New forms of employment and work: survey findings from the West Midlands

According to a survey of workplaces across the UK's major industrial region, the West Midlands, first reported in February 2000, the use of non-standard forms of employment and outsourcing is more widespread than initiatives to increase the flexibility of work organisation and working time. Yet it is the use of these latter, internal forms of flexibility, which is more likely to be the subject of negotiation and consultation with employees. A significant "participation gap" surrounds employers' use of non-standard forms of employment.

Research for the European Commission, carried out by Rachael McIlroy and Paul Marginson of the Industrial Relations Research Unit (IRRU), University of Warwick, in the summer of 1999 and reported in February 2000, analyses the use and regulation at workplace level of new forms of employment and work in the West Midlands region. The findings draw on a survey of managers at a representative sample of 163 workplaces employing 20 or more people across the region, engaged in a wide range of industries and services. The West Midlands region accounts for 9% of the UK workforce, and has long been seen as the manufacturing heartland of the economy – a role highlighted by the recent crisis at Rover (UK0005174F and UK0004164F). Accordingly, manufacturing accounts for almost a quarter of the region's workforce, compared with 15% nationally, and private sector services account for a comparatively smaller share.

Use of new forms of employment and work

New forms of employment and working were taken to include non-standard arrangements such as part-time, temporary and fixed-term employment, temporary agency work, self-employment and distance and teleworking. Chart 1 shows that two-thirds of workplaces in the survey employed part-time workers, 36% used temporary employees, a further 23% used fixed-term contracts and 27% used temporary agency workers. Only 1% of workplaces used distance or teleworking, whilst slightly more (5%) used homeworking. Around one in eight workplaces utilised self-employed workers. Overall, four out of every five workplaces (80%) reported using at least one of these seven forms of non-standard employment. Conversely, one in five did not utilise any of them. Three times as many workplaces reported an increase in the use of part-time working and self-employment over the past two years as those reporting a decrease. The number of workplaces reporting an increase in types of temporary worker was broadly offset by those reporting a decrease in use.

Non-standard forms of employment were used amongst the largest occupational – or "core" – group within the workforce and not just confined to marginal – or "peripheral" – workforce groups. Indeed, for several occupational groups part-time employment was more widespread where that group was the largest at the workplace than where it was not. Moreover, fixed-term employees and agency workers were more commonly used where the occupational group concerned was the largest at the workplace.

The new forms of work organisation investigated covered "internal" forms such as teamworking, functional or task flexibility, and flexible working time arrangements and "external" arrangements, primarily outsourcing or subcontracting. Chart 2 shows that subcontracting was utilised by the majority (63%) of workplaces, followed by teamworking (59%), functional or task flexibility (52%), and flexible working time arrangements (other than overtime) (48%). Approaching three-quarters of the workplaces concerned reported that the use of the three "internal" forms of flexibility had increased over the previous two years. A little over one-quarter reported increased use of subcontracting, with fewer reporting decreased use.

Use of teamworking and functional flexibility was negatively associated with utilisation of subcontracting and self-employed workers. Use of self-employment and agency workers was positively associated with subcontracting. This suggests that "external" forms of flexibility are an alternative to "internal" forms of flexibility rather than complementing them. Further, the use of temporary and fixed-term employees was associated with "internal" forms of flexibility, whilst overtime working and the use of agency workers was associated with "external" forms.

Rationales and consequences

Four main reasons for utilising non-standard forms of employment were identified by managers: cost minimisation (pressure to reduce costs); product market requirements (demand uncertainty and meeting peaks in demand); labour market influences (recruitment difficulties, short-term staff cover and securing specialist skills); and employees' preferences (meeting employees' needs). As chart 3 shows, the importance of specific reasons differed according to the type of employment in question. A majority of managers cited both meeting peaks in production and employees' needs as reasons for using part-time employment. Meeting peaks in production was also cited by a majority of managers as a reason for using temporary and fixed-term employees and also agency workers. Short-term cover was a second important reason for using agency workers. Obtaining specialist skills was a widespread reason for utilising self-employed workers.

The consequences in terms of costs and quality of increased use of part-time and temporary, fixed-term and agency working were by no means beneficial in all cases. Whilst costs are more likely to have reduced with increased part-time employment, they are more likely to have increased as the result of increased use of temporary, fixed term and agency working. The reverse is the case with quality. Quality tended to become less reliable with increased use of part-time employees, but more reliable as use of temporary staff increased.

Regulating the new forms of employment and work

Managers were asked about the extent to which new forms of employment and work are the subject of negotiation and consultation within the workplace. Presented with a list of 16 items (covering non-standard forms of employment, new forms of work organisation, introduction of new equipment, training, job security and redundancy and employee welfare), managers in the 36% of workplaces with employee representatives were asked whether there was negotiation or consultation with these representatives over the items specified. Just over one-half of these workplaces negotiated over at least one issue and virtually all workplaces consulted over at least one issue. A wide-ranging negotiating agenda was rare: fewer than 10% of these workplaces negotiated on five or more of the 16 issues. It was more common in terms of consultation, with over one-third of the managers concerned reporting that employee representatives were consulted over five or more items.

Amongst the five items most frequently negotiated over were the three forms of "internal" flexibility – flexible working time, task flexibility and teamworking. The same went for consultation. Non-standard forms of employment were much less likely to be the subject of either negotiation or consultation. Aspects of employee welfare for temporary and fixed-term employees were much less likely to be the subject of negotiation and consultation than those for permanent employees.

In the absence of consultation and negotiation with employee representatives, managers might consult directly with employees on the matters concerned. However, as can be seen from chart 4, direct consultation with employees is more likely to be a complement to negotiation and consultation with representatives than a substitute for it. There is neither direct consultation nor negotiation or consultation with employee representatives in at least 40% of workplaces with representatives, for any given issue. The size of this "participation gap" is considerably greater in respect of non-standard forms of employment than with new forms of work organisation. Moreover, direct consultation with employees is more likely on training, but not on any other matter, in workplaces without employee representatives than those with them.

Commentary

The finding that "external" forms of flexibility are an alternative to, rather than a complement of, initiatives aimed at "internal" flexibility is consistent with those of the most recent national Workplace Employee Relations Survey (UK9811159F). However, it questions the prescription of the influential "flexible firm" model, which suggests that firms should differentiate between core and peripheral workforce segments from whom, respectively, "internal" and "external" forms of flexibility are to be sought. Whilst cost minimisation was one of the rationales cited by managers for utilising non-standard forms of employment, the findings underline the importance too of considerations of labour supply (recruitment difficulties and shortages of specific skills), employees' own preferences for part-time or self-employed work and fluctuations in the product market. Frequently it is assumed that the management outcomes of utilising non-standard forms of employment can be "read off" from the rationales identified. The findings caution against this, revealing that adverse cost and quality consequences are far from unusual.

In the face of declining levels of union recognition, and with non-union structures of employee representation remaining uncommon, the "representation gap" at the level of the workplace in the UK has widened over recent years. The survey reported here goes a step further, showing that amongst West Midlands workplaces representation does not necessarily lead to negotiation or consultation over the organisation of work, working time, outsourcing or the use of non-standard forms of employment. In short, there is an even greater "participation gap" which forms of direct participation do not seem to ameliorate. Negotiation or consultation with employee representatives was, however, noticeably more widespread over organisation of work and working time than on the latter two aspects. The "participation gap" would appear to bear most heavily on those sections of the workforce in non-standard forms of employment. (Rachael McIlroy and Paul Marginson, IRRU)