Temporary employment and leasing of employees

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Several studies published in 1997 have contributed to putting a number of different types of "flexible employment relationship" - like temporary employment and "leasing of employees", and outsourcing - on the agenda in Norway. Representatives from trade union organisations believe that the scale of non-permanent employment relationships is too great, and would like to see either a tightening of current practice or of the present statutory provisions. The employers' organisations, on the other hand, would like to see a softening of the law on temporary employment and leasing of labour.

Several newly-published studies have contributed to putting a number of different types of "flexible employment relationship", like temporary employment and "leasing of employees", on the agenda in Norway. The debate regarding different types of flexible employment relationships has partly focused on their desirability, and partly on the relationship between regulation of temporary employment and alternatives like private placement services and outsourcing/use of external suppliers.

Temporary employment

The Worker Protection and Working Environment Act (WPWEA) of 1977 regulates the cases in which temporary employment is permissible. As a general rule, all employment relationships should be permanent. However, the WPWEA allows for certain exceptions. Temporary (fixed-term) employment may be used to fill temporary vacancies due to, for example, sickness, maternity leave or other forms of absence from work. Temporary employment may also be used for different types of traineeships. In addition, temporary employment may be used when "warranted by the nature of the work" - for example, in cases of unexpected workloads or if the work/task is of a temporary nature. In January 1995, the WPWEA was amended to place restrictions on the use of fixed-term contracts in order to carry out work which is "ordinarily performed in the enterprise". The parliamentary act was passed after extensive lobbying of the Parliament, and went further than what the Labour Party Government of that time had proposed.

Recently published figures from Statistics Norway show that approximately 13% of Norwegian wage earners, or 250,000 people, are employed on a temporary basis. Temporary employment is highest among young employees: within the 16-24 age-group, approximately one-third of all wage earners are employed on a temporary basis. More women than men are temporary employed. This may in part be explained by the fact that fixed-term contracts are more commonly found in female-dominated sectors of the economy. Previous surveys show that temporary employment is more common in the public sector relative to the private sector. In addition, many temporarily employed people may also be found within the hotel and restaurant trade. This survey covers employees with at least one hour of paid employment during the week of the interview. A number of the temporary employed (approximately 20%-25%) state that they are mainly pupils/students, work in their own home or receive national insurance/social security.

In a newly published survey, a sample of enterprises in the private sector were asked what effects the 1995 WPWEA amendments would have on their enterprise ("Mot eksternalisering av arbeid? Analyser av tilknytningsformer for arbeid", Torstein Nesheim, SNF-rapport 97:35 (1997)). A majority of the enterprises believe that the amendment will make it more difficult to hire temporary employees, and are contemplating using different types of subcontracted labour or outsourcing as a reaction to the more restrictive statutory provision. The survey concludes that the WPWEA amendments will have two effects: an increase in permanent employment as well as increased use of subcontracted/leased labour and external suppliers. So far, employees have not reported any significant changes in the type of employment relationship due to the WPWEA amendments. In the short run it will be difficult to distinguish the effects of the amendment from the effects of the significant employment growth recently seen in the Norwegian economy.

Leasing of employees

There is a general prohibition against "leasing out" labour in Norway - a term which covers both traditional private placement services/temporary work agencies and the situations when one firm leases employees from another - but certain exceptions are provided for. A general dispensation from the law is provided regarding "simple tasks" to be performed at offices, shops and warehouses, and several firms provide this type of labour (private placement services/temporary work agencies). We can also find a certain amount of subcontracting of labour between different production firms. No general dispensation is provided for this type of transaction, but the firms may on an individual basis apply for dispensation either on a case-by-case basis, or covering a given period of time.

The scale of leased labour has increased lately. A new research report estimates that private placement services doubled the number of invoiced person-hours from 1994 to 1996 ("Vikarbyråer i vekst", Karen Modesta Olsen, Institutt for samfunnsforskning. Rapport 97:11 (1997)). According to the report, private placement services in total account for approximately 0.5% of the total number of person-hours worked by wage earners in Norway. The Directorate of Labour estimate that approximately 20,000 person-years are worked by subcontracted employees all together, against 5,000 person years in 1987 ( reported in Klassekampen on 26 July 1997). This means that subcontracted labour constitutes approximately 1% of the labour force. In a comment to these figures in the Klassekampen newspaper, the head of the Directorate of Labour stated that the increase in subcontracted/leased labour can mainly be ascribed to a general improvement in the Norwegian economy, and that the figures are not particularly high.

Commentary

Norway is one of the few European countries which has a general prohibition against leasing labour, as well as having relatively tight regulations with regards to temporary employment (see "Labour market institutions and regulations", Jon Erik Dølvik et al, in "Making solidarity work. The Norwegian labour market model in transition", Jon Erik Dølvik and Arild Steen (eds), Scandinavian University Press (1997)). Lately, the statutory provisions have been tightened further. According to the press, the Labour Party Government does not want to ratify the new ILO Convention concerning private employment agencies which permits private leasing and exchange of labour, even if the Norwegian Government voted in favour of this convention at the International Labour Conference in June 1997 (see Aftenposten, 1 August 1997).

Despite this, Norway does not stand out when compared to the other Scandinavian countries, neither with regard to the scale of leased labour, nor the share of temporary employment (see Olsen, 1997, cited above). Private placement services have not only increased their turnover the past years, but in addition provide a broader spectrum of services. In the committee which grants dispensation from the law with regard to the leasing labour, a majority of the members are in favour of allowing the leasing of health personnel for a trial period, a practice which until now has not been permissible. However, this decision has been appealed by theNorwegian Confederation of Trade Unions (LO), and the question will be decided upon by the Ministry of Local Government and Labour.

When the figures which showed that approximately 250,000 employees are employed on a temporary basis were made public, several of the employee organisations called for further restrictions with regard to temporary employment. These organisations believe that enterprises use temporary employment contracts in cases where, according to the law, permanent employment contracts should be provided. Several employee organisations have also argued in favour of tightening today's practice with regard to subcontracting labour, and believe that in a number of cases enterprises use subcontracting of labour as a means of circumventing the WPWEA's provisions regarding temporary employment. The employee organisations have received support from some members of Parliament, but none of the major political parties have advocated a further amendment of the law.

The employers' organisations, on the other hand, believe that the provisions of the WPWEA with regard to temporary employment are too restrictive. These organisations are also in favour of less restrictions with regard to leasing out labour, and believe that a less restrictive practice will lead to more jobs. Political parties to the right of centre support the employers' organisations' demands for less restrictive statutory regulations with regard to the leasing of labour and temporary employment. (Kristine Nergaard, FAFO Institute for Applied Social Science)