Equal pay for temporary agency workers

Download article in original language : ES9907140FES.DOC

On 1 July 1999, a reform of Spanish legislation on temporary employment agencies was passed. Among other provisions, this gives temporary agency workers the same pay as employees of the user companies in which they work, and has brought severe criticism from the sector's employers' association.

Since the installation of temporary employment agencies (empresas de trabajo temporal, ETT) in Spain in 1994, trade unions have demanded a reform of legislation in order to improve working conditions in this type of company, which tend to be characterised by very low wages and little job security.

Negotiations over reform between the government, the employers' associations and the trade unions went on for over two years without reaching an agreement (ES9904117F). The government stated some months ago that it intended to reform the law without the consensus of the temporary agency sector's employers, which were totally opposed to one of the main planks of the proposed reform - pay parity between temporary agency workers and the employees of the user companies in which they work. However, the government's position was not without contradictions either: in the procedure of approving a new law it attempted until the last moment to moderate the initial standpoint and make some concessions to the employers. There were two main questions at stake: whether to use the user company's own collective agreement or the sectoral agreement covering that company to establish the pay of agency workers; and whether to award them pay parity immediately or to establish a transition period.

Due to pressure from trade unions and opposition political parties, the formula that was finally adopted in the legislative reform approved by parliament on 1 July 1999 was the most favourable to temporary agency workers. The new legal text - which will probably come into effect in August, 20 days after its publication in the Official Journal (Boletín Oficial del Estado) - thus establishes that agency workers must receive the same pay as laid down in the user company's collective agreement immediately on starting work. The pay rates in company agreements are usually higher than those in sectoral agreements.

As well as pay, the reform also introduces another series of provisions, such as: an obligation on temporary employment agencies to employ a minimum of 12 permanent workers in their workforce for every 1,000 workers that they provide to user companies; some limitations on the continuous use of temporary agency workers; greater safety guarantees at work; and greater control over recruitment through agencies by company trade union representatives.

Assessment by employers' associations

The reaction of the sectoral employers' association, the Spanish Association of Temporary Employment Agencies (Asociación Española de Empresas de Trabajo Temporal, AETT), was not long in coming. In AETT's opinion, the reform threatens the autonomy of the social partners, because in the current national collective agreement for temporary employment agencies (which is valid until 2000 - ES9702103N), the reference wages are those agreed in the sectoral agreement for the industry to which the user company belongs (rather than in the user company's agreement). However, the employers' most serious claim is that the new legislation threatens the viability of many agencies, especially the smaller ones, which will not be able to cope with such a drastic increase in labour costs. Sources within the sector estimate that the wages paid by temporary agencies are around 10%-15% lower than those of the user companies, although in some cases the difference is as high as 40%. The employers state that the only way to guarantee the viability of the sector is by cutting other costs. The proposals are to eliminate both the current social security contributions differential (temporary employment agencies pay a contribution of 1.5% of pay for unemployment insurance, compared with 0.5% for other companies) and the compensation of 12 days' pay per year of service that applies to the temporary contracts of transferred workers.

AETT has received the support of the Spanish Confederation of Employers' Organisations (Confederación Española de Organizaciones Empresariales, CEOE) which has expressed its concern about the increase in labour costs and the future development of the sector, and of the International Confederation of Temporary Work Businesses (CIETT), which severely criticised this reform at its recent conference.

Trade unions' assessment

The reform has fulfilled one of the main demands of the trade unions, pay parity with employees of user companies, for which they had to fight up to the last moment. However, they claim that in fact pay will not be equal, because in many cases company agreements in user companies do not regulate the whole wage that is finally received. Moreover, the unions consider that the reform is clearly insufficient in some areas. In their opinion. improvements should be made in the measures to promote employment stability at temporary agencies, because they see the new law's rate of 12 permanent workers for every 1,000 as very low. This figure is calculated not on the basis of an agency's number of contracts to provide workers, but on the total number of days worked by those workers: in practice, a great number of agencies already fulfil this criterion.

The unions also feel that there should be greater transparency and trade union control in the use of temporary agency work and that workers should have a greater degree of legal protection in the event of non-fulfilment of a contract. This has been one of the most criticised aspects of the new regulations, which are seen as still being very permissive with regard to infringements and sanctions.

Commentary

Bringing the pay of temporary agency workers into line with those of the user companies involves a radical change of scenario for this type of company. The fact that agency workers offer "equal work for less pay" has been the main reason for temporary agencies' rapid implantation since 1994 (in 1998 they were responsible for 15% of temporary recruitment). However, the abusive use of agency workers to reduce labour costs has proved to be very unpopular, as demonstrated by the unanimous approval of the new legislative reform by all political groups. The reform imposes a change of strategy for agencies, which should now seek to offer a different type of advantage, based on offering specialised staff and the ability to respond quickly and efficiently to the demands of the user companies. Although agencies will still offer the possibility of lower labour costs (because bonuses and supplements make real wages higher than those laid down in agreements, and in many companies without their own agreement wage improvements are established through company pacts), there is no doubt that the reform will lead to a considerable increase in the wages of temporary agency workers (María Caprile, CIREM Foundation).

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Lisa kommentaar