The operation and management of agencyworkers in conditions of vulnerabilitySonia McKay and Eugenia Markova

ABSTRACTirj_579 446..460

This article focuses on the operation and management of agency labour by employersand observes that there are strong contradictions between the employers’ statedreasons for using agency labour and the employment agencies’ perceptions of whysuch labour is utilised. While discussing agency labour generally, the article also takesaccount of the position of migrant workers within the agency sector, since agencieshave represented a significant route into employment for migrant labour. It drawsprimarily on 22 in-depth interviews with employers and employment agencies mainlyin the food processing, cleaning and care sectors. The research revealed that whilesome employers were using agency staff to cover for specific peaks in production,others had used it as an alternative method of dealing with vacancies that otherwisemight have resulted in permanent employment.

1 INTRODUCTION

The regulation of agency labour remains high on the political agenda following theadoption of the EU directive on temporary agency work1, which had been stalledsince 2002. The catalyst for its adoption was a meeting on 20 May 2008 when the UKgovernment signed a joint declaration with the TUC and CBI to support equaltreatment for agency workers, although only after 12 weeks’ employment. Thisopened the way for the social partners at EU level to re-commence their work onsecuring the directive. Thus just a week after the UK declaration was signed, agree-ment was reached between Eurociett/Uni-Europa, the European social partners forthe temporary work sector. This confirmed the parties’ support for a directive guar-anteeing equal treatment to temporary agency workers but went further than the UKdeclaration in stating that the ‘non discrimination principle will apply from day oneof an assignment, unless a qualifying period is agreed on at national level by socialpartners and/or tripartite bodies’. Thus, the UK social partners had negotiated a dealwhich fell short of that being pursued by most other social partner organisations inMember States. Nevertheless, its importance cannot be over-estimated, since itremoved the final obstacle to adoption of the European directive itself whose final text

❒ Sonia McKay is Professor of European Socio-Legal Studies and Eugenia Markova is a Research Fellowin Migration studies. Both work at the Working Lives Research Institute, London MetropolitanUniversity. Correspondence should be addressed to Sonia McKay, email: s.mckay@londonmet.ac.uk1 Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on tempo-rary agency work.

Industrial Relations Journal 41:5, 446–460ISSN 0019-8692

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states that there should be equal treatment of agency workers ‘as of day one qualifiedby a right for the social partners to agree otherwise’. The compromise means that UKagency workers will have more restrictive rights than those that will apply to workersin those Member States where the social partners do not agree to have a qualifyingperiod.

Twelve weeks is quite a long period of time for a worker to remain on less favour-able terms and conditions and while the UK agreement states that there will beanti-avoidance measures to prevent employers simply laying off agency workers andthen taking them on again, it does not cover situations where agencies move workerson to new assignments every 10 or 11 weeks. Assignments for fewer than three monthsare very typical in those sectors that employ agency workers. For example, researchon the poultry industry that the first author conducted in 2006 for the Ethical TradingInitiative found that a quarter of the employers surveyed used agency workers forshort-term casual work (under three months) while among the agency workers inter-viewed half had been working for less than three months.

Over the last decade, the use of temporary agency work has increased markedly.Estimates by the European Confederation of Private Employment Agencies for theUK suggest that in 2005 there were some 6,000 officially designated employmentagencies operating through 14,400 branches and sourcing 1.2 million workers a day (5per cent of the national workforce). These temporary agency workers made up 86 percent of all workers on a temporary contract, and the sector turnover was calculated at£24bn or 2 per cent of GDP.2 And these figures themselves are likely to be anunder-estimate of the number of agencies and the size of their GDP. In general it isonly the larger, well-established agencies that join the employment agencyfederations. Small agencies are much less likely to take up membership of bodies likethe Recruitment and Employment Confederation (REC), but their presence isincreasingly evident in the High Streets of most UK towns. Their growth can also beevidenced by the available VAT data, which shows that over 17,000 bodies operatingas employment agencies are VAT registered, suggesting that the number of agenciesand consequently the numbers of agency workers is much higher than the officialfigures demonstrate (McKay and Markova, 2008). Arrowsmith (2008) estimates thatin 2007 there were 1,170,000 workers in the UK working in temporary agency workand that agency work had grown by 8.7 per cent since 2004. EMAR (2008) estimatesagency working in the UK as between 1.1 and 1.5 million, with the mid-point being1.3 million. In a survey of 164 employers one in five had used recruitment agencies orlabour providers to source workers, with an even higher proportion (34 per cent)using agencies to source migrant labour (McKay et al., 2006).

This growth in agency work in the UK has depended on a variety of dynamics,ranging from the nature of national regulation to changes in the labour process andindustrial structure. Some studies have explored the economic and socio-culturalfactors driving this development (Arrowsmith, 2006; Bergström and Storrie, 2003;Koene and Purcell, 2004; Michon, 2005). Others have considered the roles of low paidand forced migrant labour in domestic work (Anderson, 2007), hospitality (Andersonet al., 2006; Wright and Pollert, 2006), the au pair sector (Ruhs and Anderson, 2006;Williams and Balaz, 2004), in agriculture and the sex industry (Anderson and Rogaly,

2 Accessed 4 August 2010 http://www.euro-ciett.org. Arrowsmith (2006) estimated just 2.6 per cent tem-porary agency workers while a CBI representative survey of 210 companies estimated 3.1 per cent (CBI, 2August 2007). The TUC (TUC, 2008).

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2005) and more widely (Anderson et al., 2006; Haque, 2002; Kempton, 2002; McKayet al., 2006; Markova and Balck, 2007; Martin, 2005; Vasta, 2004; Wills et al., 2009).

This article also considers the relationship between agency employment andmigrant labour. Although there are no reliable data on the proportion of migrantemployment contracts that are based on agency relationships, what evidence there isconfirms that migrants are less likely to be directly employed and more likely to workthrough employment agencies. Agencies appear to perform a particularly importantrole in introducing migrant workers to employers and it represents a significant firstentry point into the labour market for a considerable number of migrant workers(McKay and Winkelmann-Gleed, 2005; McKay et al., 2006). At the same time agencylabour, particularly where it is employed on low skilled work, is increasingly com-posed of migrant labour (Bell et al., 2007). Agency employment offers migrantworkers more speedy access to the labour market and this may act as a strongmotivator for migrants, who choose to work through agencies precisely because itallows them to get jobs quickly and often without having to comply with more rigidselection criteria attached to direct employment.

2 METHODOLOGY

The data for this article are drawn primarily from a research project in which weconducted face-to-face, in-depth semi-structured interviews with 22 employers andemployment agencies operating in food processing, cleaning, personal care, transportand general administration, but with a principal focus on the food processing sector,where the majority of interviews were conducted. The primary methodology adoptedwas qualitative, although we also carried out desk-based research, mainly a review ofthe existing literature. The chosen sectors represented areas of employment whereagencies were known to have a strong presence. For example, within the food anddrink industry an estimate by Food Business UK is that around one in three workersin the industry (125,000 workers) are employed through agencies (Thomas, 2006)while a survey undertaken for the Health and Safety Executive (HSE) (McKay et al.,2006) found that 26.4 per cent of workers in the workplaces surveyed, covering thefood and drink sector, were agency workers.

As the research was being conducted as part of the evidence base for the Commis-sion on Vulnerable Employment (CoVE) it was important also that we investigatedsectors where there was a predominance of low paid employment with a high presenceof vulnerable workers, whether measured by the hours that they worked, the atypicalnature of their contracts, or their migration status and this was the primary reason forboth the choice of companies and for the sectoral bias. Table 1 shows the breakdownof the interviews.

Our aim was to conduct as many of the interviews face-to-face as possible. Inpractice, while this occurred in the majority of cases (13), a minority (nine) wereconducted by phone. This occurred where the participant requested a phone interviewonly, usually because they were constrained by time or by production schedules. Theresearch was originally intended to be based in London, the East of England and theSouth East as these were important areas of employment, particularly with regard toagency labour and they were also areas where we had conducted earlier research andcould bring that knowledge of the regions into this study. However, we did conductone interview in the Midlands, one in the North of England and two in the South

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West, as the employers or agencies concerned had particularly innovative experiencethat we wished to reflect in the research. Table 2 depicts the geographical spread of theparticipants.

In terms of the size of the employers/agencies, we aimed to sample at least twolarger (250+ worker companies) and two smaller (<100 worker companies) to cover anumber of larger national employment agencies and employers, but also some smallerlocal and/or independent agencies. The overall breakdown of the participant inter-views by size is shown in Table 3.

The interviews generally were conducted with HR managers in the case of theemployer interviews and with those responsible for liaising with employers, in the case

Table 1: Distribution of interviews completed by sector

Sector

Cleaning Food processing Personal care Other Total

Employer 1 7 0 3 11Agency 7 9 6 0 22Total 8 16 6 3 33*

Source: Field survey, 2007–08.*The figures add to more than 22, as some agencies operated in more than one sector.

Table 2: Distribution of participant employers/agenciesby locality

Region Number of interviews

London 5The East of England 11The South East 2South West 2Midlands/North 2Total 22

Source: Field survey, 2007–08.

Table 3: Distribution of participant agencies/employersby size

Employer Agency Total

Less than 100 workers 3 3 6101 to 250 workers 1 1 2More than 250 workers 7 7 14Total 11 11 22

Source: Field survey, 2007–08.

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of employment agencies. The advantage to the research of interviewing employers andagencies means that we were able to reflect the potentially different perspectives of thetwo actors.

In relation to the employer interviews, the main issues explored were the organisa-tional background of the company, its agency arrangements, the characteristics of theagency workers used, their terms and conditions and their perceptions/experiences ofregulatory mechanisms. In relation to the agency interviews, the questions exploredthe extent of the agency’s operations, the number of workers on their books, themethods by which they recruited agency workers, their terms and conditions and theagency’s views on their obligations and responsibilities to the workers they sourced.Interviews were also conducted with key respondents or experts.

2.1 A profile of the participant organisations

Of the 11 employers interviewed, five were not presently using agencies, however, onlyone had never used employment agencies, meaning that the employers almost alwayshad direct experience of having used agencies and could draw contrasts between theiruse and non-use of agency labour. The four who had moved away from using agencieshad done so for a number of reasons, explored in the following sections. Whereagencies were used employers tended to favour working with a single agency, withonly one employer engaging the services of more than two agencies. Agency partici-pants had a different profile. Overwhelmingly they supplied labour to a large numberof employers. Only two supplied either to a single employer or to no more than twoemployers.

In terms of the size of the agency workforce, of the six employer participants whocurrently used agency staff, in three cases these composed less than 20 per cent of theworkforce: four per cent; five per cent and 15 per cent, respectively. The threeremaining employers had agency workforces of 20 or more per cent, specifically: 20per cent, 28 per cent and more than 50 per cent.

In relation to size, both the employer and employment agency participants reflectedsmall, medium and large organisations. All participant organisations had diverseworkforces (taking account only of the two or three major ethnic groups present ineach organisation). Poland emerged as the principal country of origin, for both theagencies and the employers, with Portugal the second most likely country of migrantworkers’ origin.

3. CONTEXT

The Gangmasters’ Licensing Authority (GLA) was established under the Gangmas-ters’ (Licensing) Act 2004 to safeguard the welfare and interests of workers whileensuring that labour providers operated within the law. It has established a licensingscheme which labour providers covered by the scheme must register with and aims topromote standards for best practice in the supply and use of temporary labour. Acheck on the GLA list of registered agencies shows that four of the 11 employmentagency research participants were registered. One other agency was part-registered,for those sectors that required it. Two agencies that were not registered neverthelessspoke of having had contact with the GLA. Of course not all agencies were obliged toregister as the GLA coverage is currently limited only to agriculture, forestry, horti-culture, shellfish gathering and food and drink processing and packaging. However,

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in relation to those employers in the food-processing sector who were using agencystaff, there was a general awareness of the need for the agencies that they used to beregistered. These employers often did not perceive registration as a disadvantage;indeed some expressed the desire for more stringent systems of control, althoughothers expressed scepticism about the ability of the GLA to deal with bad employ-ment practices.

With regard to trade union relations, just under half of the employer participantshad a recognition agreement or arrangement with a trade union. However, in relationto the employment agencies none were unionised and of the three that did haverelationships with trade unions these were expressed primarily in relation to theexchange of information, mainly in relation to migrant worker issues.

3.1 The motives for using agency labour

Gramm and Schnell (2001), Allan (2002) and Hakansson and Isidorsson (2007)distinguish several motives for employer use of agency labour, identifying primarilyflexibility; to facilitate recruitment, selection and training; for cost reasons; to accessspecialist skills; for reasons to do with legal regimes; and as a method of avoidingtrade union organisation. Forde et al. (2008), in relation to the construction sector,found that construction employers’ use of temporary agency workers remains drivenby ‘traditional’ reasons, to meet short-term peaks in demand and for one-off tasks.They found that construction employers had widespread reservations about the use oftemporary agency workers. Kersley et al., 2005 identified short term cover for staffabsence/vacancies (57.7 per cent) as a primary reason for employers’ use of agencylabour, followed by matching staff to peak demands (37.2 per cent) and unable to fillvacancies (23.8 per cent). Our research indicates that while flexibility—whether inrelation to product demands or worker attributes; costs, including the economicadvantages of outsourcing recruitment; labour, the lack of locally available labourwilling to work at the conditions set by the employer; and legislation, the outsourcingof responsibility for documentation to the agency; are all factors that encourageemployers’ use of agency labour, there are other factors that act as a deterrent andconsequently may cause employers to shift away from agency labour. These relateprimarily to:

• Training—increased training costs, including English language training forforeign workers, where the migrant agency workforce has poor knowledge of theEnglish language and/or is continually changing;

• Exploitation—concern that high levels of agency exploitation will result in badpress for the employer as the end user;

• Available labour—where migrant labour in particular reaches a critical masssufficient to source workers for the employer through word of mouth; and

• Turnover—where agency labour provides a turnover rate, which is considereddisruptive to the production process.

In a relatively small study such as this one, it is difficult to differentiate betweenpractices in the different sectors investigated or indeed by size or geography.However, of the employers surveyed, seven were companies operating in the foodprocessing sector and this provides some scope for analysis. These companies weremore likely to cite the need for flexibility as their reasons for using agency workers,

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with four of the seven citing it. However, in terms of their size there were no varia-tions, with both larger companies (over 250 employees) and small companies (under100 employees) citing the requirement for flexibility. Food processing companies werealso more likely to report the lack of locally available direct labour as their reasons forusing agency workers, with three of the seven providing this reason, whereas none ofthe employers in the other sectors used it. Cost was more rarely used as a reason forhiring agency staff with just one of the seven food companies referring to it. However,in contrast it was used by a majority (four of the seven) as a reason for not employingagency workers but again there was no differentiation by size of company. The othermain reason given was lack of local direct labour and three of the seven stated that.Most of the companies in the food sector were based in the East of England thatmakes it difficult to identify regional factors. The one food company based in Londonhad never used agency workers, drawing its workforce from an available pool of localdirectly employed workers. Overall, however, taking all of the employers together andnot differentiating by sector or geography, employers were generally fairly circum-spect in the reasons that they gave for why they used agency staff. In particular, theywere less likely to identify costs as a motivator for using agency labour and indeedwere more likely to identify it as a reason for not using agencies. In contrast, theagency representatives interviewed were more likely to identify both cost and flexibil-ity as primary motivators for the employers that they provided labour to. Employersnever identified trade union avoidance as a factor in their decisions to use agencyworkers despite the fact that most of the employers interviewed did not recognisetrade unions. The agencies interviewed identified the staff whom they sourced asprimarily working in low skilled work, particularly those recruiting for the foodprocessing and cleaning sectors.

3.2 Flexibility

Monastiriotis (2006) identifies four types of production function flexibility derivedfrom the interaction of two basic distinctions: functional versus numerical (or opera-tional versus tactical) and internal versus external flexibility. Internal functionalflexibility refers to multi-tasking and the functional re-organisation of production,where workers change their occupation while remaining with the same employer(within-job occupational mobility) while external numerical flexibility describesemployees on temporary and part-time contracts in the employed workforce togetherwith the size of the sub-contracting, out-sourcing and self-employment. By identifyingwithin the production process these four types of flexibility, Monastiriotis argues thatit is possible to differentiate between the numerical and functional aspects, the formerof which he refers to as those employees working shifts, weekends and variable orirregular hours; the share of overtime to normal hours. Monastiriotis argues thatthese distinctions, while focusing on the production process, acknowledge the quali-tative differences between enhancing the adjustability of the labour input (numerical)and increasing its adaptability to changing tasks and methods of production(functional—which might in fact reduce the numerical adjustability), or betweenmulti-tasking (internal) and sub-contracting (external). Thus, flexibility may relateeither to a requirement for a workforce open to coping with changing productiondemands or to a requirement for workers who are more ‘flexible’ in terms of workingtime, for example, the hours they are prepared to work or the shifts they are preparedto undertake.

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In one of their case study companies, French and Möhrke (2007) found thatemployment through an agency allowed the firm to maintain numerical flexibility tomeet production cycles. In our interviews with employers both numerical and func-tional forms of flexibility were identified as being prime motivators in decisions to useagencies. The need for flexible labour, to respond to production demands or toperform work as and when required and to be easily replaceable was highlighted by anumber of respondents. However, while employers were more likely to emphasisetheir requirements for flexibility as being in terms of numerical flexibility, agencyrepresentatives who were interviewed were more likely also to emphasise functionalflexibility, in terms of how work was conducted, as a primarily employer motivationfor using migrant labour.

For employers, agency work was thus often associated with the need to meetseasonal demands for additional workers, without affecting the size of the permanentworkforce. Particularly within the food-processing sector, where the productiondemands on the business were described as ‘unpredictable’, mainly due to retailer andcustomer demand and to fluctuations in crop production, agency workers were seenas an appropriate solution that could respond to the peaks and troughs of demand.Using the agency meant that job vacancies could always be immediately filled.However, it was not just the food sector that identified this as a primary motivation.Employers in the cleaning sector companies also pointed to the need for a readysupply of labour as a main reason to use agencies.

In discussing the circumstances of their use, some employers, while identifying theirneeds as those for numerical flexibility, actually described functional flexibility, sug-gesting that while this was an important motivator, it was one that they were lesscomfortable in openly discussing with us. For one employer flexibility of labour wascited as a key reason for using agency staff, however, when asked to explain what thismeant, it was described as, ‘if somebody proves to not be very good for the job andcreate problems, the agency can immediately replace [him/her]’. For another flexibilitymeant ‘if they [the agency workers] are not obedient or good for the job, they areimmediately replaced.’ For a third, the advantage of agency ‘flexibility’ was identifiedas enabling employers to get ‘committed, readily accessible skilled workers on ashort-term basis’. Flexibility therefore was more likely in practice to be conceptualisedas present in a workforce identified as vulnerable, either on the ground of low wages,migration or otherwise not in a position to exercise other options. Thus, agencyworkers were described as those who delivered higher productivity to employers, withone employment agency describing its workforce as composed of ‘very good workers,enthusiastic and committed’. In contrast, while employment agencies also referred toagency workers as being utilised for numerical flexibility, particularly in relationto seasonal work, the agencies making this claim also often were sourcing workers totheir client employers throughout all of the year, not just during seasonal peaks.

3.3 Costs, including outsourcing of recruitment

While Gramm and Schnell (2001), Allan (2002) and Hakansson and Isidorsson (2007)all point to cost as a primary reason for outsourcing work to agency labour, there isalso a significant body of literature that contests this view. Voudouris (2004) suggeststhat cost was not the primary reason for using agency labour in Greece. Heywoodet al. (2006), based on Spanish and American data, similarly argue that while thereexists the potential to save on wage and benefits costs, such savings have not been

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generally identified by employers as the most important factor in using agency labour.Similarly, we suggest that, based on our interview data, cost is less likely to beidentified by employers as a significant factor in their decisions to use agency labour.At most employers would identify cost as one of a number of factors leading to thedecision to use agencies. In contrast, agency participants were more likely to refer toit. This finding may of course be related to employer reluctance to assert that theywere taking on agency workers primarily to reduce costs, but as all of the employerinterviewees claimed that they were using ‘reputable’ agencies paying at least theNational Minimum Wage, they could assert that, taking account of the fee going tothe agency itself, it was unlikely that the cost per hour of an agency worker was lowerthan that of a directly employed worker, given the generally low skilled and low paidwork that agency staff were assigned to. Nonetheless, it is in the decomposition of costinto its direct and indirect elements that the cost savings for employers of agencyworkers are revealed. Precisely it is in the reduction of the indirect labour costs andmore significantly, in the unit labour costs that the main savings for the companies arematerialised. The provision of minimal training to agency workers and the paymentof social contributions by the agencies immediately impact on the reduction of theindirect labour costs borne by the firms. Moreover, reduced total labour costs andincreased productivity of ‘positively’ selected migrant workers contribute to lowerunit labour costs. In sum, the additional premium paid to agencies could easily beoffset by lower indirect costs and higher productivity (lower unit labour costs).

Employment agencies were more likely to identify themselves as a ‘cheaper’ optionfor employers. But they often included within their identification of costs, the savingsto employers in terms of resources for selection processes, like advertising costs,recruitment and selection costs and ‘time consuming’ interviewing ‘especially if somecandidates do not turn up for the interview’. Thus, where they identified cost savings,these were overall HR cost savings, rather than per capita cost savings. And practi-cally all of the employment agencies interviewed made this connection between theiruse and lower HR costs while none of the employer interviewees offered this analysis,further pointing to a reluctance to identify lower costs as a focus of their reasons fortaking on agency labour. Some agencies additionally suggested, in the context of HRpractices, that sourcing labour through the agency gave employers an anonymity,which for some was advantageous, particularly where they had high turnover ratesand did not wish this to be publicly known.

3.4 Lack of locally available labour

Generally, the literature offers limited evidence of agency labour being explained as aresponse to the lack of locally available labour and where there is such evidence, it ismore likely to place an emphasis on the lack of access to specialist skills (WERS,2004). For example, in a recent survey in Sweden and the UK (Hakansson andIsidorsson, 2007), some 11 per cent of the Swedish employers and 12 per cent of theBritish employers mentioned the need for specialist skills; difficulties in recruitingwere mentioned by 8 per cent of the Swedish user firms and 19 per cent of the Britishuser firms. However, French and Möhrke (2007), in relation to the North Stafford-shire area, found that employers used migrant labour to address labour shortages,and to a lesser extent, skill shortages and in the interviews we conducted with employ-ers we did find that a number claimed that there were local labour shortages, asopposed to skill shortages, and that these had driven them towards using agency

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labour, although in some cases this was identified as a lack of local labour willing todo the jobs under the terms and conditions on offer. This was expressed in terms of thejobs being unacceptable to local labour, as other better jobs were available to them,with one employer admitting that ‘UK born and raised people are least likely to cometo work here’. Other reasons given for a lack of local labour were due to the seasonalnature of some of the work available, as changes to the benefits system had createdproblems for local workers who were unemployed and on benefit, if they took upshort-term employment. But again the arguments were not just that local labour wasnot available, but that the ‘right type’ of local labour was not there, with one employ-ment agency, sourcing labour mainly to one employer, noting that agency labour wasused primarily because it was difficult to recruit workers directly from the local labourmarket:

At the beginning there was a lot of interest in us from local ‘chavs’ sent to us by unemployment agencies[Jobcentre Plus]. We did not want them as they were not really interested in the job.

3.5 Legal factors

A number of authors point to dismissal protection rules as having a significant impacton employers’ decisions to use agency labour (Antoni and Jahn, 2006; Mitlacher,2007). In this research, we found that while legal factors were often referred to, thiswas primarily in terms of circumventing or avoiding having to deal with immigrationrequirements, by pushing responsibility for these on to the agency. Thus, while bothemployer and agency respondents referred to the legal factors affecting the employ-ment of migrant workers as a reason for using agencies, the view was more frequentlyexpressed by employment agencies than by employers. Additionally, it was signifi-cantly less likely to relate to employment law rights and much more likely to be inrelation to immigration rules. Thus, for a minority of employers the advantages ofemploying agency workers were openly expressed by the fact that it saved them fromhaving to deal with the legal requirements affecting the employment of migrants, inparticular with applications for work permits. One of the interviewees made it clearthat using agency workers meant shifting responsibility for checking on legal statusfrom the employer to the agency, while another noted that having an agency ‘savedyou the trouble of work permit arrangements’. An interviewee, who no longer usedagency workers, nevertheless stated that employers did use them to avoid having todeal with immigration issues. Similarly, some of the employment agency intervieweesalso believed that employers used them to avoid having to deal with the legal prob-lems of employing migrant workers. Agencies often took on responsibility for check-ing on a migrant workers’ legal status, paying their Worker Registration Scheme feeand deducting their National Insurance contributions

Most employers did not refer to other legal issues, outside of those concerningimmigration status although one food company indicated that in general it did notwant too many agency staff, as this could create the conditions that might require thecompany to become the employer in law.

3.6 Issues of diversity

In their work for the Low Pay Commission, French and Möhrke (2007) found some,although limited, evidence that a process of substituting refugees with EU accession

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workers was occurring and suggested that this process of substitution might be linkednot only to refugees but also to indigenous workers. They report that interviews withagency representatives and some migrant workers highlighted a growing preferenceamong employers for EU accession workers. In our research, no employers madereference to a policy of substitution although neither did they conceptualise thecreation of a more ethnically diverse workforce as a benefit of using agencies,although one mentioned it as a disadvantage. In contrast, agencies were more likely toexpress this as an advantage they possessed and which they saw as valuable toemployers, with one referring to its ability to source an ethnically diverse labour forceas strength and as something that some employers might welcome. It specificallysought out ‘diversity supporting’ employers with a record of recruiting people fromdifferent ethnic groups. Another commented on the fact that it was able to offer a‘new, diverse pool of workers’ although it had noted that while ‘clients should wantdiversity of their workforce; some employers are frightened of diversity, mainlybecause of language issues’.

4 THE DISADVANTAGES AND REASONS FOR NOT USINGAGENCY WORKERS

Among the employer respondents, those that did not use agency workers also pro-vided a number of reasons for having adopted this position. These were sometimessimilar to those given as reasons for using agency workers. In other words, they wereexpressed in terms of costs, legal regulation and local availability of necessary skills.In some cases, even where local labour was not available, employers were bypassingagencies by recruiting directly in country of origin. Some employers had also foundthat agencies were not sufficiently equipped to be able to supply the numbers andskills of workers that they had needed. Others felt that the diversities of staff suppliedby the agencies were too great to manage effectively. However, even among those thatdid use agencies and among the agencies themselves there was an acknowledgementthat the use of agency labour was not un-problematic. In case of migrant labour, themain difficulties raised related to training and language skills. One food companynoted, as a disadvantage, the amount of induction training, which the employer hadto provide, particularly if each day brought in a lot of new workers, although thisinterviewee also pointed out that on balance the advantages outweighed thedisadvantages. Another highlighted the lack of control, which the company had overagency workers and the fact that they could be in the plant one day and decide to gooff the next day, describing this as ‘a waste of money spent on their training’. For thisemployer arrangements would work better if the agency worker was obliged to notifythe client employer of her/his intentions regarding length of stay, allowing theemployer the option of placing them ‘on a job that would not require much trainingand to which they could return after a long stay at home’. Similar concerns, about thetemporary presence of agency migrant workers, were expressed by another inter-viewee in the food sector who had limited its use of agency workers precisely becausethey were often students, required to return home at short notice to prepare forexams. Some employers saw high turnover of agency staff as problematic as it wasmore expensive to recruit agency staff for short-term appointments. Indeed onecleaning company commented:

There are so many problems in working with agencies. I do not want to know about it any more.

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As might be anticipated employment agencies were less likely to provide evidencepointing to the disadvantages of their use, although one did acknowledge that highturnover and agency workers going to better jobs, as well as a low commitment,sometimes from both the agency and the client, acted as disincentives, while anotherwas of the view that it was becoming more difficult to recruit migrant workers,especially Poles as they had started earning more and were becoming more selectiveabout the jobs they would not do:

Some four years ago, when most Poles first came to the UK, they did not know the language and werewilling to accept most jobs on offer. Now things have changed.

In relation to the agencies themselves, one interviewee in a local authority alsoreferred to problems with agencies that were less than honest, for example, by sendinga worker for interview, whom the agency knew had already accepted a better offerelsewhere and over whom the agency would then attempt to negotiate for a higherrate.

4.1 Labour could be directly sourced locally or abroad

In some cases, employers had moved from using agencies because they found thatthey could recruit a mainly migrant workforce directly through word of mouth. Oncea base of workers had been established in the company, word of mouth could be usedto supply all of the workers needed. This was the case with one Food Company, whichspoke of having established ‘good connections with Polish workers’ who had ‘startedacting as [their] recruitment agents’. Thus, some employer interviewees had foundthat the skill levels required were now relatively easy to find through direct recruit-ment so that agencies were only viable in cases where specific skills were required thatwere hard to find. Recruitment could also take place in country of origin with one ofthe interviewees having, for the last three years, been recruiting directly in Poland, andusing the contacts of one of its supervisors of Polish origin. The advantage for thecompany was that the supervisor had good understanding of the company’s require-ments for labour and was able to select ‘the most suitable workers’. Similarly, anotherinterviewee had moved to directly employing staff, including sourced migrant labourin country of origin. It had set up its own recruitment office abroad. A cleaningcompany that in the past had used agencies extensively but now used them sporadi-cally was confident that if the company needed staff they could be sourced abroadthrough a Polish government job centre from which it could recruit directly and forwhich there was no charge.

4.2 Costs

As already noted, some authors have suggested that employers’ use of agency labouris directly associated with a desire to reduce costs, although in our research, in generalthis was weakly argued, with few employers providing hard evidence of the costsavings of using agency labour. However, for those not using agencies, cost was muchmore likely to be an associated factor in their decisions to use directly employed staff.Thus, for some employers cost was stated as a reason for not using agencies. Employ-ers argued that by sourcing workers directly they could pay a higher hourly rate of payand that high agency costs had been a factor in shifting users away from agencylabour. One employer, when asked if it would ever consider returning to use agency

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labour, stated that while it would ‘keep an eye on the marketplace’ it was difficult forhonest agencies to compete in offering equal benefits to those offered by directemployers, as they could not ‘do it cheaper and still make a profit’, noting ‘What youthink you are getting cheap upfront is at some cost somewhere to someone.’ Here the‘competitive edge’ identified through direct employment, was in the extent to which itgave it an ‘ethical competitive edge’, particularly in relation to the supermarkets andto their concern to observe Ethical Trading Initiative Standards.

4.3 Concern regarding poor treatment of agency staff

Media focus on migrant labour in particular (and this is now commonly associatedwith low paid, low skilled agency labour), together with a growing knowledge of poorterms and conditions for agency workers, had prompted some employer intervieweesto switch to direct employment. Some specifically mentioned concern over the agencythat they had used and press scandals over the poor treatment of the workers sourcedthrough agencies and that this was one of their main motivations for shifting to directemployment. Another noted that during a period when it had used agency labour itfelt that it had no control over the terms and conditions of agency-sourced workers.Others were aware of complaints from agency staff on their premises about notgetting properly paid, receiving unfavourable terms and conditions, and at the factthat agency staff anger would then be directed at the company:

This is a huge disincentive for agency staff to do a good job; they quickly become aware of thesedifferences and do not want to continue working for their agencies.

While another noted:

In an ideal world agencies will not exist to determine different conditions for their workers, all will workaccording to the European mobility agenda and there will be equal treatment for all workers.

Other reasons given for the non-use of agency staff included their inability to supplystaff, with one Food Company stating that it had switched to direct recruitmentbecause it had found that agencies were not able to supply the numbers of workersthat the company needed for spikes in production, particularly due to its rurallocation. It had also found that the agencies would ‘skim off ’ the best workers ormove them on, even when the company was keen to keep them. As already noted,some employers sometimes saw the diversity of an agency workforce as a disincentive.In one case the employer did express a view that the diversity of the workforcessupplied by agencies made it more difficult for the company to manage and was adisincentive to employing agency workers. Another had found ‘diversity too much’when using agencies and that it did not deliver the stable staff it required. This was itsreason for moving to directly target recruitment in one country of origin.

5. CONCLUSIONS

The research described in this article points to a conclusion that while some employersare using agency staff to cover for specific peaks in production, in other cases agencyemployment has become an alternative method of dealing with staff vacancies thatotherwise, in the absence of agency labour, might have resulted in offers of permanentposts. This conclusion is based on the differing responses to the questions aroundmotivations for using agency labour, provided by employers and by agencies. For

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while the former often refer to agency labour in relation to their needs for numericalflexibility, matching labour supply to product and service demand, agencies construeemployer use of agency labour in relation to functional flexibility, in other words theneed for labour that works flexibly.

It is also important to take note of the fact that a number of the employer partici-pants in the survey were no longer using agency staff and in some cases had intro-duced alternative methods of recruiting, to respond to local labour shortages. Thesehad sometimes resulted in new and innovative methods of sourcing staff directly,including direct employment from abroad. This demonstrates that employers, whoare willing to invest in innovative recruitment methods (which could also be at lowercost), are able to source reliable labour, without the need to engage temporary agencylabour.

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