recruitment Industry’, Human Resource Management Journal, 11(2):73–89. DTI [Department of Trade and Industry] 1999, Regulation of the Private Recruitment Industry: A Consultation Document, URN 99/774, Department of Trade and Industry, Employment Relations Directorate, London. Earl, M. 1995, ‘The Temporary Employment Industry’, unpublished Masters dissertation, Oxford University School of Management, cited in K. Purcell and J. Purcell, ‘Insourcing, Outsourcing and the Growth of Contingent Labour as Evidence of Flexible Employment Strategies’, Bulletin of Comparative Labour Relations, 1999, 35:163–181. FIET [Federation of Commercial, Clerical, Professional and Technical Employees] 1996, Teleworking and Trade Union Strategy, FIET, Geneva. Fin, D. 1992, The Future of Job Centres: Labour Market Policy and the Employment Service, Low Pay Unit, London. Financial Times, 2002, ‘Government Wary Over Equal Rights for Temps’, Financial Times, Tuesday 19 February:4. Forde, C. 2001, ‘Temporary Arrangements: The Activities of Employment Agencies in the UK’, Work Employment and Society, 15(3):631–644. Golden, L. and Appelbaum, E. 1992, ‘What was Driving the 1982–1988 Boom in Temporary Employment? Preferences of Workers or Decisions and Powers of Employers?’, American Journal of Economics and Sociology, 51(4):473–493. Gregg, P. and Wadsworth, J. 1994, ‘How Effective are State Employment Agencies? Job Centre Use and Job Matching in Britain’, National Institute Discussion Paper, No. 69, NIESR, London. Harvey, C. and Kanwal, S. 2000, ‘Self-Employed IT Knowledge Workers and the Experience of Flexibility: Evidence from the UK’, in K. Purcell (ed.) Changing Boundaries in Employment, Bristol Academic Press, Bristol. Heery, E. and Salmon, J. (eds) 2000, The Insecure Workforce, Routledge, London. Hotopp, U. 2000, ‘Recruitment Agencies in the UK’, Labour Market Trends, October:457–463. IES [Institute for Employment Studies] 1996, Temporary Work and the Labour Market, Report 311. Institute for Employment Studies, Brighton. IRS [Industrial Relations Services] 1998, ‘Union Recognition for Temporary Agency Workers’, IRS Employment Trends, 659, July:4–8. LFS [Labour Force Survey] (various dates) Labour Force Quarterly Supplements, London, Office for National Statistics. Lovering, J. 1990, ‘A Perfunctory Sort of Post-Fordism: Economic Restructuring and Labour Market Segmentation in Britain in the 1990s’, Work, Employment and Society, 4(2):9–28.

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Manpower 1999, ‘Press Release’, www.manpower.co.uk (Accessed 22 January 1999). Manpower 2002, www.manpower.com (Accessed 23 November 2002). Mintel 1998, Employment Agencies, Market Intelligence, Mintel, London, December. Money Programme 1999, ‘Temporary Agency Work’, BBC 2, 25th April. NACAB [National Association Citizens Advice Bureau] 1997, Flexibility Abused, NACAB, London. Peck, J. and Theodore, N. 1998, ‘The Business of Contingent Work: Growth and Restructuring in Chicago’s Temporary Employment Industry’, Work, Employment and Society, 12(4):657–674. People Management 1999, ‘TUC Attempts to Promote Rights of Agency Workers’, People Management, 22 April:15. Pfeffer J. and Baron J. 1988, ‘Taking the Workers Back Out: Recent Trends in the Structuring of Employment’, Research in Organizational Behavior, 10:257–303. Purcell, K. and Purcell, J. 1999, ‘In-Sourcing, Outsourcing and the Growth of Contingent Labour as Evidence of Flexible Employment Strategies’, Bulletin of Comparative Labour Relations, 35:163–181. Rajan, A., van Eupen, P. and Jaspers, A. 1997, Britain’s Flexible Labour Market: What Next?, CREATE, Southborough. Sly, F. and Stillwell, D. 1997, ‘Temporary Workers in Great Britain’, Labour Market Trends, September:347–354. TUC [Trades Union Congress] 1999a, ‘TUC to Launch Agency Workers’ Campaign’, Press Release, 4 March. TUC [Trades Union Congress] 1999b, Agency Workers Have Rights Too!, TUC, London. Vosko, L. 2000, Temporary Workers. Toronto University Press, Toronto. Ward, K., Grimshaw, D. and Rubery, J. 2001, ‘Dilemmas in the Management of Temporary Work Agency Staff’, Human Resource Management Journal, 11(4):3–21.

5

New employment patterns Agencies and agency workers in the Netherlands and Denmark Erling Rasmussen, Jelle Visser and Jens Lind

Introduction Over the last two decades, there have been major shifts in labour market trends and in perceptions of work organisation. New production and management paradigms in addition to neo-liberal patterns of employment regulation have emphasised market competition through the advocacy of more flexible production, organisational and employment patterns. Although the range, contents and outcomes of these processes have been discussed since the early 1980s, we are still witnessing new aspects of economic, social and institutional changes that influence employment patterns and employment relations. In terms of Atkinson’s (1984) ‘flexible firm model’, organisations seem to have reduced their ‘core’ labour force and increased the ‘periphery’ of part-time, casual, contract and self-employed workers. While there is nothing new about these forms of atypical employment, the growth in the various categories of atypical employment has prompted extensive media interest and an explosion in academic research (Felstead and Jewson 1999; Standing 1999; Lind and Møller 1999) especially in the areas of agency work and ‘temp’ agencies. There has been a tendency to paint agencies and agency work in either black or white images where positive and negative evaluations and predictions have coexisted. The image presented has often been based on rather slim empirical evidence, or even sometimes associated with self-promotion and haphazard crystal ball gazing. This chapter attempts, therefore, to provide more solid ground for debate based on the evaluation of agencies and agency work of the Netherlands and Denmark. While the Netherlands and Denmark are among the smaller Organisation of Economic Cooperation and Development (OECD) countries, and have a historically strong reliance on agriculture, the two countries have different employment relation traditions, in addition to different industry, business size and employment structures. They also both exhibit different atypical employment patterns (Auer 2000, 2001; Rasmussen et al. 2003). Also the two countries are often placed in different categories in terms of

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their employment relations and welfare states (e.g. Esping-Andersen 1990; Crouch 1993; van Ruysseveldt and Visser 1996) and have recently experienced different types of changes to their employment relations framework. When the Netherlands and Denmark are compared there are also major variations in terms of agencies and agency workers where social, legislative and collective bargaining frameworks have positioned agency work differently and impacted on the level and type of agency work. Employer and employee choices are clearly influenced by these frameworks and by the cost and effectiveness of other available employment options. In terms of agencies and agency workers, the Netherlands is clearly the outstanding case, since this country is arguably the ‘leader’ among OECD countries. For example, the number of agency workers as a percentage of the workforce is high and the protection mechanisms for agency workers have gained notoriety outside the Netherlands as a special part of the socalled ‘Dutch miracle’ (Visser and Hemerijck 1997). Accordingly, this chapter debates how Dutch agencies and agency work has altered in the last 15 years, why employers and agency workers have made agency work their choice, and what the consequences of the progressive change in agency work have been. The Dutch trends and initiatives of the last 15 years are clearly of importance, particularly to other OECD countries that seem to be following suit, due to the likelihood of adjustments continuing into the future. In contrast to the Netherlands, Denmark has experienced a relatively low level of agency work although there has been a strong underlying growth pattern in the number of agencies and agency workers during the last decade. The Danish voluntaristic approach to employment relations – underpinned by the extensive influence of collective bargaining and social welfare – appears remarkably stable with the emphasis on continuous, small adjustments. Thus, the upward trends in agency work are probably driven by wider labour market changes, predominately the changing employer and employee demands which adjust to the business cycle and the availability and attractiveness of other forms of work. The Dutch and Danish regulations of agency work appear both flexible and comprehensive and the regulations have benefited from the considerable influence of employer organisations and unions as well as an extensive reliance on collective bargaining. There is also the looming prospect of European Union regulations, though any future regulations are likely to have a greater impact in other European countries than in Denmark and the Netherlands.1 Nonetheless, there is considerable pressure to extend protection mechanisms and we would expect further adjustments to the regulation of agencies and agency work, in both the Netherlands and Denmark, over the coming years.

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The Netherlands: world leader in agency work? In the Netherlands there has been a spectacular rise in agencies and agency workers, and the regulatory environment and protection offered to agency workers has altered considerably over the last decade (for a detailed overview, see Grunell and Beltzner 1999). As a result the Dutch approach is often discussed when the role of agencies and agency work is considered in public policy debates. There is little doubt that the Dutch approach will influence public policy in the European Union and neighbouring countries in common with the so-called ‘Dutch miracle’ and growth in other forms of atypical employment that have been used for benchmarking in the past (Visser and Hemerijck 1997; Visser 2002; Rasmussen et al. 2003). Research into the historical context of the high level of agency work in the Netherlands (the highest levels among OECD countries) reveals the influence of wider social welfare and employment considerations. Nonetheless, there are considerable differences across industries and occupations and there are also variations in the relative outcomes obtained by agency workers. Whether the high growth rate will continue will partly depend on the impact of ongoing social welfare and employment relations changes, and partly on the attractiveness (for both employers and workers) of other forms of atypical employment. Currently, there is limited information available about agency workers’ satisfaction with their work situation although it is possible to assume that these are high – as has been the case with other forms of atypical employment (see European Commission 2000). Generally, Dutch agencies have a good reputation among European commentators although whether this will still be the case when agency licensing is discontinued will be the topic of future research. The extent of Dutch agency work The temporary work market has expanded and, based on official statistics, it is larger in the Netherlands than in other OECD countries. According to data provided by the International Confederation of Temporary Worker Businesses (CIETT) and illustrated in Table 5.1, Dutch agencies are quite large and dwarf similar businesses in other countries by a large margin. Furthermore, some agencies, like the large and long-time established firm of Randstad, have become global players, with activities in the USA and Australia, as well as in most European countries. Table 5.1 provides an overview of countries with widely different employment relations and welfare states, ranging from liberal-pluralist (the US, the UK), to conservative-familiaist (Spain), corporatist (German) and social democratic (Denmark) (see Esping-Andersen 1990; Crouch 1993; van Ruysseveldt and Visser 1996). Therefore, it can be claimed that not only has the Netherlands become the champion of part-time employment (Visser 2002; Rasmussen et al. 2003), but also that Dutch ‘temp’ agencies are more common and employ more people than in other countries.

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Table 5.1 Part-time, flexible and temporary agency work in selected countries Temp workers in 1997

The Netherlands Denmark Benchmarks Germany Spain The UK The US

% all jobsa

% sales % sales per per agencyb workerb

4.50 0.25

13,300 1,100

0.50 0.75 3.00 2.25

1,600 2,800 3,500 8,400

■

Flex-contract 1983 % all jobs

1997 % all jobs

17.7 15.2

8.0 12.5

25.8 11.0 24.1 20.2

10.0 11.0 7.0 (0.5)

■

Part-time 1983 % all jobs

1997 % all jobs

12.0 11.0

21.2 23.8

29.1 17.9

11.0 24.0 7.5 (1.9)

12.6 5.0 19.0 18.4

15.1 7.9 23.1 18.3

Notes Temp workers employed through Temporary Work Agencies (TWA), figures provided by the International Confederation of Temporary Work Businesses (CIETT 2002). a calculated on the basis of daily averages of working hours worked though temporary work agencies, as a percentage of total man-hours worked in all jobs. b in thousand US$. Flex-contracts, jobs based on employment contracts of determinate length, usually less than one year (mean duration in Denmark and the Netherlands was 7–12 months in 1997). Figures from the OECD employment database, see OECD 1998. US figures are not strictly comparable and are provided by the National Association of Temporary Staffing (NATS) in the USA. Part-time, jobs (both permanent and temporary) of less than 30 hours weekly. Figures from the OECD employment database, see OECD 1998.

Self-employment has increased by around 150,000 people during the 1990s, from around 600,000 to over 750,000 in 1998; and has represented a stable share of around 12 per cent of total employment since the 1980s. Of all self-employed people, it is estimated that around one-quarter, or 3 per cent in total employment, are in a subcontracting relationship. This implies that these people, are not paying social security contributions, are not covered by standard employment legislation and do not have the social and employment protection awarded to employees. Thus, there is clearly a ‘regulatory gap’ with regard to the pension and social security coverage of the self-employed. While groups with a long tradition of self-employment often have high social security coverage this appears to be less so for newer groups of self-employed. For example, 70 per cent of self-employed truck drivers and construction workers are fully insured against the risk of disability and sickness while this is the case for only 20 per cent of freelance journalists (Ilpenburg 2000). It has been suggested that this may be one of the reasons why self-employment, as part of overall employment, has remained relatively fixed, while during the same period, agency work has increased. While the level of agency work has increased, there has been marked cyclical patterns in these trends. In an economic upswing, employers tend

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to expand the availability of overtime and then hire ‘temps’ to fill gaps in the short term. As the upswing gathers momentum, the rise in agency work levels off as some agency workers are offered regular, permanent employment. During recessions, agency workers are the first to lose their jobs by not being recalled or offered new assignments. Nevertheless, there is a clear ratchet effect with more ‘temps’ working after each business cycle, and thereby establishing a strong upward growth path. Agency work as a share of total employment has increased significantly throughout the last 20 years: from less than 1 per cent in the 1970s, to 2.5 per cent in the late 1980s, to 3.5 per cent in 1995 and around 4.5 per cent in the 1997–2001 period. The particularly strong rise in the 1990s has partly been driven by low unemployment and partly by social security and employment relation changes. It fits the business cycle pattern, that the current economic downturn has impacted negatively on young people and those hired through ‘temp’ agencies. However, the demand for agency workers is still quite high, when compared to levels experienced in the early 1990s, and it is necessary, therefore, to look for other explanations as to what drives the underlying growth pattern of agency work. What is driving the growth in agencies and temp agency workers? Between the 1930s and the mid 1960s, labour brokerage for profits was illegal and thus the public employment services had a monopoly (Visser and Hemerijck 1997). Brokers started to reappear in the tight labour market of the 1960s and often acted as quasi-employers in their attempt to induce higher labour turnover. In order to avoid social security and tax avoidance, a licensing system was introduced by legislation in 1965 (Act on the Provision of Temporary Labour – Wet op het ter beschikking stellen van arbeidskrachten). The legislation also stipulated that temporary jobs were only allowed for ‘objective’ reasons such as illness or seasonal work. The foundation and growth of most of the major agencies can be associated with the 1965 legislation. Likewise, the public employment services (in cooperation with the unions) launched their own private agency, START, in the 1970s. The environment for agency work was further liberalised in the 1990s (Jong 1996; Jong and van Bolhuis 1997). Since the government has promoted more self-regulatory market forces and the requirement for agencies to have a licence has been rescinded. The self-regulatory mechanisms have been strengthened through collaboration with the employer association that represents most of the major agencies and there has been a strengthening of the agencies’ employer role and responsibilities. Specifically, the employer responsibility associated with agency contracts has been generalised, requiring agencies to act as the employer. After three uninterrupted agency assignments, the agency worker will be considered permanently employed by the agency. The agencies have also resumed

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new responsibilities in terms of illness, disability and unemployment if the agency worker has continuously worked for the same agency. A hallmark of Dutch agency regulation is that collective bargaining plays a major role in stipulating the employment regulation and conditions of agency workers. The current legislation provides ample scope for collective bargaining: employers and unions can negotiate deviations – both upwards and downwards – from the legislative stipulated limits. Collective regulation has had a dominant role since the first collective agreement, covering the larger agencies, was signed in 1995. This agreement provided ‘benchmark’ security for agency workers with a right of continued employment and pension insurance after four consecutive contracts or 24 months of service (Büchtemann and Walwei 1996). The 1995 agreement has since been followed by new flexible legislation in 1999 (Wilthagen 1998, 2001) and collective agreements now set relatively high standards for agency workers. They can gain access to social benefits on the basis of average hours worked, and any assignments will count for a minimum three working hours. In some industries, the basic standards are even higher. For example, minimum paid working hours are six in the construction industry with some industry agreements specifying up to 18 hours in special circumstances (see van Bolhuis 1996, p. 22). Another driver of agency work has been the employers’ continuous search for flexibility. While fluctuating and uncertain production or service demands have always underpinned the employer request for agency workers, an increased cost consciousness in more fluctuating markets has heightened the traditional demand for agency work. This has been further bolstered by social security changes where increased sickness pay and disability entitlements have increased obligations on employers (Visser and Hemerijck 1997). Such entitlements made permanent employment arrangement less attractive for employers but more attractive for the agency workers, since the difference between the two types of employment has diminished. Van Bolhuis (1996) also found that agencies were used more and more as a screening device. Employers have the advantage of ‘trying before they buy’ – that is, before locking themselves into the obligations of a long-term, permanent employment arrangement – and they can take advantage of the agencies’ ‘best practice’ HRM systems. Many of the larger agencies are now promoting their HRM abilities – particularly in the recruitment and selection of employees. These services have become important in procuring assignments for specialists and professionals at the upper end of the market and it has opened a totally new market at the lower end; agencies have become involved in the placement of the long-term unemployed which has previously been the monopoly of public employment services. The placement of long-term unemployed often attracts a lump-sum payment on a ‘no-placement, no-payment’ arrangement. Consequently, agencies can frequently use their client network as well as benefit from the subsidies associated with employing the long-term unemployed.

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Finally, agencies are always on the lookout for further market opportunities. While agency work is widespread in the traditional sectors with seasonal or fluctuating business demands; retail, tourism, café and restaurants; the major expansion areas are in health, IT and professional services. Agencies also have to compete with other types of flexible employment on offer as indicated in Table 5.2. The options of part-time, casual or self-employment are still very attractive to employers and this probably explains why agency work, despite large growth rates recently, constitutes a smaller part of atypical employment than part-time employment in the Netherlands. There is no doubt that agencies have realised that they need to look after the ‘supply side’ of labour hire. They have detected the desire for more autonomy in matters of working hours and choice in leisure time and education activities, especially among young people, families and people in long-term education. The latter have become a large market for agencies, with the reduction in the education grant system and a significant expansion of people in higher education (Moolenaar 2002). The major agencies have started to campaign more regarding the options for their major target groups; the young without children, students and those ‘starting out’ in working life with two income households. The hourly compensation of ‘temp’ workers is, on average, lower than for those people in permanent employment. This tends to reflect a weaker labour market position in general with agency workers having much shorter average spells of employment, more movement in and out of the Table 5.2 Employment by sector and type of contract in 1997 Ratio of all jobs

■

TWA jobs/all flex-contract jobs

Fulltime

Parttime

Flexcontract

Industry Trade, hotels, restaurants and repair Transport and communication Financial and business services Government and education Health, culture and personal services

0.79 0.54 0.70 0.60 0.60 0.29

0.12 0.30 0.17 0.26 0.34 0.58

0.09 0.16 0.13 0.13 0.06 0.12

0.86 0.21 0.56 0.94 0.67 0.38

Total

0.58

0.30

0.12

0.54

Intermediation ratio

Source: CBS 1998. Note The figures are based on the quarterly Labour Accounts of enterprise survey data, recalculated (in the case of temp work) on an annual basis and averaged for sectors through a weighing procedure (see CBS 1999). The intermediation ratio (or share of TWAs in the market for flexible contracts has been calculated on the basis of data for 1995 and is in fulltime equivalents.

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labour market, and lower levels of work experience. Interestingly, these below-average outcomes cannot be explained by the standard demographic factors of age or education levels. At the highest level of education (12–15 years), the difference in remuneration between people in permanent and temporary jobs may be as high as 50 per cent while this gap decreases to around 30 per cent at the lower levels of education. At either end, only around half of the remuneration gap can be explained by personal and sectoral characteristics (that is age, gender, family responsibility, service sector employment) and thus, a considerable gap remains after controlling for these factors (Kleinknecht et al. 1997). While the labour position clearly constitutes a major factor in remuneration, there appears to be a complex number of influences at play. As many ‘temps’ enter the job market from unemployment or family obligations, they tend to have fewer options. These options and the associated remuneration should improve as the labour market tightens – de Grip et al. (2000) have found some evidence for this tendency. Dunnewijk (2000) highlights that ‘temps’ may pay for the screening of the agencies (and ultimately the employer), as well as for learning on the job. In this situation, agency workers have accepted a lower wage as they invest in their human capital and they may then subsequently reap higher benefits. Similarly, if one considers agency workers as ‘entrepreneurial workers’ then a risk premium and higher wages would be a possible trade-off for more employment insecurity. These explanations sound plausible but they appear to have little empirical support. It may be the case that some professionals in the information and communication technology sectors (ICT) and media sectors have above-average incomes over the medium-to-long term but it is certainly not what we observe across agency workers, or over time, within particular groups of workers. The following section now examines the situation in Denmark in relation to employment agencies and temporary workers.

Denmark: a fairy tale story of ‘temps’ and temp agencies? There has been limited discussion of agencies and agency workers in the Danish media and there has been very little academic research in these areas. There does appear, however, to have been slightly more interest in agency work over the last couple of years as the numbers of agency workers have increased and as the trade unions and the European Union have started to consider further regulation of agency behaviour and better protection of agency workers. There have also been discussions of further expansion of agency work since the legislative environment has been liberalised recently. So far, these discussions have concerned opportunities (rather than realities) since the agencies have yet to venture into new markets or expand the size of their operations significantly. The limited interest in agency work among Danish media and academic researchers

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(compared to other countries) can probably be associated with the level, status and outcomes associated with agency work. Despite a strong rise in the number of agencies and their financial turnover, agency work still constitutes a tiny proportion of overall employment. Consequently, there appears to have been few major employment relations issues associated with agency work. This can arguably be linked with the relatively high level of flexibility and limited statutory regulation of the Danish labour market (Burgess 1991a, 1991b; Due et al. 1994; Rasmussen and Lind 2000). In Denmark there is a high degree of reliance on the regulatory role of collective bargaining and this has also been the case with agency work. While there is limited information about the behaviour of agencies and the work situation of agency workers, it appears that agencies have concentrated their efforts at the upper, professional level of the labour market. In spite of the existence of several collective bargaining arrangements covering agency workers, this is an under-developed research and public policy area and the trade unions have expressed concerns about the number of jobs being substituted by ‘temps’ and their associated employment conditions. The growth in temping agencies and agency work There has been a spectacular rise in the number of agencies in Denmark over the last decade, as can be seen from Table 5.3. The quadrupling of the number of temping agencies during the 1990s has prompted a steady increase in their financial importance leading to an estimated turnover of 3 billion Danish kroner in 2001. Although the number of agencies and agency workers has expanded, it is puzzling that the overall proportion of temporary employed persons has stayed almost unchanged over the last decade. In fact, the number of selfemployed has declined steadily over the last 30 years and now covers around 8 per cent of all employed people (Danmarks Statistik various years). While in-depth research is still scarce it would appear that organisations have shifted from employing their own temporary workers – instead they have started to use the temporary labour supplied by temp agencies. As can be seen from Table 5.1, the percentage sales per agency worker is fairly similar in the Netherlands and Denmark. This is because agency work is quite common among professional groups in Denmark and this Table 5.3 Number of temping agencies, Denmark

Number

1992

1993

1994

1995

1996

1997

1998

1999

78

149

178

232

265

303

315

350

Source: Danmarks Statistik 2002a.

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has countered a propensity to have short-term temporary contracts. The three main employment areas covered by temping agencies are health care, production (including drivers) and administration amounting to 34, 26 and 22 per cent respectively in 2001 (Danmarks Statistik 2002b: 15). Health care has been expanding strongly since the mid 1990s where hospitals started to experience a number of unfilled vacancies among nurses. Besides the increase in job opportunities, it has also become more attractive for nurses to register as agency nurses because many nurses can now make more money as agency workers, compared to permanent hospital positions. The number of hours ‘sold’ by temping agencies has increased at the same rate as the turnover of the companies. In 1999, the number of hours was 10 million (equivalent to approximately 5,500 full time people) and this increased to 13.5 million hours or around 7,500 full time people in 2001 (Danmarks Statistik 2000: 30; Danmarks Statistik 2002c: 59). This has been associated with an explosive rise in the number of agency workers: 6,400 in 1993, 13,400 in 1995 and 22,200 in 1998 (HK Blade 2000). In 2000, it was estimated that more than 30,000 people would be working as agency workers in 2001. Thus, the quadrupling of agencies has coincided with a similar upward trend in the numbers of agency workers. The environment for private employment agencies has changed considerably since the 1980s and the rise in both agencies and agency workers must be viewed in the context of these changes. Agencies are now seen as legitimate and ‘normal’ actors in the wider labour market where they previously were marginalised institutions dealing with only a narrow and specialised band of workers. Until the late 1980s, the state-controlled public employment service (Arbejdsformidlingen) had a stranglehold on the provision of employment services and there were only a few private employment agencies. During the 1990s, the public employment service lost its quasi-monopoly position and private agencies were given good opportunities to expand their business. In 2002, the Government decided that the public employment service should provide private agencies with information from their files about all job-seeking persons. It is unclear what effect these changes will have as the two types of agencies – search and recruitment firms (rekrutteringsfirmaer) and temping agencies (vikarbureauer) – have not changed their behaviour markedly. There is still a clear distinction between the two types of agencies: in 2000, recruitment firms obtained 87 per cent of their financial turnover from recruitment and none (0 per cent) from the provision of ‘temps’, while temping agencies received 95 per cent of financial turnover from their temping activities and only 4 per cent from recruitment activities (Danmarks Statistik 2001). Furthermore, it is expected that recruitment firms will probably not be affected that much by the recent changes since they have tended to concentrate on the top end of the labour market – predominantly top- and middle-level management positions. This part of

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the labour market has never been a key concern of public policy or public service provision. For example, Jørgensen et al. (1990) described the public employment service as a ‘temping agency for unskilled labour’. It is expected that temping agencies may take advantage of the new opportunities and become active in the recruitment and provision of labour in the market segments where the public employment service is currently operating. According to the legislation on the employment reform, which came into force on 1 January 2003, temping agencies are expected to be active partners in the implementation of labour market policies. The Government emphasised in their programme of public sector reform that a ‘free choice’ in services and increased competition among public and private sector providers were important to improve quality and reduce costs. It was explicitly mentioned that subcontracting of unemployment and employment services was an inherent part of the policy reform. Whether this will happen to a significant extent depends to a large degree on the financial rewards associated with such activities. This was expressed in this way by a manager from one of the leading temping agencies: ‘it is a matter of business. It presupposes that we can make money on this – it may not be much – but it has to be enough to be an economic carrot’ (Jyllands-Posten 2002, p. 4). The regulation and experiences of agency work The limited media and academic interest in agency work is not just associated with the relative low number of agencies and agency workers which existed until recently; it is also associated with the way agency work has been regulated and how it is situated in the labour market. Compared to other OECD countries, the Danish labour market is very flexible, with numerical flexibility being among the highest in Europe (OECD 1999; Auer and Cazes 2000; Lind 2000; Vejrup Hansen 2000). The OECD (1999) has placed Denmark as number 8, out of 26 countries, in terms of statutory regulations of employment security.2 It has also been estimated that around 25 per cent of the employees change their job within any one year and this has been the case for at least the last 20 years. This can be explained by the combined effects of very liberal regulations of employment relationships and a comparatively high level of social security provisions. The major part of the high level of labour turnover takes part among people covered by ‘standard’ employment agreements with expectations of ongoing (‘until further notice’) employment. Only around 6 per cent of all employed people are employed on fixed-term contracts, and this form of temporary employment has remained stable since the 1980s. During the past 30 years, the number of self-employed persons has been declining from around 13 to 8 per cent of the labour force. Thus, the ‘standard’ employment agreement allows for a considerable amount of numerical

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flexibility. The regulation of the employment relationship is also liberal in the sense that legislation is limited and overall regulation takes place through an extensive network of collective agreements. Apart from legislation on anti-discrimination and recent specific EU regulations of employment conditions, the only important legislation on employment security has been restricted to white-collar workers. This legislation (Funktionærloven) set the standards for notification (up to 6 months) in case of redundancies. For other employees, collective agreements provide the only regulations and some of these agreements contain a similar level of protection regarding the termination of employment. For approximately 25 per cent of all employed people who are not covered by collective agreements, the employment relationship (including notice periods and other forms of employment security) is entirely up to the individual agreement and there is often no or only limited redundancy entitlements. There is no Danish legislation on redundancy payment but some collective agreements do prescribe payment entitlements, though generally of a very limited amount. The level of social welfare support in Denmark is considered to perform the same role as a redundancy payment. This effect is most visible for the relatively low paid segments of the labour market where unemployment benefits may be equivalent to around 90 per cent of the former wage rate. Thus, the well-functioning public employment service and the extensive welfare provisions have made job search and ongoing job opportunities less of an immediate concern, particularly in light of the last decade’s very buoyant job market. However, we assume that some recent changes may have made agency work more attractive for some workers. Following continuous concerns among employers and politicians about a link between the high level of social and unemployment benefits and then structural unemployment (Smith 2000), the access to unemployment benefits has become increasingly restricted and the coverage rate of unemployment benefits to former wages has declined (see Table 5.4). This makes unemployment less attractive and increases the incentive for job search among the unemployed and makes even a temporary job for an agency more attractive. The liberal regulatory regime of employment relationships and the high Table 5.4 Unemployment benefit compensation rates 1990

1992

1994

1996

1998

1999

Weekly pay, manufacturing, DKK Weekly maximum unemployment benefits, DKK

4,752 2,424

5,104 2,526

5,361 2,565

5,775 2,615

6,259 2,670

6,518 2,710

Level of compensation (%)

51

49

48

45

43

42

Source: Danmarks Statistik, various years, Direktoratet for Arbejdsløshedsforsikring.

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level of active labour market policy are supported by the extensive role of collective bargaining. This may have made agency work more attractive. For example, most temping agencies have a collective agreement with trade unions and some of the major agencies are members of various employers’ associations. The most important employer association in Denmark is the Danish Commerce and Services Association (DH&S) and this association is also a member of the Association of Danish Employers (DA). Additionally, the temping agencies in the DH&S have their own branch, the Association of Temping Agencies in Denmark (FVD), which had 20 members in 2003. Thus, working conditions for most of the temping agencies are regulated by collective agreements and, in principle, temporary workers should be paid the same as permanent employees in similar positions. Sometimes, as is the case for nurses and doctors, the temping workers are better paid in order to compensate for the higher insecurity of employment. However, a significant number are presumably paid less than the permanent staff performing the same functions. More detailed information on this matter is not available except in a few specific areas such as health, education, IT and cleaning services. As only the last area, cleaning, is a low paid area there is clearly a need of further research into the temporary workers in low paid occupations. Generally, Danish temping agencies function similar to agencies in the other OECD countries in that they do not guarantee employment for people on their ‘books’. However, some agency workers have a guaranteed minimum employment period within a certain time period and, in some limited cases, workers have been guaranteed a full time working week during a particular time period. The general rule is, however, that the temporary worker is employed according to demand. This implies – and it frequently happens – that agency workers can be without work for a considerable period, or their employment can be terminated with no notice at all. While we have come across these variations in ‘employment security’ during our research, it is unclear how many people are employed under the various types of ‘employment security’. The employers’ organisation, the DH&S, and the temping agencies claim that temping workers get ‘the pension, education and sickness pay they are entitled to’ while the trade unions are worried about the increasing number of jobs that are substituted by temporary work (Erhvervsbladet 2002). The unions estimate that agency workers usually work under conditions that are below the standard of ordinary employees. They have higher job insecurity, no savings for pension age, less training and education and less money in case of sickness (Erhvervsbladet 2002). There are clearly diverse evaluations among the key ‘actors’ and the limited Danish statutory employment rights make this a contestable area. Employment rights have also been considered by the European Union but there has been limited progress with the European Union’s plans so far. As the

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Danish entitlements are fairly well established through collective bargaining, it is unlikely that EU regulations will have much impact in the immediate future. All employment relationships are covered by the holiday legislation. Thus, all agency workers – including all temping workers – earn a right to take holidays and they obtain holiday pay according to the number of hours worked and their pay levels. Pension schemes are not regulated by legislation but by collective agreements. ‘Temps’, who are covered by collective agreements, will therefore receive a special contribution equal to the employer’s contribution to the pension scheme, although this is not normally the case for agency workers with no collective agreement. In the case of sickness, the agency worker has no right to receive the normal pay level – as stipulated in the legislation for white collar workers – but is still entitled to sickness pay which is equivalent to the unemployment benefit rate. On average, this is around 50 to 75 per cent of the normal pay level and proportionately less for higher pay rates since the benefit is fixed. Training and education has increasingly become an important aspect of collective agreements and the costs are increasingly being privatised with the individual employer or worker paying for the training and education costs. As many Danish organisations have a comprehensive approach to training and education, this will often benefit employees who have a permanent employment relationship. Besides benefiting from the company’s training and education schemes, these workers can also avail themselves of wider labour market training schemes. Agency workers seldom have this opportunity and, if they cannot pay for it themselves, they risk lagging behind in the continuous race to maintain the competitiveness of their training and education standards. Nonetheless, this problem has been recognised by some agencies and, in advertisements and media reports, they attempt to profile themselves as ‘good employers’ with ongoing support for training and education needs of temporary workers. Finally, it is important to highlight the diversity of agency work experiences. To date, there have been few studies of the work experiences and attitudes of agency workers in Denmark. Some recent reports and case studies may shed more light on these issues, but one has to be cautious: the research is not representative of the working conditions and attitudes across the population of agency workers. The general picture painted by the available studies can be summarised in this way – people, who are working as employees in non-standard conditions, are more vulnerable and less secure than ordinary employees, though people, who are in high paying jobs and often self-employed, appear to be more satisfied with their work than permanent employees are. A recent study, that included all non-standard forms of employment among people with an academic education, came to some rather pessimistic conclusions. Compared to people in permanent employment situations, non-standard employees were feeling more vulnerable, had a feeling of insecurity, earned less, were

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more worried about their future situation in the labour market and were more afraid that their qualifications would not be sufficient in the future (Teknologisk Institut 2000). Another study concentrated on people in the ‘grey zone’ between being an employee and being self-employed. It revealed that most of these people were more contented with their work situation, had more interesting and varied jobs, earned more money and worked longer hours than ordinary employees. However, this group was typically better educated than the average workforce and included an above-average proportion of male employees and mature people, with younger people being underrepresented (PLS Rambøll Management 2001). In short, temporary agency workers obviously have a range of experiences and attitudes and research has yet to establish a solid foundation for making generalisations or establishing trends.

Conclusion There has been a great deal of popular and academic interest in agency work with concepts of ‘temping’, ‘executive leasing’ and ‘just-in-time labour’ conjuring up all kinds of images. It is surprising therefore, that there is a dearth of detailed information and precise, empirically based research. Even in the Netherlands, which is a front runner in terms of agency work, it is only recently that it has been possible to gain a more comprehensive picture of the role and functions of agencies and agency workers. There is also evidence of a surprisingly low level of agency workers, compared to other forms of atypical employment. This is particularly the case in Denmark, though even in the Netherlands, agency work is lower than other forms of atypical employment. Despite the relatively low levels, this has undoubtedly been a major growth area over the last decade. Although the cyclical patterns are very noticeable, there has been a continuous upward underlying trend in the two countries. Besides some immediate employer and employee interests in agency work, it is still unclear what exactly drives the strong underlying growth in agencies and agency work. Agencies are themselves important ‘actors’ in this growth as they tend to ‘surf’ as best as possible the market wave of employer and employee demands as well as trying to enhance their own market share and create new markets. The role and functions of agencies have expanded in both countries and they have benefited from a more lenient regulatory environment. While the Netherlands previously had a restrictive environment there has been a strong move towards liberalisation over the last decade. This has coincided with a marked rise in the share of total employment: it has nearly doubled within the last 15 years. Denmark has always had relatively few legislative regulations and the few Danish restrictions that exist are currently being dismantled. There is a significant difference however, in that Denmark has had strong regulatory

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mechanisms through collective bargaining. The increase in collective bargaining arrangements in the Netherlands has arguably led to a convergence between the two countries where in future, EU regulations may carry this convergence further. While employer preferences for flexibility are well established it appears that employee choice and preferences have become significant drivers as people juggle education, family, life style and career preferences and their work life. Agencies have clearly picked up on these choices and preferences and they have fashioned and marketed agency work in those terms to their potential prospective agency workers. Yet, there are limits to how much people can pick-and-choose. Agency employment reflects the conditions of the various labour market segments where agencies operate. In a few segments, where there is a high demand for skilled workers, temps can achieve relatively favourable wages and working conditions and have often chosen to be ‘temps’ because of the attractiveness of agency work compared to standard employment. In other segments, people choose to work for a temping agency as an alternative to low paid jobs or unemployment. Wages and other conditions are often less attractive than conditions among mainstream employment and often the flexibility ‘choice’ is a take-it-or-leave-it option. In summary, there appears to be an interaction between employment regulations and the level of agency work where agency work is in ‘competition’ with other forms of atypical employment. The different ‘weight’ of various forms of atypical employment can be aligned with the cost and effectiveness of both employer and workers evaluating and adjusting to the various options. This is clearly an area where more research is necessary.

Notes 1 The European Industrial Relations Observatory (EIRO 1999) provided a detailed and comprehensive analysis of temporary agency work in Europe. www.eiro.eurofound.ie/1999/01/study/TN99012015.html. See also Storrie 2002. 2 As a further comment to Table 5.1, the OECD (1999) estimates that the US, the UK, Canada and Ireland have the least restrictive regulations, while Portugal, Turkey, Greece, Italy and Spain have the most restrictive regulations.

References Atkinson, J. 1984, Emerging UK Work Patterns, Institute of Manpower Studies, Brighton, Sussex. Auer, P. 2000, Employment Revival in Europe. Labour Market Success in Austria, Denmark, Ireland and the Netherlands, ILO, Geneva. Auer, P. (ed.). 2001, Changing Labour Markets in Europe, ILO, Geneva. Auer, P. and Cazes, S. 2000, ‘The resilience of the long-term employment relationship: Evidence from the industrialised countries’, International Labour Review, 139(4):379–408. Büchtemann, C.F. and Walwei, U. 1996, ‘Employment security and dismissal

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protection’, in Schmid, G., O’Reilly, J. and Schömann, K. (eds), International Handbook of Labour Market Behaviour. Interdisciplinary Approaches and International Evidence. Edgar Elgar, Cheltenham: 652–693. Burgess, P. (ed.). 1991a, Industrial Relations. European Management Guides, Incomes Data Services, London. Burgess, P. (ed.). 1991b, Terms and Conditions of Employment. European Management Guides, Incomes Data Services, London. CBS [Centraal Bureau Voor de Statistik]. 1998, Labour Accounts, The Hague. CBS [Centraal Bureau Voor de Statistik]. 1999, Quarterly Statistics on Market Services, The Hague. CIETT [International Confederation of Temporary Work Businesses]. 2002, Statistical Information, www.ciett.org (Accessed 16 June 2003). Crouch, C. 1993, Industrial Relations and European State Traditions, Oxford University Press, Oxford. Danmarks Statistik. (various years) Statistisk Tiårsoversigt, Copenhagen. Danmarks Statistik. 2000, Statistiske Efterretninger, Copenhagen, serviceerhverv. Danmarks Statistik. 2001, Nyt fra Danmarks Statistik, Copenhagen, no. 426. Danmarks Statistik. 2002a, Statistikbanken Copenhagen, www.dst.statistikbanken.dk (Accessed 16 June 2003). Danmarks Statistik. 2002b, Nyt fra Danmarks Statistik, Copenhagen, no. 413. Danmarks Statistik. 2002c, Statistiske Efterretninger, Copenhagen, serviceerhverv. de Grip, A., de Groot, S., Kuipers, K., Scholten, H. and Wolbers, M. (eds). 2000, De Nederlandse arbeidsmarktdag 2000: de arbeidsmarkt van de toekomst. ROA, Maastrict. Due, J., Madsen, J.S. and Jensen, C.S. 1994, The Survival of the Danish Model. A Historical Sociological Analysis of the Danish System of Collective Bargaining, DJØF Publishing, Copenhagen. Dunnewijk, T.W.A. 2000, ‘Why is the Dutch market for temporary labour so mature?’, in de Grip, A. (ed.), De Nederlandse Arbeidsmarktdag 2000: de arbeidsmarkt van de toekomst. ROA, Maastricht: 67–79. Erhvervsbladet. 2002, Nyhedsservice, 19 December 2002. Esping-Andersen, G. 1990, Three Worlds of Welfare Capitalism, Polity Press, Cambridge. European Commission. 2000, ‘Results of an ad hoc labour market survey covering employers and employees’, European Economy, No. 4. EIRO [European Industrial Relations Observatory] 1999, www.eiro.eurofound.ie/ 1999/01/study/TN99012015.html (Accessed 21 June 2003). Felstead, A. and Jewson, N. 1999, ‘Flexible labour and non-standard employment: an agenda of issues’, in Felstead, A. and Jewson, N. (eds), Global Trends in Flexible Labour, Macmillan, London. Grunell, M. and Beltzer, R. 1999, Temporary Agency Work and Industrial Relations: The Netherlands. www.eiro.eurofound.ie/1999/01/word/nl9812110s.doc (Accessed 21 June 2003). Ilpenburg, D. 2000, ‘De zelfstandige zonder personeel: tegen wil en dank?’, in de Grip, A. (ed.), De Nederlandse Arbeidsmarktdag 2000: de arbeidsmarkt van de toekomst ROA, Maastricht: 245–59. HK Blade. 2000, HK Blade. Maj 2000. www.hk.dk (Accessed 3 July 2003). Jong, F. de. 1996, ‘Flexibilisering van de arbeid. Een onderzoek naar flexibilisering in cao’s’. Report, Ministry of Social Affairs and Employment, The Hague.

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Jong, F. de and van Bolhuis, M. 1997, ‘Flexibilisering van de arbeid. Een onderzoek naar aspecten van (interne) flexibilisering in bedrijven’, Report, Ministry of Social Affairs and Employment, The Hague. Jyllands-Posten. 2002, onsdag 9 October 2002, Erhverv & Økonomi: 4. Jørgensen, H., Lind, J. and Nielson, P. 1990, Personale, planlægning og politik. ATA, Aalborg. Kleinknecht, A., Oostendorp, R.H. and Pradham, M.H. 1997, Patronen en economische effecten van flexibiliteit in de Nederlandse arbeidsverhoudingen, WRR-voorstudie. Document V99, Scientific Council for Government Policy, The Hague. Lind, J. 2000, Hvor fleksibelt er det danske arbejdsmarked? LEO-serien, No. 25, Aalborg. Lind, J. and Møller, I.H. (eds). 1999, Inclusion and Exclusion: Unemployment and Non-standard Employment in Europe. Ashgate, Aldershot. Moolenaar, D. 2002, The Dutch Market for Agency Work, Thesis, University of Amsterdam, Amsterdam. OECD. 1998, Employment Outlook 1998, OECD, Paris. OECD. 1999, Employment Outlook 1999, OECD, Paris. PLS Rambøll Management 2001, Atypisk beskæftigelse, PLS Rambøll Management, Copenhagen. Rasmussen, E. and Lind, J. 2000, ‘Changes in labour market regulation. A comparative study of the impacts of global competition on Danish and New Zealand labour market trends.’ The Impact of Globalisation on National and Regional Systems of Industrial Relations and Employment Relations, IIRA 12th World Congress, Tokyo, 29 May–2 June, 2000:195–209. Rasmussen, E., Lind, J. and Visser, J. 2003, ‘Flexibility meets national norms and regulations: part-time work in New Zealand, Denmark and the Netherlands’, IIRA World Congress, Berlin, Germany, 8–12 September 2003. www.fu-berlin.de/iira2003/papers/track_2/Plenary_Track_2_Rasmussen. pdf Smith, N. 2000, ‘Økonomiske incitamenter til at arbejde’, in Smith, N. (ed.), Arbejde, incitamenter og ledighed, Rockwoll Fondens Forskningsenhed, Aarhus: 179–209. Standing, G. 1999, Global Labour Flexibility, Macmillan, London. Storrie, D. 2002, ‘Temporary agency work in the European Union’, European Foundation for the Improvement of Living and Working Conditions, Dublin, www.eurofound.eu.int.int/publications (Accessed 21 June 2003). Teknologisk Institut. 2000, ‘Akademikere i atypiske beskæftigelsesrelationer’, Erhvervsanalyser, Teknologisk Institut, Copenhagen. van Bolhuis, M. 1996, ‘Externe flexibilisering: Een onderzoek bij bedrijven’, Report, Ministry of Social Affairs and Employment, The Hague. van Ruysseveldt, J. and Visser, J. 1996, Industrial Relations in Europe. Traditions and Transition, Sage, London. Vejrup Hansen, P. 2000, Det fleksible arbejdsmarked, DJØF, Copenhagen. Visser, J. 2002, ‘The first part-time economy of the world: A model to be followed?’, Journal of European Social Policy, 12(1):23–42. Visser, J. and Hemerijck, A.C. 1997, ‘A Dutch Miracle’. Job Growth, Welfare Reform and Corporatism in the Netherlands. Amsterdam University Press, Amsterdam.

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Wilthagen, T. 1998, ‘Flexicurity: A new paradigm for labour market policy reform?’, Paper, FS 1 98–202, Wissenschaftszentrum für Sozialforschung, Berlin. Wilthagen, T. 2001, ‘De transitionele arbeidsmarkt en flexicurity’, in Heuvel, N. van den, Holderbeke, F. and Wielers, R. (eds), De transitionele arbeidsmarkt. Contouren van een actief arbeidsmarkt beleid, Elsevier, The Hague: 109–29.

6

Temporary employment The situation in Canada Gordon Brian Cooke and Isik Urla Zeytinoglu

Introduction Temporary employment has become a common form of work in the Canadian economy. Recent statistics indicate that 12 per cent – or more than 1.5 million – of paid workers in Canada are considered to be temporary (Akyeampong 2001). Temporary work includes any arrangement in which workers are employed on an interim basis with a predetermined (although potentially flexible) completion date. These represent variations of the traditional bipartite relationship between employer and employee. It should be noted that agency work and temporary work are not synonymous. In Canada, agency work represents a specialised and very small subgroup of the broader category of temporary work. Agency work, for the purpose of this chapter, pertains solely to employment arrangements in which individuals are paid and retained by a service provider who contracts out individuals to third parties (usually) on a short-term basis. A unique element of this form of work is that there is a tripartite relationship between the worker, service provider (i.e. agency), and hiring organisation. The purpose of this chapter is to provide an analysis of the nature, prevalence, and implications of temporary work arrangements in Canada. As mentioned above, there are several forms of work arrangements that are temporary in nature, and, as a whole, they have grown to represent a sizable portion of the Canadian employment scene. Our premise is that environmental changes (i.e. external factors) have contributed to the growth of temporary employment in Canada. We begin by introducing a theoretical framework, followed by a listing of the presumed drivers of temporary employment and the industries in which temporary jobs prevail in Canada. An examination of the environmental influences follows, including the role of governments and organised labour. Since our intention is to provide an overview of the Canadian situation, macro factors dominate the discussion. While some of the reasons for temporary work in Canada are structural in nature, much of the growth is due to strategic decisions made by Canadian businesses. Certain forms of work and occupations inherently have a seasonal nature. We suggest that seasonality is a

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structural impediment to permanent employment. Certainly, it is possible to employ labour on a permanent basis to conduct seasonal tasks, but temporary employment is a more natural match. On the other hand, we posit that the use of temporary labour for non-seasonal (although perhaps cyclical) work is a strategic choice made by decision-makers. It is possible that temporary work arrangements are designed and offered to attract (certain types of) job applicants, although it is more reasonable to believe that they were designed to save costs, improve flexibility, and/or shift business risk. Since agency work is an unusual form of temporary employment in Canada a brief review of its peculiarities is included. As an aside, the terms ‘temporary’ and ‘non-permanent’ work will be used interchangeably throughout the chapter although no difference in meaning should be inferred. Temporary employment is defined to be any arrangement in which workers are in closed-ended employment contracts. Temporary work tends to be of two forms: i) casual labour (including those of a very short-term or even daily nature), or ii) fixed-term employment. Both forms can be of a seasonal or strategic (i.e. non-seasonal) nature, and can be arranged directly between employer and employee or facilitated by a third party (i.e. temporary help services agency). In many respects, self-employment without employees is related to temporary work since both represent alternatives to the traditional employer–employee work form. However, it is excluded here because it represents an open-ended (albeit tenuous) form of work, and the employee–employer roles are combined.

Theoretical framework In this chapter, we discuss temporary work within the general framework of industrial relations systems theory and the dual labour market theory. According to the latter, subgroups in the labour market are treated differently and have different employment opportunities (Doeringer and Piore 1971; Piore 1986). One segment of the labour market tends to receive better (i.e. more privileged, rewarded and rewarding, and secure) jobs, and another segment accesses inferior jobs. Although the concept originally pertained to the labour market as a whole – and that dichotomy still exists – there is evidence that dual labour markets also exist inside a number of Canadian organisations (see Zeytinoglu 1999a for a review of this literature). Some firms opt to have a core group of permanent workers who are augmented, on an as-needed basis for short terms, with a peripheral group in temporary and part-time jobs (Fox and Sugiman 1999; Rogers 2000; Chaykowski and Gunderson 2001). In brief, industrial relations systems frameworks list the broad environmental influences and localised factors that shape conditions of work at an organisational level (see Kochan et al. 1986 and Dunlop 1993 for an introduction to these frameworks). These influences, such as the political and economic environments in which organisations operate, affect the employ-

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ment terms that organisations offer and that current and potential employees desire. These terms – including the degree of job security provided to employees – subsequently affect decisions by other organisations, and collectively impact or reinforce the broader business environment. This reciprocal conceptualisation has been used to describe the industrial relations system for many years (see, for example, Taras et al. 2001), and continues to be relevant for understanding the factors influencing the contemporary employee–employer relationship. In this chapter, we have focused on the environmental factors affecting working conditions generally, and temporary employment in particular. The use of temporary labour is not a new phenomenon. For instance, the use of temporary labour during harvest season has existed in the agricultural industry for centuries. The new twist is that the extent of temporary labour has increased even in work situations in which permanent arrangements could have been utilised. Bluntly put, at least part of the growth in temporary employment is a result of strategic choices made by organisational decision-makers. Again, the mix of factors that influences the employment relationship has not changed. Rather, the nature of these factors has changed, and that has allowed, if not driven, the growth of temporary employment.

Agency work in Canada A summary of agency work is included here because of its uniqueness, even though its share of temporary work in Canada is small. As late as the mid-1990s, the estimated agency share of all temporary work was only 2 per cent, which was a fraction of 1 per cent of the overall workforce (Grenon and Chun 1997; Zeytinoglu 1999a). By 2000, the number of Canadians working in employment services (which includes, but is not limited to, temporary help agencies) was 85,000 (Bowlby 2001). At a maximum, the current agency share has risen to only 5 per cent of all temporary employees. Definitional problems can confound the statistics. Another survey suggests that a portion of (self-identified) permanent workers actually work with a temporary agency, but do not consider themselves to be temporary since they continue to get new assignments on an on-going basis without downtime (Lowe and Schellenberg 2001). This suggests that the agency share of temporary work could be understated. Nonetheless, although the use of ‘agency temporaries’ is well known, in practice it is a small component of temporary work in Canada. In Canada, temporary help service (THS) agencies emerged in the 1950s, primarily to provide clerical and manual labour (Akyeampong 1989). According to 1993 sample data, administrative and clerical support continues to be the largest labour category provided by Canadian agencies, followed by general and construction labour (Hamdani 1997). Along with these traditional occupations, various agencies now also

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provide workers trained in information technology, health care, drivers and equipment operators, and other professional occupations (Hamdani 1997). It is also likely that agencies provide a range of services including individual and group placement of temporary workers, perhaps training options, and other human resources functions (e.g. Kelly Services 2002). By 1993, there were over 1,100 THS organisations in Canada (Hamdani 1997). The industry, in Canada, is partially represented by the Association of Canadian Search, Employment and Staffing Services (ACSESS), which has almost 300 member organisations representing over 800 offices across Canada (ACSESS 2002). Utilising temporary employment agencies is a way for employers to acquire readily available, skilled workers to fill short-term vacancies in an efficient manner. In effect, agencies provide a quality guarantee to hiring employers (Rogers 2000). An additional employer benefit is the opportunity to utilise workers on a trial basis as potential applicants for permanent internal jobs. According to one major international agency, 40 per cent of its temporary workers eventually leave for permanent positions with agency clients (The Economist 2001). There can be significant administrative benefits as well when the agency handles payroll deductions and processing, and other human resources functions. In many cases, the agency screens individuals, refines their skills, and matches available workers to suit the needs of hiring employers. The use of agency workers continues to evolve. Rather than using them as a stopgap measure (i.e. to fill in during illnesses and vacations), some employers utilise agency staff as an integral part of their internal labour (Akyeampong 1989; Osberg et al. 1995). For instance, using agency workers can be a logical way for organisations to provide extended hours or additional staff periodically, but repeatedly, to meet cyclical customer needs. A survey conducted in 2002 found that about two-thirds of Canadian business leaders envisioned that the use of agency temporary workers will increase in the next few years, while less than one third predicted a decrease (Workplace News 2002). Moreover, others suggest that Canadian organisations have already shown an increasing propensity to rely on non-permanent labour via THS providers (Canadian Economic Observer 2002). From an employee viewpoint, working through an agency may increase continuity because a pool of potential assignments is available (theoretically) when one placement ends. This also allows agency temporaries to be more selective when searching for permanent employment (Rogers 2000). Progressive agencies may also provide training and other perks to retain its pool of workers. A disadvantage is that individuals may feel pressured to accept low skill, low pay work to continue getting regular assignments and to access better opportunities (Akyeampong 1989; Rogers 2000). Moreover, the agency–client arrangement can shield responsibility if both organisations blame each other when an employee has been mistreated (Rogers 2000; Kalleberg 2000; Gunderson 2001). The advantages and disadvantages of using agencies are summarised in Table 6.1. Overall,

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Table 6.1 Temporary help agencies: advantages and disadvantages Agency work: worker perspective Possible positives:

Possible negatives:

• system in place to arrange new assignments • agency can provide protection and deterrence from exploitative employers • agency provides training and other ‘perks’

• as middleman, agency takes cut of wages • assignments tend to be short (to avoid paying the middleman) • when worker is mistreated, it is difficult to pin down responsible party

Agency work: hiring employer perspective Possible positives:

Possible negatives:

• ease of use

• added costs (via indirect and direct fees to agency) • only accessing limited applicant pool

• access to skilled/trained applicants who have been pre-screened for fit • can use agency staff during no-risk trial for possible permanent employment

• lack of continuity if staff is changed frequently

though, the growth in the use of agency temporaries is primarily demanddriven (Kalleberg 2000). There may be advantages for workers, and some workers may enjoy it, but agency work has emerged to satisfy employer requirements.

What drives temporary employment in Canada? We suggest that temporary employment has grown in Canada primarily due to five specific drivers. They are: Weak labour markets: On a national basis, unemployment remained relatively high throughout much of the 1990s, and continues to be problematic on a regional basis (Jackson and Robinson 2000; Picot and Heisz 2000). When unemployment is high, workers are more likely to accept and remain in temporary jobs (Osberg et al. 1995; Zeytinoglu 1999a). Fewer constraints on employers: Governments in Canada, both federally and provincially, generally have adopted freer market philosophies, including the implementation of open trade agreements with the US and Mexico (Yates 2000; Adams 2001). One of the offshoots is a decline in the relative power of (organised) labour (Rose and Chaison 2001; Chaykowski and Gunderson 2001; Martinello 2000). A result is that employers face

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fewer constraints when designing work, including the decision whether to offer permanent or temporary jobs. Strategic choices by employers: Partially as a result of the freer movement of goods and capital outlined above, employers have sought to reduce labour costs, increase flexibility and reduce risk in an era of business uncertainty (Armstrong-Stassen 1998). One of the ways that employers have acted is the adoption of numerical flexibility in which temporary workers can be added or shed quickly and inexpensively (Zeytinoglu and Muteshi 2000; Lipsett and Reesor 1999). We posit that this strategic choice has been a key driver of (non-seasonal) temporary employment in Canada. In their role as employers, various governments now utilise temporary employees at least as frequently as in the private sector (Yates 2000; Kulig 1998; Picot and Heisz 2000). As a model for others, governments have effectively signalled the legitimacy of the use of temporary labour or other alternative work forms (Ponak and Thompson 2001). Economic restructuring: A longer-term trend is the emergence of the service sector and the relative decline of manufacturing in the Canadian economy. Service sector jobs are more likely to be temporary and/or parttime (Zeytinoglu and Muteshi 2000; Zeytinoglu 1999a; Heisz and Cote 1998). Technology, particularly information and communications technology and computerisation of jobs, have also contributed to the creation of temporary employment (Zeytinoglu 1999b). Worker demands: The labour force, of course, is not homogeneous. While most individuals want permanent work, it must be noted that there are workers who prefer temporary employment for a variety of reasons (Stanworth and Druker 2001; Krahn 1995). Therefore, it would appear that a small segment of temporary employment is employee-driven. In later sections of this chapter, these five drivers will be reviewed in more detail, with particular attention to the first three.

Industries utilising temporary workers in Canada The bulk of temporary workers in Canada are concentrated in health, education, tourism and recreation, food services, and public administration (Krahn 1995). On a percentage basis, however, more construction workers are in temporary jobs. Not unexpectedly, seasonal employment is common in primary industries such as fishing, farming, and forestry (Perusse 1997; Marshall 1999). Consequently, workers in these occupations are much more likely, than others, to be unemployed. The occupations with the most frequent unemployment benefit claims were those in primary industries followed by construction and education (Stratychuk 2001). As mentioned earlier, about 12 per cent of paid workers were in non-

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permanent situations as of mid-2001. This represented only a moderate percentage increase during the 1990s (see Grenon and Chun 1997; Kulig 1998). In absolute terms, though, the number of temporary employees has virtually doubled since 1989. Although the Canadian labour force has grown, the growth rate of temporary jobs has been much faster. This growth is shown in Table 6.2. The national statistics shed some light on the temporary work situation in Canada. However, to have a better understanding, it is important to consider regional and demographic differences and the working conditions of those in temporary jobs. As a background to our discussion, we first provide some basic facts on Canada. For example Canada has a population of approximately 31 million people, with the vast majority living close to the southern border (with the US) spread among ten provinces. The four eastern provinces are commonly referred to as Atlantic Canada. Central Canada consists of Ontario and Quebec, which have the highest population and manufacturing bases. Western Canada is made up of the three prairie provinces plus British Columbia. Under Canada’s federal system, labour issues are a provincial responsibility, except for key inter-provincial industries, which are subject to federal regulations. The federal government retains control over issues such as international free trade agreements, and also provides direction and input over many domestic issues, but can only attempt to coordinate ten semi-autonomously created sets of provincial labour frameworks. Traditionally, the economy was heavily resource-based, and exhibited strong seasonal patterns. Both play an important, but declining, role today (Marshall 1999). The Canadian economy has shifted, as elsewhere, towards being service-based. Although the service sector is perceived as having few full-time jobs, that shift cannot be blamed solely for the rise in temporary employment (Heisz and Cote 1998).

Table 6.2 Temporary employees in Canada 2002b

2001

1999

1997

1994

Total employees (000s)c 13,056 Temporary employees (000s) 1,707

12,768 1,637

12,068 1,459

11,421 1,296

10,778a 9,988a 00,970 0,799

Temporary as percentage of total

12.8

12.1

11.3

9.0

13.1

1989

8.0

Sources: 2002: Labour Force Survey (Cansim Table 282-0079) 2002b. 1997–2001: Labour Force Survey (Cansim Table 282-0080) 2002a. 1989–1994: Krahn 1995. Notes a Calculated by authors. b Part-year figures only. c Excluding self-employed.

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Regional differences in temporary jobs in Canada In Canada, there is significant regional variation in the type and proportion of temporary jobs. As presented in Table 6.3, half of non-permanent jobs across Canada had a fixed term (including those provided via agencies); about one in seven were seasonal, with the remainder being casual or other (Grenon and Chun 1997). In Atlantic Canada, however, temporary jobs form a larger share of all employment and seasonal jobs in particular are much more common. In fact, both seasonal and nonseasonal forms of temporary employment are tangibly higher in Atlantic Canada than elsewhere (Grenon and Chun 1997; Perusse 1997) (see Table 6.4 for recent statistics). This is important because it complicates the potential responses by public policy setters, since these regional differences suggest that a single national approach might not be suitable. Overall, annual earnings in Atlantic Canada are lower than in the rest of Canada due to lower hourly wages and fewer weeks of work per year (Sharan 2000). This suggests that the level of temporary employment is related to general economic conditions.

Demographic differences in temporary job holders in Canada Not surprisingly, differences appear among gender and racial categories, based on age and educational level. For gender and racial differences, females and visible minorities are likely to be over-represented in temporary and other non-standard jobs (Jackson and Robinson 2000; Zeytinoglu and Muteshi 2000; Zeytinoglu 2001). Typically, these workers have relatively little bargaining power and fewer alternative employment opportunities. In 1995, 47 per cent of those in permanent jobs were female, while

Table 6.3 Temporary employees in Canada: proportion of temporary workers by type – regional differences

All of Canada Regionally Atlantic Canada Rest of Canada

Fixed term (%)

Seasonal (%)

Casual and other (%)

Total (%)

2001 1995

50 50

16 14

34 36

100 100

2001 1995 2001 1995

41 39 51 51

27 27 15 13

32 34 34 36

100 100 100 100

Sources: 2001 data: Labour Force Survey (Cansim Series 282-0079) 2002a. 1995 data: Grenon and Chun 1997.

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Table 6.4 Temporary employees in Canada: seasonal vs. non-seasonal regional differences Seasonal Temporary jobs as % of total jobs

■

Non-seasonal Temporary jobs as % of total jobs

■

Total Temporary jobs as % of total jobs

All of Canada

2

10

12

Regionally Atlantic Canada Rest of Canada

5 1

12 10

17 11

Source: Labour Force Survey (Cansim Series 282-0079) 2002a. Note December 2001 data was used. If a full year average was used, seasonal employment would have been tangibly higher, especially in Atlantic Canada.

females represented 57 per cent of those in temporary jobs (Grenon and Chun 1997). Even among university graduates, a higher proportion of females than males were found to be in temporary positions (Finnie and Wannell 1999; Zeytinoglu 1999a). Some workers, such as recent immigrants, may experience cultural and language obstacles that prevent them from accessing primary labour markets. As a result, some employers utilise these workers in temporary jobs as cheap, disposable labour (Zeytinoglu and Muteshi 2000). Since these groups have been trapped in lower-paying, lower-status jobs in the labour force in general, it is not unexpected that they are over-represented in these less secure jobs as well. Interestingly, roughly 60 per cent of those in permanent and temporary jobs in Canada had at least some post-secondary education (Grenon and Chun 1997). Alternatively, among university graduates in Canada with less than two years of experience, roughly one quarter were found to be in temporary positions, but that fell to about one in ten for those with five years of experience (Finnie and Wannell 1999). This suggests that university education still improves job prospects (even versus other or partial post-secondary education), but that workers may have to accept temporary employment initially. Age, alone, also plays a role (Krahn 1995). Only 41 per cent of those in permanent jobs were under 35, compared to 61 per cent of those in temporary jobs (Grenon and Chun 1997).

Working conditions for temporary employees Average job tenure among Canadian employees has increased in recent years, although voluntary turnover has decreased (Picot and Heisz 2000; Sunter 2001). An optimistic interpretation of this situation is that job instability has been overstated. The pessimistic – and we would argue more

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rational – interpretation is that perceived stability has decreased, particularly for those people who are trapped in temporary jobs. For example, only 18 per cent of workers in temporary jobs have been there for more than one year, compared to 60 per cent of those in permanent jobs (Grenon and Chun 1997). Moreover, temporary jobs are more prevalent in depressed areas, where job security is lower, since employers have broader options concerning employment contracts and jobs are harder to find (Jackson and Robinson 2000). Job stability is not equivalent to job security where workers are stuck in ‘poor’ jobs (Auer 2001). Simply put, temporary employment is less secure and more cyclical than permanent employment (Kalleberg 2000). The potential effects of being employed in a temporary position go beyond the (real or perceived) instability of these arrangements. Specifically, the chances of having employer-provided benefits (e.g. dental, health, pension) are much higher for permanent employees in Canada (Perusse 1997). For instance, among full-time married workers, more than one in three temporaries have no access to a company health plan, compared to less than one in seven among equivalent permanent workers (Lipsett and Reesor 1999). Although temporary employees are far less likely to receive benefits, there are interesting differences between subgroups. Agency temporaries, casuals, and seasonal workers are about half as likely to receive company-provided benefits compared to fixed-term workers (Lipsett and Reesor 1999). Overall, a much lower percentage of surveyed temporary workers compared to permanent workers agreed that their job offered good benefits (Lowe and Schellenberg 2001). Given those perceptions, one would expect temporary employees to be less satisfied in general. In fact, the findings are rather mixed. Overall, job satisfaction is not necessarily lower among temporary workers (Armstrong-Stassen 1998) although this may be due to a number of factors including the reasons why people choose to undertake temporary work. According to 1995 data, earnings from temporary jobs were 35 per cent lower than those in permanent jobs in Canada, with roughly half due to fewer hours worked, and half was due to lower hourly wages (Grenon and Chun 1997). Other analyses confirm this pay differential (e.g. Zeytinoglu 1999a). The hourly wage penalty for those in temporary jobs is about 18 per cent nationally, and varies on a regional basis from 15–23 per cent (see Perusse 1997). Whether a worker is unionised appears to be a confounding variable. Non-unionised employees are roughly half as likely to have employer-provided benefits as unionised employees in Canada (Lipsett and Reesor 1999). Also, non-unionised temporaries earn less than their unionised equivalents (Kulig 1998). The role of unions will be discussed later. Additionally, those in casual or seasonal jobs earn substantially lower hourly wages than others in temporary jobs (Perusse 1997). In effect, distinct classes have emerged in the labour market between permanent and temporary workers and even among temporary workers

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(Fox and Sugiman 1999; Lipsett and Reesor 1999). Moreover, once workers get slotted into temporary employment, they can be blocked from accessing better jobs (Amuedo-Dorantes 2000). Temporary arrangements are not exclusive to ‘low level’ employees, although low skilled jobs are typical in many cases. Managers and other professionals can be found in non-permanent jobs, although examples of the former, in particular, are rare (Mallon and Duberley 2000; Grenon and Chun 1997). Conversely, managers and administrative staff are equally prevalent as professionals and technical workers among those in permanent jobs. See Table 6.5 for specific details. This suggests that job security is skewed in favour of those in more powerful positions. As an aside, the practice of filling executive vacancies with temporary workers is growing (albeit slowly) in Canada. According to one major temporary help services agency in Canada, these (seasoned) workers are utilised to fill short-term vacancies, lead projects, and/or head start-up operations (Moralis 2002). The added advantage for hiring organisations is that employee headcounts are unaffected and expertise can be acquired to fill immediate organisational needs without making long-term commitments nor incurring the risk of large severance costs (Moralis 2002). Therefore, the use of temporary workers in Canada appears to cut across all occupational and organisational levels, even though unevenly. Part of the appeal of having temporary workers is that unpleasant tasks can be off-loaded by employers and permanent employees (Rogers 2000). Alternatively, the short-term nature of temporary employment can help if duties are particularly unrewarding (Rogers 2000). In other words, negative tasks may be more annoying if one expects to be stuck with them in perpetuity. Overall, temporary workers may well have different (and inferior) job responsibilities than their peers (who have permanent jobs) but may react more positively to those tasks. That suggests that a blend of permanent and temporary workers conceivably could be mutually beneficial. However, there are indications that conflict may occur if permanent Table 6.5 Selected Canadian workers by organisational category Of those in temporary jobs (%)

Of those in permanent jobs (%)

Occupation Management and Administrative Professional and Technical Other

6 29 65

16 19 65

Working in firms with Under 20 employees Between 20–500 employees Over 500 employees

43 45 11

34 55 11

Source: 1995 data: Grenon and Chun 1997.

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and temporary employees work in close proximity. Permanent workers sometimes perceive temporary workers as uncommitted, while temporary workers may perceive their different treatment as unfair, and may resent permanent workers for the preferred treatment they receive (ArmstrongStassen 1998; Fox and Sugiman 1999).

Environment (external) factors affecting temporary employment To assess the use of temporary employment inside organisations, it is necessary to step back and assess broader trends in Canada. As discussed previously, five main drivers of the growth in temporary employment are: weak labour markets, fewer constraints on employers, strategic choices made by employers, economic restructuring, and worker demands. These five emerge from the following review of macro and micro environmental factors. Since the role of governments and to a lesser extent unions affect all other factors, they are discussed separately. At a macro level, structural economic changes such as globalisation and technological advances have increased the level of international competition and trade. For these and other reasons, the nature of work is changing, with organisations searching for more flexibility and efficiency improvements (Armstrong-Stassen 1998; Zeytinoglu 1999b; Kalleberg 2000). At the same time, there has been a general shift to the right in federal and provincial government policy (Rose and Chaison 2001). Moreover, these changes have occurred at a time when organised labour has experienced declining power (Chaykowski and Gunderson 2001). In fact, the macro policy shift is partially responsible for the marginalisation of organised labour (Rose and Chaison 2001). Clearly, production flexibility (i.e. the ability to raise or lower costs and outputs quickly) does not have to shift risk onto employees. In many cases, opting for functional flexibility would appear to be a viable option, with production flexibility addressed via multi-skilling and task redesign so that employees can undertake different tasks and processes depending on circumstances. The employer provides stable employment, and the employees provide sufficient flexibility to optimise production. The alternative is to opt for numerical flexibility. Under this policy, labour levels are ratcheted up or down to match required (short-term) production or demanded service levels (Fox and Sugiman 1999; Zeytinoglu 1999a). This naturally, leads to the use of part-time, temporary, casual, or other jobs in which workers and/or worker hours can be added or shed quickly and inexpensively (Zeytinoglu and Muteshi 2000). The reason for the use of numerical flexibility may again be explained by the industrial relations systems framework. Broad factors have forced employers to act, and no tangible political or labour pressures have prevented the shift of business risk to employees.

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Although the Canadian economy strengthened sharply after a recession in the early 1990s, employment growth lagged, particularly in Atlantic Canada. In 1995, for instance – and this was typical – the unemployment rate ranged from 10.3 per cent to 15.5 per cent in Quebec and the Atlantic provinces, and 7.0 per cent to 9.1 per cent in provinces west of Quebec (Perusse 1997). In fact, the labour market remained relatively soft until the late 1990s (Jackson and Robinson 2000; Picot and Heisz 2000). As a result, workers in temporary positions had relatively few alternatives. Overall, Canadian employment conditions weakened in 2001, leading to a rise in unemployment and increasing part-time work at the expense of fulltime work (Bowlby 2002). Similarly, on a year over year basis, temporary employment in Canada continued to grow at a faster rate than permanent employment during 2002 (Labour Force Survey 2002b). An interesting element of employment in Canada is that about 5 per cent of workers held at least two jobs concurrently at some point during 2001 (Marshall 2002). The suggestion is that some (often younger) workers hold multiple jobs for a short duration for financial reasons while other (often older) workers hold multiple jobs for longer durations because they enjoy the additional work. At the same time, it was also noted that multiple jobholding is more prevalent when the main job of those workers is in a seasonal industry, or if the main job has relatively fewer hours (Marshall 2002). This situation suggests that those in temporary jobs in Canada might be more likely to seek – and need – additional employment. This supports the notion that seasonal unemployment is different than other forms of temporary employment, while also reinforcing the potential precariousness of non-permanent work in general. At the organisational level, paid permanent and non-permanent workers in Canada are equally represented in firms with over 500 employees. However, a higher proportion of temporary workers are in very small firms (i.e. under 20 employees), compared to permanent workers (Grenon and Chun 1997). Perhaps small organisations require more (numerical) flexibility, or simply are more risk-averse and try to utilise temporary workers instead of offering permanent employment. As will be discussed later, the absence of unions might provide a better explanation for this situation.

The role of unions and temporary workers Union coverage is only slightly higher than union density in Canada, so only the latter category will be discussed. Moreover, collective bargaining is highly decentralised (Rose and Chaison 2001). The role of national labour organisations in Canada is primarily public policy influence and government lobbying (Canadian Labour Congress [CLC] 2002). This is tenuous because – as will be noted later – it is dependent on the willingness of policy makers to listen.

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The relationship between unions and temporary work is complex. Intuitively, as union presence strengthens, the use of temporary labour would be expected to decrease, since member stability and security are invariably key union objectives. Since temporary employees could increase the heterogeneity among members (thereby potentially weakening solidarity), and temporary workers are more transient and potentially harder to organise, unions tend to focus on organising permanent employees (Rose and Chaison 2001). On the other hand, once temporary workers are organised, one would expect that unions would push for permanent status. Statistics partially support these assumptions, but the difference is smaller than expected. Specifically, almost one in three permanent workers in Canada is unionised, compared to about one in five non-permanent employees (Akyeampong 2001, p. 47). It should be noted that union density in the public sector was 70 per cent in 2000, compared to 18 per cent in the private sector, and 30 per cent overall (Akyeampong 2001). Since temporary workers are heavily utilised in the public sector, this provides a possible explanation. In any case, the fact that more permanent workers are organised is not surprising. In Canada, union density slipped slightly but steadily throughout the 1970s, 1980s, and 1990s (see Jackson and Robinson 2000). Moreover, union influence, at an organisational and public policy level, has declined for several reasons. Among them is the move to freer trade, and the resulting economic and organisational restructuring (Chaykowski and Gunderson 2001). In addition, the policy shift, which will be reviewed in the following section, resulted in a smaller role for labour voices in public policy discussions (Rose and Chaison 2001). The weakened state of organised labour is ominous because research suggests that in Western European countries with stronger worker rights, underemployment is less prevalent (Sousa-Poza and Henneberger 2000). By extension, this would appear to be relevant to temporary employment as well. The presence of unions can prevent or blunt the adoption of dual labour markets inside organisations, and at a national level, broad labour strength can influence public policies that discourage inequalities in labour markets overall. In work locations where unions are entrenched, they affect employment terms as well as shop floor production. Both of these generally result in the avoidance of temporary labour where possible. Instead, a natural goal is to smooth production to minimise the possibility of layoffs, and to protect work for permanent members. As mentioned earlier, small firms are heavy users of temporary labour in Canada. Union density among firms with less than 20 employees is very low (Jackson and Robinson 2000). So, where unions are scarce, temporary workers are more common.

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The influence of government on temporary employment Governments influence temporary employment by shaping the political, legal, and economic climate in which organisations operate, and by implementing specific employment programs. The various levels of government also combine to be substantial employers. As a result, government decisions directly and indirectly impact employment conditions. Conversely, as conceptualised by industrial relations systems frameworks, government action is impacted upon by issues faced, and action taken, by business groups, the labour movement, and other influential stakeholders. Changes in the political environment – even independent of changes in labour legislation – can affect employment relations and the strategies that businesses undertake regarding labour utilisation (Martinello 2000). As mentioned earlier, there has been a shift to the right of the political spectrum among governments in Canada. A neoliberal bloc, among governments and public policy think tanks, began to form in the 1970s, with effects felt fully by the 1990s (see Adams 2001; Carroll and Shaw 2001). At a policy level, this includes freeing market forces and deficit reduction (e.g. Carroll and Shaw 2001; Ponak and Thompson 2001). The introduction of these policies emboldened employers to take a harder line with employees (Yates 2000). When the short-term effect of policies softens the labour market, a possible side effect is the growth of temporary employment (Osberg et al. 1995). Broadly speaking, Canadian jurisdictions tend to have more supportive labour laws and are particularly more favourable to union activity, bargaining, and organising relative to the US (Block and Roberts 2000). The effect of these particular policies on temporary workers is unclear. A labour perspective is that these benefits – besides being appropriate and just – are needed to shield workers and moderate the vagaries of a free market economy. A pro-business perspective is that government interventions add costs and complications to operations, particularly regarding permanent staff. As a result, businesses have incentives to search for nonpermanent labour sources to save costs and maximise flexibility. Although they may have this incentive, it is not clear how many actually shop for a low cost jurisdiction (Chaykowski and Gunderson 2001). However, a strategic approach, when organisations are considering production locations, is to consider labour costs, militancy, and government support (and legislation) for labour (Thompson 2001). Since Canadian markets are smaller, and labour laws are more extensive and costly compared to its immediate neighbours, freer movement of production reduces the likelihood that business will locate here (Osberg et al. 1995). In some Canadian jurisdictions, temporary workers have been formally excluded from collective bargaining units made up of permanent employees (Banks 2001). More generally, labour legislation is ill suited – or more accurately did not contemplate – for the presence of temporary

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work, so those workers have less access to those benefits and rights (Armstrong-Stassen 1998; Chaykowski and Gunderson 2001; Lowe and Schellenberg 2001; Gunderson 2001; Zeytinoglu 2001). This leaves workers vulnerable since part of the business community may take advantage of reductions or gaps in labour regulations, particularly in an era of relatively high unemployment and business uncertainty (see Lipsett and Reesor 1999; Amuedo-Dorantes 2000; Kalleberg 2000; Marsan 2001). In Canada, most of the public sector employees are unionised. As major employers (and in their role as public policy leaders), the Canadian federal government and most of the provincial governments have affected the tone of employment relations in Canada with their own staffing, restructuring, and downsizing efforts since the late 1980s (Ponak and Thompson 2001). Notwithstanding the existing collective agreements, most of these governments have undermined labour relations by legislating key bargained employment terms (Adams 2001). The apparent purpose was to seek salary and staff reductions or other cost savings (Canadian Policy Research Networks [CPRN] 1999; Ponak and Thompson 2001). A common perception is that governments try to be model employers to set an example for the private sector. Intuitively, the emergence of temporary employment would have occurred primarily in the private sector. In fact, temporary arrangements represented 17 per cent of total employment in Canada’s federal public service by the early 1990s (Kulig 1998). That is, the use of temporary labour is more prevalent in the (federal) public sector than elsewhere. Much of the displacement of permanent jobs in the 1990s occurred as a result of public sector restructuring (Picot and Heisz 2000). To be fair, though, the public sector had lagged the private sector restructuring of the 1980s (Adams 2001). Overall, there is little reason to believe that the government has been able to limit, or tried to limit, the continued growth of temporary employment in Canada. On the contrary, as a major employer and via the restructuring of the public sector and economic framework, government decisions appear to have contributed to the growth.

Discussion and implications Temporary work has become a sizable component of paid employment in Canada. From a worker perspective, the effects are striking and disappointing. Temporary employees are less likely to be unionised and less likely to qualify for unemployment protection and other public benefits. Moreover, they are more likely to have lower wages and fewer company-provided benefits in addition to lower job security. It is unlikely that employees in these positions are there voluntarily, and statistics suggest that females, visible minorities, and young workers are over-represented in these jobs. In Table 6.6 we provide a summary of issues relevant to Canada.

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Table 6.6 Temporary work: issues relevant to Canada Issues: • Regional economic disparity, including distribution of temporary employment • Split jurisdiction over economic, political, legal policy • Temporary employment, now at 12%, is growing and at a faster rate than overall employment • Relatively resource-based economy featuring seasonal employment • Moderate labour protection • Open borders with lightly-regulated US markets • Temporary employment in public sector is higher than in private sector

Permanent full-time employees continue to represent a major (but declining) portion of the workforce, with the rest found in other voluntary or involuntary work forms. This dichotomy exists across Canada and also inside many Canadian organisations. An organisation may have a set of core employees, while augmenting them with a fluctuating number of peripheral workers. These temporary workers may consist of fixed-term workers hired to meet cyclical needs, and casuals or agency temporaries hired to fill very short-term vacancies. Regarding the growth of temporary jobs, the appropriate policy response by governments in Canada is debatable given the economic realities (i.e. the regional disparity, free trade, and free movement of goods, capital, and production with the United States). Additional intervention could push some businesses to relocate to lower cost, less regulated jurisdictions. Restricting temporary employment may trigger other negative side effects. Forcing employment arrangements to be permanent may reduce, rather than improve, work opportunities if labour is utilised to meet seasonal or cyclical business activity. Employers may simply find some other way to avoid (fixed) labour costs. Taking no action may, however, perpetuate or accentuate the differences between the ‘haves and have-nots’ in the Canadian labour force (Zeytinoglu 1999a, p. 56). It must be said, though, that some of the findings of this chapter are contradictory. In terms of perceptions, temporary workers in general (including agency workers in particular) are thought to be of significant and growing importance in Canada, yet the statistical evidence suggests that – while growing – the pool of temporary workers still represents a slim percentage of overall employment. Our interpretation is that the core-periphery use of labour inside organisations has become more entrenched. That is, Canadian organisations are likely to retain the option of ratcheting the amount of temporary labour up or down to suit operational purposes, even though the overall share, by temporary workers, of employment remains relatively small on an aggregated basis. In concluding this discussion, we return to the industrial relations systems framework. We argue that economic and political changes, as environmental influences, and industry characteristics as a macro factor

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have directly and indirectly encouraged the growth of temporary work. Relevant micro factors that influence employment terms of temporary work include organisational factors (e.g. size, adopted strategies), worker factors (e.g. demographic characteristics, presence or lack of unions), and other micro factors (e.g. occupations involved, local labour market conditions). This discussion necessarily focused on broader influences. The growth in temporary employment has reinforced the polarisation of workers in Canada. While some continue to have secure privileged core jobs, others remain on the periphery. We argue that examining the temporary work phenomenon in Canada in an industrial relations systems framework can improve the understanding of working conditions in temporary employment and can lead to sound policy decisions.

Acknowledgements The research presented in this chapter is supported by a grant from the Social Science and Humanities Research Council (SSHRC) of Canada.

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Taras, D.G., Ponak, A. and Gunderson, M. 2001, ‘Introduction to Canadian industrial relations’, in M. Gunderson, A. Ponak, and D.G. Taras (eds) UnionManagement Relations in Canada (4th edn). Addison Wesley Longman, Toronto, CAN: 1–24. Thompson, M. 2001, ‘The management of industrial relations’, in M. Gunderson, A. Ponak, and D.G. Taras (eds) Union-Management Relations in Canada (4th edn). Addison Wesley Longman, Toronto, CAN: 117–141. Workplace News. 2002, ‘Increased demand for temporary professionals’, Workplace News, 8(8):15. Yates, C.A.B. 2000, ‘Staying the decline in union membership’, Relations Industrielles/Industrial Relations, 55(4):640–671. Zeytinoglu, I.U. 1999a, ‘Flexible work arrangements: an overview of developments in Canada’, in I.U. Zeytinoglu (ed.) Changing Work Relationships in Industrialised Economies. John Benjamins Publ, Philadelphia, US: 41–58. Zeytinoglu, I.U. 1999b, ‘Introduction and overview’, in I.U. Zeytinoglu (ed.) Changing Work Relationships in Industrialised Economies. John Benjamins Publ, Philadelphia, US: ix–xx. Zeytinoglu, I.U. 2001, ‘Social justice for workers in non-standard employment forms and contracts’, in R.P. Chaykowski (ed.) Globalisation and the Canadian Economy: The Implications for Labour Markets, Society and the State. School of Policy Studies, Queen’s University, Kingston, CAN: 218–228. Zeytinoglu, I.U. and Muteshi, J.K. 2000, ‘Gender, race and class dimensions of nonstandard work’, Relations Industrielles/Industrial Relations, 55(1):133–165.

7

Agency temporary work and government policy in contemporary Japan Kazumichi Goka and Asuka Sato

Introduction: flexibility of employment and irregular employees To begin with we examine the characteristics of the contemporary Japanese labour market. According to the labour force survey both the number of unemployed persons and the unemployment rate have continuously increased, exceeding 3.5 million people and 5.4 per cent, respectively in 2002 (Somusho Tokei Kyoku 2003). With regards to the duration of unemployment, 1.03 million people have been without work for one or more years (Somusho Tokei Kyoku 2002). Apparently Japan is entering a new era of mass unemployment. Conversely, the Japanese labour market has exhibited more flexibility in two main areas in recent years. First, there has been a reduction in the number of regular employees (especially middle-aged male employees) who had assumed to be protected by the long-standing ‘lifetime employment system’ in Japan. Second, there is the utilization of various forms of irregular or atypical employees, such as temporary, dispatched, part-time and casual workers. These two areas of labour market flexibility are closely related. That is to say, regular employees are often replaced with irregular or atypical employees and this new flexible employment management strategy was introduced into Japanese companies in the 1970s. Flexibility of employment has been further reinforced since the early 1990s. Table 7.1 illustrates the results of recent employment flexibility. There is a striking contrast between the decrease in regular employees and an increase in irregular ones. While the number of regular employees was cut by 3.26 million over five years from 1997 to 2002, irregular employees increased by 2.54 million during the same period and they exceeded 14 million in 2002. In particular, the proportion of the irregular employees among all female employees grew remarkably over these five years and approached 50 per cent in 2002. This shows that employers no longer utilize irregular employees only as a labour force adjustment valve, but have made constant use of them in many workplaces as a means to reduce labour costs. The majority of irregular employees are female part-time workers, which accounts for about 8 million.

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Table 7.1 Employees by form of employment Year

Total

Regular employees

Irregular employees

1990 1995 1997 1999 2001 2002 Male Female

43,690 (100.0) 47,800 (100.0) 49,630 (100.0) 49,130 (100.0) 49,990 (100.0) 48,910 (100.0) 28,500 (100.0) 20,410 (100.0)

34,880 (79.8) 37,790 (79.1) 38,120 (76.8) 36,880 (75.1) 36,400 (72.8) 34,860 (71.3) 24,270 (85.2) 10,590 (51.9)

8,810 (20.2) 10,010 (20.9) 11,520 (23.2) 12,250 (24.9) 13,600 (27.2) 14,060 (28.7) 4,220 (14.8) 9,830 (48.2)

Source: Somusho Tokei Kyoku 2002. Note Figures are ⫻ 1,000 people; percentage of total in parenthesis.

Characteristics of agency temporary employment and its problems Regular employment is defined by three criteria: (i) a ‘direct employment relationship’, (ii) a permanent employment contract and (iii) normal working hours. In the case of regular employment, employers make a direct employment contract with an employee at the workplace. If employment does not meet these criteria, it is classified as irregular employment (Table 7.2). Agency temporary workers are typical of irregular employees in contemporary Japan. They participate in ‘indirect employment relationships’ or ‘triangular employment relationships’ between the dispatching agency, the client and the dispatched worker. First, the employment agency and the client company make a contract with each other. The latter pays the former a fee for dispatching the worker. The employment relationship exists however only between the dispatching agency and the dispatched worker, even though the latter works for the client company. The client company does not enter the employment relationship, but directs and supervises the dispatched worker without actually hiring him or her. As a result of this relationship, the client company may in fact dismiss the dispatched worker by revoking the contract with the dispatching agency. In this case, the client company does not have any responsibilities as an employer to the dismissed dispatched worker. The ‘indirect’ or ‘triangular employment relationship’ makes it easy for the client company to adjust its work force. Moreover, the wage level of dispatched workers is generally lower than that of regular employees, and the main reason client firms utilize dispatched workers is that their labour costs are less than that of regular employees. According to a survey conducted by the Ministry of Health, Labour and Welfare (Kosei-Rodosho 2001a), most firms (40.3 per cent) that utilized dispatched workers did so ‘in order to cut back on

1 2 3 4 5 6 7 8

Regular employment Irregular employment Irregular employment Irregular employment Irregular employment Irregular employment Irregular employment Irregular employment

Regular employment/ irregular employment

Direct employment Direct employment Direct employment Direct employment Indirect employment Indirect employment Indirect employment Indirect employment

Direct employment/ Indirect employment

Table 7.2 Classification of employment patterns

Permanent Permanent Temporary Temporary Permanent Permanent Temporary Temporary

Temporary/ Permanent Full-time Part-time Full-time Part-time Full-time Part-time Full-time Part-time

Full-time/ Part-time

Regular worker Permanent part-timer Casual worker/contract worker Casual part-timer Permanent dispatched worker Permanent dispatched worker (part-time) Temporary dispatched worker Temporary dispatched worker (part-time)

Examples

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labour costs’. A further 31.0 per cent of the surveyed firms utilized dispatched workers ‘to obtain qualified personnel capable of helping the company immediately,’ while 26.2 per cent utilized such workers ‘to adjust staff levels according to changing business cycles’ (Kosei-Rodosho 2001a). In recent years, the percentage of companies that utilize dispatched workers has increased. In the finance and insurance sector in particular, the percentage is more than 25 per cent. Larger companies tend to utilize dispatched workers more than smaller firms. Only 3 per cent of small companies with from 5 to 29 employees utilized such workers, compared to 16 per cent of large firms with 1,000 employees or more (Kosei-Rodosho 2001a).

Historical development of worker-dispatching business and the worker dispatching law Before enactment of the ‘Worker Dispatching Law’1 The labour supply project, or labour-only contracting, was prevalent in the Japanese labour market before World War II. They often involved intermediate exploitation and forced labour. The Employment Security Law enacted in 1947 stipulated that only the public organizations of the employment service could, in principle, provide employment exchange services. Moreover the Law strictly prohibited the labour supply project and labour-only contracting. As a result, most private employment agencies could not carry on business. The Employment Security Law prohibited the labour-only contracting to eliminate feudal forced-labour arrangements. In 1952 the Enforcement Regulation of the Employment Security Law was revised in order to permit an improved labour-only subcontracting system that did not include intermediate exploitation and forced labour (Ministry of Labour 1969, p. 1208). During the period of high growth of the economy in the 1960s, large companies in the steel industry, shipbuilding, chemical industry, etc. made use of the improved labour-only contracting system. As a result, workers of subcontracting companies increased. They are referred to as ‘outside workers’ or ‘shagaiko’ in Japanese. While labour-only subcontractors employed them, outside workers were dispatched to the client firms and worked there. While the Employment Security Law strictly prohibited clients from directing and supervising outside workers, in reality some of them did. When the recession came, outside workers were often laid off. As soon as the economy recovered, their employment increased again. Hence, outside workers acted as buffers to protect regular employees in the client’s organizations. In the latter half of the 1960s, many large steel works were established. They tended increasingly to make use of outside workers and introduced them into the central sections of work. The outside workers role increased into all areas of steel work production and business operations.

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In autumn 1973 the first oil crisis hit the world economy. A severe recession followed it. In the latter half of the 1970s most firms tended to streamline management and to trim their core workers. Yet, they were willing to introduce irregular or atypical employees. The labour-only contracting system prevailed not only on the production line in the steel industry, shipbuilding and chemical industry, but also at the office management levels of most industries. Some labour-only subcontractors dispatching white-collar outside workers to clients’ offices were established after this oil crisis. The use of outside workers in the office rapidly increased in the 1970s. These developments form the basis for today’s temporary dispatched workers2 (Goka 1997, pp. 2–4). After enforcement of the Worker Dispatching Law In Japan, the government prohibited worker-dispatching agencies until the Worker Dispatching Law was enacted in 1985. The Worker Dispatching Law permitted the aforementioned ‘triangular employment relationship’. That is to say, the government made it lawful for a company to direct and supervise a worker without employing him/her, and for a dispatching agency to employ a worker but let others direct and supervise him/her. In this way it became possible for a client company to avoid most employer responsibilities. The Worker Dispatching Law originally limited to two categories the types of work for which workers may be dispatched. One was, ‘work which requires special knowledge, technique or experience for expeditious and appropriate performance’, and the other was, ‘work which is considered to require special management of the workers engaged therein because of the characteristics of the form of engagement or employment’ (Ministry of Labour 1990, p. 344). A cabinet order decided the designation of work and when the law was enforced in 1986, 13 types of work were permitted. Subsequently, three more types of work were added to give a total of 16 types of permitted work. Moreover, in December 1996, ten more types of work were newly permitted as a part of the labour market deregulation agenda. In total, 26 types of work were now permitted. Work examples included the operation of office machines, software development, processing financial affairs, filing of papers, drawing for machines and equipment, tour conducting, building maintenance, research, design of advertisement, announcing, telemarketing and so on. However in 1999, as part of the deregulation policy agenda, most areas of work were fully liberalized. Under the Worker Dispatching Law the period for which a client company could utilize a dispatched worker was fixed at no more than one year.3 The purpose of limiting the term of service of dispatched workers in this way was to prevent the client from relying too readily on them, thereby protecting the jobs of the client’s regular employees. As noted

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earlier, many companies in Japan have been apt to substitute dispatched workers for regular employees and in an effort to curb this a cap was placed on the length of time for which a dispatched worker may be used. However, the Worker Dispatching Law did not prohibit dispatching agencies and client companies from renewing the worker dispatch contract, and in reality the total period for which the client may utilize dispatched workers was up to three years. The revision of the regulation in 1999 is discussed later in detail.

Worker dispatching agency and dispatched worker General aspects of worker-dispatching business Since the Worker Dispatching Law allowed worker-dispatching business, a lot of firms have been replacing regular workers with dispatched workers. By using dispatched workers, a company can reduce labour costs overall and change labour costs from a fixed cost into a floating cost. It then becomes possible for a company to not only improve its profit and loss figures, but to adjust the workforce, rapidly and easily, to respond to the demands of the market. In Japan there are two types of employment for dispatched workers. One type is where a dispatching agency registers temporary workers on its waiting list. When a client company contacts the dispatching agency with a request for a worker with certain skills, the agency selects a suitable worker from its books. However, the contract of employment between the dispatching agency and the dispatched worker is not made until the latter begins work for the client company. Between jobs (when he or she is simply registered on the books of the dispatching agency), the temporary worker receives no pay or benefits from the agency. In this chapter we will refer to workers in this type of employment as ‘temporary dispatched workers’. This definition parallels the interpretation of temporary employment arrangements found in other countries (see for example Stanworth and Druker, and Hall from this volume). The other type of employment for dispatched workers is where a permanent contract exists between the worker and the agency, and the worker is paid a salary even when he or she is not dispatched to a client company. In other words, agency workers in Japan are not always employed on a temporary basis: some are employed permanently. Consequently, dispatched agency workers on a full contract are not the same as temporary dispatched workers and henceforth are referred to as ‘permanent dispatched workers’. A dispatching agency can be further classified into one of the three types. The first is an agency originally specializing in the temporary worker-dispatching business. The second one is an agency, which has entered the temporary worker-dispatching business from a completely

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unrelated business such as banking, trading, insurance, shipbuilding or machinery manufacturing. The third is an agency, which under the guise of ‘contracting-out’4 simply dispatches workers to the manufacturing assembly line in factories, despite the fact that the Employment Security Law of 1949 prohibits such an action. In the case of banks, trading, insurance and other such unrelated companies founding a worker-dispatch business as a subsidiary firm, which manages dispatched workers, the parent companies aim to have the subsidiary firm dispatch workers on a part-time basis to themselves. Then, when the worker is no longer required, they can be removed and sent to another area of need within the parent company. In this way parent companies, which are often of large size, have been cutting regular employees, especially women, and replacing them with dispatched workers. Since the Worker Dispatching Law came into effect in 1986, the number of dispatching agencies, their sales, and the number of dispatched workers have been, despite a short lived dip in the mid 1990s, increasing. According to the Ministry of Health, Labour and Welfare (Kosei-Rodosho 2002b), dispatching agencies numbered 11,571, their turnover amounts to about 2,000 billion yen, and dispatched workers totalled 1.748 million people5 in the fiscal year 2001 (Figure 7.1).

2,000,000 Dispatched workersa

1,800,000

1,747,913

1,600,000 1,400,000 1,386,364 1,200,000

1,067,949

1,000,000

855,330

895,274

800,000 600,000

612,056

574,686

724,248

575,879 400,000 200,000 0

1993

1994

1995

1996

1997

1998

1999

2000

2001

Figure 7.1 Trend of numbers of dispatched workers. Source: Kosei-Rodosho 2002b. Note a This number was calculated by adding the number of registered workers on the waiting list of agencies to that of the permanent dispatched workers.

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Working conditions and social insurance of dispatched workers The majority of dispatched workers, especially temporary ones, are female (Table 7.3). This follows on from the systemic gendering of the Japanese labour market (Broadbent 2002). 80 per cent are in their 20s or 30s, so they are generally younger than part-time employees. There is a remarkable difference in the work performed by temporary and permanent dispatched workers (Table 7.4). For temporary dispatched workers, the most common job is general office work (32.7 per cent), followed by the operation of office machines such as computers and word processors (28.3 per cent). In contrast, permanent dispatched workers are most often engaged in software development (19.4 per cent) and designing or drawing machinery and equipment (16.5 per cent). Many informationprocessing companies employ system engineers and programmers on permanent employment contracts, and dispatch them to client companies, where they engage in the development of made-to-order software for the clients’ businesses. They occasionally work at their own employers’ premises for a few weeks or months, when they work on projects such as developing general-purpose software. According to a survey of the actual conditions in the worker-dispatching business (Kosei-Rodosho 2002a), the average hourly wage paid to temporary dispatched workers was 1,286 yen, and the average yearly income was about 2.48 million yen (about 20,000 US dollars). Generally speaking, the wage level of temporary workers is higher than that of part-time employees, but much lower than regular employees.6 Another survey shows the contrast between the annual earnings of regular employees compared to irregular employees, including dispatched workers (Figure 7.2). In Japan, many obstacles must be overcome before pay equity between workers in different forms of employment can be achieved. This in turn contributes to elimination of the gender difference in pay rates between men and women. As many as 85.3 per cent of temporary dispatched workers have joined an employment insurance scheme. Further, 81.4 per cent of such workers have arranged for social health insurance coverage, and 77.7 per cent have social pension plans (Kosei-Rodosho 2002a). Any worker who has worked in the past two months is obliged to join the social insurance scheme. However, there is no guarantee that temporary dispatched workers will be Table 7.3 Distribution of dispatched workers by gender

Total Temporary dispatched workers Permanent dispatched workers Source: Kosei-Rodosho 2002a.

(%)

Female

Male

Unclear

100.0 100.0 100.0

65.1 87.4 46.9

34.8 12.5 53.1

0.1 0.1 0.0

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Kazumichi Goka and Asuka Sato Part-timer

89

Job-hopping part-timer

113

Dispatched workers

186

Irregular employeea

146

Regular employee

565 0

100

200

300

400

500

600

10,000 yen

Figure 7.2 Annual earnings of regular/irregular employees. Source: Seimei Hoken Bunka Senta 2001. Note a Irregular employee includes part-timer, job-hopping part-timer and dispatched workers. This survey is covering 1,035 people who are from 18 to 59 years old, and includes both sexes.

Table 7.4 Types of work performed by dispatched workers Type of work performed Software development Design or drawing for machines and equipment Operation of office machines Filing or classification of papers, etc. Drawing up balance sheets or processing financial affairs Drawing up papers on overseas trade and domestic transactions Reception for visitors at buildings, or management of car parks Telemarketing Sales representative Sales assistant General office work Driving Others Unclear Total Source: Kosei-Rodosho 2002a. Notes a Temporary dispatched workers. b Permanent dispatched workers.

Temporarya (%) Permanentb (%) 2.3 2.7

19.4 16.5

28.3 4.5

16.8 1.9

4.6

2.9

1.4

1.2

4.3 2.5 1.4 1.8 32.7 0.4 12.3 1.1

3.2 0.9 0.7 0.2 14.4 0.3 19.3 2.2

100.0

100.0

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able to get new jobs once their current dispatch contracts are finished. If they do not, they must join the National Pension Plan and the National Health Insurance, which cover people, such as those who are selfemployed, unemployed or elderly, who are not employed by companies. It is difficult for temporary workers to file for membership in social insurance each time they start working again after a period of unemployment. It is therefore likely that some of them will not bother.7 If dispatched workers do not join the social insurance scheme, the dispatching companies save the associated employer costs. Until a few years ago, the membership of temporary dispatched workers in the social insurance scheme was low. However, in recent years the government has been encouraging dispatched workers to join the scheme, and their level of membership has risen.8 It is important for temporary workers to improve their ability for the purpose of keeping their jobs. The ratio of those temporary dispatched workers who received training, adding together those who received training on registration with the agency (16.5 per cent) and those that received training just before or after starting work (15.5 per cent and 18.5 per cent respectively), was in total 40.5 per cent (Kosei-Rodosho 2002a). As previously mentioned, temporary dispatched workers are assigned to the client companies for a limited period on a basis of a worker dispatch contract between the temporary agency and the client. The agency has no obligation to provide assignments on a continuous basis. The dispatched workers are not guaranteed a job after termination of a dispatch contract and inevitably they suffer from unemployment. Between jobs dispatched workers receive no pay. Another Ministry of Health, Labour and Welfare study (KoseiRodosho 2001b) records 51.7 per cent of temporary dispatch workers’ contracts as ‘fewer than six months’, 34.4 per cent of workers’ contracts as ‘more than six months and less than one year’ and 12.2 per cent of workers’ contracts as ‘more than one year and fewer than two years’. It would appear that client companies tend to formally shorten the period of worker dispatch contract with the agencies, but yet, utilize the same temporary workers for years by renewing the contract several times. If the client companies are not satisfied with some temporary workers, they can easily dismiss them by terminating the worker dispatch contract with the temporary agencies. Some clients will cancel the worker dispatch contract before the expired date; this was reported as 14.6 per cent in the above survey (Kosei-Rodosho 2001b). The recent recession has increased competition among dispatching agencies, and the worker dispatch market has become a buyers’ market. The recession has thus worsened conditions for dispatched workers. Though many temporary workers are dissatisfied with their working conditions,9 few complain for fear of losing their jobs. Moreover, few of

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these workers are unionized: in the case of temporary dispatched workers, in particular, only 5.7 per cent were members of unions (Rodosho 1997). Why do people choose to be temps? Proponents of the worker-dispatching business believe there are benefits to both clients and temporary dispatched workers, and that both of these parties welcome the business (Kojima 1999; Yashiro 1999). For clients, worker dispatching reduces labour costs, including the cost of recruitment and training. Further, they avoid responsibilities as employers. For the dispatched workers, the system allows flexibility, with temporary workers able to pick and choose jobs freely, without being bound to the same firm for a long period of time. But do temporary dispatched workers really have such freedom? In the case of dispatched workers who have special abilities, such as multilingual translators or foreign language shorthand typists, it would appear to be true. However, it is not true in the case of most other temporary dispatched workers, such as secretarial and office staff, in that if they first refuse an offer of an assignment from the dispatching agency for any reason, then another assignment might not be offered to them. For that reason, they are frequently obliged to accept assignments, even if these are inconvenient or inappropriate to them. In the Ministry of Health, Labour and Welfare survey (Kosei-Rodosho 2002a), temporary dispatched workers answered multiple-choice questions about the merits and demerits of their style of working. Regarding the merits of dispatched work, the most common response was: ‘I can choose to accept only the jobs that I want to do’ (36.8 per cent), followed by; ‘The scope of the job and my responsibilities are clear’ (36.7 per cent); and ‘I can make the best use of my abilities’ (25.1 per cent). Regarding negative aspects of dispatch working, a majority of the temporary dispatched workers surveyed answered that: ‘The employment status is unstable’ (52.0 per cent), followed by; ‘I cannot predict my future employment’ (48.2 per cent); ‘My personnel evaluation does not improve even if I upgrade my skills’ (31.2 per cent); and ‘The level of pay is low’ (27.3 per cent). Most dispatched workers are not guaranteed new jobs after the termination of their present dispatch contracts, so they might be considered ‘unemployed reserves’. It is not easy for them to exercise their minimum rights as stipulated by the Labour Standards Law, such as the right to paid holidays. The surveyed temporary dispatched workers were also asked why they chose to do temporary work. The main reason they gave was: ‘I wanted a permanent position, but could not find any job other than dispatched work’ (35.5 per cent). Other common responses were: ‘I am free to choose my jobs from among those that the agencies offer’ (35.2 per cent); ‘I am free to choose the days of the week or the period of time that I work’

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(25.4 per cent); and ‘The scope of the job and my responsibilities are clear’ (25.0 per cent). In another survey (Rengo 2002), 46.5 per cent of dispatched workers answered, ‘I wanted a permanent job, but could not find one’. These surveys demonstrate that it is not correct to assume that most temporary dispatched workers prefer their style of employment to other alternatives. Among those currently employed as temporary dispatched workers, those who want to get a permanent job in the future outnumber those who hope to stay in a temporary staff position (Kosei-Rodosho 2002a).10

Deregulation and worker-dispatching business Background of the deregulation policies Since the recession started at the beginning of the 1990s, the government and business community have been strongly promoting deregulation in many areas, including economic and social policies such as the labour market, working hours, welfare and social security. The reasoning behind these policies is an attempt to overcome the decline of Japan’s economic power due to the yen’s steep rise in the first half of the 1990s, and to recover strong competitive power in order to compete successfully against other Asian industrializing countries, European countries and the US. For this purpose the Japanese government needed to relax many regulations in economic and social areas. First, the government and business community wished to change Japan’s current high-cost structure into a low-cost structure by opening the domestic market to foreign countries, importing low-priced goods, and reducing distribution and labour costs. Second, the government has aimed to establish new advanced industries such as information and communication, healthcare and welfare, as well as new service industries, where the firms in the other industrialized countries could not easily enter. Thus, it was considered necessary to eliminate many regulations in order to promote the foundation of new advanced industries (Goka 1999, p. 60). In addition to the ongoing recession, growing globalization forced Japanese companies to reduce labour costs and labour standards towards the latter half of the 1990s. Moving Japanese factories and establishments overseas has hollowed out domestic industries and increased imports of low price goods from Japanese factories overseas. It has also intensified competition for lower cost at the domestic level. If the Japanese government were to embark on full economic structural reform and deregulation, many small- and medium-sized firms and establishments in ‘inefficient’ industries would not survive. Industries such as agriculture, wholesale and retail commerce, and to some extent manufacturing would go bankrupt. Previously protected by economic regulations,

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they could not survive the tough competition that structural reform would bring. Even supporters of the structural reform and deregulation anticipated that rapid introduction of such policy would lead to an increase in unemployment: this is indeed what occurred and the number of unemployed grew rapidly. However, the government and business community did not change their policies but continued to emphasize the importance of both economic reform and deregulation as a means of escaping the prolonged depression. The government would not regulate employment cuts, and even regarded increased unemployment as inevitable. Moreover, the government continues to promote the deregulation of the labour market to support flexible employment strategies (Goka 1999, p. 60). Most companies wish to introduce the dispatched workers more freely through the private employment agencies in order to reduce labour costs. In addition the employers of large companies expected the fee-charging placement agencies to eliminate relatively high-salaried, middle-aged employees, and the government and business community expected to increase labour mobility smoothly so as to decrease the number of unemployed persons. Revision of the Worker Dispatching Law In 1996 the Japanese government increased the scope of the work to which dispatched workers could be assigned from 16 to 26 designated types of work. It also clarified client firms’ responsibilities with regard to the illegal hiring of dispatched workers. When the government revised the law again in 1999, it liberalized, in principle, the designated work to which workers could be dispatched, although some areas of work, such as construction, security service and longshore work, were excluded.11 A subsequent cabinet order further excluded, for the time being, work on manufacturing process lines and medical work (doctors, dentists and nurses) from the designated work. As for the liberalized work, the client firms may not use the dispatched workers at the same workplace for more than one year.12 In the case of using the dispatched workers for more than one year, the client must make efforts to employ them directly. The revised Worker Dispatching Law in 1999 also stipulates the following measures to protect the dispatched workers: 1 2 3

4

To protect their private and personal information;13 To encourage them to join social and employment insurance scheme; To clarify clients’ responsibilities in order to protect dispatched workers from sexual harassment and to ensure maternity protection for them; To prevent client companies from interviewing dispatched workers before dispatching agencies make an employment contract with them;14

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To admit the right of dispatched workers to inform the Welfare and Labour Minister in case that the law is breached by dispatching agencies, or client companies.

However, these measures have not been adhered to because the enforcement of regulations is not effective. For example, regarding client companies’ interviews of dispatched workers, the Ministry of Health, Labour and Welfare survey (Kosei-Rodosho 2002a) reported 38.5 per cent of temporary dispatched workers as responding; ‘Client companies often interviewed me’; and 15.1 per cent answered, ‘Clients sometimes did’. Current government policy on worker-dispatching business Since the changeover to the Koizumi regime in April 2001, Prime Minister Koizumi has been strongly promoting economic structural reform and the deregulation policies. One consequence of this has been an increase in unemployment, with unemployment rate reaching an all time high of 5.5 per cent in October 2002. The government expects the worker-dispatching business to play two roles. One is to reduce labour costs and to increase the flexibility of the labour market; the other is to absorb the unemployed population, thereby reduce the unemployment rate. To facilitate this outcome the Japanese government called up a bill revising the Worker Dispatching Law, and the parliament approved it in June 2003. The revision brings about three main changes: first, for the areas of work liberalized by the revision of the Law in 1999, it extends upper limit of the period that client companies may use a dispatched worker in the same workplace from one year to three years. Second, the revised Law eliminates the limitation on the permitted temporary employment period for the original 26 areas of work designated as appropriate for temporary dispatched workers. Third, it permits temporary employment agencies to dispatch workers to manufacturing process lines. If these changes are actually carried out, the replacement of regular employees with dispatched workers will proceed even more rapidly than at present.

Conclusions Today, there is extensive unemployment and irregular, precarious employment in the Japanese labour market. This has been brought about both by personnel management of employers, as well as government deregulation policies. The government and business community still think that it is necessary to promote both flexibility of employment and deregulation in order to overcome the current depression and survive against the tough competition in the globalization of the economy. The increase in the number of irregular employees including agency

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temporary workers will impose other difficulties on the Japanese economy. Most irregular employees usually earn much less than regular ones and as such, the replacement of regular employees with temporary dispatched workers means the increase in the ratio of low wage earners among all employees. Consequently, this will lead to a reduction in consumer spending and personal consumption in the domestic economy, which might only prolong the current depression by delaying economic recovery in Japan. In summary, although flexibility of employment will no doubt allow for companies to increase efficiency by cutting labour costs, it will also impose difficulties on Japanese economy by curtailing demand in the domestic market. Consequently, consideration must be given to the current government policy and employers’ personnel strategies that actively promote the flexibility of the labour market. Furthermore, to ensure equal treatment of regular and irregular employees, the government and business community should improve the working conditions of agency temporary workers as soon as possible. In this regard, there is much to be learned from the EU Commission proposal for a directive on agency work, drafted in March 2002 (Commission of the European Communities 2002). In addition, it is recommended that the government should impose an obligation on user firms to directly employ temporary dispatched workers who have been working for them in a temporary capacity for more than a certain length of time. This would provide these workers with the same benefits as regular employees. Ultimately, this obligation would serve to regulate the excessive replacement of regular employees with temporary dispatched workers.

Notes 1 Its formal title is ‘the Law for Securing the Proper Operation of Worker Dispatching Businesses and Improving Working Conditions for Dispatched Workers’. 2 While some Japanese scholars argue that temporary worker-dispatching business was introduced into Japan from the USA in the 1960s, this does not appear to be the case. 3 As an exception, the utilization of dispatched workers for building maintenance has been permitted to be of indefinite duration. 4 ‘Contracting-out’ relates to businesses that are involved in ‘outsourcing’. Some of these contract agencies are involved in labour-only subcontracting. 5 This was calculated by adding the number of registered workers on the waiting list of agencies (1.449 million people) to that of the dispatched workers on a regular payroll (299 thousand people). The former included those who were not actually assigned to client firms (Kosei-Rodosho 2002b). 6 For reference, the starting annual salary for a college or university graduate is approximately 2.5–2.6 million yen. Average annual wage of regular employees is 5.03 million yen in 2001 (Kosei-Rodosho 2002c). 7 In 2002, the Japan Staffing Services Association (JASSA) founded its own health insurance society in order to eliminate this inconvenience. Temporary

Temporary agency work and policy in Japan

8 9

10

11 12 13

14

127

dispatched workers who are employed by the affiliated dispatching agencies and who are expected quickly to get another job after termination of their present dispatch contracts can keep their existing health insurance at a reduced premium. According to the Worker Dispatching Law revised in 1999, agencies must notify client companies as to whether or not the dispatched workers are covered by social insurance. The biggest issue of dissatisfaction for dispatched workers was wages, followed by ‘human relationships with colleagues or bosses at the client company’ and ‘being frequently ordered to carry out tasks not stipulated in the job description’ (Kosei-Rodosho 2002a). According to Kosei-Rodosho (2002a), the ratio of those who replied ‘I want to work as temporary staff in the future’ accounted for 33.4 per cent. However, the percentages of those who answered ‘I want to work as a regular employee as soon as possible’; and ‘I want a permanent position as soon as my domestic conditions permit’ were 30.8 per cent and 13.6 per cent, respectively. Utilization of temporary dispatched workers in these areas is prohibited by the Worker Dispatching Law because it might bring about abuse of dispatched workers. As for former 26 kinds of work, the client may use the dispatched workers for less than three years. The worker-dispatching agency is obliged to protect worker’s privacy by not disclosing any individual information under article 4 of the Worker Dispatching Law. Moreover, article 10 gives details of the guidelines that a proprietor of a worker-dispatching agency must follow. The existing legislation strictly prohibits the client company from holding an interview with the temporary worker because the former is not the employer of the latter.

References Broadbent, K. 2002, ‘Gender and Part-time Work in Japan’, in I. McAndrew and A. Geare (eds), Proceedings of the 16th Conference of the Association of Industrial Relations Academics of Australia and New Zealand Vol. 1. University of Otago, Dunedin: 76–86. Commission of the European Communities 2002, Proposal for a Directive of European Parliament and the Council on Working Conditions for Temporary Workers, COM (2002) 149 final. Goka, Kazumichi 1997, Country Study: Japan/Development of Private Employment Agencies and Government Policies, ILO, Labour Administration Branch, Document No. 49-1. Goka, Kazumichi 1999, ‘Unemployment and Irregular Employment Under Restructuring in Today’s Japan’, International Journal of Political Economy, 29(1):49–64. Kojima, Noriaki 1999, ‘Kaisei Rodosha Haken Hou no Igi to Kadai’ [Meaning and Problems of the Revised Worker Dispatching Law], Kikan Rodo Hou [Quarterly of Labour Law], 190 and 191 (double issue):52–63. Kosei-Rodosho [Ministry of Health, Labour and Welfare] 2001a, Shugyokeitai no Tayoka ni kansuru Sogo Jittai Chosa Hokoku [Report of General Actual Conditions on Diversification of Employment Forms], Zaimusho Insatsukyoku, Printing Bureau, Ministry of Finance.

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Kosei-Rodosho 2001b, Rodosha Haken Jigyo Jittaichosa Kekka Hokoku [Report of Actual Conditions of Worker-Dispatching Business] http://www.mhlw.go.jp/ houdou/0109/h0903-1.html (Accessed: 30 Aug 2003). Kosei-Rodosho [Ministry of Health, Labour and Welfare] 2002a, Rodosha Haken Jigyo Jittaichosa [Report of Actual Conditions of Worker-Dispatching Business], Report submitted to Division of Private Employment Service Systems, Inquiry Commission of Labour Policies by Bureau of Employment Security, Ministry of Health, Labour and Welfare, unpublished. Kosei-Rodosho 2002b, Rodosha Haken Jigyo no Heisei 13 nendo Jigyo Hokoku no Shukei Kekka [Business Report of Worker-Dispatching Business, fiscal year 2001], http://www.mhlw.go.jp/houdou/2002/12/h1226-4.html (Accessed: 30 Aug 2003). Kosei-Rodosho 2002c, Basic Survey on Wage Structure 2002, Rodo Horei Kyokai. Ministry of Labour 1969, Rodo Gyosei-si [History of Public Administration on Labour], Rodo Horei Kyokai. Ministry of Labour 1990, Labour Laws of Japan 1990, The Institute of Labour Administration. Rengo [Japanese Trade Union Confederation] 2002, Haken Rodo Jittaichosa Kekka Hokoku [Report of Actual Conditions of Agency Work], http://www. jtuc-rengo.or.jp/new/download/chousa/haken/hakenchosakekka.pdf (Accessed: 30 Aug 2003). Rodosho [Ministry of Labour] 1997, ‘Rodosha Haken Jigyo Jittaichosa Hokoku’ [Report of Actual Conditions of Worker-Dispatching Business], Heisei 8 nendohan Zuhyo Rodosha Haken Jigyo [Worker-Dispatching Business, fiscal year 1996], Koyo Mondai Kenkyukai. Seimei Hoken Bunka Senta [Japan Institute of Life Insurance] 2001, Wakusutairu no Tayoka to Seikatu Sekkei ni kansuru Chosa [Survey of Diversification of Working Style and Life Plan], Seimei Hoken Bunka Senta. Somusho Tokei Kyoku [Bureau of Statistics, Ministry of Public Management, Home Affairs, Posts and Telecommunications] 2002, Collected Results of the Labour Force Survey from January to March 2002, http://www.stat.go.jp/data/ roudou/2002q1/dt/index.htm (Accessed: 30 Aug 2003). Somusho Tokei Kyoku [Bureau of Statistics, Ministry of Public Management, Home Affairs, Posts and Telecommunications] 2003, Annual Report on the Labour Force Survey 2002, Nihon Tokei Kyokai, Japan Statistical Association. Yashiro, Naohiro 1999, Koyo Kaikaku no Jidai [The Era of Employment Reform], Chuo Koron Shinsha.

8

Temporary agency work in Australia (Part I) Iain Campbell, Ian Watson and John Buchanan

Introduction Temporary agency work is a familiar phenomenon in Australia. The phrase itself is somewhat unfamiliar, and it is often replaced by alternative terms such as ‘labour hire’ (applied in blue-collar occupations), ‘temping’ (applied to clerical and secretarial variants) or ‘agency nursing’ (applied in nursing). In this chapter, however, we stick with the more general term ‘temporary agency work’ that seems to be accepted as the mainstream terminology in Europe. There is a key conceptual distinction between temporary work agencies and what are variously called ‘employment brokers’, ‘employment placement agencies’ or ‘placement services’ (Mangum et al. 1985, p. 602; Gonos 1997, p. 85; Creighton and Stewart 2000, p. 13). Like temporary agencies, these employment brokers are involved in triangular relationships, but the substance of the relationship is different. An employment broker is a firm that alerts job seekers to the existence of a vacancy, screens potential recruits for the employer, accepts a fee for its service and then withdraws from the scene. By contrast, a temporary work agency enters two contracts: one with the workers for the use of their labour and another with a user (or host) company to supply labour services. The temporary work agency thereby remains in an ongoing relationship with both parties. The distinction between temporary agency work and employment broking is not always clear, and has been the basis of a lengthy (and ongoing) history of contestation in many countries. Moreover, it is often blurred in practice. This is partly because temporary agency work in its modern form arose out of the activities of employment brokers. Moreover, many individual agencies offer both functions. Nevertheless, it is essential to make the distinction, because it points to important features of temporary agency work and important implications for its trajectory of growth. The work of employment brokers is at the edges of the employment relationship – subordinated to the task of serving short-term, largely subsidiary needs within individual firms. These brokers are intermediaries in specific occupational labour markets, where they grease the wheels of

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labour market transactions. By contrast, temporary work agencies intercede in the employment relationship itself, dividing up and redistributing the varied managerial practices that were formerly unified within the bipartite employment relationship. Some practices remain with the user firm, which retains the responsibility for directing the labour; some are transferred to the agency, which now often claims the role of legal employer; and still others tend to disappear in the interstices of the triangular relationship. This intercession is rich in implications and can easily go beyond a lubrication of the wheels; it can alter the entire design of the cart. These definitions and distinctions apply to temporary agency work in most advanced capitalist societies. However, if we look closely at the relationship between the agency and the worker, we can detect some significant cross-national differences. In the basic definitions of temporary agency work (Michon 1999; Storrie 2002, p. 1), it is assumed that the worker is an employee of the temporary work agency. This corresponds with regulation in most countries, including most European countries (Clauwaert 2000; Storrie 2002). In Australia, however, regulation is sparse and vague, and as a result, the employment status of temporary agency workers can be fuzzy. Some workers organized by temporary work agencies are accepted as employees of the agency, but others are often regarded as contractors; that is, as self-employed workers. Even when the workers are accepted as employees, they need not be permanent or fixed-term employees; instead they may be part of the distinctive group of ‘casual’ employees.

A profile of temporary agency work in Australia Research into temporary agency work (and temporary agency workers) in Australia is still at an early stage. There are some interesting survey-based studies, e.g. of office workers (Williams 1997) and of the outsourcing of maintenance work in manufacturing to temporary agencies (Benson and Ieronimo 1996; see also Benson 1998, 1999). There are a few case-studies, for example a community-based labour hire firm in New South Wales (Australian Centre for Industrial Relations Research and Training [ACIRRT] 1999), agency workers in the South Australian power industry (Gryst 2000), one controversial ‘labour-hire’ firm active in construction (Underhill and Kelly 1993), and a recent dispute around ‘labour hire’ in manufacturing (Underhill 1999). A few general studies pull together available information (Hall et al. 2000; Hall 2000; Watson 2000), and the recent New South Wales inquiry has added some valuable evidence and information (Labour Hire Task Force 2001). In addition, the occupational health and safety record of ‘labour hire’ workers has begun to attract scholarly attention (Underhill 2002). Though many gaps in knowledge remain, available research does offer a basic profile of temporary agency work in Australia. Temporary agencies

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range from the very large to the very small. At one end of the market are the large well-known multinational firms, such as the US-based Manpower and the European-based Adecco, and some substantial local firms, such as Skilled Engineering. The Australian origins of each of these large firms appear to reach back to the mid-1960s (Fitzgerald 2001). At the other end of the market are found numerous small ‘mum and dad’ operators. Temporary agency work probably began, as in many other countries, as a way of organizing office workers, in particular as a supply of either replacement labour to cover absences or specialist labour to meet occasional needs. However, it has since diversified and spread to numerous other occupations. In Australia, both ‘scenarios’ outlined by Michon (1999) can be found: a) temporary agency work in the tertiary sector (services, public services and retail) with a mainly female workforce; and b) industrial temporary agency work, consisting of mainly manual labour and often a male workforce. Data from the 1995 Australian Workplace Industrial Relations Survey (AWIRS) suggest that over 20 per cent of workplaces (with twenty or more employees) were making use of agency workers. Mining and finance and insurance were the two industries with the highest incidence of workplaces that made use of agency workers. Larger workplaces tended to be more reliant than smaller workplaces on agency workers (Morehead et al. 1997; see also Allan et al. 2001, pp. 266–267). Data on the number of temporary agency workers in Australia are sparse. However, it seems clear that the temporary agency workforce is still modest in size. The Labour Hire Task Force (2001, p. 18) cites a relatively high figure – drawn from an ABS employer survey (Catalogue No. 8558.0 1998–99) – of around 279,000 persons who were ‘on-hired by businesses in the employment services industries to other businesses’. Lower figures are more common (Hall et al. 2000, pp. 12–13). As explained more fully below, we estimate that the temporary agency workforce makes up a minimum of 1.8 per cent of the workforce, but it is likely to be larger, perhaps up to 2.7 per cent of the total workforce. It should be noted that these figures are all cross-sectional, based on labour force survey estimates of those employed in a particular reference week. If we take into account those on the books but not being paid, as well as the flows in and out of agencies over the longer period of a year, the significance of temporary agency work would be seen as higher. Temporary agency work seems to be growing rapidly in significance. According to AWIRS, the proportion of ‘agency workers’ in workplaces with twenty or more employees rose from one per cent in 1990 to 2.2 per cent in 1995. This is dramatic growth over such a short period.

Forms of employment The profile of temporary agency work in Australia is broadly similar to other advanced capitalist countries. The proportion of temporary agency

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workers in the total workforce is less than some estimates for the United States (Storrie 2002, p. 27). It is certainly less than the estimates for the Netherlands (4 per cent), Luxembourg (3.5 per cent) and France (2.7 per cent). But it is roughly equivalent to the conventional estimates for the United Kingdom (2.1 per cent) and ahead of most other European Union countries (Storrie 2002; see also Michon 1999). Similarly, the trajectory of change in Australia seems to conform to the pattern of rapid growth found in most European countries (Storrie 2002, p. 30; Michon 1999). However, there are some peculiarities in the Australian version of temporary agency work, primarily as a result of the distinctive features of the system of labour regulation. Apart from the provisions developed through the patchwork of awards, now supplemented by registered enterprise and individual agreements, Australia has little protective regulation for workers. The result is a highly porous, opaque regulatory system, which has become even more blurred and riddled with gaps in the course of labour market deregulation over the past ten years (Campbell and Brosnan 1999; Briggs and Buchanan 2000). The relative lack of protective regulation is particularly evident in connection with triangular arrangements such as temporary agency work. Agencies may be picked up in general regulations (though their ambiguous status more often means that they fall through the gaps). There is little specific legislation aimed at agencies, and certainly no effort to grapple with vexed issues such as the nature of the contractual relationship, restrictions on the permitted uses of agency arrangements, the duration of contracts and the concept of equal treatment (see Hall this volume; see Creighton and Stewart 2000). Collective agreements at user firms only occasionally mention agencies. Some agencies maintain cordial relations with trade unions. For example, Skilled Engineering has enterprise agreements with unions for its metals manufacturing and call-centre operations. But union strength and influence has been eroding rapidly, and relations with agencies are shallow and potentially unstable. The peak union body, the Australian Council of Trade Unions, concluded a highly publicized agreement with Manpower in 1997 (Australian Council of Trade Unions [ACTU] 1997), but this does not seem to reach much beyond a vague statement of principle. Even the little regulation that does apply to agencies seems vulnerable to evasion (Labour Hire Task Force 2001, pp. 33–36). The porous nature of the regulatory system means that agencies have extensive scope for structuring their relations with their workers as they see fit. As a result, the experience in Australia diverges from that in many other advanced capitalist societies, where workers organized within temporary agencies are clearly defined as employees, with either a fixedterm or a continuing (‘permanent’) contract of employment with that agency. In Australia, the lack of regulation allows room for workers organized within agencies to be regarded as self-employed, i.e. as

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independent contractors operating on a ‘contract for service’ rather than employees operating on a ‘contract of service’. The closest comparators in this respect would seem to be the United Kingdom and Ireland, where there is a similar potential for temporary agency workers to be regarded as independent contractors (Stanworth and Druker 2000; Storrie 2002). Any representation of agency workers as independent contractors may seem curious, since there would appear to be no lack of subordination in the relationships entered into by agency workers. Such workers are in practice generally under the strict direction of the user firm and are at the same time heavily dependent on the agency for ongoing work. In fact these ‘independent contractors’ are better seen as ‘dependent contractors’, i.e. workers who are regarded as self-employed (by themselves, by their employers and perhaps by the courts) but who are heavily ‘dependent’ on just one employer for work and whose conditions are in many ways similar to those of employees. Indeed, they are often ‘fake’ self-employed or ‘disguised wage labourers’. There are numerous advantages for the employer in encouraging workers to adopt non-employee status – the opportunity to avoid certain taxes and to avoid regulatory provisions that apply only to employees, such as minimum rates of pay, (most) controls on working hours, paid annual leave, paid sick leave, severance pay, unfair dismissal regulations, superannuation (pension) contributions and long service leave. At the same time, there may also be short-term advantages for the worker – again opportunities to avoid tax and perhaps the chance to earn a higher base wage rate. The phenomenon of ‘dependent contractors’ is not confined to Australia and the UK (see the discussion of ‘economically dependent workers’ in Eirobserver 2002), but it seems particularly prominent in these two countries. Partly facilitated by lenient interpretations from the labour courts (Creighton and Stewart 2000), a group of ‘dependent contractors’ is now a significant part of many labour markets in Australia, accounting for around one in every thirty workers in the workforce (Vandenheuvel and Wooden 1995; Waite and Will 2001). The peculiarities of temporary agency work in Australia go beyond the presence of self-employment. The group of temporary agency employees also has unusual features. They are rarely employees with a continuing (‘permanent’) or fixed-term contract. Instead, the vast majority are casual employees. Here the Australian case diverges from the situation in the UK and Ireland, since the casual contract of employment is a distinctive, indeed peculiar, feature of the Australian system (Campbell and Burgess 2001a). In contrast to the numerous rights, benefits and forms of protection attached to the continuing (‘permanent’) contract of employment, casual employees enjoy remarkably few rights, benefits and forms of protection. This in turn defines significant (and varied) advantages for employers in the course of using casual employees (Campbell 2001). Thus, casual employees lack any rights to paid annual leave, paid sick leave,

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public holidays, bereavement leave, carer’s leave, notice of dismissal and redundancy payments. Casual employment is now a major feature of most labour markets in Australia, accounting for around one in every five workers (Campbell and Burgess 2001b). Most casual employees are directly employed, but a small minority of around six per cent is organized through temporary work agencies (see Table 8.1). What joins together both casual employees and contractors are their common exclusion from most industrial rights and benefits. Both casual status and self-employment signal gaps in the regulatory system that are readily available for exploitation by employers, including by temporary agencies. Indeed, because of their ambiguous status, temporary work agencies have easier access to these gaps than more orthodox firms. This does not mean that the use of these gaps by agencies has been uncontroversial. On the contrary, the use of temporary agency work is sometimes fiercely opposed, especially where it impinges on strongly unionized areas and seems to threaten a direct replacement of permanent workers employed by the user company with temporary agency workers subject to markedly inferior wages and conditions. Such opposition has occasionally been successful at the workplace level in erecting barriers to the introduction of temporary agency work. However, it has had little success so far at the macro level. The legality of some agency arrangements was tested in the early 1990s in the Odco (or Troubleshooters) case, which revolved around the right of an agency active in construction to deploy workers who were ‘self-employed’. Because Odco supplied its workers under the guise of independent contractors it was able to sidestep various payment practices established under the Victorian Building Industry Agreement. The final High Court judgment in 1991 in effect confirmed the use of contractors within temporary work agency arrangements (Fenwick 1992, p. 242). In the wake of the decision, such arrangements have spread from construction into other industries, including abattoirs and even some white-collar areas (Underhill and Kelly 1993). Sham arrangements have also begun to spring up. One example surfaced in the 1998 waterfront dispute. In a strange subterfuge, the (unionized) workforce of the stevedoring company, Patricks, was unwittingly re-organized into temporary work agencies, declared redundant under the excuse of agency bankruptcy, and then replaced at dead of night by an alternative (non-unionized) workforce (Dabscheck 1998).1 It is difficult to estimate the size of the temporary agency workforce in Australia and its distribution among different forms of employment. One basic impediment stems from the confusion of many people, even when involved in an agency relationship, in identifying this relationship (Gryst 2000). In addition, few surveys have tried to ask either workers or employers about the extent and form of agency work. However, three recent ABS surveys – conducted in August 1998, April to June 2000 and November 2001 – included a question that asked employees whether they were ‘paid

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by an employment agency/labour hire firm’. The 2001 data suggest that 161,800 persons (95,400 males and 66,400 females) can be counted as temporary agency employees. This represents 2.2 per cent of all those classified as employees in the survey (or around 1.8 per cent of the total workforce). Table 8.1 shows the distribution of these temporary agency employees among different types of employment. It indicates that only a small minority of this group (22 per cent) had any entitlements to paid sick leave or paid annual leave – the usual test of a continuing contract of employment. The vast majority was made up of what can be understood as casual employees, i.e. either ‘self-identified casuals’ or ‘employees without leave entitlements who did not identify as casual’.2 Unfortunately, these data only concern employees. In other words, they miss the workers who are organized in temporary agencies as ‘selfemployed’ contractors. How many contractors should be added in to the estimates of the size of the temporary agency workforce? Hall (2000) suggests that agencies can seek to convince workers that they are ‘associates’ rather than employees. He goes on to argue that, though some workers were indeed employees of labour hire companies, ‘far more common is the situation where workers are engaged by the labour hire firm on a contract basis and it is made clear to them that they are not employees’ (Hall 2000, p. 26). This would suggest that the basic figure of 161,800 should be dramatically inflated to capture the presence of contractors. However, Hall cautions that he is talking about employer arguments rather than worker beliefs or indeed the actual practice, which can be much more blurred and fuzzier. Certainly, as noted above, it is clear from existing research that the Australian workforce contains many dependent contractors. But we do not yet know how many of these dependent contractors are associated with temporary agency work. The figure of 161,800 would seem to be a lower-bound estimate of the size of the temporary agency workforce, and it is likely that the true size is much higher, perhaps up to 250,000 persons. Any figures are mere estimates, but the basic point is clear. In contrast to many other countries, only a small minority of temporary agency workers in Australia is protected by a standard employment contract. The Table 8.1 Distribution of employees among different types of employment, November 2001 With paid Self-identified Without paid leave Total leave casuals (%) entitlements who did (’000) entitlements not identify as casual (%) (%) Temporary agency employees All employees Source: ABS 2001.

22.0

64.5

13.5

0,161,800

72.1

24.8

3.1

7,301,300

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vast majority lacks standard rights and benefits, either because they are casual employees or because they are classified as ‘self-employed’.

What do temporary work agencies do? Temporary work agencies operate in diverse labour markets, and this leads to diverse activities. They often undertake activities that spill beyond the strict definition of temporary agency work. For example, in addition to their temporary agency services, many of the large agencies offer recruitment services for clients seeking new employees. On the other hand, some agencies may reach out beyond a triangular relationship with user firms, for example by deciding to own and operate their own facilities in areas where they are specialized suppliers of labour. Or they may continue to be involved in a triangular relationship, but one that seems to overstep the conventional division of labour between agencies that supply labour and user firms that exercise direction over the deployment of that labour. In these latter cases, the division of labour can start to resemble more conventional sub-contract or outsourcing arrangements. The temporary agency service, even in the strictest sense, can be varied. In its more primitive and perhaps early forms, this service involved meeting the temporary needs of user firms, such as ‘the temporary replacement of employees who are absent, the performance of occasional jobs or of tasks that require an expertise not available within the firm, and seasonal or exceptional periods of peak activity’ (Bronstein 1991, p. 296). Such activities go beyond simple employment broking, but they can be seen as still limited in at least three fundamental ways: they are temporary; they involve just a minority of the host firm’s workforce; and most management functions continue to be exercised by the user firm. This can be described as the supply of stopgap or supplementary labour. These activities retain a structural resemblance to employment broking in the sense that they are only at the margins of the user firm’s operations. They are still just to do with greasing the wheels of labour market transactions. These activities are still core activities of many agencies. However, there are signs that temporary agency services can go beyond such limited assignments in order to involve more long-term relationships, a greater proportion (up to 100 per cent) of the workforce, and more and more managerial functions. Peck and Theodore (1998, pp. 658, 663–665) stress this evolution in their study of temporary work agencies in Chicago. They argue that many agencies are doing far more than delivering ‘warm bodies’ – they are moving into long-term, human-resource-based functions. This can extend to ‘on-site arrangements’ for employers, in which temp agencies contract to service and manage a complete job function (such as word-processing or assembly), including processes of supervision and performance monitoring. Peck and Theodore (1998, p. 665) describe this in terms of temp agencies deepening and broadening their sphere of

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control ‘from the labour market to the labour process: from the predominantly labour-market practices of hiring, screening, (re)allocation, scheduling and payment of workers, through to the predominately labourprocess practices of induction and training, supervision, task allocation, performance monitoring and relations with other (temp and non-temp) workers’. This evolution is associated with a transformation of the labour market and a replacement of existing workforces, and it can be described as an evolution from supplementation to substitution. The early stages of this evolution are easy to identify, for example when the supply of labour for peak periods flows over into the supply of labour as a buffer against uncertainty in all periods of the year (Bronstein 1991). However, the precise sequence is not the main concern of this chapter. Our central point is that such an evolution carries with it potent implications. It poses major consequences for workers, since it threatens to dissolve the standard form of direct employment within individual firms, together with all the rights and benefits that have come to be associated with this form of employment. In short, it threatens to redesign the employment relationship. Is this threat being realized? Survey evidence from several European countries suggests that conventional forms of temporary agency work remain dominant. Temporary agency work is most often used to replace workers on leave, to handle seasonal fluctuations or to meet unexpected peaks (Storrie 2002, pp. 35–36). There is some evidence of new elements, such as the role of temporary work agencies in providing a ‘screening’ service, whereby agency workers on assignment with a host firm may be moved on to a permanent position if they prove suitable (and after payment of a special fee to the agency). This testifies to a greater use of temporary agency work as ‘a conscious and integral part of personnel strategy’, but it is a development that remains confined to the function of recruitment – in effect it is a refinement of the basic activities that build on employment broking (Storrie 2002, p. 36; Forde 2001). What about Australia? Conventional forms of temporary agency work are important, especially in traditional temping in clerical occupations, but there is at least some evidence of novel developments. The major site of change and controversy appears to be the blue-collar ‘labour hire’ sector. One case study of a community-based temporary work agency pointed to use by construction firms of agency work as a probationary arrangement before recruitment into a more secure job (ACIRRT 1999, p. 31). Some evidence of an evolution from supplementation to substitution can be gleaned from a recent study of metal manufacturing (Buchanan 2000, pp. 359–360). Other evidence includes the involvement of one agency in supplying seasonal labour, extending to the entire workforce, in a vegetable cannery (Fitzgerald 2001, pp. 15–16). Other reports point to an increasing involvement of agencies in supplying labour and labourmanagement functions in areas such as mining and call centres.

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One indicator of an evolution towards more comprehensive relations with user firms would be an increasing length of the contract. Buchanan (2000, p. 362) reworks data from a KPMG3 study on contract length in Australia. These data confirm that temporary agency assignments may involve more than intermittent placements of very short duration. There are many short placements, but the bulk of hours worked among these firms occur in the context of longer-term placements of at least four months. This is perhaps especially true for three of the largest agencies – Manpower, Adecco and Skilled Engineering. In the six months to May 2000, they reported that, though few of their employees in metal and engineering had engagements that lasted longer than a year, around half had engagements that ran for between three and twelve months (Buchanan 2000, 361–363; see also Labour Hire Task Force 2001, p. 24). The picture of quasi-stability is also evident in data on ‘repeat business’. Far from servicing an ever-changing array of firms, most temporary work agencies in the KPMG sample got their business from repeat business. This implies de facto ongoing relations between agencies and user firms.

What are the advantages for the user firms? The decisive dynamic behind both the emergence and the subsequent evolution of temporary agency work arises out of the calculations and choices of user firms (Storrie 2002, Chapter 5; Hall, this volume). The extent to which firms use temporary agency work depends on perceptions of its possible advantages and disadvantages. In other words, it depends on the costs and benefits of temporary agency work for user firms (within a framework set by labour regulation). In a recent account of the history of temporary agency work in the US, Gonos (1997) develops a stimulating analysis of the general interests of user firms in temporary agency work. He argues that the intercession of the agency in effect divides up (dismembers) varied parts of the employment relationship that had formerly been unified. The final disposition over the labour remains in the hands of the user firm, for example decisions over the duration of the stay and the set of tasks to be performed, but other aspects have either been re-allocated to the agency or quietly lost in the confusion. The confusion can indeed be great, as ‘the employment agent becomes an “employer”; the client employer becomes a “customer”; the work performed becomes a “service”; and the worker becomes a “consumer” of the services of the THF [temporary help firm]’ (Gonos 1997, p. 105). Gonos (1997, p. 90) suggests that from the point of view of the user firm, the advantage of temporary agency work is that it offers access to labour without obligation. It allows client firms to ‘utilize labour while avoiding many of the specific social, legal and contractual obligations that have increasingly been attached to employer status since the New Deal’

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(1997, p. 86). What happens to these obligations? They may be taken over by the agency, which has assumed the legal role of employer. But this is not inevitable. The process of dividing up the employment relation through temporary agency work offers ample opportunities for these ‘obligations’ – indeed a rich array of benefits, rights and entitlements for employees – to be dropped. Indeed there are now strong pressures for these to be dropped, since they entail direct costs to the ‘employing’ agency (but few obvious or direct benefits). Even if this is not the primary purpose of temporary agency arrangements, it certainly figures as a major effect. Almost invariably, some obligations are lost. This ability to discard the employer role provides the user firm with many positive advantages. Gonos (1997, p. 86) suggests that: By giving user firms almost absolute control over the duration of a worker’s stay and over what tasks workers could be directed to do while on the job (practically unencumbered by laws or contracts governing dismissals or work rules), the ‘temporary’ solution held the potential for significantly increasing both the numerical and functional flexibility of the firm’s workforce. Similarly, by taking wages out from under existing contracts (or community wage patterns) and putting them back into competition, the arrangement also provided wage flexibility. Gonos interprets these advantages in terms of increased ‘flexibility’, which he counter poses to the alleged rigidities of the standard employment relation. But they can also be interpreted in terms of reduced costs. The obligations that firms are eager to avoid can be seen as costs that they are seeking to minimize. Just as temporary agency work involves a redistribution of obligations, so too does it involve a redistribution of risk. In particular, many of the risks associated with business fluctuations are transferred to the agency, which in turn is able to shift many of these risks onto the shoulders of its workers. Indeed, the intercession of an agency can amplify risk. The structure of temporary agency work presumes and encourages underemployment, as the agencies seek to organize workers into a pool that is sufficiently large to meet unpredictable demands. Gonos’ (1997) analysis stresses the evolution of temporary agency work from what we described earlier as supplementation to substitution. He notes that agencies were initially engaged – in somewhat similar fashion to employment brokers and in much the same occupational labour markets – in supplying supplementary labour. However, the specific position of temporary agency work as an intercessor in the employment relationship allows it to shift to grander roles and a wider range of occupational labour markets. The range of labour markets that are affected can be wide, no longer confined just to the clerical sphere (typists, telephonists, secretaries,

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administrative support, etc.) but reaching out to incorporate diverse occupations such as information technology professionals, assemblers, packers, varied trades, nurses and truck drivers. Gonos’ analysis is rich and stimulating. But it is only partial. As he seems to concede (1997, p. 86), his analysis is strongest for certain agency activities rather than others. Short-term assignments in response to traditional needs such as cover for absence do not fit well. Moreover, the argument for the development of temporary agency work seems to concede a large amount of ground to the assertion that labour market rigidities forced US firms to search for ways to enhance labour flexibility (1997, p. 103). He does not seem to quarrel with the employer’s need to respond but only with the form of the response. This appears ill judged in the case of the US labour markets, which – far from being riddled by labour market rigidities – have traditionally been associated with extensive employer discretion, including limited employment protection and a dominant philosophy of ‘employment-at-will’. Gonos’ argument appears most apt for those activities that involve longterm rather than short-term temporary agency assignments. But even here it needs some qualification. If the advantages of temporary agency work were as compelling as he suggests, we could expect such work to have transformed the employment practices of all potential user firms and to have swallowed up the vast majority of the workforce. But only a small, albeit growing, minority of the workforce is in fact organized in temporary agency work. There would seem to be two main considerations that Gonos neglects. First, ‘access to labour without obligation’ is not a goal of all firms in all circumstances. On the contrary, firms may need to rely on the independent initiative and trustworthiness of their workers and may find that the best path towards mobilizing such qualities is by means of ‘labour with obligations’. In short, the reciprocal obligations associated with employer status may work very well for many firms. Second, even where firms are attracted to ‘labour without obligation’, firms do not need to have recourse to agencies. This is particularly true in countries such as the US, where there has been only patchy provision of minimum labour standards. Most firms in the US have ample access to flexibilities without any need to take up temporary agency work. Only in those areas where minimum standards have been successfully implemented, could we expect a tentative dynamic towards the use of agencies. Only in strongly unionized areas could we expect at least a short-term experimentation with temporary agency work in order to realize the sort of advantages Gonos lists. Gonos’ argument can be applied to Australia. As in the US, the lack of regulation of temporary agency work makes it attractive as a vehicle for restructuring and cheapening labour in more regulated and more unionized sectors. But the qualifications noted above also need to be kept in mind. In particular, we can note that Australian employers have ready access to mechanisms that facilitate high levels of managerial prerogative

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without recourse to temporary agency work. They can move employees away from award regulation and trade union influence by devices such as non-union enterprise agreements, the introduction of ‘staff conditions’, or the imposition of registered individual agreements. This in turn overlaps with the ability of employers to use different forms of contract. For example, it is quite possible in Australia to be an employer and have access to ‘labour without obligation’ through casual employment. It does not require a discarding of the employer role. Similarly, it is possible for many employers to exploit directly the weak boundary between employee and non-employee status. It is possible to discard the employer role – and its obligations – without having to go through a temporary work agency. Moreover, the important issue of diversity also needs to be accommodated in the analysis. The advantages of temporary agency work to user firms can be readily summarized in terms of ‘flexibility’ and ‘cost’, but it is always useful to dig deeper. The specific configuration of advantages (and disadvantages) varies according to the type of labour market and the type of service provided by the temporary agency. The advantages of agency arrangements in clerical areas, for example as cover for workers on maternity leave, are likely to differ from their advantages in nursing or their advantages in blue-collar areas. Cost appears to be a major consideration in blue-collar areas, where ‘labour hire’ arrangements based on avoidance of standard employee entitlements are used to replace unionized workers employed under standard wages and conditions. In other areas the advantages of agency work may be quite peculiar. For example, since the cost is treated in terms of supply of (labour) services rather than employment of labour, the use of temporary agency workers can be very attractive for public sector enterprises subject to neoliberal pressures to reduce their head count of employees. Similarly, a turn to temporary agency work can also be attractive in the private sector, where a round of retrenchments – for whatever reason – can boost the share market price and thereby add to ‘shareholder value’.

Conclusion The development of temporary agency work is often associated with a threat of ‘unfair’ competition that exerts downward pressure on wages and conditions. This is indeed pertinent in some cases in Australia. Temporary agency work can be seen as a new form of this competition, or perhaps more exactly a new way of organizing such competition. Competition among workers is mediated in a new way. It is not expressed through competition between groups of workers located in parallel enterprises and producing for the same product market, as in market-mediated competition between outwork and factory work (or among different factories under single-employer bargaining systems). Nor is it expressed through direct competition among individual workers seeking to underbid each

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other on wages. Instead it is direct competition between organized groups of workers that have been placed together (often placed together within the one workplace) but under differing employment conditions. In its evolution towards substitution rather than supplementation of labour, temporary agency work introduces labour markets that are neither fully ‘internal’ nor fully ‘external’. It resuscitates some mechanisms that have not been seen for a century or more. Thus it resembles most closely ‘internal contracting’ as it existed in mid-nineteenth-century workplaces (Littler 1982), though now based on modern multinational enterprises rather than patriarchal family relations. This serves to restructure labour markets in complex ways, often erecting shadow labour markets that parallel (and can ultimately replace) the existing official labour markets. This entails real dangers of a degradation of wages and conditions for workers. However, the analysis sketched out above suggests that this argument applies in Australia only to some aspects of temporary agency in selected industries. The major problem is associated with the use of temporary agency work to undermine permanent work. In short, it is associated with the dominance of cost considerations, the substitution of workers and the introduction of long-term engagements in industry sectors characterized by the presence of effective labour regulation and trade unionism.

Acknowledgement Many thanks to Elsa Underhill for comments on an earlier draft.

Notes 1 In this case the subterfuge ultimately failed because it was judged to infringe legislative guarantees of freedom of association. 2 The relevant questions in these three surveys are disappointing. As we argue here, the definition of employment agency/labour hire firm as if it only supplied employees misses a key feature of the Australian experience of temporary agency work. Moreover, the categories used in these surveys to distinguish among employees are poorly conceptualized. The sub-division of ‘employees without leave entitlements’ into ‘self-identified casuals’ and the residual category of ‘employees without leave entitlements who did not identify as casual’ is particularly objectionable. It can be contrasted with the failure to develop a plausible category of fixed-term employee. For a summary and critique of ABS categories see Campbell and Burgess 2001b. 3 KPMG is a business advisory firm.

References ABS [Australian Bureau of Statistics]. 2001, ‘Forms of Employment, Australia’, November Cat No. 6359.0. ACIRRT [Australian Centre for Industrial Relations Research and Training]. 1999, Beyond the Fragments? The Experiences of a Community Based Labour

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Hire Firm in Achieving Flexibility with Fairness for Low Paid Casual Workers, Ultimo, NSW, Dusseldorp Skills Forum. ACTU [Australian Council of Trade Unions]. 1997, Heads of Agreement Between Manpower and the ACTU, Melbourne, ACTU. Allan, C., Brosnan, P., Horwitz, F. and Walsh, P. 2001, ‘Casualisation and Outsourcing: A Comparative Study’, New Zealand Journal of Industrial Relations 26(3):253–272. Benson, J. 1998, ‘Dual Commitment: Contract Workers in Australian Manufacturing Enterprises’, Journal of Management Studies, 35(3):355–375. Benson, J. 1999, ‘Outsourcing, Organisational Performance and Employee Commitment’, The Economic and Labour Relations Review, 10(1):1–21. Benson, J. and Ieronimo, N. 1996, ‘Outsourcing Decisions: Evidence from Australia-based Enterprises’, International Labour Review, 135(1):59–73. Briggs, C. and Buchanan, J. 2000, Australian Labour Market Deregulation: A Critical Assessment, Research Paper no. 21, Canberra, Parliamentary Library. Bronstein, A. 1991, ‘Temporary Work in Western Europe: Threat or Complement to Permanent Employment’, International Labour Review, 130(3):291–310. Buchanan, J. 2000, Beyond Fragmented Flexibility? The Restructuring of Labour Management in the Australian Metal Industry Since the mid 1980s, unpublished PhD, Work and Organisation Studies, University of Sydney. Campbell, I. 2001, ‘Casual Employees and the Training Deficit: Exploring Employer Calculations and Choices’, International Journal of Employment Studies, 9(1):61–101. Campbell, I. and Brosnan, P. 1999, ‘Labour Market Deregulation in Australia: The Slow Combustion Approach to Workplace Change’, International Review of Applied Economics, 13(3):355–396. Campbell, I. and Burgess, J. 2001a, ‘Casual Employment in Australia and Temporary Employment in Europe: Developing a Cross-National Comparison’, Work, Employment and Society, 15(1):171–184. Campbell, I. and Burgess, J. 2001b, ‘A New Estimate of Casual Employment?’, Australian Bulletin of Labour, 27(2):6–29. Clauwaert, S. 2000, Survey of Legislation on Temporary Agency Work, ETUI Report no. 65, Brussels, European Trade Union Institute. Creighton, B. and Stewart, A. 2000, Labour Law: An Introduction, 3rd edition, Sydney, Federation Press. Dabscheck, B. 1998, ‘The Waterfront Dispute: Of Vendetta and the Australian Way’, The Economic and Labour Relations Review, 9(2):155–187. Eirobserver. 2002, ‘Economically Dependent Workers’ Employment Law and Industrial Relations’, Eirobserver, comparative supplement, Dublin, European Foundation. Fenwick, C. 1992, ‘Shooting for Trouble? Contract Labour-hire in the Victorian Building Industry’, Australian Journal of Labour Law, 5(3):237–261. Fitzgerald, R. 2001, Witness Statement, Reasonable Hours Case, AIRC, C No. 2001/348 and Ors. Forde, C. 2001, ‘Temporary Arrangements: The Activities of Employment Agencies in the UK’, Work, Employment and Society, 15(3):631–644. Gonos, G. 1997, ‘The Contest over “Employer” Status in the Postwar United States: The Case of Temporary Help Firms’, Law and Society Review, 31(1):81–110.

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Gryst, R. 2000, ‘Contracting Employment’, A Case Study of How the Use of Agency Workers in the SA Power Industry is Reshaping the Employment Relationship, ACIRRT Working Paper, Sydney, ACIRRT. Hall, R. 2000, ‘Outsourcing, Contracting-out and Labour Hire: Implications for Human Resource Development in Australian Organizations’, Asia Pacific Journal of Human Resources, 38(2):23–41. Hall, R., Bretherton, T. and Buchanan, J. 2000, ‘It’s Not My Problem’: The Growth of Non-standard Work and Its Impact on Vocational Education and Training in Australia, Leabrook, SA, NCVER. Labour Hire Task Force 2001, Final Report, Sydney, NSW Department of Industrial Relations. Littler, C. 1982, The Development of the Labour Process in Capitalist Societies, London, Heinemann. Mangum, G., Mayall, G. and Nelson, K. 1985, ‘The Temporary Help Industry: A Response to the Dual Internal Labor Market’, Industrial and Labor Relations Review, 38(4):599–611. Michon, F. 1999, ‘Temporary Agency Work in Europe’, Eironline January, http://www.eiro.eurofound.ie/1999/01study/TN9901201S.html (Accessed 19 June 2000). Morehead, A., Steele, M., Alexander, M., Stephen, K. and Duffin, L. 1997, Changes at Work: The 1995 Australian Workplace Industrial Relations Survey, South Melbourne, Longman. Peck, J. and Theodore, N. 1998, ‘The Business of Contingent Work: Growth and Restructuring in Chicago’s Temporary Employment Industry’, Work, Employment and Society, 12(4):655–674. Stanworth, C. and Druker, J. 2000, ‘Labour Market Regulation and Non-standard Employment: The Case of Temporary Agency Work in the United Kingdom’, International Journal of Employment Studies, 8(1):3–25. Storrie, D. 2002, Temporary Agency Work in the European Union, Dublin, European Foundation for the Improvement of Living and Working Conditions. Underhill, E. 1999, ‘The Victorian Labour Hire Maintenance Workers’ Strike of 1997’, The Economic and Labour Relations Review, 10(1):73–91. Underhill, E. 2002, Existing Knowledge on Occupational Health and Safety and Labour Hire Employment: A Literature Review and Analysis of Victorian Worker’s Compensation Claims, A Report for Worksafe Victoria, Melbourne, Worksafe Victoria, www.workcover.vic.gov.au. Underhill, E. and Kelly, D. 1993, ‘Eliminating Traditional Employment: Troubleshooters Available in the Building and Meat Industries’, Journal of Industrial Relations, 35(3):398–423. Vandenheuvel, A. and Wooden, M. 1995, ‘Self-Employed Contractors in Australia: How Many and Who Are They?’, Journal of Industrial Relations, 37(3):263–280. Watson, I. 2000, Labour Hire in NSW – an issues paper, prepared for the NSW, May, DIR, Sydney, ACIRRT. Waite, M. and Will, L. 2001, Self-Employed Contractors in Australia: Incidence and Characteristics, Staff Research Paper. Melbourne, Productivity Commission. Williams, A. 1997, ‘Female Temporary Office Workers’, in D. Mortimer, P. Leece and R. Morris (eds), Readings in Contemporary Employment Relations, Sydney, Centre for Employment Relations, University of Western Sydney: 159–173.

9

Temporary agency work in Australia (Part II) Motivation, dynamics and prospects Richard Hall

Introduction: the antecedents of the Australian temporary agency work industry While the term ‘labour hire’ is of relatively recent origin in Australia,1 the use of agencies or companies specialising in the supply and provision of workers to client companies and organisations dates back to at least the 1950s. The contemporary form of the labour hire or agency employment industry in Australia can be comprehended as the result of at least three particular antecedents: The traditional agency employment industry ‘Temping agencies’ have long specialised in the provision of workers to help client companies cope with fluctuations in demand or the temporary absence of employees. Generally these agencies first emerged in order to provide clerical, administrative and other white-collar support staff – staff who could normally walk into organisations with standard secretarial and administrative skills. Many of these firms have flourished in recent years and many have expanded the range of staff they can provide well beyond the original office temps that dominated ‘labour hire’ prior to the 1990s. Contemporary examples of these firms in Australia include Drake Personnel, Hays Metier and Kelly Services. The recruitment industry With the increasing propensity to outsource aspects of HR functions in the 1970s and 1980s, many firms looked to specialist recruitment companies to provide shortlists of suitable candidates. With the growth in the demand for labour hire, recruitment firms found it relatively easy to offer clients short-term or longer-term placements whereby the worker was employed at the client’s premises but their wage was paid by the recruitment firm. In this way, recruitment firms are able to offer their clients an alternative to a permanent placement. Client firms can effectively trial a prospective employee as a labour hire placement and decide subsequently to engage them as a direct employee for the payment of a one-off fee to the recruitment– labour hire company.

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The ‘pure’ labour hire industry In the late 1980s a number of small specialist firms began to offer contract labour as a replacement for, or as a supplement to, existing employees for companies in a number of highly unionised and dispute-prone industries such as building and construction and shearing. In the 1991 case, Building Workers Industrial Union v. Odco Pty Ltd the full court of the Federal Court upheld an earlier decision that the workers supplied by the labour hire company Troubleshooters Available were not employees of either the host company or the labour hire firm but were, in fact, contractors (Fenwick 1992). This meant that neither Troubleshooters nor their contractors were bound by the prevailing building industry awards. The decision cleared the way for labour hire companies to provide contract staff to clients at highly competitive rates – paying the contractors below award rates and thereby having the ability to offer clients a competitive labour supply contract while still generating a profit. The contemporary industry in Australia also features a number of very large, high profile international labour hire, or ‘flexible labour’ firms that have moved in over the top of the domestic operators, on occasion acquiring ownership and control of those companies. Adecco and Manpower are among the largest labour hire operators in Australia. Those operators have spread their supply of labour across the entire labour market while other big established players such as Skilled Engineering retain more specialised operations. In 2000 it was estimated that Adecco had revenues in Australia of over $700 million and were anticipated to top $1 billion within two years. At that time, Asia Pacific CEO Ray Roe argued that the ‘explosion’ in the use of flexible workforce was set to continue (Workplace Express 19 July 2000). The peak industry body representing the labour hire industry, the Recruitment and Consulting Services Association, conducted a 1999 survey indicating that the industry generates around $10 billion in annual sales in Australia (Department of Industrial Relations [DIR] 2001, p. 18).

What is labour hire and what is the problem? While labour hire contractual relationships (see Campbell, Watson and Buchanan in this book for definition) might appear to be relatively straightforward in theory they can become complicated in practice. First, there is typically a control relationship but not a contractual relationship between the worker and the client or host company. In a labour law context predicated on the assumed existence of a bipartite employment relationship between employer and employee the law has struggled to establish where liabilities should rest in some labour hire cases. Second, the character of the legal relationship between the worker and the labour hire firm may not always be clear. For example, while some labour hire

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workers might be employees of the labour hire firm, labour hire firms often describe their workers as ‘associates’ or ‘contractors’ and seek to construct them as contractors rather than employees. Third, the extent to which the worker is working under the control and direction of the host company or the labour hire company might be disputed. The issue can be critical for ascribing responsibility for occupational health and safety. In some cases, labour hire companies suggest that they assume at least partial responsibility for their workers’ occupational health and safety (OH&S) by claiming that they refuse to send staff to a site unless they have first established the safety of the site.2 Liability for OH&S has been attributed to labour hire companies in at least some cases (WorkCover [Inspector James Swee Ch’Ng] v Drake Personnel; DIR 2001, p. 62). In other cases the WorkCover authority of NSW has argued that the host employer bears OH&S responsibilities under the relevant Act (DIR 2001, p. 56). The complicated legal character of labour hire arrangements in practice is therefore problematic for ascertaining liability in a number of instances. Two of the most common instances are in situations where there has been a breach of OH&S regulations, a labour hire worker is injured and neither client company nor labour hire company is prepared to assume responsibility for rehabilitation and return to work, and, in unfair dismissal cases where both client and labour hire firm might seek to deny that the aggrieved worker is their employee. Labour hire is also problematic for individual workers and labour markets more generally. The labour market problems associated with labour hire employment arrangements can be summarised under three inter-related themes: 1

Labour hire workers tend to be engaged as either casual employees or dependent contractors. The employment conditions tend to be characterised by insecurity, precariousness, the absence of career paths, low or below award pay and substandard conditions. Among the ranks of labour hire employees (as distinct from contractors) casual rather than permanent employment is the overwhelming form of employment. For example, the Australian Industry Group (AIG) survey estimates that almost 97 per cent of labour hire workers are engaged as ‘casuals’ (AIG 2000, p. 4). While some labour hire workers are on longterm contracts – for example, the Australian Council of Trade Unions (ACTU) has estimated that over 10 per cent of labour hire workers have been with the same client for over 2 years (ACTU 2000, p. 1) – the Recruitment and Consulting Services Association (RCSA) has estimated that the average length of labour hire assignment is six weeks. The essence of labour hire employment conditions is that continuity of engagement, let alone employment, is not guaranteed. Low pay and under-award pay appears to be common in the labour hire industry. Union submissions to the NSW Labour Hire Task Force

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document many instances of labour hire firms paying below site rates, below prevailing industry standards and, on some occasions, paying significantly below award base rates. For example, the Finance Sector Union (FSU) notes that casual labour hire staff in the operations sections and call centres of the banking industry are paid between one dollar and 3 dollars per hour less than permanent bank employees performing the same work (DIR 2001, p. 30). The secretary of the Queensland Council of Unions has also claimed that under-payment of labour hire workers is common in that state: she has estimated, for example, that only 10 of 90 labour hire companies operating in the construction industry in Queensland pay their employees at or above award rates (Workplace Express 25 April 2001). The incentive to pay low rates is a structural feature of the labour hire industry. Where a labour hire employer can be compelled to pay award rates it appears that market forces ensure that they are soon undercut by a competing operator who is prepared to avoid paying the award rate. For example, the Federated Clerks Union of Australia (FCU) notes a case involving data entry operators engaged by labour hire giant MPM Personnel. Under union pressure to pay the award rate, MPM adjusted their tender price for a major client only to lose the tender to a competitor agency which paid its workers an estimated $4 per hour below the award rate (FCU 2000). Qantas uses labour hire staff among its long haul international flight attendants based outside Australia. Adecco employs the flight attendants based in Auckland and Bangkok and these workers are not covered by the Enterprise Bargaining Agreement (EBA) that applies to Australian based Qantas flight attendants. Evidently Qantas is keen to extend the practice of employing more flight attendant staff off-shore through labour hire so as to avoid the EBA conditions enjoyed by its Australian based staff. Announcing the company’s plans to launch a new budget international airline, Qantas Chief Executive, Geoff Dixon, appealed to unions to ‘accept the realities’ and noted that 94 per cent of Qantas staff were employed in Australia under ‘premium conditions’ (Workplace Express 15 June 2001). Dixon argued that ‘[w]e need to get rid of very outmoded labour practices’ and that ‘we cannot compete if 94 per cent of our people continue to be employed under these conditions. We need other opportunities to reduce our costs by employing more people overseas’ (Financial Times, 15 June 2001). 2

Labour hire employment tends to be associated with limited training and skills development. Arguments and evidence concerning the links between labour hire employment and training and human resource development have been documented and developed elsewhere (Hall 2000; Hall et al. 2000). The overwhelming body of evidence suggests that labour hire workers receive

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less training and much less transferable training and skills development than permanent employees (ACTU 2000, pp. 6–7; DIR 2001, p. 26; Lafferty and Roan 1999). The labour hire training deficit is not only disadvantageous for individual workers who are either not receiving training or are forced to fully shoulder the burden of accessing, undertaking and paying for training themselves. The explosion of labour hire, particularly in highly skilled areas such as manufacturing maintenance, has also led to a serious depletion in the skills available in the labour market (Marshman 1998, p. 27; Hall et al. 2000). 3

Labour hire employment is often associated with limited industrial protection afforded by awards, enterprise bargaining arrangements and union coverage. Labour hire workers are inherently difficult for unions to organise for a number of reasons. First, labour workers often have relatively itinerant work histories and non-standard work patterns. This makes it difficult for unions to identify and approach potential members and to identify likely breaches of award or other industrial conditions. Second, labour hire workers are rarely prepared to speak out against employer breaches of award or statutory conditions because of their general vulnerability and dependency on their labour hire employer for future assignments. (This situation also discussed in the chapter in this book by Goka and Sato.) These realities greatly affect the enforceability of any conditions and protections even where they have been won. The case studies presented to the NSW Task Force by one of Australia’s major unions, the Australian Manufacturing Workers’ Union (AMWU), reveal a litany of breaches of award conditions: failure to pay site rates to labour hire workers where this is a condition of the EBA; failure to pay according to the appropriate award classification; and failing to pay casual loadings (DIR 2001, pp. 33–34). The Finance Sector Union (FSU) reports similar cases in the banking and finance industries. That union has claimed that all but one of the major labour hire companies it deals with have failed to abide by the promises they have made to the ACTU to pay appropriate rates and respect negotiated conditions (FSU 2000). Even where an award or registered industrial arrangement is in place, unions report persistent difficulties in ensuring that the instrument can be updated to ensure that labour hire workers’ entitlements keep pace with prevailing standards. For example, the Federated Clerks’ Union (FCU) notes that the award covering labour hire workers in the clerical industry, the Clerical and Administrative Employees in Temporary Employment Services (State) Award, contains only four grades while the main clerical and administrative award contains five. The FCU (2000) claims that the RCSA has not consented to the inclusion of the extra grade and that it is unable to mount an arbitration hearing because no labour hire worker is

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prepared to come forward and give evidence before the Commission for fear of labour hire reprisal. The union has also claimed that the labour hire companies routinely pay their workers at the lowest grade possible, often significantly lower than that being received by permanent employees undertaking the same work alongside them (FCU 2000). The operation of labour hire employment arrangements in Australia has become problematic for legal, industrial, skills development and employee protection reasons. Possible and proposed policy responses to the specific problems identified are considered in the final section. In addition, the more general desirability of labour hire employment arrangements should also be questioned. The problem with labour hire in the contemporary Australian labour market is not its existence per se – it has, after all existed in one form or another for at least 50 years – but rather in its proliferation as an alternative form of employment. Depending on definition and data source the number of labour hire workers ranges between 161,800 (ABS Forms of Employment Survey reporting the number of employees paid by an employment agency in November 2001) to about 280,000 (ABS Employment Services Survey reporting the number of people ‘on-hired’ by one business in the employment services industry to another business). Campbell, Watson and Buchanan (see previous chapter) estimate the total number of agency workers in Australia to be between 200,000 and 250,000. Regardless of the exact number of labour hire workers, it is apparent that they constitute a notable and growing proportion of the labour market. As per the examples from the airline, banking, transport, retail and manufacturing industries suggest the problematic aspect of labour hire is where it is seen as an alternative employment arrangement to permanent full-time or part-time or even regulated casual employment. As the above examples illustrate, labour hire has grown in Australia partly because it offers some employers the opportunity to lower labour costs by substituting labour hire workers for in-house, direct employees. If this is a prime motivation, and if the consequence is substandard pay and conditions and inadequate protection for workers, then quite dramatic policy action is probably in order. Lower labour costs might not be the major motivation for employers using labour hire though and the union evidence referred to above might be misrepresenting the real circumstances for most labour hire workers and clients. In order to investigate the extent and character of the labour hire problem in greater depth, the evidence concerning employer motivations for choosing labour hire is considered next.

Employer motivations for labour hire It has previously been suggested (Hall 2000, p. 30) that the motivations for employers’ choosing labour hire include:

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Capacity outsourcing–using labour hire to cope with peaks and troughs in demand. Specialisation subcontracting–using labour hire to provide specialist skills from time to time. Cost reduction–using labour hire even at the premium contract price demanded by a labour hire company so as to save on on-costs, overheads and liabilities. Contract out industrial relations problems–using labour hire workers as a substitute for an existing workforce that management might regard as problematic because of industrial disputation, poor performance or union presence. Stimulate organisational change–using or threatening to use labour hire staff as part of a fundamental change to work organisation and, potentially, workplace culture. On the basis of the submissions received from labour hire companies, unions and others the New South Wales (NSW) Task Force (DIR 2001, pp. 15–17) identified the following employer motivations: Flexibility–identified as the biggest motivation, flexibility was consistently mentioned by labour hire operators as being the major motivation for clients using their services. This conception of flexibility corresponds with capacity outsourcing and specialisation subcontracting as defined above. Most of the examples of flexibility imperatives noted by the Task Force (DIR 2001, p. 15) suggested the short-term engagement of a relatively small number of labour hire workers to cover for absences, meet peaks in demand or access specialist skills that might be needed from time to time. Only one example – using the arrangement to assess a potential employee’s performance – suggested a longer term engagement. Risk Management–many employers use labour hire as a way of minimising their risks. For example, businesses can use labour hire as a way of enhancing their capacity to ‘hire and fire’ without exposing themselves to the risk of an unfair dismissal claim (but see: Misheva v. Spicers Paper Ltd.3). Typically, if the client does not like the worker sent to their workplace they can simply call the labour hire firm and request another worker, or simply try another labour hire company. Naturally, many employers see this as more convenient than attempting a dismissal. Cost Factors–the Task Force noted union claims and evidence that some businesses can avoid, or at least reduce, the obligations they have to workers through the use of labour hire and that some labour hire operators undercut prevailing standards in order to offer clients competitive prices. The NSW Task Force report also noted a number of other motivations including the reduction of on-costs or administrative costs and the

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motivation of using labour hire to reduce union presence, institute new forms of consultation and negotiation and substitute the existing workforce with a more compliant and more affordable workforce. Some recent survey data assists in clarifying the relative intensity of various possible motivations among employers for seeking labour hire. In late 1999 approximately 400 employer members of Australian Business Limited were surveyed on a range of matters including their use of outsourcing and labour hire. The survey revealed that the use of labour hire was relatively common. Almost one third (32.8 per cent) of all companies surveyed used at least some labour hire staff. Moreover, the extent of usage was relatively large for a significant proportion of companies. Almost half (45.6 per cent) of the firms using some form of labour hire reported that at least 10 per cent of their total staff were labour hire workers. Respondents to the survey were asked to consider their use of outsourcing, labour hire and the use of contractors. They were then asked about a range of possible advantages and disadvantages of outsourcing. While respondents were not asked to distinguish between outsourcing, labour hire and use of contractors it is known that labour hire and outsourcing are closely related and it is likely that the motivations for ‘outsourcing’ are similar to the motivations for ‘labour hire’. Table 9.1 shows the proportion of companies that regard particular features of outsourcing as an advantage, in addition to the responding employers’ estimations of the most significant advantages of outsourcing.

Table 9.1 Employer assessments of the advantages of outsourcing Advantages of outsourcing

Percentage of employers nominating as an advantage

Cost effectiveness Flexibility in meeting fluctuations in demand Increased range of skills Quality of production/ service Capacity to solve site specific problems Capacity to change supplier Control over labour Lower union influence Other

54.6

36.9

48.0 31.8

30.0 10.5

24.2

6.4

25.4 29.8 17.7 8.3 2.3

5.2 4.2 4.1 0.6 2.3

Total

Percentage of employers nominating as the most significant advantage

100.0

Source: ACIRRT– Australian Business Limited Workplace Agreements Survey, December 1999 (see also Hall and van Barneveld 2000).

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It must be recalled that respondents to this survey were encouraged to think about all the ‘outsourcing’ type strategies they use – strict outsourcing and ‘turnkey project management’ right through to the occasional use of individual labour hire workers. These results should, therefore, be interpreted with some caution in reaching conclusions about the motivations for labour hire as distinct from outsourcing. Nevertheless, the data appear to confirm that cost effectiveness is a very important consideration and perceived advantage for many employers. While cost effectiveness was seen as the single most important advantage of those offered, flexibility in coping with peaks and troughs in demand and access to a greater range of skills might together be taken to constitute the flexibility motivation; and over 40 per cent mentioned one or other of these advantages as the most significant. As might be expected control is not seen to be an advantage of outsourcing. Interestingly, very few respondents identified lessening of union influence as an advantage to outsourcing. All the available evidence suggests that cost and flexibility are the two major motivations for employers’ use of labour hire. The analysis and interpretation presented above suggests that both aspects of the use of labour hire present potential difficulties for the labour market experiences of workers working in labour hire. Employers’ desire for flexible access to workers and their skills ‘on call’ is, of course, nothing new. Indeed, flexibility has probably constituted the single most prominent imperative of labour market transformation in Australia (and the industrialised world) over the past fifteen years. While there is a case for minimising the proliferation of jobs that are flexible (at the call of the employer rather than the employee) it might be possible to achieve significant improvement to the vulnerability, exposure and disadvantage for many workers through regulation of flexible labour and protection of the conditions for those flexible labour hire workers. The use of labour hire mainly for cost reasons is likely to be more pernicious. It is possible that where employers are largely motivated by cost considerations, they will be determined to seek labour hire companies that can supply labour at the lowest cost. The predisposition of companies (as purchasers of labour from labour hire companies) to seek the lowest labour supply rates will encourage labour hire firms to undercut each other’s rates. As the anecdotal examples brought to the attention of the NSW Task Force have indicated, this will often encourage at least the more opportunistic operators to pay workers at below award or below market rates, and seek to minimise the provision of adequate conditions of employment and appropriate protection of workers through workers compensation payments and the protection of entitlements. To summarise, the dynamics of the labour hire industry in Australia appears to conceal a number of problems that warrant the attention of policy makers. First, the issue of where legal liabilities rest is not always clear in practice when questions of OH&S, rehabilitation and return to

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work after injury and unfair dismissal arise. Second, in many cases labour hire workers appear to be lowly paid, or paid less than prevailing award or enterprise bargaining agreement (EBA) standards or less than permanent workers performing the same work in the same firm. They are also more likely to have poorer conditions than permanent workers. Third, labour hire workers appear to have access to less employer funded training and the proliferation of labour hire may have had deleterious consequences for the skills profile of some industries and labour markets. Fourth, labour hire workers appear to have less secure industrial regulation and protection than other in-house workers. In the course of this survey it has also been noted that at least some employers have sought to use labour hire as a mechanism for substituting existing permanent workers with less expensive, more flexible and more compliant labour hire workers. In other cases labour hire firms have been used in an attempt to either avoid legislative or industrial obligations or to make employees redundant by changing the legal identity of their employer to a labour hire firm that is either not party to an existing industrial instrument (the Tripac model4) or is bankrupt (the Patrick’s model5). The evidence on employer motivations would suggest that employers are often seeking improved flexibility in the use of agency labour. It has been argued that considering the protection of workers’ interests the conditions of flexible employment need to be strongly regulated and effectively protected. The other major motivating force pushing the growth of labour hire appears to be cost reductions. It has been argued that low cost labour hire must be significantly curtailed so that the proliferation of low cost, low paid employment under the guise of labour hire is minimised.

Responses and prospects Most Australian jurisdictions have been slow to move towards comprehensive regulation of labour hire. Queensland and Victoria now have the most detailed set of legislative regulations. In Queensland and Victoria, the definitions of employer and employee in the relevant state industrial relations acts specifically include labour hire companies and labour hire workers. Contractors can also be deemed ‘employees’ by the Industrial Relations Commission (in Queensland) or by the Fair Employment Tribunal (in Victoria) depending on the circumstances of the case. Most states also have systems requiring the licensing of ‘employment agents’, however, with the exception of the Australian Capital Territory (ACT), the definition of employment agents does not normally include labour hire companies. No Australian jurisdiction currently has legislation that purports to regulate the length of labour hire contracts, the purposes for which labour hire may or may not be engaged, or establishes the parity of labour hire workers with other comparable workers in host organisations (DIR 2001, pp. 41–42).

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NSW labour hire task force One of the most recent and comprehensive reviews of the labour hire and agency employment industries has been conducted in Australia’s most populous state, NSW. In May 2000 the NSW Attorney General and Minister for Industrial Relations established a task force to inquire into and make recommendations about the labour hire industry in NSW. The report (DIR 2001), completed early in 2001, was finally released in December 2001. The Report of the Task Force makes a number of recommendations concerning reforms to better regulate the labour hire industry in NSW. The principal recommendations made by the Task Force include the following: Expand the definition of employer to include labour hire companies Following the lead of Queensland and Victoria, this recommendation will assist in broadening the range of workers who will be afforded protection under the NSW Industrial Relations Act. Nevertheless, if implemented, the recommendation would be less than fully effective in bringing many labour hire workers within the protective provisions of the Act. The recommendation fails to propose defining labour hire workers as employees. Therefore, while a given labour hire company will potentially become subject to the Act, it will remain open to them to argue that any worker placed by them is undertaking a contract for service (as a contractor) rather than a contract of service (as an employee). In circumstances where that argument is accepted, the worker will therefore fall outside the scope of the Act and be unable to gain the benefit of its regulatory provisions. Establish a licensing regime for labour hire companies The licensing of labour hire operators provides an opportunity for the state to develop a regulatory approach to the industry. The Report recommends the establishment of a working party to work out the detail of the licensing process, however the report recommends that licensing be based on companies demonstrating that they meet statutory requirements regarding appropriate insurance, payment of workers’ compensation premiums, superannuation, payroll tax and entitlements under applicable industrial instruments. Such a regime would appear to go a long way towards raising the barriers of entry to the industry and reducing the number of low cost operators in the industry. In its submission to the Task Force the AMWU referred to the introduction of training regulations in the labour hire industry in the food industry which led to the reduction in the total number of labour hire operators from twenty to thirty to just two or three. The Task Force report

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did, however, fall short of making any recommendation regarding the imposition of requirements for a certain amount of training to be provided by labour hire operators. The Department of Industrial Relations is to conduct an education campaign on the rights and responsibilities of all parties to a labour hire arrangement. To the extent that labour hire operators or client organisations are actually ignorant of their responsibilities this recommendation may have some positive effect. Amend the OH&S legislation such that both client organisations and labour hire companies are rendered jointly responsible for the OH&S of labour hire workers. This recommendation reflects the leading NSW authority of Ankucic v. Drake Personnel t/as Drake Industrial where both Drake and the host employer were fined for each failing to ensure the health and safety of the labour hire worker. This recommendation was also supported by a further recommendation for an education campaign to increase the awareness of labour hire and host companies regarding their OH&S responsibilities. Amend the relevant legislation to mandate joint responsibility on both host organisation and labour hire company for rehabilitation and return to work of injured workers. The mandating of joint responsibility and the inclusion of WorkCover as the authority to determine the details of the implementation should ensure that injured labour hire workers stand a better chance of accessing improved rehabilitation and return to work opportunities. However, the practical problem remains that few labour hire companies will have the capacity to provide anything other than routine office work for injured employees. Overall the recommendations of the Task Force will assist in clarifying the legal liabilities and responsibilities of labour hire companies and client firms in the cases of OH&S regulatory and legislative breaches, and cases where rehabilitation and return to work becomes an issue. The first recommendation will also make it more difficult for labour hire companies to avoid the operation of relevant statutory obligations. Nevertheless, labour hire companies, seeking to avoid liability under the Industrial Relations Act will continue to argue that while they may be an employer, the worker concerned is a contractor rather than an employee. The most important recommendation is likely to be the establishment of a licensing regime for the industry. The development of reasonably stringent standards and requirements for licensing will be likely to drive out many of the smaller, low cost operators that are generally thought to be responsible for undercutting the rates of those labour hire firms that

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claim to be paying appropriate wages and providing appropriate conditions. Despite the potential significance of this recommendation, if cost effectiveness or the pursuit of cost reductions continues to be a major motivation for employers, then employers will continue to seek the most competitive rate for labour hire labour. There is no reason, on the face of the recommendation, that licensed labour hire operators will not, over time, come to compete on pay rates alone, given that they will have little room to compete on overheads and on-costs. Despite the obvious appeal of the licensing regime proposal it does not seem to envisage much actual regulation of the industry other than insisting on the business bona fides of operators. Nevertheless, the recommendation does open the way for a regulatory regime that might more effectively introduce rules and regulations governing the conduct of labour hire and employment agency operators. The Task Force also failed to make any recommendation that might address the employer-funded training deficit in labour hire and the limited industrial protection afforded labour hire workers. The Task Force report notes in passing some of the arguments concerning equity in the site rates paid to in-house employees and labour hire workers, and transmission of business issues, but it failed to make any recommendations on these matters. A strong public policy case remains for addressing each of these issues. The establishment of a licensing regime and licensing fees holds the prospect not only of a regulatory regime, but also of generating a pool of funds which might be able to be used to subsidise or provide training for labour hire workers as a means of overcoming the current training shortfall in labour hire. Other issues associated with the inferior pay and conditions often encountered by labour hire workers demand more creative and radical responses though. Consideration still needs to be given to means of compelling labour hire companies to pay at least the equivalent hourly or daily rate as casual workers performing the same work at the same site. The lack of a career path for long term labour hire workers also requires the consideration of arrangements that will ensure the portability of entitlements across engagements. Again, the licensing of labour hire firms suggests a possible institutional form for the ‘banking’ of entitlements such as long service leave.6 The regulation of labour hire by Australian courts and tribunals While different state governments in Australia have been deliberating over what, if anything, needs to be done to better regulate the labour hire industry in Australia, the courts have been forced to confront an increasing number of cases concerning the employment status of workers involved in labour hire. Typically, the courts have been asked to consider whether a labour hire worker is an ‘employee’ or an ‘independent

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contractor’. In some cases where the worker has been held to be ‘an employee’, courts or tribunals have also been asked to consider whether the employer is the labour hire company or the host company. Australian case law has not, as yet, revealed any clear, unambiguous authority on the question of the employment status of labour hire workers. It is apparent from the cases that the status of any particular worker or employer will depend on the facts of the case – a familiar legal aphorism, but one that is particularly apposite in this area of labour law (Punch 2002). Employment status is often a critical regulatory issue. If the worker is classed as an ‘employee’ and the labour hire company as an ‘employer’, for example, then the worker will be afforded the protections associated with the common law, statutory provisions and industrial instruments governing employment relations. This includes access to the unfair dismissal jurisdiction, certain rights associated with workers’ compensation protection, the various industrial rights and entitlements under common law, employment legislation and the industrial relations and bargaining systems. ‘Contractors’, on the other hand, do not normally have access to the same range of industrial rights and protections. Despite the lack of clarity as to the employment status of workers paid by labour hire or temporary work agencies, there has been a discernable trend in recent cases away from a strict, traditional ‘contract of employment’ approach to one which is more prepared to look behind the formal existence of a contract and the employer’s capacity to control the work of the worker, to the economic reality of the arrangement. As a result, the scope for the courts to find the existence of an employer–employee relationship, and hence the scope for the industrial regulation of labour hire arrangements, has been widened. The classic authority for the assertion that labour hire workers are independent contractors rather than employees is Building Workers Industrial Union v. ODCO Pty Ltd. As noted earlier, in ODCO the court found no contractual arrangement between the agency workers and the building contractors, and, while there was clearly a contractual arrangement between the labour hire company and the workers, this could not be construed as an employment contract because a number of features of the employer–employee relationship were missing – the workers were not obliged to work at any given time, the labour hire company was not obliged to provide ongoing work, and it had no control over the manner in which work was carried out. Other cases have also taken a strict approach to the traditional employment relationship tests. For example, in Advanced Australian Workplace Solutions Pty Ltd and Fox v. Kangan-Batman TAFE a Tertiary and Further Education (TAFE) teacher employed through a labour hire company, but working under the control and direction of TAFE, was found to be an independent contractor rather than an employee. Again,

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the court reasoned that there was no contract between the TAFE and the teacher. Moreover, it held that there was no contract of service between the labour hire company and the worker – the labour hire company paid an hourly rate, did not provide for leave or other ‘employee’ entitlements, required the teacher to provide her own materials and equipment, allowed her to refuse work and expressly stated in the contract that the relationship was not that of employer–employee. Nonetheless, another line of recent cases demonstrates that, on other occasions, the courts are prepared to examine all aspects of a work relationship and potentially classify it as an employer–employee relationship even if there is no evidence of the ‘employer’ having significant control over the manner of work of the worker. The ‘control test’, which had once been the primary test of the existence of an employment relationship, appears now to have been relegated to being one test of many (Punch 2002). This has allowed the courts to find labour hire companies, in some cases, to be the employer even where their employee is assigned to work at a site far removed from the supervision and management of the labour hire company. In ASU v. Options Consulting Group P/L the Australian Industrial Relations Commission found an employment relationship to exist between the labour hire company and the worker because, even in the absence of any effective day-to-day control, the labour hire company provided the payslip, deducted income tax and provided a group certificate for taxation purposes. The recent case of Slater v. WorkCover/Allianz Aust. indicates that even where the parties follow the established ODCO formula, there is no guarantee that a court will not go beyond the formalities and declare the relationship to be one of employer–employee where various characteristics of an employer–employee relationship are present. In that case, the applicant tomato picker, paid by the labour hire company to work at a host employer, was found to be an employee of the labour hire company on the grounds that she was paid by the hour, she was not required to provide specialist or skilled labour or any equipment (other than gloves), and she had no capacity to delegate her duties. In other words the applicant looked like an employee and was therefore classed as an employee (Punch 2002). In recent times the courts have also evinced a preparedness to identify an employment relationship as a means of compelling labour hire companies to accept the responsibilities traditionally associated with direct employment. In Rebecca Thomson v. Brunel Energy Pty Ltd for example, the labour hire company was held liable for unfair dismissal consequential on the host employer’s attempt to dismiss the labour hire worker. The courts have increasingly become quite harsh on employers who attempt to obviate their industrial responsibilities and obligations through the use of wholly (or substantially) owned service companies that are established to supply labour to the head employer. In at least one recent case (ALHMWU v. Burswood Catering and Entertainment) the West Australian

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Industrial Relations Commission has found that the ‘in-house’ labour hire company was an integral part of the larger parent company and was, therefore, bound by the employment terms and conditions (as specified in awards and agreements) to which the parent company had been a party. Most recently there is some evidence emerging that the industrial courts, at least, are prepared to entertain the concept of the host being regarded as the employer (see: Melbourne v. JC Techforce), or of both the labour hire company and the host employer being identified as ‘joint employers’ (Morgan v. Kittochside Nominees Pty Ltd.). While the ‘joint employers’ notion is a novel one, and appears to sit uneasily with the accepted principles of employment law, it should be remembered that the courts have previously held both host and labour hire employers to be jointly liable in the case of liability for workplace injuries (Ankucic v. Drake Personnel t/as Drake Industrial). In summary, Stewart (2002) argues that the regulatory approach to labour hire in Australia to date has been piecemeal and unsatisfactory. He makes the case for establishing a new statutory definition of the employment relationship that would be broad and clear enough to include labour hire arrangements without encroaching on the status of legitimate, independent contractors. While this represents a significant improvement in the regulation of labour hire, it would still leave undisturbed the key feature of labour hire arrangements identified in this chapter as especially problematic – the ability of labour hire companies to avoid employing workers on conditions and wages equivalent to those of employees of the host organisation. On the basis of the evidence in this chapter a more appropriate response, noted but not advocated by Stewart is the introduction of a regime whereby labour hire companies, when placing workers in a particular workplace, would automatically become bound by the terms of all awards, enterprise agreements and other industrial conditions applicable to employees at that workplace. In this way, the industrial obligations of a host employer would be automatically transferred to a labour hire company. While this could be achieved through the inclusion of appropriate labour hire clauses in enterprise bargains it would evidently be more effective to include such a provision as part of legislation regulating the labour hire and employment agency industry.

Conclusion The labour hire industry likes to portray its business as the provision of flexible labour that can conveniently be brought in to workplaces to help employers cope with fluctuations in demand, fulfil a short-term need for specialist skills, or cover for staff absences. The reality, however, is that over the past ten years the labour hire industry in Australia has grown beyond this benevolent ‘temp employment agency’ model. The deliberate use of labour hire to drive down labour costs and even to substitute exist-

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ing workforces with lower cost, more compliant workers and the attempts by client employers to avoid or minimise their responsibilities and liabilities, has created an urgent need for policy reform. As it currently operates in Australia there are a number of dimensions of agency or labour hire employment that are problematic for workers. First, employment conditions tend to be characterised by insecurity, precariousness, the absence of career paths, low or below award pay and substandard conditions. Second, agency workers tend to receive less training and skills development opportunities than their directly employed colleagues. Third, agency workers generally have limited access to the protections and conditions afforded by awards, enterprise bargaining arrangements and union coverage. Recent proposals for reform, such as those suggested by the NSW Task Force, will go some way to improving the industry. However, it is apparent that the recommendations do not go far enough in a number of areas. Recent Australian cases demonstrate that a progressive approach is being taken by the courts in at least some jurisdictions. Building on some of those developments, Stewart (2002) has proposed a statutory redefinition of employment that would bring dependent contractors and agency workers within the definition of ‘employee’. While this could potentially improve the level of regulatory protection available to agency workers, the proposal will do little to stop agencies or labour hire operators paying their workers less and providing them with fewer conditions than in-house employees performing the same work. Until the thorny issue of equivalence in industrial conditions between employees and agency workers is grasped by policy makers, labour hire will continue to be an attractive option for at least some employers for all the wrong reasons. The most effective response would appear to be an Australian industry regulatory regime that compelled labour hire companies to pay and provide conditions equivalent to those in-house employees performing similar work.

Notes 1 The terms ‘labour hire’ and ‘agency employment’ are both used in Australia, although the former is more often used in connection with manufacturing while the latter is more common in services settings. The terms are used interchangeably in this chapter. 2 See comments of Adecco Asia Pacific CEO in Workplace Express, July 19 2000. 3 In this case, both the labour hire company, Adia Centacom, and the host company, Spicers Paper, were held to be in an employment relationship with the worker, although only the labour hire company was ultimately held liable for unfair dismissal. 4 When Tripac International, a motor vehicle components manufacturer, purchased an Australian company making air conditioning components for Ford, the employment of existing employees was transferred to a labour hire firm. All employees were employed under Australian Workplace Agreements rather than the previous union negotiated award and EBA conditions (ACTU 2000, p. 11).

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5 The Patrick Group of companies transferred the employment of their waterside workers to four labour hire companies that subsequently were declared insolvent and dismissed the employees without paying out their entitlements (ACTU 2000, p. 10). 6 At the time of writing, the Task Force recommendations had still not been implemented by the NSW state government. In its policy statement prior to its re-election in March 2003 the NSW Labor Party policy stated that the Government would create a tripartite Labour Hire Industry Council that would ‘oversee industrial relations and health and safety compliance’, ‘encourage the accreditation of labour hire companies’ and report to Government by May 2004 on ‘the effectiveness of self-regulatory and accreditation arrangements within the industry and whether a tougher legislative approach is needed’ (see: Australian Labor Party 2003).

References ACTU [Australian Council of Trade Unions]. 2000, Submission to the Labour Hire Task Force, New South Wales Department of Industrial Relations. Australian Council of Trade Unions, September. AIG [Australian Industry Group]. 2000, Submission to the Labour Hire Task Force, New South Wales Department of Industrial Relations. Australian Industry Group, September. Australian Labor Party. 2003, Working for the Future: Labor’s Plan for Workers and Business. Australian Labor Party – New South Wales Branch. http://www. nswalp. com/alpweb/2003electionpolicies/IR_2003_Policy.pdf. DIR [Department of Industrial Relations]. 2001, Labour Hire Task Force Final Report. Report of the Task Force to the Department of Industrial Relations, New South Wales. FCU [Federated Clerks Union of Australia]. 2000, Draft Submission to the Labor Council of NSW for the Labour Hire Task Force. Federated Clerks Union, September. Fenwick, C. 1992, ‘Shooting for Trouble? Contract Labour-hire in the Victorian Building Industry’, Australian Journal of Labour Law, 5(3):237–261. FSU [Finance Sector Union]. 2000, Draft Submission to the Labor Council of NSW for the Labour Hire Task Force. Finance Sector Union, September. Hall, R. 2000, ‘Outsourcing, Contracting-Out and Labour Hire: Implications for Human Resource Development in Australian Organisations’, Asia Pacific Journal of Human Resources, 38(2):23–41. Hall, R. and van Barneveld, K. 2000, Working It Out? Why Employers Choose the Agreements They Do: Final Report on the 1999 Workplace Agreements Survey. Sydney: Australian Centre for Industrial Relations Research and Training and Australian Business Limited. Hall, R., Bretherton, T. and Buchanan, J. 2000, ‘It’s not my Problem’: The Growth of Non-Standard Work and its Impact on Vocational Education and Training in Australia. National Centre for Vocational Education Research, Kensington. Lafferty, G. and Roan, A. 1999, ‘Public Sector Outsourcing: Implications for Training and Skills’, Employee Relations, 22(1):76–85. Marshman, B. 1998, On the Brink of Crisis?, Report to the Engineering Skills Training Board (Vic) Inc. MERSITAB.

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Punch, G. 2002, ‘Contract of Services or Contract for Services?’, Industrial Law, 11 (December):7–8. Stewart, A. 2002, ‘Redefining Employment? Meeting the Challenge of Contract and Agency Labour’, Australian Journal of Labour Law, AJLL LEXIS 10:1–45.

Table of cases Advanced Australian Workplace Solutions Pty Ltd. and Fox v. Kangan-Batman TAFE (1999) 46 AILR 4–124. ALHMWU v. Burswood Catering and Entertainment Pty Ltd. [2002] WAIRC 04778 (12 February 2002). Ankucic v. Drake Personnel t/as Drake Industrial. NSW Industrial Relations Commission No. 6465 of 1996. ASU v. Options Consulting Group P/L & Anor. (1999) 47 AILR 4–217. Building Workers Industrial Union & Ors. v. ODCO Pty Ltd. (1991) AILR 129. Melbourne v. JC Techforce Pty Ltd. [1998] SAIRComm 62 (23 July 1998). Misheva v. Spicers Paper Ltd. (1998) AILR 3–904. Morgan v. Kittochside Nominees Pty Ltd. Australian Industrial Relations Commission, PR918793 (13 June 2002). Rebecca Thomson v. Brunel Energy Pty Ltd. [2001] WAIRC 04102 (7 November 2001). Slater v. WorkCover/Allianz Aust. (Chiquita Brands Adelaide Pty Ltd.)/CGU and Anor. [2002] SAWCT 27 (14 March 2002). WorkCover (Inspector James Swee Ch’Ng) v. Drake Personnel NSW Industrial Relations Commission No. 3064 of 1997.

10 Agencies, agency workers and atypical employment in New Zealand Erling Rasmussen, Jens Lind and Jelle Visser

Introduction: radical reforms, labour market fluctuations and agency work New Zealand has witnessed major changes in its economic, social and employment relations frameworks and the notion of the New Zealand ‘experiment’ is renowned in academic and public policy literature (Boston et al. 1996; Kelsey 1997). The framework changes have mainly affected mainstream collective bargaining and employment patterns, though the changes have also facilitated a rise in atypical employment – including agency work. Still, New Zealand has relatively low levels of agency work though there has been a strong underlying growth pattern with the number of agencies and agency workers rising during the last decade. The growth in agency work has coincided with fluctuating unemployment and employment trends over the last fifteen years, although a relatively buoyant labour market has prompted patterns of skill shortages during the last decade. Overall, the upward trends in agency work are associated with wider labour market changes – they appear to be predominantly influenced by employer and employee demands as these adjust to business cycles and the availability and attractiveness of other forms of atypical work. Agencies have, however, also promoted agency work vigorously and have continuously sought to enlarge their market share and the overall ‘agency market’. New Zealand has an unregulated ‘wild west’ approach to agencies and agency work. For example, agencies can start up without any public quality control and conditions of agency workers are, to some degree, a private matter between the contracting parties. This situation is comparable in approach to that in both the USA and Australia (see Chapters 3, 8 and 9 in this volume). Recent research indicates that there is considerable interplay between various forms of atypical employment, that many agency workers co-register and shift among agencies and that many agency workers are quite content, depending on their work situations, labour market position and the current state of job opportunities (Rasmussen and Deeks 1998; Alach and Inkson 2003). Nevertheless, there

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are considerable public policy issues associated with the long-term impact of ‘temping’ (for example, employment entitlements, career and educational considerations), as in the case of other types of atypical employment. This provides a latent pressure to extend protection mechanisms. Recent public policy interest in smaller European countries could lead an interest in the Dutch and Danish regulations of agency work (discussed in Chapter 5 of this volume). These regulations fit with the current public policy approach to employment relations in New Zealand because of their flexibility and the extensive reliance on collective bargaining (Rasmussen and Lind 2003). It could also have an impact on agency work if the Labour Government fulfils a policy pledge about more protection of employment conditions during outsourcing and company ownership changes (Wilson 2004).

Employment relations reforms and atypical employment Over the last twenty years, New Zealand experienced more economic and social deregulation than any other OECD country. The country went from a rather closed economy to being one of the most deregulated OECD economies in less than a decade. Besides general changes in economic policy, there were major reforms of the public sector, energy, transport and telecommunication sectors, the financial sector, education and health sectors (Boston et al. 1996; Spicer et al. 1996; Kelsey 1997). On top of radical changes to the employment relations framework, there were comprehensive reforms of occupational safety and health, vocational education and training, privacy and human rights legislation (Deeks and Rasmussen 2002). Until recently, New Zealand had become known for two diametrically opposed employment relations models (Rasmussen and Boxall 1995). The conciliation and arbitration model lasted for nearly 100 years until the Employment Contracts Act replaced it in 1991. The Industrial Conciliation and Arbitration Act (1894) established a regulatory model with extensive state interventionism, supportive structures for unionism, minimum wage fixing through awards, and conflict solutions through conciliation and arbitration (Holt 1986; Walsh 1993). The Employment Contracts Act shifted away from this tradition of collectivism and state interventionism (Dannin 1997; Rasmussen and Lamm 2000; Deeks and Rasmussen 2002). Instead it had few prescriptions for bargaining behaviour, facilitated a shift towards individual and workplace bargaining and extended individual employment rights. The Act covered all employees, whether on collective or individual employment contracts and in both public and private sectors. The Act also prompted a sharp fall in collective bargaining and in union membership – union density fell from over 40 per cent in 1991 to 17 per cent in 1999 (Crawford et al. 2000). Finally, a third model, the Employment Relations Act was introduced

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in October 2000. The Employment Relations Act sits between the two previous models: it supports – as the pre-1991 framework did – collective bargaining and unionism but it has kept voluntary unionism, the coverage of both collective and individual agreements and an emphasis on less judicial intervention from the Employment Contracts Act (Deeks and Rasmussen 2002, p. 124). The Act has also introduced the concept of good faith bargaining and behaviour1 as an integral part of employment relations and has sought to foster ‘productive employment relationships’ through an emphasis on consensus and balancing power differences. While the precise effects of the Employment Relations Act are still unfolding and being debated (Thickett et al. 2003; Rasmussen 2004), the current framework has shifted significantly in terms of employment relations processes and outcomes, compared to the 1990s. These radical and comprehensive reforms prompted major labour market changes with strongly fluctuating unemployment patterns and shifts in employment opportunities. There was a considerable decline in public sector and manufacturing jobs during 1987–1992, followed by strong employment growth in the post-1992 period. Much of the employment growth has been in non-unionised, service sector jobs. There has also been a marked increase in atypical employment with a bifurcation of working time patterns through growth in part-time work and in long working hours (Brosnan and Walsh 1998; Rasmussen et al. 2003). In addition, studies of individual sectors and local labour markets have indicated how people have had to adjust their employment aspirations (Conway 1999; McLaughlin 2000; Barrett and Spoonley 2001). These changes have prompted considerable public policy interest in employment relations outcomes, changes to work and the protection of people in atypical employment.2 The statistics underlying Figure 10.1 present some interesting patterns, although the shifts in work patterns and labour trends go well beyond the patterns presented here. As illustrated there has been a strong rise in parttime employment during 1987–2002. This rise has been both absolute in terms of the number of people involved and relative in terms of its share of total employment. Specifically, there has been a 60 per cent rise in the number of people in part-time employment and this has resulted in an increase from 17.1 per cent to 23 per cent of total number of people employed (Statistics New Zealand 2003, p. 27). While there has been a strong rise of 38 per cent in the number of self-employed people, this has only resulted in an increase from 10.0 per cent to 11.6 per cent of total number of people employed. Following a strong rise of nearly 35 per cent in the number of self-employed people during the 1991–1997 period, there has been a stagnant growth pattern in the number of self-employed people during 1997–2002 (Statistics New Zealand 2003, p. 26). The trend in the number of self-employed illustrates how a strong percentage rise in the absolute number can have relatively limited impact in terms of overall labour market trends if the starting point is from a limited

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450.0 400.0 No. of people (’000s)

350.0

Part-timers Self-employed Agency workers

300.0 250.0 200.0 150.0 100.0 50.0

19 87 19 88 19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02

0.0

Years

Figure 10.1 Atypical employment in New Zealand 1987–2002. Source: Statistics NZ 2003, pp. 26–27; RCSA 2000, p. 5. Notes Self-employed cover self-employed without employees (i.e. employers are not included). Agency workers are estimated by doubling the 2000 figures provided by RCSA and calculating other annual figures on the basis of a 5 per cent annual growth.

number. This is also reflected in our interpretation of the rise in the number of agency workers. While there may have been a strong rise in the absolute number of people – and we have no official statistics to support this – the relative labour market impact appears to be relatively minor considering its low starting point in terms of the number of people involved (see Figure 10.1). The trend in the number of self-employed also illustrates that the growth pattern is somewhat volatile (though upward bound over time). This is probably an indication of the sensitivity to employment trends in the particular labour markets where selfemployment is important. A similar kind of sensitivity can be found in agency work, as discussed below.

What do we know about agencies and agency workers? In New Zealand, recruitment and employment agencies and the rise in the number of agency workers have attracted a fair amount of media attention over the last couple of years. Surprisingly, there has been very little academic research of the supposedly major changes in this part of the employment market. For example, a recent study found that there was a ‘lack of literature on temping in New Zealand’ (Alach 2001, p. 34). Recently, there

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have been several studies that looked at the work situation and experiences of agency workers (see below)3 but all of these studies have covered smaller groups of agency workers and can, therefore, not be regarded as representative of these workers. The studies have also come to rather different evaluations. When one starts looking at the available figures and trends, it appears that there are, compared to the media ‘hype’, relatively few agency workers and the growth in their numbers has been steady rather than spectacular. There are, as far as we are aware, no available figures for how many agency workers there are, how they fluctuate over time and how much they work during a year. The Recruitment and Consulting Services Association (RCSA) has estimated that its members would on a normal day ‘employ’ around 8,000 temporary employees and 1,500 contractors and the agencies would have on their books and databases around 32,500 people seeking temporary employment and 7,200 people seeking contract work (RCSA 2000, p. 5). These figures do not include all agency workers since many agencies are not a member of the Association but they do represent the bulk of the major agencies. Still, even if there were more than 19,000 workers in total – twice the figure provided by the Association – this would represent just over one per cent of the workforce.4 Nevertheless, there has undoubtedly been considerable growth in the number of agencies and agency workers from a fairly low base. This has been associated with a growth generally in various forms of atypical employment (Figure 10.1). For example, self-employment has now become a considerable slice of male employment; standing at over 16 per cent in 2002, despite the recent slow growth in self-employment. The growth of agencies and agency workers has been driven to some degree by demand. The radical and comprehensive reforms in the post1984 period created larger markets in the central government sector, the newly corporatised and privatised firms, local government and in the health sector (Boston et al. 1996; Spicer et al. 1996; Easton 1997). The business cycle – especially the major downturns after the 1987 share market crash and after the 1996 Asian crisis – prompted private sector restructuring and further growth in agency work and agencies. On the other hand, new employment legislation and the turmoil following the 11 September 2001 event led to a downturn in the ‘temp’ market during 2000–2002, with the Auckland market for personnel and human resource management staff totally drying up for a while. Likewise, the market for IT specialists has also had significant up and downs, though with a constant market demand for particular skills. However, across the various ‘temp’ markets there appears to have been a steady growth pattern regardless of business cycles. This growth has been fuelled by organisational restructuring, the emphasis on flexibility and lean staffing, as well as the small size of many New Zealand organisations. Agencies have themselves, as described by Peck and Theodore (see

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Chapter 2) in respect of the USA, tried to develop their markets.5 This has taken the form of promoting the advantages of ‘temps’, ‘leased executives’ or contract employment, continuous attempts to create closer relationships with employers (obtaining preferred supplier status) and developing a high quality pool of particular kinds of agency workers. In a personal interview in 1996, the manager of a major agency described how the company would attempt to break into the lucrative health sector. Five years later, this company (now under a different name and ownership) had a significant role in providing nursing ‘temps’. Another confusing feature of the agency scenario is that the employment status and ‘employment patterns’ of New Zealand agency workers appear to be rather fluid. Like the USA,6 agency workers are normally employees of the agency: ‘The temp is legally employed by the agency, which invoices the client organisation for the hours she has worked, and pays her wages and other associated benefits7 as agreed’ (Alach and Inkson 2003, p. 6). However, the Recruitment and Consulting Services Association makes a distinction between temporary employees and contractors: a worker who is either an independent contractor hired out by the member organisation to a client or an employee of the member placed on assignment with a client. The status of Temporary or Independent Contract worker is always one selected by the worker and usually follows the type of status they have just previously experienced and anticipate in the foreseeable future. (RCSA 2000, p. 4) This is why the Association mentions two different types of workers – on any single day, the Association has 8,000 temporary employees employed and 1,500 contractors working on a contract. Additionally, agency workers can be self-employed or an employee at other times when they are not ‘working’ for an agency. It is quite normal that they shift between these types of employment status over time. Although some agency workers tend to stick to a particular agency (and agencies try to encourage that), it is also a well-known practice to register with several agencies. This is often the temp’s attempt to secure continuous and lucrative employment as it is a key understanding that on-going employment is not promised by the agency and the agency has the right to curtail any assignments (Alach 2001; Alach and Inkson 2002). The lack of obligation to provide on-going employment has often led to concerns over exploitations and insecurity of agency workers. This has some foundation since the agency workers are often not entitled to certain employment benefits (for example, paid parental leave demands a certain level and length of employment with a particular employer) and they will not benefit from the recent expansion of legislative support for

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collective bargaining (Deeks and Rasmussen 2002). In fact, their employability is often increased for exactly this reason as employers try to circumvent the costs associated with standard employment. A strong bifurcation among agency workers and generally among self-employed has also been found (Department of Labour 1999, p. 22). Besides the high-paid, sought after ‘leased executive’, specialist or temp, there is a low-paid, continuously job changing, highly stressful side to agency work (Rasmussen et al. 1996; Alach and Inkson 2003). In the latter case, the question arises whether agency work is voluntary or involuntary. The whole question of whether people are ‘pulled or pushed’ into selfemployment and/or agency work is a rather vexed one, with the various ‘pull and push factors’ impacting differently on individuals (Bururu et al. 1998; Firkin 2003; Perera 2003). As discussed by Rasmussen et al. (1996), involuntary agency work can become voluntary over time as the individual changes her or his perception. However, it is necessary not to paint too negative an image of agencies and agency workers. Recent research has found that many agency workers are often quite satisfied with their status (Alach 2001; Casey and Alach 2002). The temporariness can have advantages, dependent on the family situation and perception of the agency workers. Also, some agencies are setting high standards in their employment practices and it is noticeable that there have seldom been employment court cases involving agencies. In fact, many ‘temps’ prefer to deal with agencies because these take care of ‘all the hassles’ associated with employment. While anecdotal evidence has unveiled a few examples of substandard employment practices, this involved only smaller, ‘fringe’ agencies. Again, it is necessary to lament the lack of comprehensive research. There is limited knowledge about how many agencies exist and how they operate. The Recruitment Services and Consulting Association has estimated that there are at least 1,200 companies involved in recruitment, personnel and temping (RSCA 2000, p. 5). Currently, anyone can set up a recruitment and/or agency business, with no registration or licensing being in place and with no need to provide proof of skills or experience. This ‘wild west’ situation has been debated in the media recently as a result of one recruitment company becoming embroiled in a major political scandal (Rasmussen and McIntosh 2002). In view of the lack of regulation, market forces have reigned supreme with a bifurcation of the market in recent years – a concentration among the major agencies and a growth in niche market agencies and in smaller agencies. For a while, the American company ‘TMP’ gained considerable market presence by buying a number of well-established companies. However, the company – now trading as ‘TMP/Hudson’ – appears to have less dominance in the current market. While many new smaller companies have appeared recently there are still a number of well-established firms. These firms can often trace their roots to long-standing or overseas organisations and they are generally trying to

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profile themselves as high-quality, well-established operations with a pool of well-selected and highly skilled ‘temps’. It has been suggested by many agencies for several years now that they are becoming ‘strategic partners’ with their client companies. This implies that the agencies have a more intimate and long-term relationship with the client companies. Several agencies have advocated these types of relationships but it is unclear to us how well developed these relationships are. We know of several cases in banking, local government, law firms and hospitals where the ‘preferred supplier status’ has gone very far and there are many smaller firms where agencies provide extensive consultative and advisory services (particularly when there is no dedicated human resource management staff). Thus, there has undoubtedly been an increase in the intensity of the agency-company collaboration but this is still an area where there is scope for agency ‘speak’ to meet reality. The current government’s resolve to reduce the public sector use of ‘advisors’, consultants and consultancy services as well as halting or reversing privatisation and corporatisation have clearly diminished some of the more lucrative markets for agencies. This implies that agencies will need to work hard to further develop key areas of ‘strategic partnership’ such as providing advice in strategic management areas and recruit and develop staff who can fit with future growth areas.

Work situations and experiences of agency workers Recently, there has been more research interest in the work situation and experiences of agency workers. This has led to a more complex understanding of agency workers but it has not provided a comprehensive or conclusive picture. There are different interpretations or evaluations of the work situation and experiences. For example, two recent studies of ‘temps’ have arrived at rather different evaluations. While Hardy (2000) found that most ‘temps’ were dissatisfied with several aspects of their work situation and many would have preferred a permanent job, Alach (2001) and Alach and Inkson (2003) found that ‘temping’ was the preferred choice and there were several positive aspects to ‘temping’ (see Table 10.1). Likewise, two previous studies of the higher end of the agency market – so-called ‘executive leasing’ – also came to rather different evaluations. One evaluation, based on interviews of ‘leased executives’ from (at that time) New Zealand’s largest agency in the ‘leased executive’ area, painted a rather positive picture of the agency workers’ work situation and experiences (Inkson et al. 2001). It was suggested that the interviewed ‘leased executive’ could be a prototype for career patterns in the twenty-first century; an understandable interpretation as the authors had written about ‘boundaryless careers’ (Arthur et al. 1999; Inkson and Arthur 2001). The other evaluation, based on answers from respondents working for several

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Table 10.1 Agency workers: evaluations of temporary work General findings

Downsides

Preferred not to have a permanent job Saw temporary work as less risky than permanent jobs Temping is a good for self-development Temps continued temping even in difficult market conditions Temps do not feel socially isolated Employer prejudice can make longterm temping a bad career choice

Job insecurity and quality Performance pressures Pay levels have been stagnant Problems dealing with the agency Agency looks more after client company Limited progression and seniority gains

Source: based on Alach and Inkson 2003.

agencies, came to a less positive picture (Snelders 1997). This study found that the uneven power balance between agency and agency workers was frequently mentioned, there were major concerns about the uncertainty of hours and the periodically very long working hours, there was a lack of training support and opportunities, long-term career development was a concern and some respondents were worried about income insecurity and obtaining sufficient pay levels long term. There is no doubt that the methods and interpretations of researchers often play a determining role in this variety of evaluations. It is a particular problem that the research basis of each research project is often very limited – less than 50 participants – and there are often selection biases associated with ‘snowballing’ techniques and agencies selecting candidates for interview. However, there are also major difficulties in evaluating the work situation and experiences of agency workers: agency workers can evaluate similar work situations and experiences very differently, their evaluations may change dramatically over time as their situation or the ‘temp’ market change, and the evaluations are often influenced by their position in the ‘temp’ market and their dealings with particular agencies. Likewise, our analyses of ‘entrepreneurial workers’ have found that there were quite a variety of experiences and most workers mentioned both advantages and disadvantages (Deeks and Rasmussen 2002; Rasmussen and Deeks 1998). As indicated by Table 10.2, it is possible both to celebrate the job flexibility, the lack of emotional commitment, and the different work environments and variety of work and to lament the job insecurity, income fluctuations and missing the company of colleagues. The recent study by Alach and Inkson (2003) is interesting as they interviewed both agencies and agency workers. They came to rather positive evaluations of agency work, though they also acknowledged a considerable downside to employment conditions and experiences of agency workers (Table 10.1). It is remarkable that the overall positive findings co-exist with the traditional issues of dependency (the power

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Table 10.2 Attitudes among entrepreneurial workers Advantages

Disadvantages

Challenging and exciting Provides flexibility and independence More choice re: when to take time off Control over my life Empowering I feel good about what I can do I am proud of my work I like the variety of work Family life is easier Good for the children Positive role model for my children

Insecurity Income fluctuations Contract negotiations are difficult Problems with Inland Revenue It is stressful I never really stop working Difficult to keep up with new technology Bookkeeping can be a problem Treated as an outsider Miss the company of a team Holidays and sickness are unpaid

Source: Rasmussen et al. 1996.

balance is clearly in favour of the agencies), job and income insecurity, and lack of career progression. Surprisingly, some of the ‘temps’ were not considering other types of employment when they were faced with long spells of unemployment when the temp market declined in 2001–2002. ‘Despite this decline, which had caused some participants periods of weeks or even months without employment, very few participants were actively looking for permanent work’ (Alach and Inkson 2003, p. 5). Many of the respondents were also aware that pay levels had stagnated for some time and that the previous pay premium over permanent workers – often touted as a compensation for income fluctuations and lack of benefits – had all but disappeared for many ‘temps’. The New Zealand debate has clearly benefited from more analysis of agency work and there are several new findings and angles on agency work. At the same time, there are many puzzling findings and a need for more theoretical discussions. We will in the following point to some of our ‘puzzles’ and theoretical concerns but there are undoubtedly many more. One can only wonder why people continue to seek agency work when they are faced with considerable income insecurity and a disappearing pay premium. Part of the explanation may be found in the very high turnover rates among agency workers; many people see this as a temporary existence and leave in adverse labour market conditions. It is probably not an option for many people to have long spells of no or little income. It is also interesting how little employment benefits have featured in the debate. A particular issue is the question of pension entitlement. Considering that the aging population and pension entitlements have attracted considerable media attention, one cannot help noticing that this is absent in the debate of agency workers. How are these people going to fare in old age and what should the reaction be if significant groups of workers have no pension entitlements?

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While Alach (2001) and Alach and Inkson (2003) can rightly point out that the academic debates have painted too negative a picture of agency work and a more positive interpretation is possible it is problematic that their literature review is mainly based on English and American analyses. It is well known that people in atypical employment in these labour markets often have substandard prospects and outcomes (Tilly 1996; Felstead and Jewson 1999; Fraser 2001). As shown in Chapter 5 of this volume, there are different protection mechanisms in the Danish and Dutch labour markets and this leads to different prospects and outcomes. Thus, it is important to have attention to context and specificity as situational factors and norms vary between and across labour markets. In order to understand the variation of norms and choices, it is also necessary to draw on a wider range of theories and labour market analyses. While new career theory and gender research have opened for new interpretations, there is ample scope for further exploration and discussions. For example, why is it that preference theory has been used in research on part-time work (e.g. Hakim 1995, 2000) but it has yet to feature prominently in New Zealand research on agency work? The use of these kinds of theories may explain why some people make a very short-term choice (and what may seem an ‘irrational’ choice) in seeking agency work. It also opens for debates about the centrality of work in people’s lives and how agency work can be a way of balancing conflicting demands and interests.

Conclusion The extensive reforms of the New Zealand ‘experiment’ have facilitated an extension of atypical employment pattern. However, despite a growth in other types of atypical employment, agency work appears to be relatively limited. This evaluation is based on an estimate since there are no official statistics regarding the number of agency workers, their demographic profile, how much they work and the variety of their employment conditions. There is clearly a need to develop comprehensive statistics in order to establish a clear picture of the short- and long-term outcomes associated with agency work. In light of the relatively low level of agency work, it could be asked why agency work often features in media reports. This can partly be associated with the marked increase in certain sectors – for example, among agency nurses in the health sector – and partly with agencies ‘feeding’ information to media reports as a way of promoting their services in the media. Additionally, agency workers are also interesting since they may be regarded as a new ‘prototype’ of worker. These workers are often involved in interesting – but difficult to research – shifts across employment status, job experiences and attitudes to work. Thus, they can provide new insights about how to deal with a fluid labour market. The continuous tension between flexibility and protection makes it

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necessary to incorporate a public policy dimension in the debate. There is a surprising lack of regulation surrounding agencies and agency work in New Zealand. This implies that there are several unanswered public policy issues associated with agency work. For example, what is the ‘proper’ level of public regulation of agencies and agency work and how can efficient, low cost regulations be implemented and policed? In light of the discussion of the ‘knowledge society’, it is also important to discuss how vocational education and training can be enhanced and whether there are certain mechanisms and training systems that are better than others? The commercial and academic interest in agency work has so far not been matched by a similar interest in the public policy dimension. Finally, it is important to see agency work in both a wider theoretical and contextual perspective and provide more specificity about agency work. The wider theoretical and contextual perspective is necessary because there is considerable fluidity across countries, local labour markets, industries, occupations and individual people. The impact of context creates a variety of trends which raises a number of questions about people’s choices and the consequences of these choices. It also raises issues about so-called work-life issues and what the role of nonwork factors is in relationship to choices about work and working time. Thus, the complexity of the interplay between situational factors and individual choices needs to be further explored through wider perspectives and more sensitivity towards individual circumstances and choices.

Notes 1 The concept of good faith bargaining and behaviour has, inter alia, been dealt with in two issues of the New Zealand Journal of Industrial Relations (see 24(2) and 28(2)). There has been a surprising lack of legal precedent in the area of good faith bargaining (see Hughes 2004). This is partly because negotiators on both sides have been reluctant to be embroiled in lengthy court battles and have opted for informal understandings instead (Treanor and Rasmussen 2003). 2 The Labour government has implemented several projects: an evaluation of process and outcomes under the Employment Relations Act, and a future of work project (see Department of Labour 2003) including a research report on precarious work. 3 The reader should also consult the Labour Market Dynamics Research Programme at Massey University as we draw on their research for this chapter (see Massey University 2003). 4 As an illustration, this represents a proportion of the workforce that accounts for considerably less than men in part-time employment. 5 Several of the major New Zealand agencies have either overseas owners or links (collaboration) with overseas agencies. 6 Peck and Theodore (in Chapter 2 of this volume) clearly see the employee status as a way of circumventing employment relations. However, this would be enhanced if agency workers shift into self-employment status (often called independent contractors), as self-employed workers are explicitly placed outside New Zealand employment law and employee entitlements (Deeks and Rasmussen 2002). 7 Special leave, sick pay, holiday pay etc.

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Hardy, D. 2000, ‘A preliminary study of temporary employees in New Zealand’, Research Report, Massey University, Palmerston North. Holt, J. 1986, Compulsory Arbitration in New Zealand – the First Forty Years. Auckland University Press, Auckland. Hughes, J. 2004, ‘Good faith bargaining under the Employment Relations Act’, in E. Rasmussen (ed.), Employment Relationships: New Zealand Employment Relations Reforms, Auckland University Press, Auckland (forthcoming). Inkson, K. and Arthur, M.B. 2001, ‘How to be a successful career capitalist’, Organizational Dynamics, 30(1):48–61. Inkson, K., Heising, A. and Rousseau, D. 2001, ‘The interim manager: prototype of the 21st-century worker?’, Human Relations, 54(3):259–284. Kelsey, J. 1997, The New Zealand Experiment: A World Model for Structural Adjustment? Auckland University Press, Auckland. Massey University. 2003, ‘Labour Market Dynamics Research Programme’, Massey University, Albany. www.lmd.massey.ac.nz. (Accessed 16 September 2003). McLaughlin, C. 2000, ‘ “Mutually beneficial agreements” in the retail sector?’, New Zealand Journal of Industrial Relations, 25(1):1–17. Perera, H. 2003, ‘Non-standard work in the accounting profession in New Zealand: some preliminary evidence’, Research Report, Labour Market Dynamics Research Programme, Massey University, Auckland. Rasmussen, E. (ed.). 2004, Employment Relationships: New Zealand Employment Relations Reforms. Auckland University Press, Auckland (forthcoming). Rasmussen, E. and Boxall, P. 1995, ‘Workforce governance’, in P. Boxall (ed.), The Challenge of Human Resource Management. Longman Paul, Auckland. Rasmussen, E. and Deeks, J. 1998, ‘Entreprenuerial workers – taking the rough with the smooth’, in J. Lind (ed.), Denmark and Down Under. LEO, Aalborg: 145–162. Rasmussen, E. and Lamm, F. 2000, ‘New Zealand employment relations’, in G.J. Bamber, F. Park, C. Lee, P. K. Ross and K. Broadbent (eds), Employment Relations in the Asia-Pacific: Changing Approaches. Allen and Unwin, Sydney: 46–63. Rasmussen, E. and Lind, J. 2003, ‘Productive employment relationships: European experiences’, New Zealand Journal of Industrial Relations, 28(2):158–169. Rasmussen, E. and McIntosh, I. 2002, ‘Chronicle’, New Zealand Journal of Industrial Relations, 27(1):135–145. Rasmussen, E., Deeks, J. and Street, M. 1996, ‘The entrepreneurial worker: changes to work and contractual relationships’, in J. Gibson (ed.), Accord or Discord? University of Waikato, Hamilton: 335–356. Rasmussen, E., Lind, J. and Visser, J. 2003, ‘Flexibility meets national norms and regulations: part-time work in New Zealand, Denmark and the Netherlands’, Paper, IIRA World Congress, Berlin, Germany, 8–12 September 2003, www.fu-berlin.de/iira2003/papers/track_2/Plenary_Track_2_Rasmussen.pdf. Recruitment and Consulting Services Association (RSCA). 2000, Submission on the Employment Relations Bill. Wellington, 3 May 2000. Snelders, B. 1997, ‘Executive leasing: work and career in times of change’, M.Com Thesis, The University of Auckland, Auckland. Spicer, B., Emanuel, D. and Powell, M. 1996, Transforming Government Enterprises. The Centre for Independent Studies, Melbourne.

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Index

ABS see Australian Bureau of Statistics ACIRRT see Australian Centre for Industrial Relations Research and Training ACSESS (Association of Canadian Search, Employment and Staffing Services) 94 ACTU see Australian Council of Trade Unions Adecco 4, 56–7, 63, 131, 138, 146, 148, 161 n2 age 9t, 40t, 43–4, 58, 67, 99, 119 agency work sectors 3, 7–8, 9t; Australia 137, 161 n1; Austria 40t; Belgium 40t; Canada 93–4, 96–7, 101, 101t; Denmark 40t, 81, 84; EU 39, 40, 40t; Finland 40t; France 40t; Germany 40t; Greece 43; Ireland 39, 40t; Italy 40t; Japan 115, 116, 119, 120t, 124; Luxembourg 40t; Netherlands 40t, 78, 78t, 79; New Zealand 164, 174; Portugal 40t; Spain 40t; Sweden 40t; UK 39, 40t, 60, 61, 62; US 26, 28, 29–30, 31, 34 AIG (Australian Industry Group) 147 Akyeampong, E.B. 104 Alach, P. 167, 169, 171, 172, 172t, 173, 174 AMWU see Australian Manufacturing Workers’ Union Andries, F. 41 Appelbaum, E. 2 Arthur, M. 171 Ashton, D. 41 Association of Canadian Search, Employment and Staffing Services (ACSESS) 94 Association of Danish Employers (DA) 84

Association of Temping Agencies in Denmark (FVD) 84 Atkinson, J. 72 Australia: Adecco 131, 138, 146, 148, 161 n2; advantages for user firms 138–41; agency work sectors 137, 161 n1; Brunel Energy 159; Buswood Catering and Entertainment 159–60; case studies 130; casual employees 133–4, 135, 136, 141, 147; contracts 135, 138, 141, 158–9; courts and tribunals 157–60, 163; ‘dependent contractors’ 133, 135; Drake Personnel 145, 160; employer motivations for labour hire 150–4, 152t; employment brokers 129–30; employment status 13, 157–9, 160, 161; flexibility 139, 151, 153, 154; forms of employment 131–6, 135t; fringe benefits 9t; government programs 10; growth of temporary agency work 131–2, 150; Hays Metier 145; ‘internal contracting’ 142; Kelly Services 145; labour hire (see temporary agency work); Manpower 131, 132, 138, 146; MPM Personnel 148; NSW labour hire task force 147–8, 149, 151–2, 153, 155–7, 162 n6; occupational health and safety (OH&S) 147, 156; Odco 134, 146, 158; Options Consulting Group 159; outsourcing 152–3, 152t; Patrick Group 134, 154, 162 n5; pay 147–8, 150; privatisation 10; problems with labour hire 146–50, 161; ‘pure’ labour hire industry 146; recruitment industry 145; regulation of labour hire 12, 13, 13t, 47t, 130, 132–4, 154, 155–7, 160, 161, 162 n6; seasonality 137;

180

Index

Belgium 7, 9t, 39t, 40t, 47t Bertola, G. 44 Boeri, T. 44 Boockmann, B. 44 Bretherton, T. 130, 131 British Telecom 61, 64 Bronstein, A. 136 Buchanan, J. 130, 131, 137 Burgess, J. 5, 6, 44, 48 business cycle: EU 44, 76; New Zealand 168; US 27–9, 30t, 31, 32, 33f, 34, 35

fringe benefits 9t; governmental influence 105–6; growth of temporary employment 7, 95–6, 97, 97t, 102–3, 107–8; job security 100, 101; multiple jobs 103; pay 100; regional differences 98, 98t, 99t; regulation 13, 13t, 105–6; seasonality 91–2, 96, 98t, 99t, 103; temporary employment 91, 92, 93; temporary help service (THS) agencies 93–5, 95t; theoretical framework 92–3; trade unions 100, 103–4, 105, 106; unemployment 96; working conditions 99–102, 106–7, 107t Canadian Economic Observer 94 career development 6, 21 case studies: Australia 130; Denmark 85–6; New Zealand 168, 171–4, 172t; UK 65–8 Cazes, S. 44 CBS (Centraal Bureau Voor de Statistik) 78t Chartered Institute of Personnel and Development 57 Chun, B. 98t, 101 CIETT see International Confederation of Temporary Work Businesses clandestine activity 3 Clerical and Administrative Employees in Temporary Employment Services (State) Award 149 collective bargaining: Denmark 80, 84, 85, 86–7; Netherlands 77, 87; New Zealand 170; see also trade unions Communication Workers Union 63 Confederation of British Industry 65 Connell, J. 5, 6, 44, 48 contracts: Australia 135, 138, 141, 158–9; Canada 7; Denmark 47t, 81, 82; EU 37, 46, 47t, 48; France 7, 47t; Ireland 46, 47, 47t; Japan 113, 117, 121; Netherlands 47t, 76, 78t; UK 46–7, 47t, 58–9, 67 costs 151–2, 153, 154

call centres 61, 64 Canada 97; agency work 91, 92; agency work sectors 93–4, 96–7, 101, 101t; demographic differences 98–9; dual labour market theory 92, 104; environment factors 102–3; extent of temporary employment 91–2; fixedterm contracts 7; flexibility 102;

DA (Association of Danish Employers) 84 Danish Commerce and Services Association (DH&S) 84 Danmarks Statistik 80t, 83 De Grip, A. et al. 79 De Ruyter, A. 50 Deeks, J. 170, 172, 173t

Australia continued self-employment 132–3, 134, 136; Skilled Engineering 131, 132, 138, 146; TAFE 158–9; temporary agency employees 133, 134–5, 135t; temporary agency work 129, 130–2, 137, 145, 155, 160–1, 161 n1; temporary work agencies 129, 136–8, 146; terminology 129, 145; trade unions 132, 149; traditional agency employment industry 145, 161 n1; training 148–9, 155–6, 157; Tripac International 154, 161 n4; Troubleshooters Available 134, 146; WorkCover 156, 159 Australian Bureau of Statistics (ABS) 134–5, 135t, 142 n2, 150 Australian Business Limited 152, 152t Australian Centre for Industrial Relations Research and Training (ACIRRT) 130, 137, 152t Australian Council of Trade Unions (ACTU) 132, 147 Australian Industrial Relations Commission 159 Australian Industry Group (AIG) 147 Australian Labor Party 162 n6 Australian Manufacturing Workers’ Union (AMWU) 149, 155 Australian Workplace Industrial Relations Survey (AWIRS) 131 Austria 9t, 39t, 40t, 47t

Index 181 Denmark: agency work sectors 40t, 81, 84; case studies 85–6; collective bargaining 80, 84, 85, 86–7; contracts 47t, 81, 82; employment patterns 72–3; employment relations 73; extent of agency work 39t, 75t, 79–80, 80, 86; growth of TWAs 10, 39t, 73, 80–2, 80t; holiday legislation 85; IT 84; job security 84; pay 84; pensions 84, 85; redundancy entitlement 83; regulation of TWAs 13, 13t, 47t, 73, 82–5, 86–7; search and recruitment firms 81–2; self-employment 80, 82; social welfare 83; temping agencies 81, 82; temporary agency workers 40t; trade unions 84; training 85; turnover of workers 82; unemployment 83, 83t Department of Industrial Relations (Australia) (DIR) 146, 147, 151, 156 Department of Trade and Industry (DTI) 54, 55, 56, 61–2, 65 DH&S (Danish Commerce and Services Association) 84 DIR see Department of Industrial Relations (Australia) Dixon, Geoff 148 Druker, J. 48 DTI see Department of Trade and Industry (UK) dual labour market theory 92, 104 Dunnewijk, T.W.A. 79 Earl, M. 58 earnings see pay EBA (Enterprise Bargaining Agreement) 148 Economist, The 94 educational attainment 8, 9t, 99 EES (European Employment Strategy) 43 ELFS see European Labour Force Survey Employment Agencies Act 1973 (UK) 56 employment brokers 129–30 Employment Contracts Act 1991 (New Zealand) 165, 166 Employment Protection Laws (EPL) 43–4, 46 Employment Relations Act 1999 (UK) 47, 64 Employment Relations Act 2000 (New Zealand) 165–6, 175 n2

Employment Security Law 1947 (Japan) 115 employment status 12–13; Australia 13, 157–9, 160, 161; EU 12–13, 37, 38, 41; New Zealand 13, 169–70; UK 13, 64; US 13 Enterprise Bargaining Agreement (EBA) 148 EPL see Employment Protection Laws Erhvervsbladet 84 establishment size 9t European Employment Strategy (EES) 43 European Foundation for the Improvement of Living and Working Conditions 41 European Labour Force Survey (ELFS) 38, 40 European Union (EU): age 40t, 43–4; agency work sectors 39, 40, 40t; Agency Workers’ Directive 48, 50; business cycle 44, 76; contracts 37, 46, 47t, 48; employee status 12–13, 37, 38, 41; employment benefits 48, 50, 65; extent and growth of TWAs 38–42, 39t, 50–1; flexibility 42–3, 44; foreign workers 40–1; gender 39; illegal immigrants 38, 41; implications of TWA growth 50–1; job security 37–8, 42, 50; low-skill jobs 41, 44; Manpower 38; neo-liberal agenda 43; Randstad 38; reasons for growth 32–46, 45t; regulation of TWAs 11–12, 37, 43, 46–50, 47t, 51; seasonal fluctuations 44, 45t; skill shortages 41; temporary employment 37; temporary work agencies (TWA) 37–8; Temporary Workers’ Directive 48; training 9t, 41; turnover of workers 39, 50; TWAs as bridge to permanent jobs 45–6; unemployment 43, 44–5; workers’ rights 48, 84; youth temporary employment 43–4 European Union on Working Conditions for Temporary Workers 11–12 European Working Time Directive 64 extent of temporary employment 6–7, 10; Australia 129, 136–8, 146; Canada 91–2; Denmark 39t, 75t, 79–80, 80, 86; European Union (EU) 38–42, 39t; Germany 39t, 75t; Japan 113, 115; Netherlands 39t, 74–6, 75t, 86;

182

Index

extent of temporary employment continued New Zealand 164, 174; Spain 39t, 75t; UK 39t, 75t; US 27, 32, 75t Federated Clerks Union of Australia (FCU) 148, 149–50 Felstead, A. 41 FIET (International Federation of Commercial, Clerical, Professional and Technical Employees) 61 Finance Sector Union (FSU) 148, 149 Financial Times 65, 148 Finland 7, 9t, 39t, 40t, 47t flexibility 5–6, 8, 20; Australia 139, 151, 153, 154; Canada 102; EU 42–3, 44; Japan 112, 113t, 122, 126; Netherlands 77; US 27, 35 flexible firm model 72 Forde, C. 46 foreign workers 38, 40–1 France 7, 38, 39t, 40t, 41, 47t, 49 fringe benefits 8, 9t, 48, 50, 57, 59, 65 Fround, J. 8 FSU see Finance Sector Union future research directions 18–20 FVD (Association of Temping Agencies in Denmark) 84 gender 3, 9t, 39, 40t, 62, 98–9, 112, 118, 119, 119t Germany: agency work sectors 40t; business cycle 44; contracts 47t; extent of agency work 39t, 75t; foreign workers 41; growth of temporary employment 7, 10, 39t; regulation of TWAs 11, 47t, 49; seasonal workers 41; temporary workers 9t, 39t, 40t Gonos, G. 138–40 Goudswaard, A. 41 government programs 4–5, 8, 10 Gray, A. 44 Greece 7, 11, 43, 47–8, 47t, 49 Green, F. 41 Grenon, L. 98t, 101 Grimshaw, D. 5, 59, 60 growth of temporary employment 8, 9–11, 19; Australia 131–2, 150; Austria 39t; Belgium 7, 39t; Canada 7, 95–6, 97, 97t, 102–3, 107–8; Denmark 10, 39t, 73, 80–2, 80t; EU 32–46, 39t, 45t, 50–1; Finland 7, 39t;

Germany 7, 10, 39t; Ireland 10, 39t; Italy 7, 10, 39t; Japan 7, 112, 118t; Luxembourg 39t; Netherlands 7, 10, 39t, 56, 74, 76–9, 86; New Zealand 167, 168–9; Portugal 7, 39t; Spain 10, 39t; Sweden 7, 10, 39t; UK 39t, 54–5, 68; US 10, 25–6, 28–9, 30t, 31–2, 33f, 34 Gryst, R. 130 Hagen, T. 44 Hall, R. 130, 131, 135, 150–1 Hardy, D. 171 Hegewisch, A. 38 Heising, A. 171 Hemerijck, A.C. 73 Hotopp, U. 65 IES see Institute for Employment Studies ILO (International Labour Office) 44–5 IMF (International Monetary Fund) 47 immigrants 38, 41, 99 Industrial Conciliation and Arbitration Act 1894 (New Zealand) 165 Inkson, K. 169, 171, 172, 172t, 173, 174 Institute for Employment Studies (IES) 55, 57 international comparisons 1–2, 6–7 International Confederation of Temporary Work Businesses (CIETT) 45, 45t, 48, 74 International Federation of Commercial, Clerical, Professional and Technical Employees (FIET) 61 International Labour Office (ILO) 44–5 International Monetary Fund (IMF) 47 International Revenue Service (IRS) 57 Ireland 10, 39, 39t, 40t, 46, 47, 47t, 49 IT (information technology) 61, 62, 79, 84, 168 Italy: agency work sectors 40t; contracts 47t; growth of temporary employment 7, 10, 39t; regulation of TWAs 47, 47t, 49–50, 56; temporary agency workers 38, 39t, 40t Japan: agency temporary employment 113, 115; agency work sectors 115, 116, 119, 120t, 124; contracting-out 118, 126 n4; contracts 113, 117, 121; deregulation 123–5; dispatched workers 118, 118f, 119t; flexibility of

Index 183 employment 112, 113t, 122, 126; growth of temporary employment 7, 112, 118t; pay 113, 119, 120f, 121, 126, 126 n6; permanent dispatched workers 117, 119, 120t; reasons for temping 122–3, 127 n10; regular employment 113, 113t, 114t; regulation 13, 13t, 123–5; social insurance 118, 121, 126–7 nn7–8; temporary dispatched workers 117, 119, 120t; temporary workers 9t, 112, 113t, 114t; trade unions 122; training 121; unemployment 112, 121, 124, 125; worker-dispatching business 20, 115–18, 121; Worker Dispatching Law 116–17, 124–5, 126 n1, 127 n8, 127 n11, 127 n13; working conditions 119, 121–2, 127 n9 Japan Staffing Services Association (JASSA) 126–7 n7 job security 9t; Canada 100, 101; Denmark 84; EU 37–8, 42, 50; New Zealand 169–70; UK 37–8, 42 Johat, S. 8 Jyllands-Posten 82 Kalleberg, A.L. 35 Kelly 4, 25, 26, 27, 145 Kelly, D. 130 KMPG study 138 Kochan, Tom xvii Korea 7 Korpi, T. 42–3 Kosei-Rodosho 113, 115, 118, 118f, 119t, 120t, 121, 122, 125, 126 n4, 127 nn9–10 Krahn, H. 97t Laabs, J. 5 Labour Force Survey (LFS) 60, 62, 97t, 98t, 99t Labour Hire Task Force 130, 131 Levin, H. 42–3 Lewis, W.M. 31 Luxembourg 7, 38, 39t, 40t McClure, L. 5 male breadwinner model 3 Manpower 4, 56; Australia 131, 132, 138, 146; EU 38; France 38; UK 38, 56–7, 61, 63; US 25, 26, 27, 38 measurement of temporary employment 6–7 Mexico 7, 9t

Michie, J. 5, 6 Michon, F. 131 Mintel 56, 58 Molloy, N.H. 31 Moralis, M. 101 Netherlands: agency work sectors 40t, 78, 78t, 79; business cycle 76; collective bargaining 77, 87; contracts 47t, 76, 78t; employment patterns 72–3; employment relations 73; extent of agency work 39t, 74–6, 75t, 86; flexibility 77; growth of temporary employment 7, 10, 39t, 56, 74, 76–9, 86; illegal immigrants 41; pay 78–9; Randstad 38, 74; reasons for growth 76–9, 86; regulation of TWAs 13, 13t, 47t, 51, 73, 76; self-employment 75; self-regulation 76; social security 75, 76, 77; START 76; students 78; temporary agency workers 9t, 38, 39t, 40, 40t, 73; unemployment 77 New Zealand: agency work 164, 174; atypical employment 166, 167f, 174, 175 n2; business cycle 168; case studies 168, 171–4, 172t; collective bargaining 170; employment agencies 167–71, 172, 175 n5; employment relations reforms 164, 165–7; employment status 13, 169–70; entrepreneurial workers 172, 173t; executive leasing 171; good faith bargaining 166, 175 n1; growth of agency work 167, 168–9; independent contractors 169; IT specialists 168; job security 169–70; pay 173; pension entitlement 173; regulation 13, 13t, 164–5, 170, 175; self-employment 166–7, 167f, 168, 175 n6; temporary employees 169; TMP/Hudson 170; trade unions 165; turnover (labour) 173; unemployment 164, 166 New Zealand Journal of Industrial Relations 175 n1 non-standard work: definition 2 NSW labour hire task force 147–8, 149, 151–2, 153, 155–7, 162 n6 occupation 9t Organisation for Economic Cooperation and Development (OECD) 1, 6, 7, 8, 9t, 40–1, 42, 43, 44, 47, 47t, 72, 82

184

Index

organisational effectiveness 6 Organisational Justice theory 50 Parker, R.E. 31 pay 2, 6, 8, 9t; Australia 147–8, 150; Canada 100; Denmark 84; Japan 113, 119, 120f, 121, 126, 126 n6; Netherlands 78–9; New Zealand 173; UK 44, 63–4, 66, 67 Peck, J. 136 pensions 2, 20, 84, 85, 173 People Management 57 Portugal 7, 9t, 39t, 40t, 47t preference theory 174 Pringle, J.K. 171 Purcell, J. 55, 58, 59, 61 Purcell, K. 55, 58, 59, 61 Qantas 148 Randstad 4, 38, 74 Rasel, E. 2 Rasmussen, E. 170, 172, 173t Recruitment and Consulting Services Association (RCSA) 146, 147, 149–50, 168, 169, 170 Recruitment and Employment Confederation (REC) 54, 55–6, 65 redundancy entitlement 83 regulation 11–14, 19, 20; Australia 12, 13, 13t, 47t, 130, 132–4, 154, 155–7, 160, 161, 162 n6; Belgium 47t; Canada 13, 13t, 105–6; Denmark 13, 13t, 47t, 73, 82–5, 86–7; EU 11–12, 37, 43, 46–50, 47t, 51; France 47t, 49; Germany 11, 47t, 49; Greece 11, 47–8, 47t, 49; Ireland 47t, 49; Italy 47, 47t, 49–50, 56; Japan 13, 13t, 123–5; Netherlands 13, 13t, 47t, 51, 73, 76; New Zealand 13, 13t, 164–5, 170, 175; Portugal 47t; Spain 47, 47t, 49, 50; Sweden 47, 47t; UK 13, 13t, 47t, 64–5; US 11, 13, 13t, 25, 26, 34 Rengo 123 retirement incomes see pensions rights and obligations xvii, 2, 48, 67–8, 69, 84, 138–9 risk management 46, 151 Roe, Ray 146 Rousseau, D. 171 Rubery, J. 5, 59, 60 seasonal employment 8; Australia 137;

Canada 91–2, 96, 98t, 99t, 103; EU 44, 45t; France 41; Germany 41; Korea 7; Mexico 7 Segal, L.M. 31, 32, 34 Seimei Hoken Senta 120f self-employment: Australia 132–3, 134, 136; Denmark 80, 82; Netherlands 75; New Zealand 166–7, 167f, 168, 175 n6 Sheehan-Quinn, M. 5, 6 Silber, J.M. 28, 31 Single European Market 56 Sly, F. 60, 62 Smith, N. 83 Snelders, B. 172 social contract xvii social security 20–1, 75; Denmark 83; Japan 118, 121, 126–7 nn7–8; Netherlands 75, 76, 77; see also pensions Somusho Tokei Kyoku 113t Spain: agency work sectors 40t; contracts 47t; extent of agency work 39t, 75t; growth of TWAs 10, 39t; regulation of TWAs 47, 47t, 49, 50; temporary agency workers 9t, 39, 39t, 40t; temporary employment 7, 43; temporary workers 9t; turnover of workers 39; unemployment 43 standard employment model 2–3, 4t Statistics New Zealand 167f Stewart, A. 160, 161 Stillwell, D. 60, 62 Storrie, D. 10, 12, 39t, 40t, 45 Street, M. 170, 172, 173t students 58, 66, 78 Sullivan, D.G. 32, 34 Sweden 7, 10, 39t, 40t, 47, 47t taxation 2, 20 temporary agency work: context 1–5 temporary employment 91; as bridge to permanent jobs 18, 45–6, 58, 62; characteristics 3, 4t, 7–8, 9t temporary work agencies: industry characteristics 10; services 10; specialisation 8 temporary workers: characteristics 8, 9t, 40t; limits to use 19 terminology 129, 130; Australia 129, 145; Canada 91, 92; Denmark 81–2; Japan 117 TGWU (Transport and General Workers Union) 63

Index 185 Theodore, N. 136 Trade Union Congress (TUC) 57, 64, 69 trade unions 2, 8, 19; Australia 132, 149; Canada 100, 103–4, 105, 106; Denmark 84; Japan 122; New Zealand 165; UK 56–7, 63–4, 69; US 63; see also collective bargaining training 2, 6, 8, 20; Australia 148–9, 155–6, 157; Denmark 85; EU 9t, 41; Japan 121; UK 57, 62 Transport and General Workers Union (TGWU) 63 TUC see Trade Union Congress Turkey 9t turnover (agency industry) 54, 118 turnover (labour) 7, 11, 39, 50, 82, 173 Underhill, E. 130 unemployment: Canada 96; Denmark 83, 83t; EU 43, 44–5; Japan 112, 121, 124, 125; Netherlands 77; New Zealand 164, 166; Spain 43; UK 57, 58, 68 Unifi 63, 69 n1 United Kingdom (UK): Adecco 56–7, 63; agency work sectors 39, 40t, 42, 60, 61, 62; call centres 61, 64; commercial agencies and labour market 57–8; contracts 46–7, 47t, 58–9, 67; employers’ use of agency labour 59–60; employment agencies 56–7; employment status 13, 64; extent of agency work 39t, 75t; foreign workers 41; fringe benefits 57, 59; future regulation 64–5; growth of TWAs 39t, 54–5, 68; human resource management 57; job insecurity 37–8, 42; Manpower 38, 56–7, 61, 63; office temps (case study) 65–8; pay 44, 63–4, 66, 67; privatisation 42; reasons for use of temporary workers 44; regulation of TWAs 13, 13t, 47t, 64–5; repeat assignments 46; research

methodology 55–6; students 58, 66; technological change 61; temporary agency workers 38, 39t, 40t, 54, 61–2; trade unions 56–7, 63–4, 69; training 57, 62; turnover of workers 50; unemployment 57, 58, 68; workers’ rights 48, 67–8, 69; working conditions 42 United States (US): agency work sectors 26, 28, 29–30, 31, 34; Bureau of Labor Statistics 8–9, 33f; business cycle 27–9, 30t, 31, 32, 33f, 34, 35; business model 26, 32; decline of temporary employment 7; employment regulation 11, 13, 13t, 25, 26, 34; employment status 13; extent of agency work 27, 32, 75t; flexibility 27, 35; fringe benefits 9t; growth of TSI 10, 25–6, 28–9, 30t, 31–2, 33f, 34; Kelly 25, 26, 27; Manpower 25, 26, 27, 38; marketbuilding 31–2; payrolls 27, 28; professional markets 29, 31; publicsector markets 30, 31; recessions 29, 34; short-term employees 28, 29, 30–1, 30t; temporary staffing industry (TSI) 24–5, 138–40; trade unions 63 Van Bolhuis, M. 77 Visser, J. 73 wages see pay Ward, K. 5, 59, 60 Waring, P. 50 Watson, I. 5, 130 Williams, K. 8 work experience 8 Workplace Employee Relations Survey (WERS) 42, 44, 50, 59, 62 Workplace Express 146, 148, 161 n2 Workplace News 94 Zeytinoglu, I.U. 107