Temp Workers Squeezed Most in Tightening Job Market

Akito Yoshikane

Temp workers arrive at a mail sorting depot in Bristol, England, on October 27. The Communications Workers Union (CWU) may launch a legal action to stop the Royal Mail Group from using temp workers to clear the backlog of mail caused by a strike action.

Of all workers hurt by the ongoing global financial crisis, temporary workers are the most vulnerable to the downswing, according to a new report.

The latest findings by the International Labour Organization (part of the UN) say temp workers are the first to lose their jobs during the recession, as hiring patterns become more flexible because of the downturn.

The report—“Private employment agencies, temporary agency workers and their contribution to the labour market” — was released early last week, shortly before meetings in Geneva where government officials, employers and workers gathered to promote a UN measure (Convention No. 181) that would strengthen labor regulations and employment safety nets.

It highlights the proliferation of private temp agencies, most of which are concentrated by a handful of corporations, and workers who struggle to navigate tightening job prospects in an unstable economy.

The findings from the report supplement the Convention tenets, adopted in 1997, which outline labor regulation parameters for workers and temporary job placement agencies. It urges legislation to protect minimum wages, workers safety, collective bargaining, in addition to health and social benefits.

Surprisingly, it has only been ratified by 21 of 183 member states. The United States is not a signatory to the Convention, also referred to as the Private Employment Agencies Convention. The new report speculates the low number of signatories may be due to a non-existent marketing campaign,” but nevertheless, citizens have heeded the call to pressure their states.

Governments have come under pressure from a range of social actors to make changes to the benefits and social assistance provided to workers placed through agencies, although reform has been slow and piecemeal where it has occurred at all,” the report said. It also cautions against leaving labor enforcement to private staffing agencies, adding,

…self-regulation, however, must not replace the role of national legislators and law enforcement agencies. Legislation is a means of reconciling the protection of workers’ rights with the interests of the agencies.

The warnings come as temp agencies have steadily grown over the last several decades. As funding for public employment diminished in the 1970s, private temporary agencies rose in its place. The liberalization of the market has attracted many employers to use temp agencies to adjust to a flexible economy. The private employment agency industry boomed especially in the mid-’90s, doubling in size from 1994 – 99 and again from 1999 – 2006, the report said. Agency profits have risen with the rise, reaching $341 billion in 2007.

Beyond profits, the industry is also highly concentrated. Only six markets — U.S. (28 percent), UK (16 percent), Japan (14 percent), France ( 9 percent) and Germany (6 percent) — accounted for 80 percent of total revenue. Of the 20 largest private staff agencies, 11 are in America.

As temp agencies have grown, so have the number of temp workers who tend to be young, female or minorities. Globally, temp employees more than doubled from around 4.5 million in 1997 to 9.5 million in 2007, especially in the manufacturing sector.

But the study shows that U.S. temp workers earn less than the national average. Construction workers, garbage collectors and record clerks, for instance, all had at least a ‑5% wage difference than national average wages, reflecting the overall trend of U.S. temp workers who earned –5.27% less than the average wages in their sector. ILO reports:

The data on average hourly wage rate and divergence from the national average show that wages for agency staff are mostly below the average for the occupation, and considerably so in some cases – for example, for construction and manufacturing labourers. However, owing to the nature of their skills, nurses and computer programmers placed by agencies earn more than the national average.

The global crisis has worsened the work conditions. Though the report says temp agencies took a hit in profits, workers face grim prospects.

In general, the balance of power has moved from the placed workers to the user enterprises. As the number of laid-off temporary agency workers has increased, so the competition for new placements has intensified. With a rise in the number of workers on their books, it is likely that the agencies will intensify their selecting and sorting of workers, with consequences for who fares best when the recession abates.

In an industry where temp agencies serve as intermediaries between workers and employers, the disposable nature of this relationship makes it crucially important to ratify safeguards for workers.

Akito Yoshikane is a freelance writer based in Chicago.
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