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UK – The real impact of temporary agency workers on workplace performance?

13 April 2012

A surprisingly one sided interpretation of an academic study on the impact of temporary agency workers on workplace performance appeared in The Telegraph this morning.

Under the headline ‘Temporary workers harm health and wealth of permanent staff, claims NIESR’, The Telegraph reports that “working with temps harms your health and wealth”. Temporary workers are supposed to drive down the wages of permanent staff by as much as 5% and companies that use temps are characterized as being more cut-throat and cost-conscious than those who do not. Furthermore, permanent staff are found to have lower job satisfaction and higher anxiety in companies using temporary agency workers.

The study was produced by the NIESR (National Institute of Economic and Social Research), Britain's longest established independent economic research institute and which is independent of all party political interests, receives no core funding from government and is not affiliated to any university.

What The Telegraph did not report was that the NIESR also found that temporary agency work is “positively associated with workplace financial performance” (the effect being described as quantitatively quite substantial) and that “its positive association with sales per employee is on the margins of statistical significance. The study found that the average marginal effect of a company moving from no temporary agency work to temporary agency work is to increase its probability of having a financial performance that is a lot better than average by 11%.

The percentage of managers who believed workplace performance was better (between 1998-2004) was 54% among those using temporary agency workers, compared with 44% among those who did not.

The NIESR found it difficult to find any correlation at all between how hard permanent employees are made to work and the use of temporary agency workers concluding that “there may be no direct impact of temporary agency work on the intensity with which employees work”. However, the study did conclude that the presence of temporary agency workers in the workplace is negatively associated with employees' wellbeing in terms of lower overall job satisfaction, lower satisfaction with non-pecuniary aspects of the job, and higher job anxiety - although goes on to explain that this effect could be due to the fact that these businesses just happened to be more labour intensive and not necessarily because temporary agency workers were present in the workplace.

John Nurthen, Executive Director International Development, at Staffing Industry Analysts commented, “It really is quite surprising to see a supposedly business-friendly, conservative publication such as The Telegraph summarize an academic report in this way. They have focused only on the negative findings of the study and ignored any positive aspects of temporary agency work completely. The study cautions that the results should not be interpreted as causal but you wouldn’t pick this up from today’s Telegraph report. Perhaps it’s not surprising that some people are anxious about temporary work when the media filters information in this way. Personally, I would be a lot less anxious working for a company where financial performance is improved through the use of temporaries rather than one that doesn’t bother.”

The full NIESR study on temporary agency work can be downloaded below.


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