Employment Relations in Britain - Assignment Example

Introduction Rapid growth in agency employment has generated an intense debate about its implications on employee and employer. Number of employment agencies in UK appears to be increasing while UK’s agency labour market is the most fragmented one in Europe (Hoggart, Campbell, Ray, and Vegeris, 2006). In proportion of all kinds of temporary work, ratio of agency work is rising in a steep manner, for instance, 13 per cent of agency workers in 1997 increased to 17.1 per cent of all temporary work in 2007.According to OECD’s employment outlook (2002), “European Foundation estimates that in 1998 the top five agencies controlled between 75 per cent and 80 per cent of the market in France, Belgium, and the Netherlands, compared with only 16 per cent in the UK”(cited in TUC Commission,2008,p.15). Research evidence suggests that the availability of agency and short-term contracts flexibility in UK accommodate and provide the employment opportunity for people with limited working experience, under-qualification, or under-developed skill level (DTI, 2007, p.7). Considering the increasing importance of temporary agency workers’ sector in Britain and beyond, the European Commission (EC) has introduced proposals for a European directive in order to prevent the discrimination against agency temps (EC, 2002a cited in Forde and Gray, 2005, p.249).In its analysis of whether the availability of agency working and short-term contracts expand new opportunities for secure employments or it leads to the exploitation of vulnerable workers, the paper identifies that the former claim may be true to some extent, it does not compensate for the later. A closer look at the recent changes in British labour market reveals an incredible but neglected trend of rapid temporary agency growth. Only 50,000 workers in mid-1980s (Casey, 1988) increased to more than one per cent of all employees’ jobs that amounts to about 270,000 workers (cited in Forde and Gray, 2005, p.1). Temporary work is an omnibus term which incorporates a number of different forms of employment agreements, such as, on call employment, fixed term employment, and temporary agency employment (Campbell and Burgess, 2001).Irrespective of the differences in sources which categorize agency workers’ in sectors and occupations, agency workers are most likely to be hired in professional ,secretarial, process/plant/machine operations, administrative occupations, and personal services, such as, social careers, workers in hospitality, and class room assistants(EMAR,2008,p.12). Two main sections in this paper analyse the prospects of new opportunities for secure employment and exploitation of vulnerable workers. Opportunities for secure employment With increasing unemployment throughout the world, it seems logical that unemployed will turn to other means for earning and temporary employment through agency provides them they way out. Survey of Recruitment Agencies 2007(SORA) evidence proves that agency work provides a route to enter into permanent employment for several workers. During one year period, the survey identified that nearly 340,000 people got a permanent job stemming from their experience with a particular employer as a temporary worker (cited in EMAR, 2008, p.13). According to Labour Force Survey (LFS) data (2006) approximately 25 per cent of temporary workers are employed at managerial and professional levels (cited in DTI, 2007, p.7).Furthermore, Labour Force Survey (LFS) data (2006) indicates that 24 per cent of UK’s agency temporary workers were either unemployed or inactive one year before (DTI, 2007, p.7). There are various reasons for working as temporary employee. According to Recruitment and Employment Confederation (REC) research, 63 per cent of temps decided to work temporarily because they were unemployed. Moreover, 39 per cent referred to other reasons, such as, earning during study or during career break. Labour Force Survey (LFS) put forth the same question differently and got 58 per cent of people mentioned that the absence of permanent job led them to temporary opportunity while 20 per cent didn’t prefer a permanent job (cited in EMAR, 2008, p.13). Changing working environment, technology, productivity, and cost efficient solutions work as a driving force for organizations that lead to hiring agency worker. Workers Online (2003) Uzi and Barness (1998) suggest that reorganization and increasing technology in workplace is reshaping the permanence of jobs in which contingent workers who can accomplish the requirements of permanent job are easily substituted for permanent ones, furthermore, the suggestion led to claims that today’s firms are shedding permanent workers for hiring agency workers (cited in Burgess and Connell, 2006, p.132). Most of the people come to workplace in an effort to balance their work and family life in different ways possible. In some cases, they are more concerned to earn more for their families while in some case; they want to work less in an effort to balance child care or phase into retirement. Part-time working opportunities offer much needed flexibility for people to prioritise their time. Approximately, quarter of all employments in UK is part-time. Over 70 percent of people who work part-time chose it over full time employment while nine per cent chose it because they are unable to find full employment. Most people want to work as permanent employees, while others may prefer a series of temporary jobs, sometimes for getting different job experiences and sometimes because they only prefer to work when they chose. It is crucial that today’s worker has a freedom to choose between different forms of works and contracts due to flexibility in legal framework (DTI, 2007, p.8). For providing every worker the same employment status and associated rights for all groups does not reflect different levels of responsibilities in employment relationships. Most of temporary agency workers and their hiring firms appreciate the flexibility associated with agency work, such as, need of little or no notice while leaving a particular assignment. In order to give other rights to agency workers would lead to user undertaking and agency workers would be asked for precise and potentially extended periods of notice. In this case, much valued employees and employers’ flexibility will be undermined (DTI, 2007, p.11). Most often, temporary work agencies (TWAs) offer various human resource services in addition to providing temporary workers. Considering TWAs as external HRM providers, Medcof and Needham (1998) suggest that their growth is driven by inter-organization alliances, contingency workforce, and outsourcing (cite in Burgess and Connell, 2006, p.130). Peck and Theodore (1998) also stress that most agencies are going beyond providing “warm bodies” by getting into long-term human resource focused functions, for instance, Adecco is the largest temporary work providers in the world and provide the opportunity of “one-stop shopping” for all kinds of temporary workers(cite in Burgess and Connell, 2006, p.130). The service led to the perception that such service works as consultant rather than a people factory (Sansoni, 1997 cite in Burgess and Connell, 2006, p.130).It implies that purpose and objective of agencies is beyond serving the interests of employers to higher levels of HR practices. There are several opportunities originating from temporary employment, for instance, it can reduce job searching time and cost, enhance matching within the labour market, and offer an opportunity for transition to permanent employment (OECD, 2001).Nature of temporary work and workers continue to change over time. Firstly, capacity of activities performed by temps is changing. Initially, temps were contracted to take on low-skilled and clerical jobs, however, now they are as likely to be working in professional and technical occupations (Hipple and Stewart, 1996) as in teaching (Bryson and Blackwell) and nursing profession (cited in Burgess and Connell, 2006, p.132).Secondly, temps were utilized as a “stop-gap” when permanent employees were on holidays or ill, conversely, evidence reveal that organizations are utilizing temps as a part of their competitive strategy in order to improve bottom lines and circumvent unwarranted claims in case of employee dismissal(Connell and Burgess,2002). Beck (1992, 2000), Giddens (1998) and Sennett (1998, 2004) argue that social relations and employment conditions are increasingly becoming insecure and individualised (Cited in in O’Reilly, John, Tizana, and Jose, n.d.p.3). However, Fevre (2007) objects such claims by measuring insecurity in UK by critically analyzing the empirical evidence. Referring to the measures of perceptions of unemployment risks, insecurity feeling, and non-permanent employment contracts, the tendency appears to be entirely opposite during last ten years as non-permanent contracts seemed to decline with increasing sense of job security. Doogan (2001, 2005) and Auer and Cazes(2000,2003) also support the above analysis as cited in O’Reilly, John, Tizana, and Jose(n.d.p.3). According to Fevre(2007) job insecurity perceptions are more prevalent in Spain, Portugal and Poland as compared to UK, or in regions where class inequalities are more prevalent as it is in UK, according to Paugam and Zhou(2007) as cited in O’Reilly, John, Tizana, and Jose (n.d.p.3). Irrespective of other countries, it is important to note that TUC (2006, p.6) lament at non-standard attributes of flexible working relationship in UK. Increasing use of temporary agency worker is mainly stimulated by employer’s need for greater organizational competence. Organizations’ need is triggered by increasing competitive pressures originating from the development of new technologies and abrupt fluctuations in consumer demands. Agency working set-up is established to have the power to create new employment opportunities and provide flexibility, however, we cannot ignore the fact that such working arrangements are characterised by labour market polarization, job insecurity, and exploitation of temporary agency workers. There may be lack of information among agency workers about individual employments rights and the way they should be exercised. However, it is not limited to agency workers. Therefore, it is significant for all kinds of employees to know their rights, authority responsible for delivering the rights, and where they should seek help when their rights and entitlements are contravened (DTI, 2007, p.8). Exploitation of vulnerable workers Vulnerable employment refers to the one with low pay, illegal or unfair pay deduction, insecurity at work, unsafe workplaces, and limited or no rights to leave (O’Reilly, John, Tizana, and Jose, n.d.p.3).The Commission on Vulnerable Employment defines vulnerable workers as, “Precarious work that places people at risk of continuing poverty and injustice resulting from an imbalance of power in the employer-worker relationship” (TUC, 2008, p.12).Agency workers are considered to be vulnerable economically because they have almost no security of job, they can be laid off at any instance to face unemployment. Legal position reinforces their economic insecurity and vulnerability because neither agency workers are considered employees nor they are illegible for legal rights even after meeting minimum requirements available to direct employees (TUC, 2007, p.5). Over half of the total British labour is employed as temporary agency workers, while significant numbers of temps continue working for the same employer for several years (up to seven) job security remains a major concern for most of them (TUC Commission, 2008, p.74).Forde and Slater (2005) suggest little evidence for ‘new economy work’ rather the findings indicate the use of agency worker as short-term consideration accommodating the labour cost. They confirm high levels of dissatisfaction among agency employees for content of work and restricted scope of utilizing their initiatives (cited in Burgess and Connell, 2006, p.133). According to Burgess and Connell (2006, p.135-136) HR challenges originating from the use of temps are quite significant. Temporary workers are inherently marginalized from internal labour market. For instance, their commitment and identity with host firm remains uncertain. Hall and Forde and Slater expressed concerns over the usability of temps in the context of high performance systems (cited in Burgess and Connell, 2006, p.135).Moreover, Hall argues that HR managers don’t consider the management of the workers provided by agency as their responsibility, because of the fact that they are required to manage the organizational damage done by insecure, distrustful, less committed temporary agency workers (cited in Burgess and Connell, 2006, p.135). According to Forde and Gray (2005, p.250), agency workers are undoubtedly amongst least protected groups in British labour market. Uncertain nature of the ‘triangular’ employment relationship between worker, client, and agency is aggravated by various definition of employee status in employment law and tax regulation. On the other hand, courts characterised agency worker neither agency employees nor their clients (Davidov, 2004, p.727).According to TUC (2003, p.15) trade unions in Britain broadly received Commission’s proposals for increasing basic pay and employment rights of agency workers (cited in Forde and Gray, 2005, p.250). TUC Survey (2006) revealed a ‘differential’ treatment of agency employees and direct employees where ‘differential’ refers to worse terms and conditions for agency workers and lesser occupational benefits in comparison to direct employees both in private and public sector (p.14). According to TUC(2006,p.16-18) lower pay rates of agency workers for the same or similar work is just like ‘legally permitted discrimination’ with agency workers on the basis of their employment status. Furthermore, agency workers have no access to similar occupational pension schemes, and mostly, they have to go by statutory minimum provisions on holiday entitlement and sick pay. They face substantial difficulty is securing their holiday and some agencies exploit their lack of information and understanding. Paying ‘rolled up’ holiday pay is another practice in which worker is not paid for leave. Agency workers are also exploited in a range of other conditions. TUC (2006, p.18-23) Survey respondents suggest that employers consider agency temps as suitable addition to their operational or productive capacity, but they are concerned to contain the cost involved. Differential treatment is reported not only about significant matters, such as, confidential support services, expenses, crèche, car allowance, limited health care schemes, and grievance and disciplinary procedures but also on facilities, such as, toilet facilities, canteen, car parking, and recreational facilities. Furthermore, when it comes to trade union memberships, temporary agency workers don’t have recognition or negotiating rights because they are rarely classified as employees. Fear of victimization and losing the permanent opportunity also keeps them away from union membership. Despite all the challenges, unions are progressing to some extent on their objective to protect and promote the interests of agency workers. Despite individual trade unions efforts to improve working terms and conditions in collaborations with larger agencies, lacking broader regulatory system have limited the success of such efforts. Low level of union membership among agency workers is due to the fact that agencies compete on price and union acknowledgment led to procedural rather than substantive allowance from agencies (Heery, 2004, p.334).Recent step from Commission overcomes the inherent weakness of such efforts. The central objective of directive is to ensure the similar working and employment conditions for agency workers as it is provided to the direct company employees for similar positions. In addition to supporting the concerns for agency workers’ job quality and non-discrimination, in recent directive, agency work is broadly utilized to expand and meet the needs of new ‘knowledge economy’ (EC, 2002a, p.10) as cited in Forde and Gray (2005, p.250). Potential risks associated with increasing the relative size of temporary employees include, exclusion from standard employment benefits, segregation from company’s internal labour market, training and career path, separation from a cycle of contingency work setting, and wage and job insecurity(Burgess and Connell,2006,p.131).The research study by Stanworth and Druker consider the complexity and diversity of labour strategies in firms which are reflected in factors, such as, use of temporary workers as constant buffer against uncertainty in cyclical industry, cost reduction for budget control, and to fill the shortage of skilled staff in a particular industry. TWAs provide other HR services in addition to temporary labour. Furthermore, the research revealed that organizations react to the time of workplace instability by hiring more temporary workers, and rearrangements for expanding the periphery and shrinking the core (cited in Burgess and Connell, 2006, p.134).Workers with no skill or lower levels of skills are prone to get affected by job ‘cycling’ which refer to getting in and out of short-term employment. Approximately, two third of job seekers annual allowance claims are repeat claims while approximately half of repeat claims belong to no or low skill workers(Labour Force Survey,2007 cited in TUC Commission,2008,p.94). Contrary to popular belief about the image of temporary agency worker, TUC survey (2006, p.5) results portrays temporary agency workers as ‘causal’ workers who are often appointed for one assignment alongside permanent staff for quite lengthy periods. Despite being engaged in same or very similar work as direct employees, temporary agency workers are frequently expose to worse conditions and compensation. Agency temps are discriminated on the basis of their employment status. Furthermore, survey explain that the lacking legal protection which is accessible to and compensates the flexible workforce, such as, part-time and fixed-term contract workers, in case of temporary agency employees, the discrimination continues without any kind of acknowledgement (TUC, 2006, p.5). According to Peck, Theodore, and Ward (2005, p.23) agency industry, aimed to provide better employment opportunities for upmarket, intensive growth. However, Hoque, Ian, Alex, and Chris (2008, p.390) argue that evidence suggests employers as major drivers who even impose it in some cases. For instance, in health and local government, ‘preferred’ and ‘sole supplier’ has been bargained (National Audit Office, 2006, Office of Government Commerce, 2006 as cited in Hoque, Ian, Alex, and Chris, 2008, p.390) for responding to increasing fees and raising concern for workforce quality. Significantly, these actions were taken for the instances where agency workers were occupying core professional roles (Hoque and Kirkpatrick, 2008). The argument that temporary agency employments create job opportunities may seem to be valid, however, frequently believed (by businesses and government) idea that temporary agency arrangements provide a ‘foothold’ in labour market and proves to be an opportunity for secure employment needs to be reconsidered. In order to move ahead, workers need more transferable skills and qualifications (TUC, 2006, p.19).Labour Force Survey (LFS) data (2007) confirms the bleak situation when it comes to temporary workers’ training. The data revels that only 8 per cent of temporary agency employees receive any training as compared to 16 per cent of all employees. Furthermore, 61 per cent temps had never been offered training by employers as compared to 30 per cent all employees. In the sectors having most-representation of agency workers, such as, elementary, administrative, and secretarial occupations, temps are 50 per cent less likely to get trained by employees as compared to 33 per cent direct employees (TUC, 2008, p.94). The survey reveals that agency workers are least likely to get such training or qualification opportunities unless they personally strive for it. In some case, there is minimal training provided which serve the purpose of performing at job rather than serving as transferable skills. The situation reflects employers’ efforts to contain the cost on workers they consider as dispensable. Moreover, only minority of employers inform agency workers about permanent job openings while some reject the idea strongly (TUC, 2006, pp.19-20). Proportionate regulatory framework in UK provide workers’ right without repressing job creation or giving rise to two-tire labour markets. Therefore, 94 percent of UK’s labour force is employed under traditional contracts while approximately 6 percent is working under temporary and agency contracts. Important aspect of UK’s labour framework is that not only permanent employees, but also other workers including agency workers are entitled to some rights, such as, non-discrimination, daily and weekly rest breaks, workplace health and safety, paid annual leave, protection from unlawful pay deductions, and trade union membership freedom. Contrary to common perception, UK’s temps are not all under-paid or in low-status (DTI, 2007, p.4-7). According to Forde and Gray (2005, pp.249-50), due to the absence of detailed investigation, contradictory claims have materialized about agency working, quality of jobs provided by agencies, opportunities for agency workers, and need of regulation. For instance, evidently different estimates emerged related to the ratios of agency workers in highly skilled professions in Britain (Hotopp, 2000; TUC, 2003) and point to which agency jobs work as opportunities to permanent jobs (CBI, 2001; TUC, 2003) as cited in Forde and Gray (2005, p.250).Moreover, there is no agreement on the affect of agency working on compensation. According to the recruitment and Employment Confederation (REC, 2002a), 60 per cent of agency temps either earn equal or more than their permanent equivalent, conversely, the Department of Trade and Industry (DTI, 2002, p.28) reported ‘anecdotal’ evidence for agency workers earning more than permanent employees but reports agency pay as 68 per cent of the permanent employee pay (2002, p.32) as cited in Forde and Gray (2005, p.250).Furthermore, the perception that agency work is accepted on voluntary basis(DTI,2002,P.3) appeared to be conflicting with TUC’s(2003,p.5) finding that largest percentage of agency temps take such works as a ‘second choice’ as cited in Forde and Gray (2005, p.250). Beck (1992) and Heeray and Salmon (1999) put forth some bleak explanations of attributing agency work as a part of an emergent ‘risk society’ which was overtaken by another different but influential ideology that agency work is not only essential but also strengthening for the new ‘knowledge economy’(cited in Forde and Gray,2005, p.250).According to Forde and Gray (2005, p.250)increasing emphasis on ‘knowledge work’ is argued to involve rapid growth in professional, scientific, managerial, and technical professions and the corresponding downfall of ‘old economy’ and related manual and service jobs. By taking the argument further, Albert and Bradley (1997) and Knell (2000) suggested that these developments are indication of primary changes in the organization of work in which highly skilled professionals are increasingly inclined to sell their expertise to a series of clients through labour market intermediaries, for instance, employment agencies (cited in Forde and Gray, 2005, p.250).Considering the earlier concerns about job quality and insecurity, agency work expansion is received as an inevitable outcome by some groups. Legal aspects: Agency Workers Directive (AWD) In order to give protection to temporary workers, legislation from the European Parliament has been adopted .Most significant amongst this legislation include Fixed Term Employees Regulations (2002) and The Agency Worker Directive (AWD).Former ensures all temporary workers’ rights equivalent to permanent workers, excluding agency workers. In which they cannot be treated on discriminatory basis (Macdonald, 2003). While analyzing Fixed Term Employee Regulation (2002) and Conduct of Employment Agencies and Employment Business Regulations (2003), Bigg et al. find that after the implementation of legislation, utilization of temporary employees decreased by 24 per cent with 11 per cent decline in the utilization of agency workers. Nearly 27 per cent of temporary workers became permanent after legislation as compared to 22 per cent before legislation. As a result, post-legislation temporary workers is not as appealing an offer for firms and flexibility pressures are easily transferred within internal labor markets towards permanent employees(cited in Burgess and Connell, 2006, p.134). According to O’Reilly (2003),“Since the late 1980s there has been a wealth of cross-national comparative research on ‘atypical’ employment, as well as a number of government and company initiatives to encourage and remove regulatory anomalies around flexible work and encourage better ‘work-life balance”(cited in O’Reilly, John, Tizana, and Jose,n.d.p.1). For instance, in May 2008, UK legislation has allowed the same rights to agency workers as permanent employees after 12 weeks of employment (BBC, 2008 cited in O’Reilly, John, Tizana, and Jose, n.d.p.1). Significant changes can be expected from October 1, 2011 after the implementation of EU’s Agency Worker Directive (AWD).The basic purpose for Agency Worker Directive (AWD) is to ensure the temporary agency workers’ rights through implementing the rights of equal treatment and curbing preventable restrictions and limitations on temps. However, the Directive’s ‘equal treatment’ refers to only basic work and working conditions for temps, for instance, pay and working time. Furthermore, it will not have any impact on employment status of temporary agency workers (BIS, n.d.). Conclusion Increasing part of temporary agency employment in labour market has raised concerns about its impact on temporary workers. Availability of agency and short-term contracts flexibility in UK provides the employment opportunities for people with limited working experience, qualification or skill (DTI, 2007, p.7).Some evidence confirmed that temporary work secured employment for many. However, TUC (2006.p.41) questions the potential of agency work for secure employment. On the other hand, agency workers face low pay, illegal or unfair pay deduction, insecurity at work, unsafe workplaces, and limited rights for holidays. Job security always remains a major concern for temps in all sectors (TUC Commission, 2008, p.74). The Agency Worker Directive promises to protect temps (BIS, n.d.).However, overall picture of labour market reveals that its potential for secure employment is not as promising as are the chances of temporary workers’ exploitation in UK’s labour market. Reference List BIS.n.d. Agency Worker Directive and Regulations 2010.Department for Business Innovation and Skill [online] Available at: < http://www.bis.gov.uk/policies/employment-matters/strategies/awd> [Accessed 24 March 2011]. Campbell-Barr V, Ray K and Vegeris S, 2006. Staying in Work and Moving Up: Evidence from the UK Employment Retention and Advancement (ERA) Demonstration, London: Department for Work and Pensions Research, Report No. 381. Campbell, I. and Burgess, J., 2004.International aspects of temporary agency employment: and overview. In: Burgess, J. and Connell, J. ed. International perspectives on temporary agency work, London: Routledge, pp.1-23. 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