Susan Houseman - Controversy behind the recent growth of agency work

Susan Houseman, Senior Economist at W. E. Upjohn Institute for Employment Research, discusses the controversy behind the recent growth of agency work.

I think it’s important to appreciate the fact that historically, temporary work agencies were seen as exploiting workers. If you go back into the early part of the twentieth century, particularly during the Great Depression, many temporary work agencies charged high fees for workers and often gave misleading or unrealistic expectations about the wages that they would earn and as a consequence of this, this view that temporary work agencies were quite exploitative.

Many countries including Germany banned, or largely banned, temporary work agencies. Now, European countries started to relax restrictions in important ways in the 1980s, it continued to the 1990s and early 2000s, relaxing restrictions.

This relaxation of restrictions was the result of high unemployment, and rightly or wrongly many governments perceived that employment protection legislation was causing high unemployment. Relaxing restrictions on temporary work agencies, along with allowing fixed term contracts was a way to introduce more flexibility into the work force.

So, not surprisingly, with the relaxation of restrictions on the use of temporary work agencies there was a high growth in temporary help employment in Europe, rising from almost nothing, to two or three per cent by the 2000s. In Great Britain it was actually a bit higher, about four per cent.

Interestingly, in the United States, we saw a similar growth in temporary work employment during this time period, so all of this suggested that business globally, at least large businesses, were really changing the way that they staffed employment.

So, why is this controversial?
Many still regard, temporary work employment as bad jobs. They are largely filled by low-skilled workers, although the temporary help agencies have tried to move increasingly into professional jobs, for the most part for low-skilled, low-wage work. And many view these as essentially traps, not allowing people much, not giving workers much in the way of job skills and not really leading to permanent jobs. On the other hand, some have viewed them as potential stepping stones for low wage workers, by helping them to build skills and to find permanent jobs ultimately.