Precarious situation of temporary agency workers

At present, the temporary agency work sector is expanding considerably in Denmark. In 2005, earnings in this sector increased by 35%. The present shortage of labour in the Danish labour market has contributed to the success of temporary work agencies in recent years and employers are very satisfied with the flexibility involved in recruiting a temporary agency worker. However, according to a research paper published in October 2006 by the Employment Relations Research Centre, the legal status of temporary agency workers in relation to a number of working conditions is still precarious.

Business is expanding in the temporary agency work sector in Denmark. In 2005, earnings in this sector increased by 35% compared with the preceding year. In 2004, earnings in the temporary work sector amounted to DKK 4.9 billion (€657 million as at 23 January 2007), compared with DDK 6.6 billion (€885 million) in 2005, according to figures published by Statistics Denmark (Danmarks Statistik).

Earnings are highest in the manufacturing industry, building and construction, and transport sectors. Last year, turnover in these sectors increased by 62%. Due to labour market shortages, the manufacturing industry, the building and construction sector and the transport sector have now for the first time surpassed the health sector as the biggest users of temporary agency workers. The large increase in the use of temporary workers in these sectors is partly due to the increasing employment of foreign workers in these fields.

Flexibility versus security

At a time when greater emphasis is being put on adhering to the Danish rules on hiring and firing employees specifically, and on flexicurity generally, this marked increase in the employment of temporary agency workers comes as something of a surprise. It could be assumed that the use of temporary workers increases the numerical flexicurity in the labour market; however, the question remains whether this alone explains the increasing use of temporary workers and if temporary workers enjoy adequate job and social security. Many enterprises seem to use temporary workers as a more or less permanent labour reserve for the purpose of reducing costs.

These are some of the results of a recent research paper (in Danish, 145Kb PDF) published by the Employment Relations Research Centre (FAOS) at the University of Copenhagen, which focuses, in particular, on the contractual regulations of the pay and working conditions of temporary workers. The report concludes that the employment situation of temporary agency workers could be described as being caught ‘in the firing line between flexibility and security’.

Reasons for recruiting temporary workers

The report analyses the factors that compel employers to increasingly choose to employ temporary agency workers. Some of these factors include the following:

  • to increase flexibility in the enterprise;
  • to avoid the administrative burdens associated with employment contracts;
  • to solve a temporary need for labour due to restructuring of the enterprise;
  • to address an acute need for labour due to the historically low level of unemployment and labour shortages in many sectors;
  • to test and recruit new employees;
  • to cope with other competition.

Collective agreement coverage

Many temporary agency workers today are covered by a collective agreement, while all of the larger and the majority of smaller temporary work agencies are members of an employer organisation. Danish Commerce and Services (Dansk Handel og Service, DHS, which in January 2007 merged with Dansk Erhverv, DE (DK0611029I)) covers 85% of all temporary work agencies in Denmark. Nevertheless, the use of temporary workers involves some problems that are specific to certain fields and sectors concerned. In the industrial field, temporary workers are covered by the collective agreement of the user company. In the services sectors, temporary workers are covered by the agreement between the temporary work agency and the workers themselves. Case law concerning the special position of temporary workers in relation to the temporary work agency and the user company is not very clear. One example of this is the so-called ‘electrician judgment’ from January 2006 (DK0602102N). In this case, it was held that the agreement concluded by the employer organisation, Danish Mechanical and Electrical Contractors’ Association (Tekniq), was a sectoral agreement; this means that it covers all work performed by electricians, including temporary workers, and also in relation to local agreements. Another judgment in the field of services established that the applicable agreement was the one concluded by the temporary work agency.

In some areas, temporary agency workers are covered by agreements that offer lower work standards and conditions than those applying to the permanent workers in the user company. This is the case, for instance, in situations where temporary workers are employed in jobs normally occupied by salaried employees. Temporary workers may be employed on the basis of different terms and conditions, as they are not covered by the statutory definition of salaried employees as laid down in the Legal Relationship (Employers and Employees) Act; moreover, according to a judgment from 2005, temporary work agencies are not covered by the agreement applying to salaried employees in the industrial sector. This means that it is possible for temporary agencies and user companies to hire and fire temporary workers giving only a day’s notice. Very often, these workers are employed for short periods at a time, so that they will not be covered by the EU directive on temporary agency work. This means that it will be difficult for temporary agency workers in some sectors to obtain continuous employment for the waiting period required to obtain the social benefits laid down in the collective agreement such as, for instance, pension and sickness pay.

Commentary

Traditionally, trade unions have not paid much attention to the temporary agency work sector. Instead, their main focus has been on regular employment. However, according to the conclusions of the FAOS research paper, the explosive expansion in recent years in the temporary work sector means that the trade unions will now make more of an effort to ensure stable pay and working conditions for temporary agency workers.

Carsten Jørgensen, FAOS

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