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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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