Short and sweet?: Job Quality in Temporary Work

Chris Forde and Gary SlaterLeeds University Business School and

University of Bradford

Prepared for presentation at University of Sheffield Economics Department Seminar Series, 30th May 2007

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?

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

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’

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

Previous research

Real hourly wage differences temporary vs. permanent jobs

Raw difference Controlled difference

Men Women Men Women

Booth et al. (2002a) – BHPS, 1991-97

Seasonal/casual 46% 23% 11% 8%

Fixed-term 13% +14% 7% 11%

Booth et al. (2002b) – BHPS, 1999-2000

Agency workers 38% 19% 18% 4%

Wage estimation

Basic theoretical model: w = eγx estimated as log(w)=β’x + ε

Standard estimation of temporary job differential

E[log(wi)|xi,TWCi]=β’xi+φTWCi+ εi (1) hence ΔTWC=eφ-1

But estimate of β may not be consistent estimator of γ:

E[w|x] = [elog(w)|x] = E[eβ’x+ ε|x] = eβ’xE[eε|x]

Assume ε follows a normal distribution, then E[eε|x] = eV(ε|x)/2

Assume V(ε|x) is linear, hence V(ε|x) = λ1x + λ2TWC

It follows that ΔTWC=eφeλ2/2 -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

OLS estimates of error dependence

Table 1

All Men Women

Agency 0.045* (0.020)

0.006 (0.028)

0.081** (0.027)

Fixed-term contract -0.002 (0.011)

0.010 (0.018)

-0.010 (0.013)

Seasonal/casual 0.049* (0.019)

0.001 (0.033)

0.066** (0.023)

Other 0.094** (0.025)

0.051 (0.046)

0.117** (0.029)

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

Table 2: Temporary employment in Britain (employees, Spring 2006, Labour Force Survey)

Number Proportion of temporary employment

Proportion of total employment

Temporary agency employees

244,930 18.9 1.0

Fixed-term contract employees

603,443 46.6 2.6

Seasonal/casual employees

301,385 23.3 1.3

Other temporary employees

145,997 11.3 0.6

All temporary employees

1,295,735 100 5.5

Permanent employees

22,368,214 - 94.5

Who takes temporary jobs? Multinomial logit results (Spring, 2006, Labour Force Survey)

Table 3 Agency Fixed-term Seasonal/

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)

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

Table 4. Mean hourly wages by contract type and gender All Men Women Hourly wage (£) Permanent 9.74 11.20 8.35 Agency 7.83 7.55 8.17 Fixed term 10.20 12.09 9.07 Seasonal/casual 5.70 5.93 5.54 Other temporary 8.85 9.41 8.59 Wage difference (£) (p) – (a) 1.91***

(6.21) 3.65*** (8.46)

0.18 (0.42)

(p) – (f) -0.46** (2.15)

-0.89** (2.02)

-0.72*** (3.47)

(p) – (s) 4.04*** (17.03)

5.27*** (15.14)

2.81*** (9.53)

(p) – (o) 0.89* (1.79)

1.79** (2.01)

-0.24 (0.42)

Source: Labour Force Survey, 5-Quarter Longitudinal Datastets, Spring 2001-2005 Notes: Wages in constant (Autumn 2001) pounds. Absolute value of t-test of the wage difference in parentheses. * significant at 0.1 level **significant at the 0.05 level *** significant at 0.01 level

Estimations of log gross hourly wages by status

Table 5 Estimations of log gross hourly wages by contract type and gender

OLS OLS corrected All Men Women All Men Women All Men Women All Men Women Agency -0.020

(0.026) -0.034 (0.032)

0.002 (0.042)

0.003 (0.030)

-0.031 (0.036)

0.043 (0.048)

Fixed-term 0.043*** (0.013)

0.084*** (0.023)

0.020 (0.015)

0.043*** (0.016)

0.093*** (0.029)

-0.028* (0.017)

Seasonal/casual -0.044 (0.027)

-0.028 (0.043)

-0.065* (0.035)

-0.020 (0.030)

-0.027 (0.048)

-0.031 (0.037)

Other temporary -0.027 (0.039)

-0.003 (0.065)

-0.040 (0.048)

0.020 (0.044)

0.023 (0.074)

0.019 (0.053)

n 36408 17656 18752 36408 17656 18752 Source: Labour Force Survey, 5-Quarter Longitudinal Datastets, Spring 2001-5 Notes: Estimates are from ordinary least squares (OLS). The standard errors in the uncorrected OLS regression are robust. n is the number of person-year observations. Each specification also includes: age, age2, gender (all), ethnicity (4 dummies), married, education (6), industry (12), occupation (9), employment status one year ago (3) job tenure, job tenure2, part-time, union membership, country of origin, region (19) and 5 year dummies, Wages in constant (Autumn 2001) pounds. Standard error is in parantheses. * significant at 0.1 level ** significant at 0.05 level *** significant at 0.01 level

Corrected estimation of log gross hourly wages by temporary status

Table 6. Corrected estimations of log gross hourly wages by contract type and gender

RE FE All Men Women All Men Women Agency -0.035**

(0.021) -0.048** (0.027)

-0.014 (0.030)

-0.075*** (0.026)

-0.080*** (0.033)

-0.065* (0.041)

Fixed-term 0.035*** (0.013)

0.089*** (0.022)

0.007 (0.014)

0.007 (0.017)

0.037 (0.029)

-0.036** (0.020)

Seasonal/casual -0.039** (0.021)

-0.061** (0.032)

-0.038* (0.026)

-0.060** (0.028)

-0.101*** (0.041)

-0.036 (0.038)

Other temporary 0.001 (0.025)

0.040 (0.046)

-0.016 (0.031)

-0.004 (0.032)

0.076* (0.057)

-0.052* (0.040)

n 36408 17656 18752 36408 17656 18752 Hausman test χ2 (df) All: 1418.40 (37); Men: 777.06 (36); Women: 639.92 (37)

Source: Labour Force Survey, 5-Quarter Longitudinal Datastets, Spring 2001-5 Notes Standard errors inbrackets. n is the number of person-year observations. Each specification also includes: age, age2, gender (all), ethnicity (4 dummies), married, education (6), industry (12), occupation (9), employment status one year ago (3) job tenure, job tenure2, part-time, union membership, country of origin, region (19) and 5 year dummies, Wages in constant (Autumn 2001) pounds. Standard error is in parentheses. * significant at 0.1 level ** significant at 0.05 level *** significant at 0.01 level

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

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”

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

Arbitrary dismissal

Discrimination Victimisation

by management

Bullying Sexual

harassment

Agency 0.720*** (0.261)

0.883*** (.0267)

0.809*** (0.264)

0.952*** (0.234)

0.666** (0.326)

FTC -0.010 (0.208)

-0.189 (0.195)

-0.292 (0.203)

-0.293 (0.198)

-0.197 (0.190)

Seasonal/casual 0.029 (0.315)

-0.074 (0.316)

-0.005 (0.354)

0.298 (0.313)

0.327 (0.320)

Other temp. 0.792*** (0.303)

0.497** (0.251)

0.595** (0.275)

0.274 (0.228)

0.152 (0.251)

Female 0.020 (0.086)

0.088 (0.089)

0.081 (0.088)

0.299*** (0.096)

0.508*** (0.101)

TU member 0.113 (0.089)

0.149* (0.089)

0.188** (0.087)

0.192** (0.095)

0.168 (0.105)

Part time -0.059 (0.102)

0.015 (0.108)

-0.053 (0.107)

0.089 (0.112)

-0.117 (0.119)

U 6m+ 0.146* (0.087)

0.238*** (0.089)

0.184** (0.087)

0.142 (0.094)

0.045 (0.097)

Second job -0.002 (0.123)

-0.135 (0.136)

-0.164 (0.137)

-0.066 (0.147)

0.181 (0.137)

LT illness 0.199* (0.116)

0.178 (0.121)

0.245** (0.121)

0.215 (0.137)

0.245* (0.141)

Pseudo R2 0.058 0.053 0.054 0.063 0.075 n 1323 1323 1323 1323 1323

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

Constrained effort measures (1) (2) (3) (4) (5)

Discretionary effort

Job requires hard work

No time for everything

Excessive pressure

Effort index

Agency 0.484* (0.274)

0.321 (0.320)

0.264 (0.300)

0.190 (0.314)

0.278 (0.247)

FTC 0.456*** (0.163)

-0.011 (0.238)

0.662*** (0.211)

-0.009 (0.149)

0.199 (0.129)

Seasonal/casual 0.415 (0.274)

0.113 (0.465)

0.334 (0.349)

-0.263 (0.322)

0.043 (0.248)

Other temp. -0.214 (0.256)

0.103 (0.392)

-0.025 (0.300)

-0.333 (0.234)

-0.111 (0.226)

Female 0.153** (0.077)

0.264** (0.120)

0.046 (0.088)

0.007 (0.068)

0.068 (0.061)

TU member -0.037 (0.077)

0.197 (0.120)

0.071 (0.090)

0.262*** (0.072)

0.179*** (0.065)

Computer use 0.179** (0.086)

0.131 (0.128)

0.203** (0.097)

0.228*** (0.079)

0.199*** (0.071)

Work visible -0.042 (0.065)

0.138 (0.103)

0.207*** (0.077)

0.046 (0.064)

0.129** (0.054)

Regular appraisal

0.230*** (0.067)

0.221** (0.100)

0.170** (0.076)

0.105 (0.064)

0.161*** (0.058)

Supervisor 0.222*** (0.085)

0.138 (0.130)

0.251** (0.102)

0.280*** (0.074)

0.232*** (0.067)

Part time -0.205** (0.086)

-0.423*** (0.122)

-0.301*** (0.104)

-0.396*** (0.0.83)

-0.366*** (0.074)

U 6m+ -0.013 (0.073)

0.034 (0.109)

0.048 (0.082)

0.087 (0.068)

0.063 (0.061)

Second job 0.059 (0.113)

-0.294* (0.153)

-0.168 (0.127)

-0.169* (0.100)

-0.204** (0.095)

LT illness 0.219** (0.103)

0.063 (0.148)

0.075 (0.116)

0.292*** (0.099)

0.151* (0.083)

(Pseudo) R2 0.074 0.097 0.063 0.155 n 1700 1700 1700 1705 1704

Table 8 Determinants of work effort

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)

Table 9. Measures of work strain

(1) (2) (3) (4)

Worry about job

after work Difficult to

unwind Exhausted at

end of day Work strain

index Agency -0.377*

(0.218) -0.187 (0.236)

-0.401* (0.240)

-0.487 (0.439)

FTC -0.136 (0.144)

-0.054 (0.167)

-0.035 (0.147)

-0.236 (0.373)

Seasonal/casual -0.218 (0.332)

-0.429 (0.303)

-0.172 (0.290)

-1.685*** (0.596)

Other temp. -0.202 (0.242)

-0.240 (0.243)

0.207 (0.200)

-0.214 (0.659)

Female -0.018 (0.069)

0.020 (0.069)

0.025 (0.068)

0.023 (0.166)

TU member -0.092 (0.076)

-0.073 (0.074)

0.043 (0.070)

-0.119 (0.173)

Effort index 0.499*** (0.035)

0.515*** (0.038)

0.554*** (0.032)

1.501*** (0.074)

Discretion 0.059* (0.033)

-0.028 (0.033)

-0.064** (0.032)

-0.067 (0.076)

Supervisor 0.155** (0.073)

0.054 (0.073)

0.000 (0.073)

0.128 (0.181)

Part time -0.180** (0.087)

-0.182** (0.088)

-0.214** (0.086)

-0.454** (0.194)

U 6m+ 0.032 (0.072)

0.026 (0.070)

0.084 (0.065)

0.114 (0.154)

Second job -0.115 (0.109)

0.055 (0.113)

-0.089 (0.111)

-0.233 (0.244)

LT illness 0.210** (0.105)

0.403*** (0.090)

0.334*** (0.092)

1.128*** (0.244)

(Pseudo) R2 0.125 0.109 0.103 0.365 n 1710 1710 1710 1665

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

Table 10a. Extrinsic job satisfaction

Agency Fixed-term

contract Seasonal/

casual Other Pay

Extrinsic satisfaction Promotion prospects

-0.442** (0.218) -0.393 (0.244)

-0.433*** (0.168)

-0.554*** (0.204)

0.109 (0.400) 0.054

(0.475)

-0.792*** (0.240)

-0.740*** (0.283)

0.301*** (0.104)

Pay

-0.370** (0.189) -0.250 (0.209)

-0.078 (0.188) -0.102 (0.209)

0.180 (0.424) 0.193

(0.516)

0.000 (0.263) -0.002 (0.280)

0.802*** (0.130)

Security -1.259*** (0.195)

-1.294*** (0.214)

-0.869*** (0.209)

-1.008*** (0.222)

-0.315 (0.453) -0.237 (0.508)

-1.308*** (0.228)

-1.214*** (0.259)

0.227** (0.102)

Hours worked -0.415 (0.260) -0.457 (0.297)

-0.076 (0.182) -0.049 (0.207)

0.438 (0.394) 0.892** (0.398)

0.183 (0.290) 0.131

(0.398)

0.303*** (0.087

Fringe benefits -0.066*** (0.226)

-0.735*** (0.265)

-0.454*** (0.137)

-0.498*** (0166)

-0.034 (0.376) 0.061

(0.471)

-0.150 (0.252) -0.199 (0.255)

0.521*** (0.108)

Training provided

-0.416 (0.333) -0.376 (0.355)

-0.075 (0.186) -0.212 (0.216)

0.167 (0.356) 0.314

(0.389)

-0.797*** (0.270)

-0.801*** (0.300)

0.117 (0.105)

Table 10b. Intrinsic job satisfaction

Agency Fixed-term

contract Seasonal/

casual Other Pay

Ability to use initiative

-0.682*** (0.249)

-0.806*** (0.112)

-0.182 (0.196) -0.296 (0.215)

-0.086 (0.289) -0.234 (0.339)

-0.300 (0.199) -0.271 (0.217)

0.421*** (0.112)

Work itself

-0.467* (0.268)

-0.486** (0.237)

-0.285 (0.201) -0.427* (0.233)

-0.055 (0.310) -0.137 (0.389)

-0.049 (0.208) -0.071 (0.231)

0.330*** (0.100)

Amount of work

-0.362 (0.272) -0.245 (0.029)

-0.040 (0.174) -0.154 (0.202)

0.452 (0.339) 0.592* (0.328)

-0.145 (0.231) -0.177 (0.257)

0.283*** (0.093)

Variety in work

0.122 (0.192) 0.202

(0.227)

0.007 (0.194) -0.094 (0.222)

0.440 (0.278) 0.469

(0.339)

-0.420*** (0.142)

-0.411** (0.170)

0.411*** (0.099)

Challenge job sets

0.054 (0.260) 0.097

(0.297)

-0.052 (0.212) -0.150 (0.245)

-0.004 (0.287) -0.107 (0.358)

-0.317 (0.209) -0.165 (0.214)

0.498*** (0.094)

Responsibility in job

-0.447* (0.239)

-0.525** (0.264)

-0.077 (0.204) -0.194 (0.239)

-0.317 (0.300) -0.444 (0.373)

-0.273 (0.209) -0.237 (0.211)

0.452*** (0.096)

Chance to develop self

-0.185 (0.301) -0.337 (0.301)

-0.044 (0.191) -0.152 (0.210)

0.135 (0.360) -0.001 (0.430)

-0.715*** (0.233)

-0.655*** (0.236)

0.278*** (0.099)

Chance for personal

achievement

-0.344 (0.214) -0.442* (0.226)

-0.027 (0.221) -0.172 (0.233)

0.252 (0.280) 0.218

(0.361)

-0.430** (0.194)

-0.413** (0.199)

0.453*** (0.100)

Table 10c. Relational and overall job satisfaction

Agency Fixed-term

contract Seasonal/

casual Other Pay

Relational satisfaction Friendliness of work colleagues

-0.380 (0.286) -0.448 (0.295)

-0.241 (0.180) -0.241 (0.208)

-0.138 (0.524) -0.060 (0.590)

-0.131 (0.265) -0.052 (0.287)

-0.107 (0.095)

Relations with the boss

-0.450** (0.181)

-0.483*** (0.214)

0.128 (0.232) 0.139

(0.245)

0.034 (0.278) 0.062

(0.332)

-0.493** (0.236)

-0.528** (0.255)

0.078 (0.097)

Ability of management

-0.906 (0.288) -0.072 (0.096)

0.022 (0.193) 0.026

(0.216)

0.146 (0.298) 0.197

(0.347)

-0.153 (0.218) -0.212 (0.241)

0.183* (0.096)

Overall Overall satisfaction

-0.480** (0.211)

-0.492** (0.097)

-0.179 (0.169) -0.297 (0.242)

0.522 (0.348) 0.670* (0.363)

-0.701*** (0.234)

-0.804*** (0.265)

0.348*** (0.097)

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