Employers exploit agency work boom

Agency work is soaring, thanks to the huge benefits it affords both agencies and the employers that use them. As ever, it is the workers who are losing out.

The extent of temporary working through employment agencies has rocketed in recent years and shows no sign of stopping. According to market research company KeyNote, the requirement for temporary workers is "insatiable". It says the value of the market for temporary and contract recruitment rose by 74% between 1997 and 2000, and is set to almost double from £17.14 billion in 2000 to more than £32 billion in 2005.

A survey commissioned by the Department of Trade and Industry (DTI) and carried out by the Bostock Marketing Group estimated that 529,000 people were employed by agencies in 1999. While this is still a small proportion of the total workforce (around 24 million), it is increasing rapidly. A KeyNote report, Recruitment agencies (temporary and contract) 2000 market report, shows that the number of workers placed in temporary jobs or in contract positions increased by 46.8% between 1997 and 2000.

According to TUC figures, 18% of temporary workers are now agency workers, compared to just 7% eight years ago. And the Workplace Employee Relations Survey (WERS) 1998 reported that more than a quarter of workplaces (28%) now use agency temporary workers.

The increase is good news for the temporary recruitment industry, as supplying agency workers can be a lucrative business, with agencies typically charging commissions of between 10% and 25% and many making huge profits (see box).

But it can be bad news for unions and workers. Although part of the increase reflects the difficulties experienced by particular sectors in recruiting and retaining groups of workers, in others, permanent workers are being replaced by temporary agency staff with fewer employment rights and worse pay and conditions.

The image of the typical agency worker being an "office temp" is also outdated. Secretarial and clerical workers accounted for only 13.5% of temporary and contract workers in 2000-2001, compared with 29% three years before, when they made up the largest group. Although around 70% of agency workers are women, this percentage has been declining over several years as the clerical and secretarial sector declines in importance.

A survey by the trade association for the private recruitment and staffing agency, Recruitment and Employers Confederation (REC), shows that industrial workers are now the largest group of temporary or contract workers, making up nearly 29% of the total (see chart). And there has been a large increase in the number of professional and managerial temporary and contract workers. These now make up nearly 9% of the total, compared to only 1.4% in 1997-98.

There are a number of reasons for the increasing use of agency workers. The TUC points out that they are no longer used mainly to cover holiday and sickness absences - with only a third of agency workers having worked for their current employer for less than three months.

KeyNote reports: "Outsourcing and downsizing have been responsible for the growth in temporary workers, as has the fast pace of technological and customer change. Most companies now operate with the smallest complement of staff possible, which means that when their markets change suddenly, or when client demand shifts, they may be without the necessary staff. Recruiting temporary workers is a speedy means of filling gaps in staff requirements".

But the TUC detects a more sinister rationale. It has reported a worrying trend for employers in areas like call centres or further education colleges to terminate staff contracts and re-employ people as agency workers on less pay and with fewer rights. Its general secretary, John Monks, said: "Too many businesses are using the lack of protection for agency workers to keep permanent parts of their business going with agency workers on worse terms and conditions".

This is precisely what has been happening in further education. A few years ago a number of further education colleges sacked their part-time workers after a ruling which entitled them to the same rights as full timers. They then rehired the staff through agencies, without the employment rights enjoyed by their permanent colleagues. According to further and higher education union NATFHE, one in three colleges now employ staff via agencies such as Education Lecturing Services and Nord Anglia, and the sector is now the most casualised, after catering.

Last year, a TUC survey, Permanent rights for temporary workers, found that in nearly half of the 196 workplaces surveyed, temps were paid less than permanent workers. In nearly three quarters they could not join pension schemes and in a quarter they did not get sick pay. Many did not receive maternity pay or leave, even though they may have worked as temporary staff for the same employer for many years. And as well as facing substantial job insecurity, they could not join their employer's pension scheme.

Agency working also has safety implications. The Simon Jones Memorial Campaign was set up by the friends and relatives of Simon, a 24-year-old student who was killed on his first day at work as an agency worker at Shoreham docks in 1998. He had been placed by the Personnel Selection agency in a job unloading cargo from a Euromin-owned ship - a dangerous job which he was not qualified to do.

The campaign has been fighting under the slogan "casualisation kills" against the replacement of skilled unionised workforces with cheaper, casual labour. It organised a day of action against casualisation in April this year, with demonstrations outside employment agencies profiting from casual labour, including Personnel Selection.

The European Commission has recently put forward proposals for a directive giving agency workers increased rights and outlawing discrimination in pay and conditions, although it does not contain any entitlement to join the employer's pension scheme. Under current plans the directive would come into effect after an agency worker has been continuously employed at a workplace for six weeks, and should provide some disincentive to casualisation.

The CBI employers' organisation is lobbying for the proposals to be watered down, and wants temps to have to work for at least 18 months before being entitled to equal rights with their permanent colleagues. And it appears that they are pushing against an open door. Patricia Hewitt, the trade and industry secretary, recently told the European Parliament that the government would oppose the new legislation, arguing that agency workers should only have equal rights after being placed at a firm for at least 12 months.

Even if the legislation was to go through as currently proposed, it will not help the situation of the most vulnerable agency workers, like transport union RMT member Paula Mason and her colleagues. Mason has been leading a campaign, with the help of Portsmouth MP, Syd Rapson, to highlight the plight of agency workers in the shipping industry.

She works on a P&O Portsmouth ferry where the vast majority - around 80% of the 60 crew members - are now agency staff, employed by Sealife Crewing. This situation has arisen because P&O Ferries Portsmouth have only employed agency workers for the last 10 years or so. Although many of the agency workers have worked for the company for several years, they work a 90-hour week from Wednesday to Wednesday, and are then laid off for a week, so in legal terms they would not meet the six-week qualification period.

Instead of being paid an annual wage of £18,500 as the permanent P&O workers are, they are paid just £9,500 for doing exactly the same job for exactly the same number of hours. They have no rights to sick pay, paid holidays, pensions or maternity pay.

Paula Mason told Labour Research, "We call ourselves the sea elves - we're just like the house elves in the Harry Potter stories who keep the school in order but don't exist. In terms of our rights at work, we don't exist either". She is concerned that any employer could do the same as P&O Portsmouth. "They've seen a loophole in the law and they've exploited it to drive down pay and conditions", she said.

Finances of the top 10 employment agencies

Company No. of workers on the books Turnover (£000) Pre-tax profit/(loss)(£000) Year end

Adecco 100,000 528,893 275 12.00

BNA1 100,000 400,965 15,511 12.01

Manpower 45,000 817,605 7,513 12.00

Hays2 40,000 891,498 124,747 6.01

The Corporate Services Group3 31,000 444,369 2,748 12.01

Reed Executive 22,000 406,995 14,233 12.01

Pertemps Group 20,000 287,662 1,200 12.00

Brook Street Bureau 11,000 150,507 15,404 12.00

Kelly Services (UK) 10,000 223,747 (4,448) 12.00

Select Appointments 10,000 130,709 40,632 12.00

Top 10 equals largest by number of workers on their books. Source: Recruitment International magazine May 2000, Recruitment agencies (temporary and contract 2000 market report, KeyNote. Financial information: company accounts. 1 British Nursing Co-operations Group; financial information relates to Nestor Healthcare Group. 2 Financial information relates to Hays Personnel Services. 3 Financial information relates to UK operations

The law as it stands

The activities of employment agencies are controlled by the Employment Agencies Act 1973 and regulations made under that Act which set minimum standards of conduct.

Employment agencies are prohibited from charging fees to workers for finding or seeking to find them work, with the exception of finding jobs for performers and certain other workers in the entertainment field, and photographic and fashion models.

An agency employing workers for temporary work must give written terms, and must pay the worker, even if it has not been paid. An agency which collects pay from the employer must pass this on to the worker within 10 days.

An agency should also check whether workers have any qualifications required by law, and should obtain enough information to show that a worker is suitable for the job. The maximum penalty for contravening the Act and regulations is £5,000.

The government proposed an overhaul of this legislation, to:

* increase clarity;

* promote labour market flexibility;

* provide proper protection for clients and the general public;

* curb payment abuses; and

* safeguard clients' money.

However, this has been put on hold as the European Commission has put forward proposals for a directive that would provide increased rights for agency workers after they have worked at a particular workplace for six weeks. The government has made it clear that it will be looking at a period of 12 months or more before the provisions would apply.

Agency workers are excluded from the proposed new regulations on temporary workers, which are due to come into effect in October this year.

The jobs they do

The occupational profile of temporary/contract workers:

Industrial 28.9%

Secretarial/clerical 13.5%

Technical/engineering 10.6%

Professional/managerial 8.8%

Computing/IT 7.7%

Nursing/medical 7%

Hotel/catering 5.7%

Drivers 3.7%

Education 1.1%

Financial 1%

Other 12%

Source: REC (formerly the Federation of Recruitment and Employment Services)