Survey of Non-Regular Employment in Europe and the United States. Report on the United Kingdom

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1 Survey of Non-Regular Employment in Europe and the United States Report on the United Kingdom March 2010 Produced for the Japanese Institute for Labour Policy and Training by Dr Chris Forde Work and Employment Relations Division University of Leeds and Centre for Employee Relations Innovation and Change Dr Gary Slater Department of Development and Economic Studies University of Bradford and Centre for Employee Relations Innovation and Change

2 Contents 1. Introduction Non-regular employment in the UK: the economic and legal context Introduction The labour market context Non-regular employment: definition and regulation Patterns of non-regular work The economic context Patterns of temporary work Part-time working in the UK Self-employment in the UK Accounting for the trends Background to the case studies Introduction The case-study organisations CarCo FoodCo EducationCo Transitions from non-regular to permanent employment Introduction The use of non-regular workers to screen for permanent employment Is non-regular employment voluntary? The frequency of transitions to permanent employment Company requirements for the transition to permanent work Cycling between permanent and non-regular work within companies Equal Treatment of Non-Regular Workers Introduction Non-regular job characteristics Overall quality of non-regular jobs Working Hours Wages Holiday leave and other entitlements Training and skill development Opportunities for progression

3 6.2.7 Union membership Equal treatment with regular employees Employment Stability Introduction How long are single contract periods for non-regular workers? What conditions must non-regular workers satisfy when renewing their contracts? How often can a contract be repeatedly renewed? Employment security regulations for non-regular workers Non-regular Workers and the Economic Crisis Introduction Recession and non-regular workers in the UK Workforce adjustment and recession Innovative changes to adjustment mechanisms Unions and the organisation of non-regular workers Conclusions Key themes On-going debates...62 References...64 Appendix

4 1. Introduction There has been long-standing interest in non-regular employment in the UK, at academic and policy making levels. From concern in the 1980s over whether employers were strategically segmenting their workforces into core and peripheral components, to discussion surrounding rising levels of insecurity in the 1990s, through to current interest in employment regulation, protection and equal treatment of workers, the nature and consequences of non-regular employment have long been debated. Whilst much is now known about the nature of particular non-regular forms of employment in the UK, from large scale surveys and nationally representative sources, there remain important gaps in our knowledge. Furthermore, little is known about the impact of the current economic recession on employers use of non-regular employment in the UK. In this report, we examine the nature, evolution and consequences of non-regular employment in the UK. How are non-regular forms of employment regulated, and how (and why) has regulation shifted over recent years? What trends have we observed in non-regular employment, and how can we account for these trends? Does non-regular employment act as a bridge to more permanent forms of employment, and under what circumstances? How are non-regular workers treated, in legal terms and in practice, compared to full-time permanent employees. What impact has the economic recession had upon the use of, and strategies of employers towards, non-regular workers? Whilst there is considerable debate about the meaning of the term non-regular, our starting point is to define this in contrast to regular employment. In the UK context a regular job is a permanent, fulltime employee job, under contract to a firm. Consequently non-regular captures anything which deviates from this full-time permanent norm. It thus includes temporary, part-time and selfemployed status. In the chapters that follow, we examine non-regular forms of employment in the UK using a range of sources. We draw on large-scale representative survey evidence, particularly from the UK Labour Force Survey (LFS). Alongside this we utilise other survey sources, such as the Working in Britain Survey, the British Household Panel Survey, the Annual Survey of Hours and Earnings and the Workplace Employment Relations Survey. We also draw on ad-hoc survey evidence and from relevant academic, policy and practitioner literature. Importantly, we also draw on evidence from three case studies, conducted specifically for this project. These case studies comprise major employers in the UK from manufacturing and services, and include cases from both the public and private sectors. The case studies include detailed interviews with senior management representatives about their use of the full-range of non-regular employees. In Chapter 2, we look at the economic and legal context surrounding non-regular work in the UK. The chapter begins by looking at debates in the 1980s, 1990s and 2000s surrounding non-regular work. Interest in non-regular forms of work was fuelled by debates over the flexible firm in the 1980s and over levels of insecurity in the 1990s. The chapter then offers definitions of non-regular employment, before looking at the regulation of these forms of work. It is only relatively recently that legislation has been extended to cover some of the particular variants of non-regular employment. However, it remains the case that under UK labour law the traditional presumption towards a permissive hiring regime remains. Non-regular employment in the UK is subject to many fewer restrictions than other European countries. Despite a partial strengthening of employment protection legislation under the New Labour government since 1997, particularly for non-regular workers, the approach, however, 4

5 remains one of minimum standards in a flexible labour market (McCarthy, 1997). There remain important gaps in UK labour law for non-regular workers, which leave such workers in a vulnerable position. Chapter 3 looks at trends in non-regular employment. Temporary employment rose rapidly through the 1990s following recession, but has fluctuated since Agency temporary employment has continued to rise throughout the 1990s and 2000s. There is a long-standing trend towards the growth of part-time work, with one in four workers in the UK employed on a part-time contract by Part-time working remains heavily gender-biased. Self-employment has remained fairly consistent over the 1990s and 2000s. Overall, the data do not provide evidence of a secular shift to a greater use of non-regular employment in the UK, although there are important cyclical, sectoral and compositional differences amongst different types of regular work, which we explore in more detail in Chapter 3. We also argue that given the broadly cyclical nature of non-regular employment it is likely that there will be a temporary rise in such jobs once the economy begins to recover from the recession. In Chapter 4, we introduce the primary research case studies conducted for this project. Three company case studies were conducted, across manufacturing and services and the public and private sector. In each case, interviews were conducted with a senior member of management, and were supplemented with background documentation. All three cases utilised a range of non-regular forms of employment. The rationales for use, extent of use, treatment of non-regular workers in comparison to permanent staff, and impact of the recession on the use of non-regular workers varied across the three cases. The results from these case studies are presented in Chapters 5,6, 7 and 8, alongside further large-scale survey analysis. In Chapter 5, the report examines transitions from non-regular to permanent employment. Many have suggested that non-regular employment is indeed a bridge to more permanent employment, but evidence on this issue remains patchy. We begin by reviewing evidence on whether employers use non-regular contracts to screen for permanent employees. We then look at whether workers are reluctantly taking up non-regular employment. We then move on to look at the extent of transitions between non-regular and regular employment. We finish the chapter by considering whether workers move back and forth between regular and non-regular positions. In Chapter 6, we look at the nature and quality of non-regular jobs in comparison to permanent employment. We have already reviewed, in chapter 2, the legal context of non-regular work. Many studies have suggested that in practice non-regular jobs are inferior in terms of pay and conditions, and overall job quality, when compared to regular employment. In this chapter we assess these claims, using national level survey data and evidence from our case studies. We begin by looking at national level data on job quality in non-regular work, along with some initial observations from our case studies. This sets the scene for a more detailed discussion of particular aspects of non-regular jobs, in comparison to permanent employment. We look in turn at working hours, wages, leave, skill development, progression and membership of unions. We find significant differences between nonregular and regular employees across most of these dimensions. 5

6 In Chapter 7, we consider levels of employment stability for non-regular workers compared to other groups. We look at the length of non-regular employment contracts drawing on survey evidence and data from the three case studies conducted for the project. We then look at what conditions nonregular employees have to satisfy to renew their contracts. Thirdly, we look at how often nonregular contracts are renewed, using the case studies for primary evidence. Fourthly, we look at how often contracts can be repeatedly renewed. Finally, we review some of the essential points of employment security regulations for non-regular employment. In Chapter 8, the report looks at the impact of the economic recession on non-regular workers. Whilst many commentators have suggested that non-regular employees will be affected most severely by restructuring and layoffs, there remains a lack of robust data on these claims. In this chapter we begin by looking at how the economic recession has affected non-regular workers in the UK. We then move on to look at rules for adjustment used by companies in the UK, and explore some innovative strategies of adjustment that have emerged during the current recession. Finally, we consider the question of how unions have organised non-regular workers. Our cases reveal quite different strategies towards non-regular employees adopted by different employers. We seek to explain some of the different approaches. Finally, in Chapter 9 some brief conclusions about non-regular working in the UK are drawn and some on-going, live issues noted. 6

7 2. Non-regular employment in the UK: the economic and legal context 2.1 Introduction The turbulent macroeconomic environment of the 1980s and 1990s together with the resulting policy responses have re-shaped the contours of the UK labour market. During the past 30 years there has been a relative decline in the proportion of full-time, permanent regular jobs. This chapter examines the nature of these changes beginning with a discussion of overall labour market conditions before moving on to a discussion of the legal framework and patterns of non-regular work. 2.2 The labour market context Academic and policy interest in non-regular employment in the UK grew following the deep recession of the early 1980s. As the economy began to recover, a debate emerged around the extent to which firms were re-segmenting their workforces into a stable, full-time core and a flexible, relatively insecure periphery of workers on non-regular contracts. Traditionally this division had been viewed as one that applied between firms; in the 1980s the division was identified within flexible firms (Atkinson, 1985). Firms, it was said, were expanding their use of peripheral nonregular labour to provide a flexible buffer against increasingly unstable product markets. Much of the subsequent literature focused on employer strategy in the use of non-regular labour contracts (for example Hunter et al., 1993; Rubery and Wilkinson, 1995; Casey et al., 1997). Although far from conclusive, research indicated that the responses were less a strategic step-change in employer practices and more an extension of traditional reasons for seeking flexible employment solutions: the need to meet temporary peaks in demand or a reflection of the difficulty in recruiting permanent, full-time staff (McGregor and Sproull, 1991; Beatson, 1995). Following the second major recession in the space of a decade, attention shifted in the 1990s to insecurity across all workers, regular and non-regular. Partly this reflected the fact that until the mid- 1990s, very little net employment growth in the UK was due to full-time, permanent employment (see Deakin and Reed, 2000). Secondly, it reflected an argument that work was becoming inherently insecure due to the twin pressures of technological change and globalisation on product markets. The corollary of greater product market competition was said to be greater pressure on labour costs and hence greater use of non-regular employment. In the extreme, this, it was said, was leading to a Brazilianization of employment as the old employment patterns and conditions of work became unsustainable (Beck, 2000). Although not restricted to the UK, these themes were seized upon, leading to a large academic literature mapping insecurity and exploring its connection to non-regular employment. However, whilst a detailed survey of the job insecurity in the UK found evidence of a worrying rise in perceptions of insecurity, these were often found to be linked to the loss of valued job features (e.g. promotion opportunities; control over the pace of work) rather than due to the fear of job loss or an increase in more inherently unstable non-regular jobs (Burchell et al., 2002). Indeed, data on average job tenure indicated no clear secular trends towards shorter jobs and greater labour market churn. Although average tenure was found to have fallen for UK men, this 7

8 was largely a legacy of the large number of redundancies made in the early 1980s recession; for women, average tenure was actually lengthening over the period (Gregg et al., 2000). From the mid-1990s, the UK economy and the labour market strengthened considerably, with a constant expansion in output between 1992 and As unemployment fell, so too did perceived insecurity. A detailed study by Green (2006) demonstrates that both objective and subjective measures of job insecurity largely moved in line with aggregate unemployment in the UK labour market. While the mid-1990s saw a temporary rise in reported insecurity, by the turn of the century low unemployment rates were reflected by falling levels of insecurity across all types of job(green, 2006, table 7.3). Indeed, although insecurity is, not surprisingly, found to be higher among temporary job holders, here too the level fell. The same trend is clear for full-time and part-time workers, with surprisingly little difference in the level of insecurity between them. Thus, despite the wilder predictions, actual labour market outcomes highlight important continuities particularly allied to the business cycle. Where change has occurred, this has tended to be compositional. One explanation for the heightened interest in insecurity in the 1990s is that fact that previously stable, white collar jobs in financial services and the professions experienced previously unheard of job losses. Hence, the redistribution of insecurity towards more vocal sections of the labour force may well have raised interest in the issue, rather than a secular shift towards a more inherently insecure workforce (Green, 2006). As discussed in section 3.3 below, non-regular employment in the UK has itself shown a strong cyclical pattern. This is not to deny that there has been significant compositional change in terms of the incidence of non-regular employment across occupations or industries. It does, however, suggest two important issues: first, that there is no evidence of a secular shift to a greater use of non-regular employment in the UK and second, that given the cyclical nature of non-regular employment it is likely that there will be a temporary rise in such jobs once the economy begins to recover from the recession. 2.3 Non-regular employment: definition and regulation In order to define non-regular employment, it is necessary to define regular employment. In the UK context this is a permanent, full-time employee job, under contract to a firm. Consequently nonregular captures any deviation from this and includes: temporary jobs, part-time and self-employed status. These non-regular employment forms will be examined in more detail below. It is only relatively recently that legislation has been extended to cover some of the particular variants of non-regular employment. However, it remains the case that under UK labour law the traditional presumption towards a permissive hiring regime remains. In the UK the overriding principle is that the parties to the employment relationship should be free to choose from a range of employment forms (Deakin and Reed, 2000). Despite some recent changes, documented below, it remains the case that employers do not have to justify the use of part-time or fixed-term contracts nor are there currently any restrictions on temporary agency working. Indeed, temporary agency workers are not even required to have employee status which leads to some vulnerability. This is also discussed further below. Overall this means that non-regular employment is subject to many fewer restrictions than other European countries. On the OECD s index of employment protection strictness the UK has one of 8

9 the lowest scores, closer to the United States than other European economies, despite recent increases in employment regulations and protection (see table 2.1). Table 2.1 Strength of employment protection (EP) legislation, selected OECD countries, 1998 and 2008 Overall EP strictness Scale 0-6 EP strictness for regular employment Scale 0-6 EP strictness for temporary employment Scale Australia Austria Belgium Denmark France Germany Greece Italy Japan Netherlands Spain United Kingdom United States Notes: Employment protection index is from 0 (lowest) to 6 (highest) Source: OECD (2009) Given the relatively low protection for temporary work, it might be expected that the UK has a high incidence of these jobs. However, as is clear from table 1, regular employees in the UK enjoy relatively little protection. As a result, employers have a wide margin of flexibility without recourse to non-regular employment and, as shown below, the incidence of non-regular work in the UK is relatively low. Indeed, as Deakin and Reed (2000, p.124) note, the employment protection regulations that do exist are largely procedural rather than substantive weakening still further the incentive to use non-regular employment practices since there are few costly obligations to evade. This weak coverage of employment law is a legacy of a system in the UK that has historically given precedence to collective bargaining over regulatory legislation. Employment protection legislation emerged relatively late in the UK, with the principle of job security rights and corresponding redundancy compensation payments dating from 1965 and unfair dismissal legislation legislation following in Formed principally with full-time, permanent employees in mind, the effect of the legislative floor of rights put into place was to exclude millions of workers either because they were considered to be self-employed, not employees, or because they failed to qualify due to lack of continuity of service. 9

10 What little protection there was further weakened by the Conservative governments of the 1980s and early 1990s. For example, qualifying periods for unfair dismissal were extended from six months to one year in 1979, then two years from Part-time employees working under eight hours per week did not qualify for basic protection at all, whilst those working between eight and fifteen faced a longer qualifying period of five years continuous service for basic employment protection. Fixedterm contract staff were allowed to waive their statutory right to dismissal protection, and employers frequently took advantage of this by including the waiver clause in contracts. The selfemployed were excluded altogether, whilst in practice so too were casual and agency temporary workers whose employment status in law was, and remains, unclear in many cases (Deakin and Reed, 2000). The election of the New Labour government in 1997 saw a partial strengthening of employment protection legislation, particularly for non-regular workers. The approach, however, remains one of minimum standards in a flexible labour market (McCarthy, 1997). Differential thresholds facing part-time workers had already been ruled unlawful in 1995 due to indirect sex discrimination, given that the majority of part-time workers in the UK are women. The introduction of minimum standards came largely as a result of the ending of the UK opt-out from the European Community s Protocol on Social Policy (the social chapter ) of the Treaty of Maastricht. As a result and following European directives, new Working Time Regulations have been introduced, to place a limit on working hours and to formalise holiday entitlements. In addition, part-time and fixed-term contract workers now have the right to the same treatment as full-time and permanent staff, and fixed-term staff cannot waive their rights to dismissal and redundancy protection. In addition, the Labour government introduced a national minimum wage in 1999 and reduced the qualifying period for unfair dismissal protection to one year for all employees, although redundancy compensation still only applies after two years service. Despite these and other changes, critics have pointed to the minimalist strategy underpinning the introduction of EU directives into UK law (Smith and Morton, 2006) and the fact that there is limited scope for collective, union representation to secure individual rights or indeed a well-resourced state infrastructure for enforcement (TUC, 2009a). The biggest problem facing people with non-regular jobs is that the UK retains a complex system of employment rights, with employees able to access a higher standard of protection than workers, who are often low paid (TUC, 2009a). Beyond these two categories are the self-employed who fall outside of employment protection altogether. The status of worker applies to individuals who supply their own personal services to the employer under an individual contract and are economically dependent on the employer's business (i.e. derive a high proportion of their income from that employment) but who do not meet the requirements of employee status. This category potentially includes freelance workers, sole traders, homeworkers and casual workers of various kinds (see Burchell et al., 1999).This is a wider definition than employee status and it applies under equal treatment legislation, the National Minimum Wage Act and Working Time Regulations. Table 2.2 sets out the main differences between the employment rights of workers and employees. 10

11 Table 2.2 Employment rights of workers and employees under UK employment law STATUTORY EMPLOYMENT RIGHT EMPLOYEES ONLY ALL WORKERS Discrimination Protection from discrimination relating to equal pay, sex, race, sexual orientation, disability, age, religion General Employment Rights Written statement of employment particulars, specifying: pay, hours of work, holidays, sick pay arrangements and disciplinary and grievance procedures Itemised pay statement Protection from unlawful deductions from wages Statutory sick pay National Minimum Wage Failure to be paid the NMW Failure to allow access to records relating to the NMW Protection from unfair dismissal related to NMW Protection from detriment related to NMW agency workers and homeworkers expressly covered (Note: Apprentices under the age of 19, or aged over 19 and in the first 12 months of their apprenticeship, are not entitled to the National Minimum Wage) agency workers and homeworkers expressly covered 11

12 STATUTORY EMPLOYMENT RIGHT EMPLOYEES ONLY ALL WORKERS Working Time Rights to daily rest, weekly rest and rest breaks Paid annual leave Right not to be dismissed in relation to working time Right not to suffer detriment in relation to working time Job Security / Unfair Dismissal Statutory minimum notice periods General right not to be unfairly dismissed or unfairly selected for redundancy Protection for terms and conditions, continuity of employment and from dismissal in case of transfer of an undertaking agency workers expressly covered agency workers expressly covered agency workers expressly covered Right for union or workplace reps to be informed or consulted about collective redundancies or transfers of an undertaking of affected employees Protection from dismissal on grounds of medical suspension, acting as occupational pension trustee, for making a protected disclosure, for asserting a statutory right Right to statutory redundancy pay Protection from dismissal relating to right to be accompanied in grievance and disciplinary procedures Non-regular Worker Rights Equal treatment rights for part-time workers Equal treatment rights for those on fixedterm contracts Source: adapted from TUC (2009a, pp ) This is the only unfair dismissal right which applies to non-employee workers 12

13 The complexity of UK employment law is particularly important for temporary non-regular workers who are most likely to suffer abuse (TUC, 2009a). Although fixed-term contract temporary work tends to lead to employee status, very often temporary agency and casual jobs are offered in such a way that individuals are entitled only to worker status, and correspondingly weaker employment protection (table 2.2). Given the low pay in many of these jobs, this further compounds labour market disadvantage. Problems also emerge with self-employed status. Worker status is a form of dependent selfemployment (Burchell et al., 1999) but recent evidence from the TUC (2009a) notes that in many cases employers force workers to accept bogus self employed status. This is by requiring workers to establish themselves as directors of a limited company in their own right and then to hire out their own services, through their own company, to the client. This is particularly common in the construction industry and in homeworking. In reality, the economic dependence on the client and the lack of independence and autonomy over their work that the hallmark of genuine self-employed status mean that these workers have the characteristics of an employee but none of the protection (see Burchell et al., 1999; Böheim and Muehlberger, 2006; TUC, 2009a). Indeed, research shows that these workers are distinct from employees and independent self-employed workers, with an increased likelihood of low education, low job tenure indicating job instability and, on average, they are older workers (Böheim and Muehlberger, 2006). Again, this research suggests that the gaps in UK labour law lead to a connection between vulnerable employment status and labour market disadvantage (see also TUC, 2009a). Through directives agreed at the European Union level and implemented into UK some protections have been afforded to some non-regular workers. The Part-Time Worker (Prevention of Less Favourable Treatment) Regulations implemented in 2000 and Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations implemented in the UK 2002 have established the principle of non-discrimination by contract type regarding pay and conditions. Further, fixed-term workers can request permanency if they have held two or more successive contracts with the same employer within a four year period. As discussed later in the report, attempts to reach agreement around similar provisions for agency workers have been much more controversial at the European and UK level. Until equal treatment legislation applies to agency workers, however, they are at a distinct disadvantage. Indeed, even when regulations have come into force it will still be possible to evade them in some circumstances by falsely applying self-employment status, which remains a key criticism of UK employment law (Burchell et al., 1999; Hendy and Ewing, 2003; TUC 2009a). 13

14 3. Patterns of non-regular work This chapter examines the patterns of non-regular working in the UK in recent decades. In order to provide some context, it begins with an outline of the wider economic and sectoral shifts and trends that underpin labour market outcomes. 3.1 The economic context The UK labour market has been particularly volatile in during the last thirty years, with two major recessions leading to large employment losses in the early 1980s and 1990s. The long period of constant expansion from 1992 has now come to an end as the UK struggles to recover from its deepest recession since the 1930s (see figure 3.1). Source: Authors analysis of data from Office for National Statistics This macroeconomic volatility has overlaid longer-term trends. Chief amongst these is deindustrialisation, as productivity gains and loss of markets lead to the shrinking importance of manufacturing as a source of employment. In the UK competitive weaknesses and output instability have led to both relative and absolute declines in manufacturing employment. Against this, output and employment has been rising in the service sector. In particular, a major driver of employment in the 1990s has been the financial and business services sector. Some contribution has also been made by the distribution, catering and hotels sector and by other services (cultural and leisure industries, membership organisations and personal care, including hairdressing) but a much greater rise is apparent in the public-sector dominated public administration, health and education sector 14

15 following a deliberate government strategy of expansion from Reflecting the property boom of the last decade, construction jobs have also increased steadily (see figure 3.2). Despite these shifts in the structure of the economy, manual employment still accounting for around 10.5 million of the 29 million jobs in the UK. Part-time work has expanded at the expense of full-time employment, and female participation rates have increased significantly, such that women presently constitute half of the paid labour force. Source: Authors analysis of data from Office for National Statistics These wider shifts provide the context for the more specific changes in the organisation of work and employment that have informed academic and policy debates on insecurity, the quality of jobs and work futures in general (see Nolan and Slater, 2010). The changing balance between regular and non-regular employment has been of central concern and it is to these patterns that we now begin to turn. Figure 3.3 shows patterns in the absolute number of employees by full and part-time status, self-employment by full and part-time status and temporary jobs (as a subset of all employees). Detailed discussion follows in subsequent sections, but in short the trends are clear: part-time working is continuing a slow but steady increase, temporary working shows no secular trends and self-employment is more or less constant. For the UK, the picture is one of very slow change away from regular and towards non-regular working. 15

16 7000 Figure 3.3 Employee and self-employed jobs by type, UK 1992 to Thousands Parttime employees Full time self employed Part time self employed Temporary employees Full time employees (right-scale) Thousands Source: Authors analysis of data from Office for National Statistics In the following sections we examine non-regular working in more detail beginning with temporary work. 3.3 Patterns of temporary work Figure 3.4 shows that temporary employment in the UK peaked in 1997 at just about 1.7 million workers (approximately 7 % of all employee jobs). The rapid rise through the 1990s following recession was not sustained. Since 2000 the aggregate level of temporary employment has fluctuated. There is some indication of a rise during the current recession and if the pattern of the 1990s is repeated it is to be expected that as employment recovers, much of the net growth will be in temporary work. As yet, it is too early to tell. Figure 3.4 also details the contribution of different forms of temporary working in the UK. The classification comes from the official Labour Force Survey, in which employees identify the reason for the temporary nature of their job as either: fixed term; a temporary agency job; a casual job; a seasonal job; or some other reason. Close inspection of the data indicate that the decline in temporary work can be attributed to falling numbers of fixed-term workers following the introduction of equal treatment legislation in Against this, temporary agency working has continued to increase. 16

17 Source: Authors analysis of Labour Force Survey data, various years These aggregate data conceal radical shifts in particular sectors. Most striking is the expansion of short, fixed-term contracts in the public services, particularly in health and education, beginning in the early 1980s. In the private sector, temporary working increased in most sectors after the early 1980s, although often from a low base, and for the first time took root in industries, such as banking and finance, previously associated with stable employment and jobs for life (Nolan and Slater, 2003). Figure 3.5 shows the share of total temporary jobs by industry. The composition of temporary jobs shows cyclical as well as secular trends. Among the former, the manufacturing share of temporary jobs rose sharply in the recovery of the mid to late 1990s. Longer-term trends include the small but steady increase in the share accounted for by banking, finance and insurance services, one of the main drivers of total job growth in the UK in recent years. Public administration, education and health also accounts for an increasing share of temporary jobs, particularly from 2000, following increased government spending. 17

18 Source: Authors analysis of Labour Force Survey data, various years What type of jobs tend to be temporary? Figure 3.6 compares the share of permanent and temporary jobs by occupation. Compared to permanent jobs, temporary jobs are over-represented among both higher skilled (professional) and lower skilled (elementary) jobs. This reflects the industrial structure of temporary work, with many of the professional temporary jobs located in the public sector (nurses, teachers, social workers), whilst elementary occupations, which include labourers, cleaners, shelf-fillers and security guards are spread across a range of industries. Temporary jobs are also over-represented among personal service occupations. Again, these jobs are spread across a number of industries, public and private, particularly ones that have seen employment growth since the early 1990s. Occupations here include: assistant nurses; childcare occupations; adult carers; teaching assistants; travel and leisure attendants; hairdressers and beauticians and housekeepers. 18

19 Source: Authors analysis of Labour Force Survey data, various years Further analysis of temporary worker characteristic is presented in the table A1 in the appendix. Temporary working is now balanced in terms of gender (from female over-representation in the early 1990s). Compared with permanent employees, temporary workers tend to be younger, with a high proportion of agency and seasonal/casual workers under 30. Reflecting the importance of fixedterm contracts in professional work, this group has an over-representation of high qualifications. Conversely, reflecting the age profile, seasonal-casual jobs tend to have lower qualifications. Nonwhite workers are over-represented in temporary working, and agency-working in particular is associated with recent migrants, particularly temporary agency working among arrivals from the new accession countries of the European Union. Looking at the overlap with other non-regular employment features, temporary workers tend to be more likely to work part-time than permanent employees. In 2008 the incidence among the latter group was 24%. For temporary agency workers the proportion was 30%, for fixed-term workers 37%, seasonal and casual workers 83% and for other temporary workers 55% (table A1). Looking at those who work through an agency on a self-employed basis (rather than as an employee), the incidence of part-time working is much lower at 17%, however these are male-dominated jobs concentrated in professional and skilled manual trades. The use of temporary workers in UK workplaces has not changed in the last decade. Kersley et al. (2005) report that 30% had employees on any type of temporary contract in 2004, similar to a comparable 1998 survey finding of 32%. They also report that the use of temporary agency staff is less common than fixed-term contracts although they are still utilised in 17% of all workplaces, representing no change since

20 3.4 Part-time working in the UK The growth in part-time employment is a long-standing trend. In 1971, one in six employees worked part-time. By the end of 2009, with approximately 6.5 million part-timers out of 24.8 million employees, this ratio had risen to one in four. Part-time working remains heavily gender-biased. In 1992, only 13% of male employees (16% of all men in employment) worked part-time. By 2009 this proportion had risen to 22% (25% of all) (ONS 2010). The rise has been a slow and steady increase, rather than a reaction to the current recession. The continuing expansion of part-time employment has been sustained since 1979 by the net creation of 7.2 million jobs in services. By 2004, 83% of workplaces employed part-time staff, with these employees in the majority in 30% of workplaces (Kersley et al., 2005). Overwhelmingly filled by women, these jobs are much more likely to be poorly paid, low-skilled and unstable (Stewart 1999). Moreover, around half of part-time employees occupy small jobs involving less than 16 working hours, and almost 1 million work as few as eight paid hours per week (Nolan and Slater, 2003). At industry level, those with high incidences of part-time working include wholesale and retail, and hotels and catering in which almost half the workforce is employed part-time. In the public sector, community services, health and education have the largest shares of part-time working (Nolan and Slater, 2003). Figure 3.7 looks at this issue another way, focusing on the share of all part-time working accounted for by each industry sector. Source: Authors analysis of Labour Force Survey data, various years The declining importance of manufacturing to part-time working reflects its broader decline. Against this, some rise in the share in banking and finance is evident but it remains the case that retail and 20

21 wholesale distribution, hotels and restaurants and public administration, health and education account for the bulk of part-time working, with a growth in the share of the latter evident in recent years. Source: Authors analysis of Labour Force Survey data, 2009 Turning to occupation, the over-representation of part-time working in clerical, personal service and elementary occupations is not surprising given its gender and industry patterns (table 3.8). However, although dominated by female workers, there are important occupational differences by gender. 21

22 Source: Authors analysis of Labour Force Survey data, 2009 Figure 3.9 indicates that part-time male employees are highly over-represented in sales and customer service and elementary occupations (which includes basic retail jobs, cleaning and security work). Thus, where men do work part-time, this tends to be in lower-skilled and lower-paid work, whilst male full-time employment tends to be concentrated in higher skilled jobs. The occupational patterns for part-time women are somewhat different (figure 3.10), with female part-time working concentrated in clerical and personal service in addition to sales and elementary jobs. The continuing growth in these occupations and their related industries underpin the continued slow increase in the proportion of part-time working in the UK labour market as a whole. 22

23 Source: Authors analysis of Labour Force Survey data, Self-employment in the UK As figure 3.3 above shows, self-employment in the UK has remained relatively constant in absolute terms. In this section the industrial and occupational distribution of self-employment is considered and some of the key characteristics of self-employed workers are discussed. Turning first to the distribution of self-employment by industry, figure 3.11 shows that it is dominated by construction and banking, finance and insurance which account for almost half of all these jobs. In comparison to employee jobs, agriculture and fishing also account for a much greater share of employee jobs. 23

24 Source: Authors analysis of Labour Force Survey data, 2009 The industrial concentration of self-employment is reflected by its occupational distribution. Figure 3.12 shows that self-employment is highly concentrated in skilled trades, reflecting the large share of such work in construction, and in managerial and professional work. This latter association follows from the large share of self-employment accounted for by the banking and finance industry and, to a lesser extent, public administration, health and education. Compared to employee jobs, plant and process operative occupations account for a higher share of self-employed workers and this in the main is due to many drivers of taxis and goods vehicles being engaged on a self-employed basis. 24

25 Source: Authors analysis of Labour Force Survey data, 2009 Further information on the characteristics of the self-employed can be found in the appendix (table A1). Self-employed workers (not working through an employment agency) tend to be older on average than permanent employees, more likely to be male (73%) but with a similar qualification and ethnicity profile. 3.6 Accounting for the trends Various accounts have been put forward to explain these trends in non-regular work. The flurry of interest around the notion of the flexible firm noted in section 2.1?? above has subsided but many modern accounts retain that approaches focus on external technological and competitive pressures as the driver for labour market outcomes (see Nolan and Slater, 2010 for a critique). Rajan et al. (1997), a government commissioned report, is typical. It notes that increases in non-regular follow from the benefits both to employers in terms of reduced costs and workers in terms of flexibility. Further, firms employment systems are shifting from an emphasis on security to one on employability in which workers are provided with transferable as well as firm-specific skills, the authors argue. In this context, greater use of non-regular employment is part of a wider shift by firms to accommodate rapidly changing technology and customer demands. More recent government analysis has largely accepted these drivers as the cause. Given their perceived inevitability, the UK government has repeatedly announced its intention to retain and enhance the UK s flexible labour market (HM Treasury, 2003). Indeed, from the government perspective there is little attempt to understand the drivers of non-regular employment; rather 25

26 these forms are embraced for meeting the needs of workers and firms. That said, some potential downsides to non-regular employment are recognised, including the fact that rising part-time employment may reflect the lack of opportunities for women to combine full-time work and family responsibilities and that too much temporary working may harm the reproduction of skills (HM Treasury, 2003: 36-7). From the perspective of the trades unions, the growth in non-regular work cannot be separated from the gaps in employment legislation that allow employers the scope to evade labour costs and responsibilities, particularly in the use of temporary or self-employed labour (TUC, 2009a). This is exacerbated, it is said, by the increasing importance of small firms to employment growth, where labour standards may be lower and from lengthening corporate supply chains as private and public organisations make greater use of sub-contractors. It is these firms that often utilise non-regular labour, particularly temporary and false self-employed workers. Despite the overall tighter labour market until 2008, these trends have been supported by inward migration to the UK from former Eastern Europe, leading to a ready supply of poorly informed and vulnerable workers, who are likely to find employment in non-regular jobs (TUC, 2009a; see also table A1). These arguments find some support in the academic literature. Grimshaw and Rubery (1998) point to the shifting basis of power between employers and different sections of the labour force in driving growth in non-regular work. They argue that firms have been taking increasing advantage of the fact that labour market alternatives vary or have diminished across different sections of labour supply by age, gender, ethnicity and migrant status, following deliberate changes to welfare benefit and tax rules and shifting skills demands. This has then allowed firms to secure stable labour input despite a worsening in the terms and conditions offered, including the security and stability of jobs. Rather, firms have been able to fill these often low-paid, low quality jobs easily with disadvantaged groups who face few real alternatives. In the next chapter we turn to examine some of the patterns already outlined in more detail, drawing on original case-study evidence. 26

27 4. Background to the case studies 4.1 Introduction As part of the research, three case studies were conducted to examine various aspects of employers use of non-regular employment arrangements. The cases were selected to provide coverage of a range of industrial sectors, and mixes of non-regular and permanent employment arrangements. In each of the cases, interviews were conducted with a senior member of management with knowledge about employment arrangements, such as a Human Resources or Employment Relations manager, or, in one case, with the Managing Director. Where possible, interviewees were questioned on multiple occasions, to allow for reflection on previous answers. Interviews were supplemented with background/contextual data on each of the three companies. These background data were generated via the respondents themselves, or from publicly available sources. In two of the cases interviews were conducted over the telephone, in a third case, interviews took place faceto face. The interviews took place between November 2009 and February The length of each of the interviews varied from 45 minutes to 90 minutes and covered a range of topics, including: contextual and background data; company and establishment information; employment trends; use of nonregular employees; industrial and occupational distribution of non-regular employment; reasons for using non-regular employees; the tasks conducted by non-regular employees; equal treatment of non-regular employees; opportunities for progression to permanent employment; union membership; and the use of non-regular workers in the economic recession. The interviews were semi-structured in nature, to ensure that the aims and objectives of the project could be achieved, but also to allow for emergent themes on the use of non-regular employment to be discussed in more detail. In each of the three cases, the name of the company has been changed, to preserve anonymity and confidentiality. 4.2 The case-study organisations Contextual information on the three cases is provided in Table 4.1 below and a narrative on each of these cases follows. In all three cases, the information gathered centred on non regular employment within the entire organisation in the UK, rather than within a particular establishment. In all three cases, however, respondents were able to also provide examples and evidence from within particular establishments in their company in the UK. Indeed, in one of the cases (FoodCo), the organisation existed as a single establishment. 27

28 Table 4.1 Overview of case-study companies Company name Activities Employees in UK CarCo (private sector, services) Large multinational automotive manufacturer. UK operations comprises car sales and dealership network, parts, warehousing and UK central offices (HR, finance and administration) Food production, ready meals to foodservice, leisure, brewery and convenience sectors Public sector company responsible for providing education support services for school age children in Northern city FoodCo (private sector, manufacturing) EducationCo (public sector, services) Use of non regular employees Agency staff Fixed-term contract staff Casuals Independent contractors Part-time employees Interview 200 employees, at single establishment Part-time Temporary Agency (but not at present) Managing Director 1100 direct employees (HR, estates, special educational needs staff, pupil referral units) HR responsibility for further council employees in the area of education (teachers, support staff etc) Part-time Agency Fixed-term contracts Casual Independent contractors Variety of flexible working arrangements HR Manager Employee relations manager CarCo CarCo is a global car manufacturer with head office in France. The company does not manufacture cars in the UK. It employs 5000 workers in sales, distribution, finance, parts and human resources activities. The largest majority of workers are employed in sales and warehousing, with around 450 employed in human resourcing. Of the 5000 staff in the UK, between % are typically on nonregular contracts. The largest component of the non-regular workforce is agency workers, who comprise approximately 10 % of the total workforce. Fixed-term contract workers make up 0.5 % of the workforce, and some of the 450 head office staff (cleaning, catering) are employed via independent contractors. Very few of the 5000 strong workforce are on part-time contracts of employment. 28