Impact of subcontracting on working conditions

A report on subcontracting has been published by France’s Research and Statistics Department (DARES). The survey-based research examines the impact of subcontracting on working conditions and has found that the practice varies by sector and involves workforces with particular characteristics. Although subcontracted work is found to be more intense and risky, the levels of job satisfaction and job security are only slightly lower than in the economy generally.

Main findings

The study (in French, 164Kb PDF) published by the French agency for Studies, Research and Statistics (DARES, part of the Ministry of Work, Employment and Health) assesses the impact of subcontracting on working conditions. Drawing on data from the 2006–2007 Organisational Change and Information survey (Changement Organisationnel et Informatisation, COI) researchers found that 29% of all companies with at least 20 employees undertake some form of subcontracting. There are three different types of subcontractors:

  • general contractors (donneurs d’ordres) subcontract part of their activities to other firms (18% of all companies are classified as general contractors).
  • subcontractors (sous-traitants) receive orders from general contractors. They account for 7% of all companies in the study.
  • intermediates are both subcontractors and general contractors and account for 4% of all companies.

Company characteristics

Figure 1 shows the distribution of different types of companies by sector. Whereas most general contractors operate in commerce and services (54% of all companies in that category) subcontractors and intermediates are most prominent in the manufacturing sector (52% and 56% respectively). Companies in construction and transport are more likely to receive work as subcontractors than to contract their work out.

Subcontractors tend to be smaller companies than the other parties involved: 57% have 20 to 49 employees (40% of intermediates and 42% of general contractors). Consequently, only 12% of subcontractors have staff levels of more than 200 (31% of intermediates and 30% of general contractors).

The vast majority of companies involved in subcontracting are members of a company group. This applies to 86% of all subcontractors and 73% of all general contractors, but only 55% of the intermediates and 49% of all companies in the economy. This does not mean, however, that subcontracting takes place mainly within these groups. The main client is a member of the same company group in about 25% of cases for intermediates and 17% for subcontractors.

Figure 1: Subcontracting by type and sector (% of all companies in that category)

Figure 1: Subcontracting by type and sector (% of all companies in that category)

Source: DARES, based on data from COI

The workforce of subcontractors and intermediates is characterised by a low proportion of women (25% and 24%, respectively) and a high proportion of blue-collar workers (57% and 43%), most of them with formal qualifications (40% and 31%). 5.9% of those employed by subcontractors are agency workers (4.9% for intermediates and 3.5% for general contractors and the whole economy).

Working conditions

The report finds that formalised relations between contractor and subcontractor have an impact on work organisation, and Figure 2 summarises selected findings. The figures show that formalisation seems to be significantly higher with regard to orders and instruction, the setting of precise working objectives and following strict quality procedures in all companies that are involved in subcontracting. Permanent control at work is significantly more frequent for general contractors and subcontractors, whereas a higher degree of control among colleagues is only observed in subcontracting companies. Finally, being at the lower end of subcontracting (that is, intermediate contractors) decreases the likelihood of unclear instructions to employees.

Figure 2: Selected work organisation indicators (% of employees by type of enterprise)

Figure 2: Selected work organisation indicators (% of employees by type of enterprise)

Notes: * Difference statistically significant at 10% level (all other things being equal); ** Difference statistically significant at 5% level (all other things being equal); ns: not statistically significant.

Source: DARES, based on data from COI

Statistically significant differences in working time constraints are reported from general contractors and subcontractors. Whereas work on Sundays is particularly prominent for the former, employees in the latter work above average at night. However both periods of working time are more likely to be found among intermediates. At least three out of six work intensity indicators are more frequently found in subcontracting firms and intermediates, than in those companies that are not involved in subcontracting. These types are also more likely to report deadlines and quality standards being ignored due to time pressure.

Companies involved in subcontracting are more likely to have works councils and a trade union presence in the workplace, but this is likely due to differences in the size of companies. Little variation is recorded with regards to interpersonal relations. Concerning occupational health and safety (OSH) there are considerable differences between different types of companies, but few are significantly different from companies that are not involved in subcontracting. Roughly half of the workforce within subcontracting and intermediate companies stated that errors at work can have dangerous consequences for their security and the security of others. For general contractors, these indicators are 36% and 37%, respectively. Subcontractors and intermediates also report higher rates of accidents (11% and 9% of employees, respectively) than general contractors (6%) as well as higher rates of employees who have been absent from work as a result of an accident (8%, 6% and 4%, respectively). However, none of the above is significantly different from the reference group. Finally, the report links the differences in OSH to higher shares of industrial jobs and the tendency to outsource risky tasks in particular.

Conclusion

The study makes some concluding remarks about the sustainability of employment in subcontracting. Three sets of factors are worth noting. First, employees in subcontracting perceive higher health and safety risks, notably through more work-related accidents and increased time pressure. Second, there are a number of psychological risk factors, such as perceived economic insecurity and worries about losing one’s job, that are more likely among subcontracting workers. Finally, work satisfaction is recorded to be lower among employees in subcontracting. They report, for instance, more often to have reduced their commitment to work over the last three years and that they are not being paid correctly. Thus, the authors of the study conclude, the study presents some evidence that jobs in subcontracting firms are less sustainable than jobs in contracting companies.

Methodology

The most recent Organisational Change and Information survey, the basis for this study, was carried out between 2006 and 2007. Data were collected from some 14,000 companies with at least 10 employees in the private and public sectors, including hospitals. Subsequently, employees of respondent companies with at least 20 employees were surveyed. Some 14,400 responded.

Reference

Algava, E. and Amira, S. (February 2011), ‘Sous-traitance: des conditions de travail plus difficiles chez les preneurs d’ordres (164Kb PDF)’, Dares Analyses, No. 011.

Sebastian Schulze-Marmeling, HERA

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

Eurofound welcomes feedback and updates on this regulation

Add new comment