1. Short and sweet?: Job Quality in Temporary Work Chris Forde and Gary Slater Leeds University Business School and University of Bradford Prepared for presentation at University of Sheffield Economics Department Seminar Series, 30 th May 2007

2. Background  EU directives on non-standard employment fixed-term contract (UK: 2002) temporary agency work (EC proposed 2002; stalled)  Concerns over the quality of jobs in terms of pay and conditions (equal treatment principle)  Recent focus in UK on agency working in particular: government resistance large market for temporary employment agencies fivefold increase in agency working 1984-2000 previous studies not able to examine agency work separately (e.g. Booth et al. 2002)  Key questions: 1.Who takes temporary jobs? 2.What is the quality of temporary jobs? -what are they worth? -non-monetary aspects of quality: anxiety, effort, work strain, satisfaction 3.Is there a case for extending regulation to agency workers?

3. Structure of presentation  Temporary work in theory characteristics and rewards  A note on wage estimation  Data sources  Comparative analysis: characteristics & pay  Non-monetary aspects of job quality  Comparative analysis: job quality  Summary and conclusions

4. Temporary working in theory 1. Who takes temporary jobs?  Temporary labour as a buffer: ‘voluntary sorting’ in labour market attractive to those with weak attachment young, singles, women, older workers more likely i.e. do not want to invest in firm-specific training  Agency workers in particular may be used as a screening device; reduce costs of hiring ‘risky’ workers (Houseman et al, 2003) association between agency work and disadvantaged labour market groups and those with poor work histories  Industry emphasises role of agency working in assisting labour market ‘outsiders’

5. Temporary working in theory (2) 2. What are temporary jobs worth?  Standard theory suggests wages lower due to: differences in human capital status as ‘outsiders’ not covered by union bargaining ‘risky’ workers ‘pricing themselves into permanent employment’ (Addison and Surfield, Southern Economic Journal, 2007)  Positive wage gap may occur for: shortage occupations as compensation for poorer conditions

6. Previous research

7. Wage estimation  Basic theoretical model: w = e γx estimated as log(w)=β’x + ε  Standard estimation of temporary job differential E[log(w i )|x i,TWC i ]=β’x i +φTWC i + ε i (1) hence Δ TWC =e φ -1  But estimate of β may not be consistent estimator of γ: E[w|x] = [e log(w) |x] = E[e β’x+ ε |x] = e β’x E[e ε |x]  Assume ε follows a normal distribution, then E[e ε |x] = e V(ε|x)/2  Assume V(ε|x) is linear, hence V(ε|x) = λ 1 x + λ 2 TWC  It follows that Δ TWC =e φ e λ 2 /2 -1  λ can be estimated using squared residuals of (1) in place of V(ε|x) See Blackburn, M. (2007) ‘Estimating wage differentials without logarithms’, Labour Economics

8. OLS estimates of error dependence Table 1

9. Data sources  UK Labour Force Survey administered quarterly to a sample of 60,000 households Spring 2006 LFS used to examine who takes agency jobs short panel element to LFS longitudinal five-quarter datasets from Spring 2001 to Spring 2005 pooled to examine wages  Working in Britain 2000 cross-section of 2,466 working individuals aged 20-59/64 large range of questions on non-monetary aspects of job quality work status questions identical to LFS  Both focus on contract status of employees

10. Table 2: Temporary employment in Britain (employees, Spring 2006, Labour Force Survey) NumberProportion of temporary employment Proportion of total employment Temporary agency employees 244,93018.91.0 Fixed-term contract employees 603,44346.62.6 Seasonal/casual employees 301,38523.31.3 Other temporary employees 145,99711.30.6 All temporary employees 1,295,7351005.5 Permanent employees 22,368,214-94.5

11. Who takes temporary jobs? Multinomial logit results (Spring, 2006, Labour Force Survey) Table 3AgencyFixed-termSeasonal/ Casual Other Characteristics increasing likelihood of state relative to permanent employment  High qualifications  Inactive one year ago  Low-skilled and semi-skilled occupations  New EU and rest of world countries of origin  Female with child (aged under 5 or 5- 18)  High qualifications  Unemployed or inactive one year ago  Old EU, new EU and rest of world country of origin  Part-time  High-skilled and semi-skilled occupations  Vocational qualification  FT student  Inactive one year ago  Part-time  Low-skilled, semi skilled occupations  New EU and rest of world countries of origin  Unemployed or inactive one year ago  Part-time Characteristics decreasing likelihood of state relative to permanent employment  Child aged 5-18  Managerial occupations  Child under 5  Older workers  Low skilled occupations  Older workers  Black workers  Child 5-18  Married  Managerial occupations  Older workers  Child 5-18  Female with child (under 5 or aged 5-18)

12. Mean hourly wages by contract type and gender (table 4)

13. Estimations of log gross hourly wages by status

14. Corrected estimation of log gross hourly wages by temporary status

15. Non-monetary aspects of job quality  Follow Green (2006) and Clark (2005)  Non-monetary aspects of job quality important  Job quality a measure of worker well-being  Also a focus of the EC: directives emphasise quality of temporary jobs EC (2001) develops 10-point indicator, incl.:  wages (and transition to higher paid jobs)  job satisfaction  stress; strain

16. Job quality: anxiety  Anxiety a focus in health literature relation between temporary jobs, anxiety and depression  Measure used reflects anxiety about status  Reflects precarious position under UK labour market regulation  Self-completion questions 4 point scale: “not at all anxious - very anxious”

17. Table 7 Anxiety about situations arising in job (ordered probit analysis)

18.  Much anecdotal evidence of ‘drive’ in agency work  Use Green’s distinction: discretionary effort constrained effort  Work psychology literature suggests agency jobs do not suffer ‘role overload’; roles clear (Guest, 2006; Parker et al., 2002)  Fits economic theory Job quality: effort

19. Table 8 Determinants of work effort

20. Job quality: work strain  WiB contains measures of psychological well-being (Warr, 1990)  Self-reported 6 point scale of frequency of worry/exhaustion caused by job  Individual items and index to capture multi- dimensional aspect (alpha=0.77)

21. Table 9. Measures of work strain

22.  Useful subjective indicator of job quality  Rose (2006) distinguishes between ‘intrinsic’, ‘extrinsic’ and ‘relational’ aspects of satisfaction  Little existing research focused on temporary workers  Expectations for some aspects clear: job security promotion prospects  Other less obvious: nature of work hours worked relations with colleagues/supervisors  May be differences between forms of temporary work Job quality: satisfaction

23. Table 10a. Extrinsic job satisfaction

24. Table 10b. Intrinsic job satisfaction

25. Table 10c. Relational and overall job satisfaction

26. Conclusions  Some evidence that casual/seasonal and other temps suffer lower pay  More compelling evidence that agency workers have lower pay  Satisfaction levels of agency workers lower than permanent employees across a range of intrinsic, extrinsic and relational measures  Anxiety levels of agency workers are higher  Not clear that agency work appeals to groups claimed by industry  More research needed on wage differences and reasons for them  Suggests role for regulation in UK to enhance attractiveness of agency work (as EC desires)  Structural characteristics of agency work more difficult to address