‘Precarious’ Non-Standard Employment

‘Precarious’ Non-Standard Employment – A Review of the Literature

Labour Market Policy Group Department of Labour PO Box 3705 Wellington Telephone (04) 915 4742 Fax (04) 915 4040 Website www.futureofwork.govt.nz www.lmpg.dol.govt.nz www.dol.govt.nz

DECEMBER 2002 Author Deborah Tucker Labour Market Policy Group Department of Labour PO Box 3705, Wellington Email [email protected] Telephone (04) 915 4376 Fax (04) 915 4040

Acknowledgements The author would like to thank Jeff Borland and Peter Brosnan for reviewing the paper. Thanks are also due to Geoff Bascand, Lis Cowey, William Dillingham, Brian Johnson, Shane Kinley, Bettina Schaer and Richard Whatman for helpful comments and discussions.

Disclaimer The views expressed in this working paper are those of the author. They do not necessarily reflect the views of the Department of Labour and do not represent Department of Labour policy. The paper is presented with a view to inform and stimulate wider debate and further research.

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‘Precarious’ Non-Standard Employment – A Review of the Literature Abstract This paper reviews the literature around ‘non-standard’ and ‘precarious’ employment and provides an introduction to the issues surrounding the interface between some types of non-standard employment and ‘precariousness’. The literature defines ‘nonstandard’ employment as employment that is not full-time and permanent and ‘precariousness’ as employment that is low quality and which puts workers at risk of injury, illness, and/or poverty (from low pay and little opportunity for training and career progression). While these terms have obvious limitations, they are commonly used in the literature that has been reviewed. There is no causal link, necessarily, between non-standard work and precarious work. On the contrary, many forms of non-standard work are highly desirable for both workers and employers and, equally, precarious work may exist in standard employment. This paper focuses on casual and temporary work arrangements because its hypothesis, and the conclusion reached in the literature, is that these arrangements have a higher risk of being precarious than standard employment or other forms of non-standard employment. It is also an area where the New Zealand data is very limited. The review develops potential indicators of precariousness that could be used in the New Zealand context and argues that it is the interaction of the nature of jobs and worker preferences that determine what constitutes precarious employment. It examines the location and characteristics of people likely to be associated with these forms of non-standard employment, the determinants of non-standard employment and its growth, and some of the policy concerns and complexities highlighted in the international literature around issues of income, training, health and safety, mobility and labour market outcomes. Given the significant limitations of cross-country comparability in this area, much of the overseas evidence can only suggest trends and themes for further areas of research for New Zealand. It is clear from the review that there is a need for quantitative and qualitative data on casual, temporary and fixed-term employment, and for data collection to have a time-series dimension to allow the monitoring of trends and longer-term outcomes for workers.

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Contents ABSTRACT.............................................................................................................................................2 CONTENTS ............................................................................................................................................3 EXECUTIVE SUMMARY ....................................................................................................................5 OBJECTIVES OF THE REVIEW ..............................................................................................................5 FINDINGS OF THE LITERATURE REVIEW .............................................................................................6 DEFINITIONAL ISSUES .........................................................................................................................6 THE INCREASE IN NON-STANDARD EMPLOYMENT..............................................................................6 POSSIBLE INDICATORS OF PRECARIOUSNESS FOR USE IN NEW ZEALAND .........................................7 LOCATION OF PRECARIOUS NON-STANDARD WORK ...........................................................................7 CHARACTERISTICS OF PERSONS ASSOCIATED WITH PRECARIOUS NON-STANDARD EMPLOYMENT CONDITIONS .........................................................................................................................................7 EXPLANATIONS FOR THE PREVALENCE OF NON-STANDARD WORK ...................................................8 POTENTIAL POLICY CONCERNS...........................................................................................................8 Earnings differentials ......................................................................................................................9 Employment relations......................................................................................................................9 Health and safety.............................................................................................................................9 Training...........................................................................................................................................9 Labour market outcomes / mobility...............................................................................................10 Social and psychological consequences ........................................................................................10 WHERE TO FROM HERE?...................................................................................................................11 1. INTRODUCTION.............................................................................................................................12 1.1 OBJECTIVES OF THE REVIEW .....................................................................................................13 1.2 STRUCTURE OF THE REVIEW .......................................................................................................14 1.3 DEFINITIONS AND MEASURES ......................................................................................................14 2. WHAT IS NON-STANDARD EMPLOYMENT AND WHAT FORMS ARE MOST LIKELY TO GENERATE PRECARIOUSNESS? ............................................................................................16 2.1 CONTEXT – INCREASING NON-STANDARDISATION OF THE INTERNATIONAL LABOUR FORCE ..17 2.2 THE EXTENT OF NON-STANDARDISATION … DIFFERING VIEWPOINTS ......................................18 2.3 SPECIFIC FORMS OF NON-STANDARD EMPLOYMENT AND TRENDS IN NEW ZEALAND...............19 2.3.1 Casual, temporary and fixed-term work...............................................................................19 2.3.2 Part-time and self-employment in New Zealand ..................................................................21 2.3.3 Contractors in New Zealand ................................................................................................23 2.4 NON-STANDARD EMPLOYMENT RELATIONS IN NEW ZEALAND .................................................23 3. WHAT IS PRECARIOUS EMPLOYMENT? ...............................................................................24 3.1 PRECARIOUS EMPLOYMENT INDICATORS IN A NEW ZEALAND CONTEXT .................................25 4. LOCATION – WORKPLACES, INDUSTRIES AND PERSONS ASSOCIATED WITH PRECARIOUS EMPLOYMENT CONDITIONS .............................................................................28 4.1 WHERE ARE ‘LOWER-END’ NON-STANDARD WORKERS LOCATED ACCORDING TO INTERNATIONAL RESEARCH?............................................................................................................28 4.1.1 Where are ‘lower-end’ non-standard workers located according to New Zealand research? .......................................................................................................................................................29 4.1.2 Public / private sector – international evidence … ..............................................................31 4.1.3 Size of enterprises – international evidence ….....................................................................32 … and New Zealand evidence .......................................................................................................32 4.2 CHARACTERISTICS OF PEOPLE IN LOWER END NON-STANDARD JOBS – AGE, GENDER, ETHNICITY, SKILL LEVELS, EDUCATION ...........................................................................................32 4.2.1 Gender – New Zealand evidence .........................................................................................33 4.2.2 Ethnicity – international evidence.......................................................................................33 4.2.3 Age and education – international evidence .......................................................................34

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5. WHAT DETERMINES THE EXTENT OF NON-STANDARD AND PRECARIOUS WORK? ................................................................................................................................................................36 5.1 WHAT ARE THE MOTIVATIONS OF EMPLOYERS FOR USING NON-STANDARD WORK ARRANGEMENTS INTERNATIONALLY …? .........................................................................................37 …. AND IN NEW ZEALAND?...............................................................................................................38 5.2 WHAT ARE THE MOTIVATIONS OF EMPLOYEES FOR WORKING IN NON-STANDARD / PRECARIOUS JOBS?............................................................................................................................39 … AND IN NEW ZEALAND?................................................................................................................41 5.3 WHAT CONTRIBUTES TO THE GROWTH OF PRECARIOUS/NON-STANDARD WORK?..................41 6. POTENTIAL POLICY CONCERNS .............................................................................................43 6.1 EARNINGS DIFFERENTIALS..........................................................................................................43 6.2 EMPLOYMENT RELATIONS ..........................................................................................................44 6.3 HEALTH AND SAFETY ..................................................................................................................46 6.4 TRAINING .....................................................................................................................................47 6.5 TRADE UNIONS – THEIR RELATIONSHIP WITH NON-STANDARD WORK ......................................49 6.6 MOBILITY ....................................................................................................................................50 6.6.1 New Zealand research on mobility.......................................................................................54 6.7 WORK-FAMILY AND OTHER SOCIAL CONCERNS.........................................................................54 6.7.1 Evidence from New Zealand.................................................................................................55 6.7.2 Evidence from overseas........................................................................................................55 7. CONCLUSIONS ...............................................................................................................................57 WHERE TO FROM HERE?...................................................................................................................63 REFERENCES......................................................................................................................................66 APPENDIX ONE ..................................................................................................................................73 DEFINITIONS OF TEMPORARY EMPLOYMENT IN SELECTED OECD COUNTRIES’ LABOUR FORCE SURVEYS .............................................................................................................................................73 APPENDIX TWO .................................................................................................................................74 DEFINITIONS OF TEMPORARY EMPLOYMENT USED IN THE OECD (2002) REPORT...............................74 APPENDIX THREE.............................................................................................................................76 REGULATORY FRAMEWORK FOR EMPLOYMENT RELATIONS ..............................................................76

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‘Precarious’ Non-Standard Employment – A Review of the Literature Executive summary ‘Non-standard’ work, that is, work that is not full-time and permanent, is increasing in New Zealand – data on trends in part-time work and self-employment show a gradual increase over the past 15 years. International evidence also points to an increase in ‘non-standard’ work in developed nations (ILO, 1997) and there is general concern in the overseas literature about the growth in ‘precarious’ non-standard employment. There are many categories of non-standard work and, in terms of employment conditions, a continuum of these non-standard jobs exists. •

At the ‘higher end’ of the continuum are some of the self-employed and parttime workers who are more likely to have reasonable incomes, job stability and workplace autonomy.

•

At the ‘lower end’ of the continuum are some of the casual, temporary and fixed-term workers who are, generally speaking, more likely to be in ‘precarious’ employment than those at the ‘higher end’. ‘Precarious’ employment is employment that is low quality and that encompasses a range of factors that put workers at risk of injury, illness and/or poverty (from low wages, low job security, limited control over workplace conditions, little protection from health and safety risks in the workplace and less opportunity for training and career progression) (Burgess and Campbell, 1998; Rodgers and Rodgers, 1989).

This review is concerned with the ‘lower end’ non-standard jobs. Of course, it needs to be borne in mind throughout this review that such terminology in and of itself can be simplistic; in reality there is considerable overlap between the various forms of non-standard employment and there are no absolutes in terms of ‘good’ job or ‘bad’ job notions. In addition, the terminology has obvious limitations (for example, some forms of ‘non-standard’ work are so prevalent as to be ‘standard’), however, the concepts are commonly used in the literature that has been reviewed.

Objectives of the review This review aims to explore the linkages between the ‘lower-end’ non-standard employment forms and ‘precariousness’ and the implications for labour market outcomes. In order to address this issue, it is important to find a way of defining ‘precariousness’ that is appropriate and relevant in a New Zealand context. We need a New Zealand specific measure for precariousness and this review begins that task. While we acknowledge that some standard employment may be precarious, it is not the intention of the current review to assess precariousness against all employment forms. This is due, in part, to reasons of scope, and because evidence suggests that the ‘lower-end’ forms of non-standard work (such as casual, temporary and fixedterm employment) are more at risk of being precarious than standard employment.

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As part of our attempts to understand this issue, the review will examine demand/supply/institutional explanations for the prevalence of non-standard work, and the motivations for employers and workers for offering and engaging in nonstandard employment. The review will discuss the policy concerns surrounding lower end non-standard work, highlighted in the international literature, for employment relations, health and safety, training issues, labour market outcomes, work-life balance and other social and economic implications.

Findings of the literature review Given the paucity of information on casual, temporary and fixed-term work in New Zealand, the majority of the literature surveyed is from overseas, particularly Australia, the US, Europe and the United Kingdom, with New Zealand material used where it is available.

Definitional issues Defining and measuring the various non-standard work forms, and non-standard work itself, is an extremely problematic task, given the widely varying country definitions that exist and the different methods of measuring them. Terms used in studies and their definitions vary between and within countries. It follows that the many studies referred to in this paper use a variety of terms, which may only partially fit with our definitions of casual, temporary and fixed-term employment. This makes comparability of findings between countries problematic. In addition, forms of non-standard employment are not mutually exclusive and they frequently overlap. For example, casual workers may be ongoing or temporary, parttime or full-time, and temporary workers may be casual or full-time. Given the significant limitations of cross-country comparability in the area of nonstandard work, and the different labour market contexts and regulatory arrangements, caution is needed in any attempts to draw inferences from the international evidence. The overseas findings are useful, however, in providing us with a general picture of trends and patterns and in suggesting themes for future New Zealand research.

The increase in non-standard employment The majority of the literature is in agreement that non-standard employment has increased over the last 15 to 20 years. Views differ, however, as to the actual extent of the increase and the adequacy of national datasets, because of disagreement over definitional and measurement issues. We know that a considerable, and increasing, proportion of the New Zealand workforce is engaged in non-standard work, given the data we have on part-time and self-employment. However, there is no official data collected on casual, temporary and fixed-term employment in New Zealand. The data we do have are from the two national workplace surveys conducted in 1991 and 1995 (Brosnan and Walsh, 1996), which found that, for both years, casual, temporary and fixed-term employment made up 11 percent of the workforce.

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Possible indicators of precariousness for use in New Zealand The characteristics of precariousness are not absolute – they are best thought of as a continuum and it is the combination of a number of elements that causes precariousness, rather than any one aspect. Below are potential indicators of precariousness that could be used in the New Zealand context. i. ii. iii. iv. v. vi. vii. viii. ix. x.

The job can be terminated with little or no prior notice by the employer. Hours of work are uncertain or can be changed at will by the employer. Earnings are uncertain or irregular. Functions of the job can be changed at will by the employer. There is no explicit or implicit contract for ongoing employment. There is, in practice, no protection against discrimination, sexual harassment, unacceptable working practices. The job is low income – at or below the minimum wage. There is little or no access to ‘standard’ non-wage employment benefits such as sick leave, domestic leave, bereavement leave or parental leave.1 There is limited or no opportunity to gain and retain skills through access to education and training. The task performed or the health and safety practices at the workplace makes the job unhealthy or dangerous.

In assessing precariousness, it is also important that the focus is not solely on the job itself or the nature of the contract but takes into consideration the characteristics of the worker and their preferences. For example, a casual night job with low pay, and irregular hours and earnings may be desirable for a student wishing to combine fulltime study with paid work; however, for a single parent the same arrangement could be considerably more problematic. It is the interaction of the nature of jobs and worker preferences that determine what constitutes precarious employment.

Location of precarious non-standard work International research indicates that the highest concentrations of lower end nonstandard jobs are to be found in agriculture and unskilled, predominantly manual, jobs (conventionally held by men), and in the less skilled service jobs (conventionally held by women). Both New Zealand and overseas studies found that the service sector has by far the highest proportion of casual workers, at a third or higher. These studies also indicate that the workplaces where demand is seasonal also have a far higher share of casual workers.

Characteristics of persons associated with precarious non-standard employment conditions Overseas research is generally in agreement on the characteristics of workers in precarious non-standard jobs. In short, precarious workers, or those at risk of precariousness, are more likely to be women, young, an ethnic minority, and lessskilled and -educated.

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This leave is accrual based and therefore a situation may arise where a casual, temporary or fixedterm worker, despite working for the same employer for a year or more, may not meet the qualifying criteria for these benefits if their contract is repeatedly renewed after short intervals.

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International and New Zealand evidence suggests that men are more likely to be in higher end forms of non-standard employment, such as independent contracting and consulting, while women are predominant in the lower end forms, such as casual work.

Explanations for the prevalence of non-standard work Explanatory factors identified as contributing to the growth of non-standard employment can be referred to as supply-side, demand-side and institutional factors. Whilst these “pure” types are conceptually distinct, the explanations, in practice, are generally some combination of the three. Labour demand factors include technological and structural change; supply-side factors relate to changing social attitudes and demographic changes such as family structures; and institutional factors include changes to employment legislation and other regulatory arrangements. These factors do not necessarily interact in equal ways. New Zealand and international research indicates that supply-side factors are more likely to predominate for the higher end non-standard arrangements, such as self-employment and part-time work (Bururu, 1998; Carroll, 1999; Mangan, 2000). For the lower end of nonstandard work, however, the picture is considerably more complex. There is a high degree of preference for a flexible schedule due to family, school, training or other personal obligations, although demand-side factors do appear to predominate for the majority (US Bureau of Labour Statistics). That is, the majority would prefer to be in a permanent job and are less satisfied with their jobs than standard workers (OECD, 2002). Other hypotheses considered in the literature include bargaining power and union influence. Lower end non-standard jobs are more likely to have a higher proportion of people with limited personal bargaining power. Bargaining power over wage and non-wage conditions may also operate differently in the low wage labour market. Workers in these jobs have little to bargain with if they are low skilled, have no qualifications, have skills that are widely available or (particularly for women with young children) are only available at certain hours. In general, there is little empirical information available on the relationship between unions and the level of non-standard employment. Hypotheses that exist in the literature are that: •

A decline in union influence would have a likely reduction in worker bargaining power (this effect could be intensified, given that non-standard workers are less likely to be collectivised)

•

Declining union influence may have contributed to the increase in non-standard working arrangements.

Findings from an empirical study by Wooden and Hawke (1998) indicate that the presence of ‘active’ unions in the workplace appears to impede the use of casual employment.

Potential policy concerns The review examines the literature’s assessment of the economic and social implications for those in ‘lower end’ non-standard work. It addresses earnings 8

inequalities, employment relations, health and safety issues, workplace training, implications for trade unions, labour market outcomes, and family and other social issues. Earnings differentials Wage inequalities between standard and non-standard workers are the subject of a great deal of attention amongst researchers overseas. In the main, the empirical evidence shows the wage differentials to be significant, with most types of nonstandard workers earning considerably less than standard workers. When the industries and the characteristics of the workers (such as age, education, skill levels and occupation) are also controlled for, the wage differentials for temporary workers are still statistically significant (see OECD, 2002). Employment relations Non-standard working arrangements can impact on employment relations in a number of ways. Research is limited in this area. There is some New Zealand case-study information to suggest that non-standard employees (with the exception of the higher end group) fare worse than standard employees in the negotiation of employment contracts (Whatman et al., 1999). The Survey of Labour Market Adjustment under the Employment Contracts Act (Department of Labour, 1997) found that awareness of wage and holiday provisions tended to be lower than average among those on informal contracts and young employees, and casual employees tended to be less informed than permanent employees on minimum wage conditions. Health and safety The overseas literature indicates that the impact of increased non-standard work on workplace health and safety deserves greater attention. The European Agency for Health and Safety at Work found greater health and safety risks associated with nonstandard employment in their quantitative and case study research. They found that precarious workers are more exposed to physical work hazards, may experience stress from insecurity, and may be more difficult to reach to provide OSH services than permanent workers. The Agency’s case study research indicates a transferral of workrelated risks to non-permanent employees and to subcontractors, meaning that these workers do the dirtiest, the most dangerous and the most monotonous jobs. Training Overseas empirical studies point to a significant difference in training, particularly external employer-supported training and in-house training courses, between casual employees and permanent employees. Casual employees are also less likely to participate in informal on-the-job training and the data suggest the gap is not narrowing (Campbell, 2001). The OECD (2002) reports similar results from 12 European countries, but suggests that informal on-the-job training (which they do not measure) may give a more positive picture of the amount of training received by temporary workers. They stress that temporary jobs offer work experience, irrespective of whether formal training is offered, and thus contribute more to human capital accumulation than nonemployment.

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Labour market outcomes / mobility It is important to look at mobility into and out of precarious jobs in order to determine whether they are ‘stepping stones’ to standard work or whether they are ‘traps’. The issue of precarious employment and job mobility is extremely important in terms of lifetime worker welfare. This is an area of intense research interest, and while a number of studies in this review are pessimistic, others are less so, suggesting that there is evidence of both propositions. The OECD (2002) finds evidence from European countries to suggest that a considerable share of temporary workers move into permanent jobs over a relatively short time period, which is consistent with the stepping stone metaphor, while others stay in temporary employment or become unemployed. US studies (Houseman, 2000; Lane et al., 2001) find empirical evidence suggesting that few temporary jobs lead to permanent employment, and there may be a cycling effect; that is, temporary workers moving back and forward between the states of unemployment and temporary work. New Zealand data on benefit exits into work indicate a cycling effect in some rural areas where seasonal employment may be a significant part of the labour market. Lane et al. (2001) argue that assessing the outcomes of ‘at-risk’ non-standard workers depends on whether the comparison group is standard workers or nonemployed workers. They find that individuals in temporary work had worse earnings and employment outcomes a year later than individuals in standard employment; yet individuals in temporary work fared substantially better a year later than did similar individuals in nonemployment. This is similar to Heinrich et al. (2002) who explore the effects of temporary help firms on the labour market outcomes of welfare recipients and conclude that, overall, those in temporary help jobs have significantly better future prospects than those who remain on welfare. In contrast, a UK study on low pay2 (Stewart, 2000) finds that the impacts of unemployment and low pay are not dissimilar and that the low paid are more likely to become unemployed in the future. Likewise, Richardson et al.’s (2002) review of the literature argues that there is little support for the view that any job is better than no job in improving prospects for future employment or escape from low wage jobs. The issue of whether outcomes for lower end non-standard workers are relatively better or worse than for those who are unemployed or in standard employment, and what the transition paths are over time, are key areas for further investigation in New Zealand. Social and psychological consequences Finally, whilst international research into the social and psychological consequences of precarious work is limited, available studies do show that problems are experienced, both by the worker and their families. International and New Zealand studies point to greater personal costs associated with these work forms, and 2

While low wage jobs are not the same as temporary jobs, it is argued that people in low end nonstandard jobs are the same people that other studies identify as receiving low pay (Brosnan and Scully, 2002).

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demonstrate more problems with health, personal and family relationships, quality of life and general well being.

Where to from here? In presenting a framework for analysing precarious work, and evidence on its location, this review lays the groundwork for future research in the area. It is clear from the review that an area for further consideration is the very limited quantitative and qualitative data on casual, temporary and fixed-term employment in New Zealand. Other key areas where information gaps exist include: •

Demand and supply factors – what drives employer/employee behaviour? What are the issues around bargaining power and worker preference?

•

Institutional factors – what are the effects of institutions and regulatory arrangements on the incidence of non-standard/precarious work? Do increased regulations lead to increased or decreased demand for non-standard/precarious workers? What are the costs and benefits of policy responses in this area, and are targeted measures to shield workers from undesirable employment conditions more or less effective than general measures?

•

Union influence – what is the relationship between unions and the level of nonstandard employment?

•

What are the impacts on the wage progression and skill acquisition of precarious non-standard workers and, more generally, on the labour markets where these forms of work are prevalent? What are the policy concerns in New Zealand with respect to earnings differentials, health and safety, workplace training and mobility, employment relations and family and other social and psychological issues?

In order to address these knowledge gaps, one-off and repeated cross-sectional surveys would be useful to collect quantitative information (and possibly qualitative information on outcomes and preferences). The most important starting point would be to determine the incidence and scope of precarious non-standard jobs in New Zealand. It would be useful for data collection to have a longitudinal dimension to track patterns over time and examine issues such as occupational mobility and the degree to which these jobs may be traps or stepping stones. The consequences of precarious employment will be quite different if the same group of workers are in these jobs throughout their working careers, as opposed to a situation where all workers during their careers ‘cycle’ through these jobs for a short amount of time. Longitudinal data could also capture information on whether the outcomes for lower end non-standard workers are relatively better or worse than for those who are unemployed or in standard employment and what the transition paths are that people take between these states over time. From a policy standpoint, this is a key area for future investigation in New Zealand.

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1. Introduction There is general concern about the growth in ‘precarious’ non-standard employment in most developed countries in recent decades. Until recently, in response to high unemployment, job creation was at the forefront of the labour market policy agenda, as opposed to job quality per se. At the end of the 1990s this attitude towards job quality had changed among policy-makers in some parts of the developed world and some international institutions. In 1999, the ILO launched a new agenda for action, the primary goal of which was decent work. One year later, in March 2000, the European Council in Lisbon adopted the twin goals of full employment and job quality for the European Union in the first decade of the new millennium. The European Union views the issue of quality of work as having clear links with the topic of non-standard employment. The general literature on ‘non-standard’ employment (employment that is not fulltime and permanent) identifies an increase in the proportion of workers engaged in non-standard work. The OECD (2002) points to an increase in ‘temporary’ employment, defined as ‘dependent employment of limited duration’, in a considerable number of OECD countries in the past two decades. Likewise, nonstandard employment in New Zealand has been gradually increasing over the past 15 years, as shown by data on part-time work and self-employment. Figure 1: Part-time employment and self-employment

number of people (000s)

500 400 300 200 100 Self-employed 0 1986

1988

1990

1992

1994

Part-time employed 1996

1998

2000

2002

While many workers engaged in non-standard work enjoy good incomes, job stability, adequate protections from health and safety risks in the workplace and opportunities for training and development, some do not experience such conditions. Some may be in ‘precarious’ jobs, that is, work with low wages, low job security, higher health and safety risks, little or no control over workplace conditions or hours of work, and limited opportunity for training and skill development.

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Evidence suggests that the former category are more likely to be self-employed or part-time; those in the latter are more likely to be temporary or casual workers. This is not to say that temporary or casual jobs are necessarily precarious, or that precarious jobs do not exist in other forms of non-standard or standard work. There are two general approaches that can be used when attempting to define precarious employment. The first treats precariousness as a subset of non-standard employment, whilst the other examines the characteristics of all jobs and defines precariousness on a case-by-case basis (Burgess and Campbell, 1998a).3 Whilst we recognise that some standard jobs may be precarious, this review takes the first approach for several reasons – to focus on the areas of employment where we have the least knowledge and data in New Zealand; to limit the scope of the research for reasons of practicality; and, primarily, to focus on the types of employment considered to have a higher risk of being precarious, ie casual and temporary work. International studies suggest that many casual and temporary workers find their employment less favourable than standard employment (European Foundation, 2002; OECD, 2002; Dawkins, Simpson and Maddeen, 1997; Meuders and Tytgat, 1989). Job insecurity and the associated financial insecurity are highlighted as disadvantages faced by casual and temporary workers. In most countries, non-standard workers do not benefit from the same statutory rights as permanent workers and in many cases are worse off in terms of remuneration, especially when they are not party to collective agreements.

1.1 Objectives of the Review The aim of the review is to examine ‘precarious’ non-standard work, focussing on ‘lower-end’ non-standard employment, ie, casual, temporary and fixed-term employment arrangements. The review aims to organise a working definition of ‘precariousness’ that has relevance in the New Zealand context and that can be applied to lower end non-standard jobs, making it possible to measure precariousness in New Zealand. Precariousness is a useful concept if applied in this way as it does not presume that certain types of employment are precarious per se; it takes into consideration a number of variables and acknowledges there are varying degrees of precariousness which may or may not present a problem for the individual concerned. The review proposes to draw together information to assist with the following questions: 1. What is ‘precariousness’? - What are the alternative perspectives on how the concept of ‘precarious’ work should be defined and what is an appropriate framework for New Zealand? 2. Where is it located? - by industry, occupation and composition - what are the characteristics of people associated with precarious non-standard work? 3

Burgess and Campbell (ibid) argue that the first approach treats non-standard employment as necessarily precarious, whereas the second approach is more comprehensive, as it concentrates on developing precariousness as a concept that can be used to assess the attributes of all forms of employment, both standard and non-standard. This approach sees all jobs as being precarious to some degree.

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3. What determines the extent of non-standard work, what contributes to its growth, and why do employers and workers use it? 4. Why are we concerned with precarious non-standard work? - What are some of the potential policy concerns for those in precarious nonstandard work arrangements? - what are the labour market outcomes for precarious non-standard workers (are these jobs ‘stepping stones’ or ‘traps’)?

1.2 Structure of the review Section 2 defines the characteristics of non-standard work, with particular emphasis on the types of arrangements that may generate precariousness. It also identifies the definitional and measurement problems inherent in this area of work. Section 3 examines precariousness as a concept, and looks at ways of operationalising it in the New Zealand context in order that it could be used as a research tool. It suggests ten indicators for precariousness. Section 4 summarises the literature and empirical evidence on the location of precarious non-standard employment by industry and occupation. It then examines evidence on the characteristics of people more likely to be in these employment arrangements and the prevalence by gender, age, ethnicity, and skill levels. Section 5 is concerned with the determinants of non-standard employment and the supposed factors that contribute to its growth. It addresses demand-side, supply-side and institutional explanatory factors, the issue of bargaining power, and employer and employee motivations for non-standard employment arrangements. Section 6 looks at why we are concerned with precarious non-standard work and what some of the policy concerns might be with regard to employment relations, health and safety, training, work-family and other social and economic issues. It examines the empirical data available on the mobility of precarious non-standard workers – whether their jobs are ‘traps’ or ‘stepping stones’ to better jobs. Section 7 concludes the review. It summarises the findings and potential policy concerns and looks at where the knowledge gaps are for New Zealand and the types of research that would be useful to address these gaps.

1.3 Definitions and measures There are major definitional and measurement problems in the area of non-standard work. The terminology used varies widely between countries as does the definition and ways of measuring non-standard work. The diversity of concepts used by different countries and by different authors makes comparison difficult and it becomes quickly evident that standard definitions are lacking both within countries and in cross-country comparisons. For example, the US Bureau of Labor Statistics (BLS) refers to ‘contingent’ workers, defined as those who do not perceive themselves as having an explicit or implicit contract for ongoing employment. The Australian Bureau of Statistics (ABS) refer to 14

‘casual’ employees, defined as workers not receiving certain benefits, which is a consequence of their casualness, not the defining feature. The defining feature is their legal status as new short-term hirees (even if their de facto status is otherwise). The International Labour Organisation4 (ILO) defines ‘precarious’ workers as either: (a) ‘workers whose contract of employment leads to the classification of the incumbent as belonging to the groups of “casual workers”; (b) “short-term workers” or “seasonal workers”; or (c) workers whose contract of employment will allow the employing enterprise or person to terminate the contract at short notice and/or at will, the specific circumstances to be determined by national legislation and custom. The ILO defines ‘casual’ workers as having an explicit or implicit contract of employment which is not expected to continue for more than a short period. This is similar to the definition of ‘contingent’ work used in the US. The OECD refers to ‘temporary’ employment as an umbrella term for all “dependent employment of limited duration”, which includes fixed-term contracts, temporary agency work, contracts, seasonal work, on-call work and trainees. All other jobs are referred to as “permanent” jobs. The OECD usefully collates the definitions of temporary employment used by various countries in their labour force surveys (see Appendix One). This shows the variability of definitions between countries and illustrates the difficulties and limitations of cross-country comparisons. Further emphasising this, Appendix Two presents the definitions of temporary employment used by the OECD (2002) in its recent paper referred to in this review. For 28 countries they have selected the sub-categories of employment available in national statistics that appeared best suited to approximate an internationally consistent definition. In the New Zealand context, for the purposes of this review, the terms casual and temporary (the latter which will also embrace the concept of fixed-term work), or the embracing concept of ‘lower end’ non-standard work, will be used. We utilise the definitions given in Brosnan and Walsh’s (1996: 160) two New Zealand workplace surveys, as shown in the table below. Table 1: Definitions used in this review Casual workers Employees hired on a periodic basis as need arises. Temporary workers Employees taken on for a relatively short but unspecified period. Fixed term workers Employees on a contract with a specified expiry date or employed to complete a specific project. Contractors/consultants Persons that are not direct employees who contract to provide labour services to an organisation (whether or not they own their own tools or equipment). 4

In January 1993, the ILO sponsored International Conference of Labour Statisticians made a resolution Concerning the International Classification of Status in Employment (ICSE-93) (http://www.ilo.org/public/english/bureau/stat/res/icse.htm).

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2. What is non-standard employment and what forms are most likely to generate precariousness? This section sets out to define non-standard employment and discuss its growth. It also presents an overview of debates from commentators challenging the ‘growth’ assumption or the ‘casualisation thesis’ as it is also referred to. The information we have on non-standard work in New Zealand is then reviewed, with specific reference to casual, temporary and fixed-term work. Aspects of part-time work and selfemployment, including contract work, are also discussed. Non-standard employment covers a wide range of employment relationships and a wide range of employees with varying characteristics. Non-standard workers are engaged in a variety of occupations, they work varying numbers of hours, and differ widely in experience and education. Their income, status afforded, work security, benefits, terms and conditions, and motivation for engaging in non-standard work will also differ greatly. As with the various categories of non-standard work, the distinction between standard and non-standard work is murky and there are many variations in how the two are conceptualised and defined in the literature. Some forms of ‘non-standard’ work such as part-time work, are so prevalent as to be ‘standard’. Rather than presenting an exhaustive account of the debates in the literature, this paper will, arguably somewhat hastily but in the name of pragmatism, accept the definitions used by previous New Zealand commentators in the area (Brosnan and Walsh, 1996; Carroll, 1999; Whatman, 1994), which are generally consistent. Firstly, in seeking to define non-standard employment, it is useful to define what makes employment standard. According to Campbell (1991) and Burgess (1994) standard employment possesses a set of characteristics that translate to full-time, permanent, on-site and waged employment. This is similar to Whatman (1994: 356) who defines standard work as work that meets all of the following criteria: •

full-time (30 or more hours per week)

•

in a permanent job (that is, an expectation of continuing employment)

•

regular hours5

•

over the whole year

•

for someone else

•

primarily at that employer’s premises.

5

The criteria of ‘done in daylight hours’ and ‘on weekdays’ ie, excluding shiftwork could also be included here.

16

Non-standard work includes all those jobs that fall outside this definition of standard employment, for any of the following reasons. That is, they may be: •

part-time

•

casual

•

irregular hours or on-call work

•

seasonal, temporary or fixed term contracts

•

self employment

•

undertaken as ‘homework’

•

undertaken in the ‘black’ economy

•

any combination of the above.

Brosnan and Walsh’s (1996) definition of standard employment is similar but, in addition to permanent and full-time work, they also include working standard hours on, or from, the employers premises between 7am and 6pm between Monday and Friday.

2.1 Context – increasing non-standardisation of the international labour force The majority of the international literature on non-standard employment identifies a general increase in the proportion of workers engaged in non-standard employment in developed countries during the past two decades (Mangan, 2000; Rodgers and Rodgers, 1989; Barker and Christensen, 1998; OECD, 2002; ILO, 1997). Indeed in Australia, the apparent growth in non-permanent or casual employment has been widely claimed to be one of the most significant changes to the Australian labour market over the last decade or so (Campbell and Burgess, 1993; Norris, 1993; Campbell, 1996a, Norris and Wooden, 1996, cited in Wooden and Hawke, 1998). In the US, current research indicates that one in ten workers are employed in an alternative work arrangement – temporary help, independent contractors, on-call workers, and contract company workers. Moreover, employment in the temporary help services industry grew five times as fast as overall (non-farm) employment between 1972 and 1997 (Lane et al., 2001), although this growth tapered significantly in the second half of the 1990s, growing at less than four times the average of total non-farm employment (Dillingham, 2000). It is widely argued that non-standard work forms are not new (Mangan, 2000; Lane et al., 2001; DoL, Canada, 1997). They were common until the 1940s, declined in importance during the economic growth years of the 1950s to the mid-1970s, and reemerged in the late 1970s. This was due in part to an expansion of part-time work and the beginnings of corporate downsizing in the 1970s and 1980s. Since then nonstandard work forms have continued to gain momentum. Applebaum (2001: 23) asserts that the US has always had a large, low wage secondary labour market, and that women, minorities and immigrants have always been disproportionately employed in insecure jobs lacking benefits or opportunities for mobility. 17

What is new today is the increase in the proportion of non-standard work in newly created jobs, and the inclusion of widely differing types of workers and work arrangements. The social and cultural context has also changed dramatically, for example, increased participation by women in the workforce, dual-earner families, more people studying, shop trading hours, and new migrant communities.

2.2 The extent of non-standardisation … differing viewpoints An important strand of the research argues that non-standard employment has not increased, or not to the extent that some researchers have argued. Problems with varying and inconsistent definitions and measurement methods are largely responsible for this, as well as the political nature of the issue. This section discusses some of these differing viewpoints. Definitional problems and variations exist not only between countries, but also within countries. For example Murtough and Waite (2000a) of Australia’s Productivity Commission believe the data collected by the Australian Bureau of Statistics (ABS) is problematic and responsible for the ‘casualisation thesis’. The problems with the ‘casuals’ data, they argue, are that the types of employment identified are very broad. For example, many owner managers are treated as employees and the terminology can be confusing. They challenge the work of Australian labour market analysts, such as Campbell and Burgess, who use the ABS data in statistical analyses. In response, Campbell and Burgess (2001) acknowledge limitations with the data, but argue against the validity of some of the decisions by Murtough and Waite (2001) such as the counting of self-identified casuals only without factoring in the employment contract and working conditions, and the attempted exclusion of those who are not ‘true’ casuals (see Australian Bulletin of Labour, June 2001). The ABS is aware of the conceptual murkiness in defining casual employment, and in its most recent set of figures (August 2000) abandoned the use of the label ‘casual’ for the more cumbersome ‘employees without leave entitlements’ (ibid). In the US, the term ‘contingent’ has been used for many years to describe a variety of non-standard work arrangements. Some definitions of contingent work have focussed on work considered contingent because of the low level of job security provided, whilst other definitions are broader and include such work arrangements as part-time employment and self-employment. For this reason, estimates of the size of the contingent workforce range from four percent of the total workforce using the BLS definition (2001),6 to almost 30 percent when workers in other categories are added (GAO, June 2000). A US Department of Labour report (Houseman, 2000) argues that point-in-time estimates of the number of agency temporaries and short-term hires mask much larger flows into and out of temporary jobs: “The data indicate that the number of positions

6

(http://stats.bls.gov/news.release/conemp.nr0.htm)

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created for agency temporaries7 during a year is seven to eight times the number of temporary agency jobs likely to exist at any point in time, while the number of shortterm hires8 during a year is five to six times greater than that captured in a point in time survey” (Houseman, 2000: 7). Callister (1997) in his review of research evidence on trends in employees’ tenure, turnover, and work scheduling patterns, concludes that predictions and perceptions of very rapid growth in temporary and casual work appear to be exaggerated. He argues that there is not strong evidence of growth in ‘casual’ work, however, in some countries temporary and fixed-term work has been of some significance. This includes Australia, the UK, New Zealand and the US. Whilst there is debate about the extent of non-standard employment, there is general agreement that, in most countries, non-standard employment has increased. The OECD (2002) concludes that temporary jobs are now a significant feature of the employment landscape in most OECD countries. Section Five looks at some of the reasons behind this.

2.3 Specific forms of non-standard employment and trends in New Zealand Little is known about non-standard employment in NZ, particularly casual, temporary and fixed term employment arrangements. Statistics New Zealand, through the Household Labour Force Survey, Quarterly Employment Survey and Census, collect data on part-time and self-employment but not on casual, temporary or fixed-term work. Carroll’s (1999) work examining recent trends in non-standard employment found that some forms of non-standard employment have been growing at a faster rate than standard employment in the period from 1985 to 1998, including part-time work and self-employment. Of non-standard employees, part-time workers were the largest single category, making up 19 percent of total employment in 1998. The next largest non-standard employment group was employees working 50 or more hours per week, making up 13 percent of workers in 1998. Other significant groups of non-standard workers were employers, making up eight percent, and the self-employed, making up 12 percent of the workforce in 1998. 2.3.1 Casual, temporary and fixed-term work Temporary and casual employment have often been identified as the two most precarious forms of non-standard employment. They are often associated with a shortfall in protection in terms of employment rights, benefits and other forms of protection. Casual employees, in particular, can experience highly variable working hours arrangements, both in terms of their length and their timing. Campbell (2000), 7

Defined by Houseman (2000: appendix) as “Individuals who work at the establishment but who are paid through an employment agency and are not on the organisation’s payroll”. 8 “Individuals who are employed directly by the organisation for a limited and specific period of time …” (ibid).

19

arguing on the basis of increasing casualisation9 of the Australian workforce, views casual work as significant because of what is known about the conditions of casual jobs. Apart from what, in practise, amounts to non-entitlement to benefits, he argues that casual workers are also vulnerable to low pay and numerous forms of labour insecurity, such as income, working-time and representation insecurity. “In short, casual employment is characterised by shortfalls in protection and substantive disadvantages over most of the dimensions of what can be termed ‘precariousness’ in employment” (Campbell, 2000: 73). In Australia, the rationale for the exclusion of employer-funded benefits such as paid holiday and sick leave is that, under common law, casuals are deemed to be employed on a new contract at every engagement, and so are unable to accrue the required continuous service with an employer (Wooden and Hawke, 1998: 84). In terms of labour market functioning, temporary employment is particularly important at the margin and, according to Rodgers (1989: 6), disproportionately affects new labour market entrants and those re-entering work after unemployment. Whether this has a positive or negative outcome depends on both the nature of the worker and the job combined. For many workers, a temporary attachment to the labour market may suit their living arrangements. For example, they may be semiretired, a student, a parent, or suffering from ill-health. If they are new to the labour market they may wish to ‘job shop’ or gain work experience and develop contacts with the aim of securing a permanent job. Brosnan and Walsh (1996) have undertaken the most detailed New Zealand study into non-standard employment, using data from employer surveys: one of 2000 workplaces in 1991 and another of 5,200 workplaces in 1995.10 The proportion of workers in casual, fixed-term or temporary employment was 11 percent for both years. This proportion was higher for women (at 14 percent). More men were contractors and apprentices than women, while more women were fixed-term workers. Fixed-term employment almost trebled from 1.1 percent in 1991 to three percent of the workforce in 1995. Temporary employment rose from 1.7 percent of the workforce in 1991 to 2.6 percent in 1995. Most of that increase was in part-time temporary work, which nearly doubled in the period analysed. Surprisingly, casual work declined, falling from eight percent to five percent between 1991 and 1995. The authors give two possible reasons for this decline. The first is that during an economic recovery employers move away from casual employment. The second is that under the Employment Contracts Act it became cheaper to employ 9

Campbell (2000:68) defines casualisation as an increase in the proportion of employees under a ‘casual’ contract of employment. 10 The response rate was 33 percent in 1991 and 38 percent in 1995. This is lower than the level that Statistics New Zealand would deem acceptable. Nonetheless it is a high rate of response for a voluntary anonymous postal survey without follow-up, for which a response rate of 20 percent is usually considered satisfactory. The data were collected from employers only rather than from the population. The authors assert that the weighted data corresponded closely with official figures from the Household Labour Force Surveys (HLFS) for June 1991 and June 1995 and points of comparison between the survey and HLFS showed very little variation.

20

full-time permanent workers for longer hours because of the elimination or substantial reduction in penal and overtime rates. This was preferred to the employment of a just-in-time casual workforce with its attendant management difficulties. They suggest further analysis would be needed to reach firm conclusions about this (ibid).11 Overall, the data showed that expectations of “a pronounced shift to non-standard employment …were not substantiated …[and] … must be viewed with some scepticism” (ibid: 165). On the other hand, responses to a question on expectations of workforce changes over the following five years found there was a greater expectation of an increase rather than a decrease in the employment of non-standard workers, particularly in respect of casual employees. The Department of Labour’s 1993 and 1997 Survey of Labour Market Adjustment Under the Employment Contracts Act found 11 percent of the workforce to be casual employees on either a full-time or part-time basis in both 1993 and 1997. This phone survey of 2,000 employees distinguished between casual and permanent employment (rather than between casual, temporary and fixed-term employment), as does the current evaluation of the Employment Relations Act (ERA) by the Department. The ERA evaluation will provide some quantitative data on the scope of casual work in New Zealand and evidence of the employment relations implications for casual workers. Due to the survey not being designed, primarily, to answer questions regarding casual and temporary jobs or precariousness, the generalisability of the findings to a wider casualised workforce will be limited. 2.3.2 Part-time and self-employment in New Zealand This section briefly presents the notion that much part-time and self-employment is of a voluntary nature, and that therefore the growth of both these forms of non-standard work is not in itself a cause for policy concern. Of course, this is not always the case. As with the notion of precariousness, there exists the same continuum across the spectrum of standard and non-standard jobs in terms of degrees of insecurity or precariousness. For example, some forms of self-employment such as ‘dependent’ contracting may have elements of precariousness associated with them, and some contractors in the forestry industry, for example, may be at risk of being in precarious jobs. In addition, there are those who have become self-employed as the only alternative to unemployment. Both part-time and self-employment have been steadily increasing over the past 15 years, relative to total employment.

11

Interestingly, a smaller firm survey of the Employment Contracts Act by the NZ Institute of Economic Research (Savage and Cooling, 1996) found, in contrast, that the Act appeared to have some effect on the ability of employers to hire casual staff. A net 29 percent of respondent companies reported an increase in casual employment under the Act, with the largest increases coming from manufacturers and builders and services. (A total of 1,300 surveys were posted to recipients of the Quarterly Survey of Business Opinion (QSBO), of which 562 usable responses were obtained.)

21

Figure 2: Percentage share of total employment

% share of employment

25 20 15

1986 2002

10 5 0 Self-employment

Part-time employment

Part-time work is the most prevalent form of non-standard work.12 New Zealand Household Labour Force Survey (HLFS) data indicates that most people who work part-time choose this over full-time work. Only six percent of people who are employed part-time report that they would prefer to be working full-time, although nearly a third said they would prefer to work more hours (Carroll, 1999). Therefore supply-side factors dominate for part-time work in New Zealand and this is consistent with analysis of data in overseas countries (Mangan, 2000;13 ILO, 1997). However, data also indicates that involuntary (demand-side determined) part-time work is on the increase, particularly among prime-aged males and entry-level workers (Mangan, 2000). Notwithstanding this, much regular part-time work is also permanent and is less likely to meet the characteristics of precariousness – there is often secure tenure and stability around hours and the employee is more likely to have a knowledge of the health and safety risks associated with the workplace because an ongoing relationship exists. The self-employed can also be split into two categories according to supply- and demand-side factors. That is, those that choose to be self-employed and those that are pushed into self-employment. Many self-employed may be redundant workers – they use their redundancy pay to buy a small business. Bururu (1998) uses Census data and HLFS data to conclude that in New Zealand, much like in other Western countries, the ‘pull’ (or supply-related) factors such as independence and the possibility of financial rewards appeared to be stronger than the ‘push’ (or demand-related) factors such as unemployment and family circumstances. 12

Between the 1991 and 2001 censuses part-time employment increased by 60.2% (149,900 jobs) compared to full-time work which increased by 15.4% (176,900 jobs). The increase in part-time work has been greater among males than females, increasing 83% (50,400 jobs) compared to 52.8% (99,500 jobs). Women still account for 72.1% of part-time workers. 13 Mangan (2000) argues that these supply-side factors may be a passive acceptance of family and other circumstances rather than a whole-hearted embracing of part-time work as an ideal concept.

22

2.3.3 Contractors in New Zealand Contractors belong to the self-employed category. Commentators differentiate between ‘independent’ self-employed contractors, and ‘dependent’ self-employed contractors. According to Greene (2000) dependent contractors fall into the ‘grey’ area between employees and independent contractors. A ‘dependent’ contractor is a contractor who is dependent upon one source or employer for the majority of all of his/her income. The dependent contractor brings to the exchange labour and capital by way of equipment and tools and/or vehicles (ibid). Greene (ibid) reports that in New Zealand employers are opting for independent contracting arrangements, whether by contracting out to existing external providers, or by ‘converting’ employees into independent contractors. The advantages include the transfer of risk and liability and the avoidance of (perceived) dismissal complexities. Greene argues that some forms of ‘contract labour’ are clearly disadvantaged and their true status is likely to be an employee. Independent contractors in New Zealand are not afforded employment protection such as that provided by the minimum employment standard legislation, for example, the Holidays Act.

2.4 Non-standard employment relations in New Zealand While non-standard employment relations have been a feature of the New Zealand labour market for some time, the introduction of the ERA 2000 resulted in some clarification to the nature of non-standard employment relations and widely publicised some issues relating to the use of non-standard employment arrangements. Casual or part-time employees, fixed-term employees and homeworkers continue to be afforded the protections of 'employees' under the ERA (see Appendix Three for a summary of current employment protections). Most notably, the protections for employees on fixed-term contracts were strengthened under the ERA - employers using such agreements must have a genuine reason for doing so and can not use a fixed term arrangement when the job is really a permanent one. However, whether the increased protection and publicity has resulted in less use of these types of arrangements, or whether non-standard workers are aware of their rights is not clear.14 The next section seeks to define precariousness and possible indicators for use in a New Zealand context.

14

Further proposed research and the Department’s current evaluation of the ERA will address these issues.

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3. What is Precarious Employment? Changes in the quality of employment can be analysed from a number of different perspectives, including income, job security and employment conditions. The concept of ‘precariousness’ in employment is a catch-all term that attempts to encompass the full range of attributes associated with employment quality (Campbell and Burgess, 1998a: 6).

‘Precariousness’ is not a common term in New Zealand, but is discussed as a concept in academic and official reports in Australia, the US, Canada and Europe. Interest in ‘precarious’ employment reflects concerns that there are a growing number of unstable, low-paying and unregulated jobs emerging across the OECD. One of the key problems with the concept of precariousness is that there is no commonly accepted definition in the literature. There are also a variety of terms used that may refer to precarious work, such as ‘insecure work’, ‘contingent work’ or ‘casual work’. As Campbell and Burgess (1998a: 10) note, its inherently ‘fuzzy’ nature puts it at risk of being non-operational. They advise that, in order to anchor the concept in empirical application, ‘criteria’ are required by which employment can be classified as being precarious. Many researchers in the field refer to Rodgers and Rodgers’ (1989: 3) suggestion that there are several dimensions to precariousness and different degrees of precariousness. The dimensions, or characteristics, of precarious jobs are as follows: •

degree of certainty of continuing work – precarious jobs may have short time horizons, be of limited duration or have a high risk of termination

•

aspect of control over work – the less the worker controls working conditions, wages or the pace of work the more insecure the work is

•

protection – to what extent are workers protected, either by law or through collective organisation, or through customary practice – against, for example, discrimination, unfair dismissal or unacceptable working practices

•

low income – a somewhat more ambiguous aspect, low income jobs may be regarded as precarious if they are associated with poverty and insecure social insertion.

Thus, the concept of precariousness involves instability, lack of protection, insecurity and social or economic vulnerability. This does not, however, eliminate ambiguity. An unstable job is not necessarily precarious; rather it is some combination of these factors which causes precariousness, and the boundaries around the concept can be somewhat arbitrary. Burgess and Campbell (1998a) suggest that it is possible to develop a preliminary definition of precariousness in terms of low levels of pay and high levels, despite the fact that no fixed definition of precariousness has yet been commonly agreed upon. They regard labour insecurity, as manifested in a range of dimensions, as the key operational characteristic of precariousness in employment and outline eight ‘forms’ or ‘dimensions’ of labour insecurity (see Table 2).

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Table 2: Forms of labour insecurity Employment Insecurity – when employers can dismiss or lay off workers, or put them on short time without great difficulty or costs. Functional Insecurity – when employers can shift workers from one job to another at will or where the content of the job can be altered or redefined. Work Insecurity – when the working environment is unregulated, polluted or dangerous in some way, so that the ability to continue to work is at risk. Income Insecurity – when earnings are unstable, or when transfer payments are contingency-based and not guaranteed, or when earnings are close to established poverty lines. Benefit Insecurity – where access is limited or denied to ‘standard’ non-wage employment benefits such as sickness, holidays and retirement. Working-Time Insecurity – when hours are irregular and at the discretion of the employer, or where hours are insufficient to generate a minimum income. Representation Insecurity – when the employer can impose change in the labour process and refuse to negotiate with trade unions or with other institutions protecting workers’ collective interests. Skill Reproduction Insecurity – when opportunities to gain and retain skills through access to education and training are impeded. Source: adapted from Standing, 1993: 425-426, 1997: 8-9, 18-22 cited in Burgess and Campbell, 1998: 11).

Burgess and Campbell (ibid) see the virtue of the typology in its ability to incorporate a range of conditions that generate precariousness in employment. Some criteria are readily operational and can be super-imposed on existing employment types, such as casual employment and temporary employment. Other criteria are more difficult to apply, such as income and working-time insecurity. Individual jobs also can be assessed in terms of these measures. Some jobs may appear to be precarious on all or almost all of the measures and can be justly termed precarious jobs, whilst others may appear to be precarious only in terms of one or two of the measures. Thus it is possible to imagine a continuum of precariousness. As Burgess and Campbell (ibid) point out, a limitation of Table 2 is the absence of a system for ranking the criteria. Standing (1997 cited in Burgess and Campbell, 1998a: 12) argues that the familiar concern with employment insecurity is misplaced, and that the two most crucial forms of insecurity for the future are in fact income insecurity – which is tied to ‘working-time insecurity’ – and ‘representation insecurity’.

3.1 Precarious employment indicators in a New Zealand context Another practical technique we might apply, which is complementary to Table 2, draws on the ‘job quality count’ (Clark, 1998: 17), which is used to assess who has the “good jobs”. To calculate an overall measure of job quality, Clark suggests combining the information contained in seven variables.15 This is done by counting 15

These seven variables are: pay; hours of work (both overwork and underwork); future prospects (opportunities for advancement); job security; how difficult the job is; job content (interest, prestige and independence); interpersonal relationships (with co-workers and with management). These are all argued to be important parts of a good job, from the worker’s point of view, or of job satisfaction (Clark, 1998).

25

the number of aspects, out of these seven measures, for which an individual has a ‘good job’. The resulting scale runs from zero, for someone whose job is dissatisfying on all seven of the measures, to seven for someone whose job is of ‘good quality’ on all of the measures. A similar technique could be used to calculate precariousness. Below are ten possible indicators for precariousness which, combined, could be used to assess precariousness and who has precarious jobs. A scale would run from zero, whereby a person’s job could not be considered precarious, to ten for an individual whose job is precarious on all ten measures. Potential indicators of precariousness we could use in the New Zealand context are listed in Table 3.16 Table 3: Potential indicators of precariousness i. ii. iii. iv. v. vi. vii. viii. ix. x.

The job can be terminated with little or no prior notice by the employer. Hours of work are uncertain or can be changed at will by the employer. Earnings are uncertain or irregular. Functions of the job can be changed at will by the employer. There is no explicit or implicit contract for ongoing employment. There is, in practice, no protection against discrimination, sexual harassment, unacceptable working practices. The job is low income – at or below the minimum wage. There is little or no access to ‘standard’ non-wage employment benefits such as sick leave, domestic leave, bereavement leave or parental leave.17 There is limited or no opportunity to gain and retain skills through access to education and training. The task performed or the health and safety practices at the workplace make the job dangerous or unhealthy.

Some of these indicators relate to a shortfall in formal protection that an ‘employee’ is legally entitled to (see Appendix 3 for employment rights and minimum conditions of casual and fixed-term workers). If this was to occur, it could result from either a lack of willingness on the part of the employer to carry out their legal obligations, or a lack of knowledge of the legal entitlements. There are also indicators that are important at the level of employment practice and which do not relate to the nature of the employment contract per se. The key one is training – non-standard employment does not entail any formal impediment in access to training (Campbell, 2001) or access to a healthy and safe workplace. The issue is centred at the level of employment practice. It is also important that an assessment of precariousness does not focus solely on the job itself or the nature of the contract but takes into consideration the characteristics of the worker and worker preferences. Students may have a much higher preference 16

These are drawn, in part, from Table 2 and the Australian Bureau of Statistics, cited in Murtough and Waite (2000a). 17 This leave is accrual-based and therefore a situation may arise where a casual, temporary or fixedterm worker, despite working for the same employer for a year or more, may not meet the qualifying criteria for these benefits if their contract is repeatedly renewed after short intervals.

26

for temporary or casual jobs than adults who have completed schooling. It is the interaction of the nature of jobs and worker preferences that determine what constitutes precarious employment. The welfare impacts also depend on the preferences of those affected. For example, the precarious characteristics of a job would have greater adverse welfare consequences for older workers with dependents than for young full-time dependent students. The incorporation of attitudinal questions into a survey on precarious employment would be an essential element. This would be the best way of working out the effect on worker welfare of each type of factor associated with precarious employment. The methodology of asking questions about workers’ subjective assessment of their welfare outcomes from work is now seen as very credible within the labour economics field (Clark, 1996). Differences in personal characteristics, including household situation and family income, are also important considerations. Precarious job traits such as irregularity of income or hours are likely to have a different impact on a ‘second’ earner (for example, a woman working part-time in a high income household) than on a ‘primary’ earner with dependents, or on a household with other precarious workers. If we accept the above definitions of precarious employment, it is likely that some non-standard jobs in New Zealand would be precarious. Anecdotal evidence from those working close to industry18 and case study and survey evidence does suggest that some non-standard employment in New Zealand meets these characteristics of precarious jobs. This is discussed in the following section.

18

The Department of Labour’s Occupational Safety and Health inspectors and Employment Relations staff in the regions, employers and union spokespeople.

27

4. Location – workplaces, industries and persons associated with precarious employment conditions Section 4.1 looks at where lower end non-standard work may exist in terms of industry and occupations, whether it is more prevalent in the public or private sector and in large or small enterprises. It draws together international evidence, taking a broad initial sweep of industries and occupations before focussing specifically on particular sectors in New Zealand. Section 4.2 examines the literature around the characteristics of people more likely to be associated with ‘lower-end’ employment.

4.1 Where are ‘lower-end’ non-standard workers located according to international research? Definitional issues arise in this section, given that overseas studies will assess various categories of non-standard work forms and may encompass a broader group than the casual, temporary and fixed-term work forms that this review is focussing on. However, any definitional differences are highlighted in this and subsequent sections. The OECD data defines ‘temporary’ employment as dependent employment that does not offer workers the prospect of a long-lasting employment relationship. This incorporates our definitions of casual, temporary and fixed-term work forms, but also includes contract work, trainees and persons in job creation schemes. The OECD (2002) found that the highest concentrations of temporary jobs are to be found in agriculture and the unskilled (or ‘elementary’) occupations. These are predominantly manual jobs typically held by men. However, less skilled, service jobs (ie, ‘pink-collar’ jobs such as retail sales clerks and secretaries), conventionally held by women, are more likely to be temporary than are the skilled, white-collar jobs and jobs in industry. The US Bureau of Labor Statistics provides data on ‘contingent jobs’ (those without an explicit or implicit contract for ongoing employment), through a special supplement to the Current Population Survey (CPS).19 The February 2001 ‘Contingent and Alternative Employment Arrangements’ supplement obtained information from workers on whether they held contingent jobs and was administered to three-quarters of the CPS sample of 50,000 households. As in prior surveys, contingent workers were spread across the different occupational groups. They were, however, far more likely to be in the services industries than noncontingent workers, with over half being employed in services (55 percent). They were also more likely than noncontingent workers to be in administrative support, including clerical, and in precision production, professional speciality, and farming occupations. In addition they were more likely than noncontingent workers to be found in the agriculture (which may relate to the seasonal nature of the work) and construction industries.

19

http://www.bls.gov/news.release/conemp.toc.htm

28

Houseman (2000), from a nationwide telephone survey of 550 employers in the US, found that the prevalence of ‘alternative work’ varied across industries. The incidence of agency temporaries is highest in manufacturing (72 percent of the firms used agency temporaries) and use of on-call (casual) workers was highest in the services industry (44 percent). Wooden and Hawke’s (1998) analysis of seasonal work in Australia, using data from the Australian Workplace Industrial Relations Surveys conducted in 1989/90 and 1995, found that workplaces where demand was seasonal were more likely to employ casuals. The average casual employment share was about 25 percent higher than in workplaces where demand was not seasonal. In addition, continuous production was associated with lower levels of casual employment. The incidence of casual employment was lower at long established workplaces and workplaces that had recently undergone major organisational restructuring. 4.1.1 Where are ‘lower-end’ non-standard workers located according to New Zealand research? In common with the above studies, the New Zealand workplace surveys20 (Anderson, Brosnan and Walsh, 1994) showed significant variation between industries. Community and personal services, the fastest growing sector, had the most atypical labour force. It had the smallest proportion of any sector in permanent full-time employment (less than half the labour force), and the largest proportion of its labour force in part-time permanent employment, in fixed-term employment and in casual employment. Public and non-profit services also had a relatively small proportion of its labour force in full-time permanent employment (64 percent). It had virtually no temporary workers, but one worker in five was casual. Full-time permanent work was the highest in the manufacturing industry. The other notable incidence of nonstandard work was the use of contractors in the primary and building/construction industries. Apart from the above data, there is little empirical information available on occupational profiles of casual and temporary jobs in New Zealand. A number of sectors have been investigated, which report some evidence of precarious nonstandard work. These studies, however, are not representative and do not preclude the existence of precarious non-standard work in other sectors. They are also not statistically generalisable, thus findings cannot be generalised across the industries as a whole. Accommodation, winemaking and brewing Case study research into three industries – accommodation, winemaking and brewing – found that all the firms studied used casual workers to a greater or lesser extent (Whatman et al. 1999). In the accommodation firms studied, there was a reported trend towards an increased use of temporary staff, as compared with full-time permanent staff, fewer guarantees of hours of work and greater pressures for all staff to be available to work on call. In the winemaking and brewing enterprises studied, casual or temporary staff were used extensively to deal with seasonal variation and to 20

Conducted by Gordon Anderson, Peter Brosnan and Pat Walsh of the Industrial Relations Centre, Victoria University of Wellington, May 1991. The surveys were national surveys of 2000 workplaces in 1991 and 5200 in 1995. The industry groupings for the 1995 data are different, however the general industry pattern is the same as in 1991.

29

supplement permanent staff during busy times. The use of casual and temporary labour to facilitate ‘just-in-time’ production was increased. Nursing The New Zealand Nurses Organisation (NZNO, 1993) and McKillop (1995) report that the use of casual nursing staff in public and private hospitals throughout the country increased in the first half of the 1990s. They refer to area health board data which show that the actual number and full-time equivalents of casual registered nurses employed by area health boards rose 41.4 percent and 37.3 percent respectively between 1990 and 1993. The data for casual enrolled nurses shows a similar increase (NZNO, 1993). NZNO staff working in the private sector also reported a similar increase in casuals employed21 (NZNO, 1993). Forestry A feasibility study on behalf of Forestry Industries Training and Industry New Zealand indicates that a key issue in the forestry industry is that of ‘contract’ work (Forme Consulting Group, 2001). The study challenges the assumption that forestry contractors actually want to be in business for themselves. It found that the majority of existing contractors/employers have been told by forestry companies to start up a forestry contracting business – “[t]hey have been literally thrown in the deep end as major contractors” (2001, 6.5). In turn, these ‘major contractors’ become responsible for new entrants into the industry and evidence suggests that, while they may be good foresters, they are not always good managers. Meanwhile, forest owners have progressively distanced themselves from contractor employer/employee relationships for fear of being seen under current legislation as ‘the employer’. Furthermore, minimal income can be an issue for some contractors in the industry with limited experience due to the ‘piece rate’ system of payment. Forme Consulting argue that there is a linkage between payment systems and on job behaviour.22 That is, piece rate payment encourages production, and for trainees this happens at the expense of quality and safety, sound work methods and sound skill development (ibid). Retail A survey of 210 employees in the retail sector (McLaughlin and Rasmussen, 1998)23 found that almost half said they had no choice over the hours and days they worked in a seven-day industry and, according to the Northern Distribution Union, those workers classed as permanent part-time workers were often treated as casual employees, rostered on different days and different hours from week-to-week. In response to a question on the impact of their hours of work on family life: •

about one third left the question blank

21

Information on ‘casualisation’ in the private sector is largely anecdotal as the private sector is not covered by legislation requiring disclosure of information (NZNO, 1993). 22 See Leavitt (1964) and Hyman and Brough (1975) cited in Forme Consulting Group, 2001. 23 The survey was limited to the Auckland region. As the authors point out, the response group (210) is too small to provide results that can be generalised to the whole retail population and it is also biased. There is also a definite skew towards full-time, long serving and older employees, in an industry with a prevalence of part-time and young workers. Consequently, those who responded are likely to have greater bargaining power and better bargaining outcomes than the average employee in the sector is (McLaughlin and Rasmussen, 1998).

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•

one third said it had no effect with some reporting that they were single, had no family, or their children had all left home so the hours of work were not a big issue for them

•

the remaining third reported that the hours had a significant negative impact on family life. The most common responses were: “you have none [quality family life] when people are forced to work every weekend” … “weekends and nights ends family life” … “I don’t like working evenings and weekends because my children miss out and I have to hire a baby-sitter” … “when I’m working my wife isn’t and vice versa, so the kids get looked after but we don’t get to see much of each other”.

The survey reported that those with the least bargaining power were younger workers, those recently employed in their jobs, and those in small organisations. These same employees were also least likely to belong to the union (McLaughlin and Rasmussen, 1998). 4.1.2 Public / private sector – international evidence … The majority of the overseas literature is in agreement that, with the exception of some areas of part-time work, non-standard work is overwhelmingly contained within the private sector (Mangan, 2000; Wooden and Hawke, 1998). Wooden and Hawke’s (1998) findings indicate that rates of casual employment within the public sector are less than half that in the private sector, and Simpson (cited in Mangan, 2000: 42) estimates that at least 70 percent of all casual workers in Australia are employed in the private sector. Reasons given for this include a greater amount of regulation and more emphasis on gender equity and affirmative action programmes in the public sector than in the private sector. This has the effect of limiting the scope of managerial flexibility in the public sector when it comes to labour hiring. Higher rates of unionisation in the public sector may also be a contributory factor in rates of casual employment being significantly higher in the private sector. … and New Zealand evidence Results from the Brosnan and Walsh (1996) surveys, for non-standard employment overall, showed that the relative size of the non-standard workforce for the public and private sector changed quite significantly between 1991 and 1995. In the 1991 survey, non-standard workers comprised 33 percent of the public sector workforce compared with 25 percent in the private sector. By 1995, non-standard workers in the public sector had declined to 31 percent and the private sector had increased to 30 percent. It is the view of the authors that the effects of public sector restructuring in the second half of the 1980s had slowed since 1991, whilst the private sector’s capacity to reshape its workforce was enhanced following the ECA 1991. Thus, all non-standard employment categories increased in the private sector between 1991 and 1995. The fall in casual employment during this period was almost entirely a public sector phenomenon – it actually increased in the private sector from four to six percent (Brosnan and Walsh, 1996).

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4.1.3 Size of enterprises – international evidence … The size of enterprises is also important when attempting to gain insights into nonstandard precarious work and can give further insights into its likely locality or areas of higher risk. The OECD (2002) found that smaller firms are more likely to hire workers on temporary jobs than are medium-and large-sized firms. Similarly, Wooden and Hawke’s (1998) analysis of Australian workplace data found there was about a 50 percent larger, other things equal, casual employment share in small firms (less than 100 employees). … and New Zealand evidence This is also reflected in the New Zealand workplace survey findings (albeit that the group referred to is non-standard work overall, rather than a breakdown into temporary, casual and fixed-term work) (Brosnan and Walsh, 1996). These findings showed that the size of the non-standard workforce tends to decline as the size of the workplace increases. In 1991 and 1995, the smallest workplaces, those of two to nine employees, had the largest proportion of non-standard workers at 34 percent. Nonstandard employees in the largest workplaces (more than 50 employees) remained almost unchanged, dropping one percentage point to 27 percent in 1995. Workplaces of 10-49 employees experienced a considerable rise in non-standard employees (from 27 percent in 1991 to 32 percent in 1995).

4.2 Characteristics of people in lower end non-standard jobs – age, gender, ethnicity, skill levels, education An overview of the literature on individual characteristics of workers in lower end non-standard jobs reveals much commonality in the findings. In short, these workers are more likely to be women, young, an ethnic minority, and less educated and lower skilled (OECD, 2002; Polivka, 1996; Rodgers and Rodgers, 1989; Zeytinolgou and Muteshi, 2000). However, the OECD (2002) found that, whilst women are over-represented among temporary workers, gender differences are only large in a few countries. The difference is minimised, given that high concentrations of temporary jobs are in manual jobs that are conventionally held by men. Rodgers and Rodgers (1989) argue that the characteristics of the better-off groups will be different from the characteristics of the worse-off group. The better-off are more likely to be male, older and better educated. This applies particularly to selfemployment, contract work and, to a lesser degree, some types of part-time work. On the other hand, the characteristics stated above for lower end non-standard workers are more likely to be stronger, the more ‘precarious’ is the work concerned. Consistent with this argument are findings from the Bureau of Labour Statistics (2001) that the characteristics of workers in alternative employment arrangements differed widely among the four alternative arrangements.24 “For example, compared with workers in traditional arrangements, independent contractors were more likely to 24

These are independent contractors, on-call workers, temporary help agency workers, and contract company workers.

32

be white, male and age 35 and older, while temporary help agency workers were more likely to be black or Hispanic, female, and between the ages of 20 and 34” (BLS, 2001: 3). 4.2.1 Gender – New Zealand evidence Brosnan and Walsh’s (1996) New Zealand workplace surveys reflected the above findings by gender, but no New Zealand evidence on temporary or casual work is available for ethnicity or youth. With respect to non-standard employment overall, the data for 1991 and 1995 showed that women were much more likely throughout this period to be in non-standard employment than men – almost 90 percent of employed males were full-time employees in 1991 and 1995 compared with just over 60 percent for females. Major gender differences in casual employment were found. Women were more than twice as likely as men to be casual workers in both 1991 and 1995. In contrast to casual employment, men were more than four times as likely as women to be contractors or consultants. Males and females were employed on a temporary basis in virtually the same proportions in 1991. By 1995, although male temporary employees had risen, female temporary employment had increased from 1.8 percent to 3.0 percent of the female labour force (ibid). This is consistent with the above findings that men are more likely to be in the higher end forms of non-standard employment, whilst women predominate the lower end. 4.2.2 Ethnicity – international evidence A US Bureau of Labor Statistics report25 (Polivka, 1996) found that blacks had higher rates of contingency than whites within the industries that employed close to the majority of contingent workers, such as the construction industry and retail trade. For example, in the construction industry, 12.1 percent to 17.4 percent of blacks were contingent, compared with only 3.8 percent to 7.4 percent of whites. Similarly, in the retail trade, blacks’ rates of contingency were about double the rates for whites. “Overall, these industry estimates suggest that blacks’ higher rates of contingency were not simply a function of their employment distribution among various industries. Rather, blacks’ higher rates of contingency also were a function of labor market factors within industries” (Polivka, 1996: 16). Evidence also suggests that recent immigrants in Canada are over-represented in nonstandard work. Using Census data from 1986 to 1996, and focusing on those in prime working ages of 25 to 44, Badets and Howatson-Leo (1999 cited in Zeytinoglu and Muteshi, 2000) found that although most recent immigrants spoke one of two official languages and were highly educated, they were less likely to be employed or, if employed, more likely to be in part-time or part-year (seasonal, casual) jobs. Their study also showed that in the 1990s, recent immigrants, three quarters of whom were racial minorities, were not only more likely to employed in non-standard work, they were also stuck longer in those type of jobs.

25

This report profiles ‘contingent workers’ using data collected through a special supplement to the February 1995 Current Population Survey (CPS). Contingent workers are defined as individuals who do not have an explicit or implicit contract for ongoing employment.

33

Zeytinoglu and Muteshi (2000) refer to a number of studies in Canada, which find that racial minority women, many of whom are from low economic class, are disproportionately represented as the ‘flexible’ workers in the labour market. Jobs designated as less skilled, lower paying and casual were filled by racial minority and Aboriginal women and/or women of low economic class. 4.2.3 Age and education – international evidence Studies suggest the strongest demographic pattern in lower end non-standard employment is the over-representation of younger and less-educated workers. Polivka’s (1996) data indicates that contingent workers were more than twice as likely as noncontingent workers to be between the ages of 16 and 24. Contingent workers were three to four times more likely to be enrolled in school than were noncontingent workers. Among those not enrolled in school, contingent workers were more likely than noncontingent workers to not have a high school diploma. Similarly, the OECD (2002) found that temporary jobs are disproportionately held by younger and less educated workers. On average, for the 28 OECD countries considered, youth (ie, workers aged 15-24 years) were approximately three times as likely as older workers to hold a temporary job. This suggests, according to the OECD, that these jobs often serve as entry ports into the world of work. Workers who had not completed upper secondary schooling had a rate of temporary employment that was approximately 60 percent higher than that of more educated workers which, according to the OECD, is suggestive of long-term traps in precarious work. Mobility into permanent jobs is also lower for less educated workers. Despite these differences, the OECD (ibid) concludes that temporary workers are a diverse group and the majority are to be found in the same demographic and institutional categories as the majority of all workers. From an Australian employee sample in 1995, Wooden and Hawke (1998) found that casual employment was particularly high among young people, with 30.2 percent of employed persons under the age of 25 estimated to be working on a casual basis. Their results indicate a high probability of casual employment among both women and young workers, and a greater likelihood of casual employment at the upper end of the age distribution (55 years and over). 26 Lane, et al’s (2001) analysis of the Current Population Survey found that education levels for workers in alternative arrangements – temporary help, independent contractors, on-call workers, and contract company workers – are low, with about one-third of these workers lacking a high school diploma. The above evidence is consistent and suggests a degree of overlapping between the ‘age’ and ‘education’ characteristics. Lower end non-standard work can provide employment for those for whom employment is not the primary task, and enable students to combine study and paid work. It is the non-students without qualifications and in precarious work who are more likely to present a policy concern.

26

They estimate a multivariate probit model of casual employment using the employee data collected as part of the Australian Workplace Industrial Relations Surveys 1995 (Wooden and Hawke, 1998).

34

The next section is concerned with understanding the determinates of non-standard employment. Why are employers and employees using non-standard employment arrangements? What are the explanations for the rise in non-standard employment?

35

5. What determines the extent of non-standard and precarious work? This section attempts to provide greater insight into why non-standard/precarious employment arrangements are being used. It discusses the role of supply, demand and institutional factors in determining the extent/distribution of non-standard/precarious work at a point in time. Section 5.2 examines demand, or employer motivations, and supply, or employee motivations, for using non-standard work arrangements. Section 5.3 discusses factors that may account for its growth. The types of jobs that exist in the economy reflect the interaction of the demand by employers for labour to perform production tasks, the supply of labour by households, and the institutional framework. Supply-side, demand-side and institutional factors interact in different ways for the various forms of non-standard employment, but not necessarily equal ways. Mangan (2000) argues that employers seem to be the instigators of most moves to change labour hire practices or working arrangements and cites a survey conducted by McAndrew (1992) in New Zealand, which found that of those firms that put new individual contracts in place, employers initiated 88 percent. Mangan (ibid) refers to the contrasting theories of demand-side (recession-push) and supply-side (entrepreneurial-pull) both of which have considerable empirical support (see Mangan, 2000: 91). International research shows that supply-side factors are more likely to be predominant in the more desirable forms of non-standard employment, whereas in the more precarious forms, demand-side tend to dominate. In general the more contingent and less desirable the form of nonstandard employment, in terms of pay and conditions, the more dominant are demand-side factors. This is why independent contractors and other self-employed are generally seen as the top echelon of non-standard worker (Mangan, ibid: 94).

In thinking about precariousness, there are also a number of other factors to consider, including firm production technologies, worker preferences, bargaining power and union influence. With respect to firm production technologies, for example, firms may have different costs of providing precarious and non-precarious jobs. A firm in hospitality, which is required to operate for longer hours than a firm in manufacturing, may find it more costly (because of penalty rates) to offer only full-time jobs. With respect to bargaining power, in jobs where employers have a relative advantage in bargaining power over employees, it is likely that jobs will reflect employer preferences. In jobs where workers have a relative advantage in bargaining power over employees, it is likely that jobs will reflect worker preferences. With respect to non-standard employment, workers in the former category are more likely to be lower end workers and workers in the latter are more likely to be higher end. In the main, the literature fails to emphasise bargaining power as a key determinant of non-standard work. The issue of bargaining power may be important in connection

36

with unions – a decline in unions would have a likely reduction in worker bargaining power. This would be expected to shift the distribution of types of jobs that exist towards a distribution that is preferred more by employers (such as a greater share of jobs without effective protection of rights). This effect will be intensified with nonstandard workers who are less likely to be collectivised. In terms of a worker’s ability to trade off their wage or non-wage conditions, traditional economic theory might proffer the compensating model of earnings variations, which would suggest that a job with precarious non-wage characteristics would receive a higher wage as compensation. However, others would argue that the low wage labour market functions differently from the normal labour market and is more complex than the model might suggest (Metcalfe, 2002). Bargaining power over wage and non-wage conditions may have greater credence at the higher end of the non-standard labour market, but at the lower end the choices are more stark. Brosnan and Scully (2002) argue that those workers who are forced to accept the most unpleasant jobs are in the lowest tiers of the labour market and have no other options. Their employers therefore have no economic incentive to offer compensating features. The existence of widespread unemployment provides a ready source of competition, so that the job need not offer permanency. Workers in these lower end jobs have little to bargain with if they are low skilled with no qualifications. If their only alternative is an equally poor job or unemployment, there is little incentive for an employer to offer better pay or conditions than other firms. Mangan (2000) suggests that the principal form of departure of non-standard work from traditional work is one of control in the work relationship. The traditional model represented a balance of power shared relatively equally by employers and organised labour within a system of rules set by government. Power for some in non-standard work, such as independent contractors, has shifted to the individual (worker), whereas lower end non-standard workers are, he argues, defined by their lack of employerfunded benefits and their almost total absence of workplace influence.

5.1 What are the motivations of employers for using non-standard work arrangements internationally …? According to Rodgers and Rodgers (1989) one of the major reasons for the use of various non-standard employment forms is to avoid the designation of an individual as an employee. Employees may have legal or regulatory rights that impose costs on employers (including specific terms and conditions of employment and rights to employment protection such as restrictions on lay-off or redundancy). The level of these costs will influence the extent to which employers may seek to avoid employee status. Empirical evidence in this area that is widely referred to is Houseman’s 1997 survey (2nd rev, 2000)27 of US employers conducted by the Upjohn Institute for Employment Research. This survey of 550 private sector employers asked firms questions about

27

http://www.upjohninst.org/publications/wp/01-67.pdf

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their use of flexible staffing arrangements.28 The impetus for the survey arose from concern over evidence showing the increasing use of flexible staffing arrangements by employers, and the concomitant realisation that the evidence for the motivations of employers using these arrangements and their implications for workers was very limited. Houseman (ibid) found that the reasons most commonly given for using flexible staffing arrangements were the traditional reasons of minimising costs and accommodating fluctuations in workload or absences in staff. The empirical evidence suggested that while there are many reasons for firms to use alternative work arrangements, firms’ staffing needs – primarily short term – are the main source of demand for on-call workers and agency temporaries. Firms did not often use alternative work arrangements to screen employees for full-time, permanent positions. Finally, savings on benefit costs was an important factor determining employers’ use of flexible staffing arrangements. Workers in flexible staffing arrangements typically are not covered by regulations governing benefits, and they generally do not receive key benefits offered to standard workers (Houseman, 2000).29 This concurs with evidence from a similar survey conducted in Australia (Brosnan and Scully, 2002).

…. and in New Zealand? Brosnan and Walsh’s (1996) findings are similar and indicate that non-standard forms of employment create opportunities for employers, particularly in the new service industries. Non-standard employment allows labour deployment to be tailored to times of peak demand and times of fluctuating demand, and allows employers to avoid training costs. However, they argue that the benefits are offset by the added difficulty of managing a non-standard labour force and the reduced likelihood of a mutual commitment between employers and their workers. Whatman et al. (1999) found in their case studies that employers were utilising this type of labour to increase their operational flexibility when faced with uncertain workflows and operating environments. The flexibility agreed to in contractual arrangements meant that it was common for casual staff to bargain weekly and sometimes daily over hours of work. They also used casual and temporary contract arrangements to reduce overtime and other costs of permanent employment such as holiday pay, and to reduce labour costs and risks by using such employment arrangements as three-month trial periods and temporary contracts. By trialling new workers, employers could let the contracts of the poor performers lapse rather than have to dismiss them. Evidence from the Department of Labour’s recently completed firm interviews showed significantly different responses between the small firms and the larger

28

These were temporary help agency workers, on-call workers (equal to our definition of casual workers), contract workers, short-term hires (defined as individuals who are employed directly by the organisation for a limited and specific period of time, which is similar to our fixed-term worker category), and regular part-time workers. 29 This is less of a consideration in the New Zealand context, given that employers generally do not offer pension or health entitlements, as is the common practice in the US. However, other benefits such as parental and sick leave, based on accrual, are still relevant considerations.

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firms.30 The larger firms tended to have responses consistent to those already mentioned. However, many of the smaller firms emphasised the need to use casual staff as a matter of financial survival. Achieving growth by increasing permanent staff was simply not financially viable for many of them. A flexible workforce was therefore seen as the only option for responding to changing demands in the future. Dismissal procedures were seen as particularly onerous by the firms visited and many felt the current legislative environment was too strict. The risk of employing someone on a permanent contract who could prove unsuitable ‘on the shop floor’ was seen as high, particularly for the small firms.

5.2 What are the motivations of employees for working in nonstandard/precarious jobs? On the supply side, there are groups of workers who are responsive to non-standard employment and others who are not. It is useful to understand workers’ motivation for engaging in the various forms of non-standard work and their satisfaction associated with this employment in order to determine whether it is their preference. Data from the US Bureau of Labor Statistics31 indicate that workers take contingent and other temporary jobs for a variety of reasons, both personal and financial. These reasons include workers’ preference for a flexible schedule due to school, family, or other obligations; need for additional income; inability to find a more permanent job; and hope that the position will lead to permanent employment (GAO, 2000: 9).32 Dillingham’s (2000) research using data primarily from the CPS found that most of the reasons for contingent temporary work were personal, defined by the CPS as flexibility of schedule; family or personal obligations; in school or training; and other. According to Lane et al. (2001: 21), however, most workers work in temporary help services (which, alongside casual workers, makes up the majority of the contingent group) because they have no choice, not that they choose temporary work for personal reasons. In particular, worker responses to the (CPS) question that examined the reasons for the choice of temporary employment found overwhelmingly that workers work in the temporary help industry for economic reasons – that is, it was the only type of work that they could find; that they hoped it would lead to permanent employment; or that the nature of the work was seasonal. Workers in the temporary help industry are not there for personal reasons such as schedule flexibility, childcare, school scheduling, or family and personal obligations … Not surprisingly … most workers in temporary work are not particularly happy in that job.33

30

This work entailed visiting 18 firms in the retail trade and manufacturing industries in the Auckland and Wellington regions, looking at how firms adjust to changes in demand for their products and key factors affecting their decision to increase employment.

31

This data is from the biennial Supplement (‘Contingent and Alternative Employment Arrangements’) to the Current Population Survey – a monthly survey of 50,000 households that is the primary source of

information on the nation’s labour force. 32 http://www.gao.gov/ – ‘Contingent Workers: Incomes and Benefits Lag Behind Rest of Workforce’. 33 (http://www.urban.org/Uploadedpdf/410374_nonstandard-employment.pdf).

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It is worth noting that Lane et al.’s findings are drawn from the three ‘Contingent and Alternative Employment Arrangements’ Supplements to 1999, prior to the February 2001 Supplement results. In the 1997 Supplement, 57 percent of temporary help agency workers would have preferred a ‘traditional’ or standard job, but this had declined to 44 percent in the February 2001 Supplement, the reasons for which are not made clear. In the narrowest estimate (self-employed workers and independent contractors are excluded from this estimate) over half (58 percent) of contingent workers would have preferred a permanent job, while 35 percent said they preferred their contingent employment arrangement. If self-employed and independent contractors are included, the percentage of contingent workers preferring a permanent job is reduced, although it is still over half (52 percent), while 40 percent preferred their contingent employment arrangement. Independent contractors as a group clearly preferred their arrangement, with 83 percent preferring it over a traditional work arrangement. Temporary workers tend to be less satisfied with their jobs than permanent workers, according to survey evidence on job satisfaction levels in 14 European countries (OECD, 2002).34 The relative dissatisfaction of temporary workers focuses on job security, in particular, and pay. Objective indicators of working conditions also suggest that the incidence of monotonous tasks and inflexible work schedules is significantly higher among temporary workers, who are also somewhat more likely to work night and weekend shifts. The finding with respect to inflexible work hours is noteworthy according to the OECD (ibid) as it highlights the possibility that the scheduling flexibility associated with temporary jobs may more frequently be used to satisfy employers’ production needs than workers’ time-use preferences. In the Walsh and Deery (1999: 59) study, a direct relationship is shown between the degree of dissatisfaction, as indicated by the percentage of employees who prefer a different status, and the extent to which working hours are irregular and unsociable. For example, in the retail and hotel firms, where working patterns were extended and unpredictable for temporary employees, there was a greater propensity to express a preference for changed employment status. The unpredictability of flexible working hours was particularly problematic for women. There are other considerations that may lead to some workers preferring to be in temporary or casual jobs. Some workers may prefer to be in an arrangement where ongoing commitment or loyalty to an employer is not required. Short-term work may be desirable for reasons such as health or other personal commitments. Other workers may wish to gain work experience in a variety of occupational sectors. They may be semi-retired, or paid work may be secondary to other non-labour market activities or family responsibilities. Students also may opt for casual or temporary work as a way of supplementing income while studying. Overall, there does appear to be a common theme in the international literature of the distinction between the higher end and the lower end non-standard work forms. In 34

Given that job satisfaction indexes are difficult to interpret, being based on individual subjective evaluations of their situation, objective indicators of working conditions in temporary jobs are also examined in order to paint a fuller picture of how favourably temporary jobs compare with permanent jobs (OECD, 2002).

40

general, the former group of workers exercise choice in their employment arrangement, whereas there is a higher likelihood of the lower end non-standard group being involuntary participants.

… and in New Zealand? There is little New Zealand evidence on this issue, with the exception of Carroll’s (1999) work indicating that the majority of part-time workers prefer their type of work arrangement. This is in contrast to many of the temporary and casual employees interviewed in the accommodation, winemaking and brewing industry case studies (Whatman et al., 1999) who felt that their employment was insecure and that they had few alternative employment opportunities available to them.

5.3 What contributes to the growth of precarious/non-standard work? Explanations for the growth of non-standard employment also relate to a combination of supply-side, demand-side and institutional factors (Department of Labour, Canada, 1997; Mangan, 2000; Brosnan and Walsh, 1996; Murtough and Waite, July 2000a). Supply-side factors include the substantial increase of female participation in the workforce and their propensity to work in non-standard, particularly part-time, employment; changing family structures; the need to combine family responsibilities with paid work coupled with the availability of childcare; and an increase in the share of young people who are students.35 Demand-related reasons include the desire of employers for a more flexible labour force in response to changing product market conditions such as customers’ requirements of individual and just in time production. In addition, developed economies have shifted away from the production of goods, and towards services, in which part-time and casual work has always been more important. Other possibilities for an increase in non-standard work include: •

firms have faced an increase in competitive pressure that has led to greater product demand uncertainty, which in turn impacts on their employment choices

•

downsizing, and the associated intensification of work that has accompanied it, may have led to a decline in labour hoarding, therefore temporary workers may fill the gap

•

jobs requiring little firm-specific capital may have become more common (Australian Labour Market Research, 2001).

In New Zealand, the growing competition firms face as a result of globalisation and a reduction in trade barriers and transportation costs, has meant that firms have

35

Within Australia’s labour market, young people account for the highest share of casual employment. The majority of these jobs are part-time, taken by students, concentrated in the service sector and in relatively low-skilled occupations (Gaston and Timcke, 1999).

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increasingly been looking for ways to cut costs. The more intensive use of nonstandard employees may be one way of achieving this cost-cutting (Carroll, 1999). With respect to the New Zealand data, labour demand explanations for the rise in nonstandard work are primarily based around three ideas: •

non-standard employment allows employers increased flexibility in production

•

non-standard employees carry fewer costs and, more generally, can be paid less than standard employees, and

•

employers may use non-standard workers so that they can transfer economic risk to the workforce (Carroll, 1999; Brosnan and Walsh, 1996).

Quantitative research in Australia suggests that demand-side factors provide more likely explanations for changes in the overall level of casual employment than supplyside characteristics (Wooden and Hawke, 1998; see Murtough and Waite, July 2000a). Institutional factors such as minimum wage requirements and other regulatory arrangements may directly affect the extent of precarious employment. An easing of labour laws and a climate of greater labour market flexibility may result in an increase in non-standard employment. In Australia and Spain labour market deregulation was seen to encourage an increase in non-standard employment (Mangan, 2000; Brosnan and Thornthwaite, 1994). It is difficult, however, to establish a direct causal effect and the widely varying labour market contexts complicate this issue. For example, Spain has a unique ‘dual labour market’ in which a third of employees work under very flexible employment contracts with low severance payments and two-thirds work under permanent employment contracts with extensive employment protection and high redundancy provisions (Dolado et al., 2001). In reaction to the high employment protection for permanent workers, employers have pushed for and progressively achieved the sanctioning of non-standard forms of employment (Mangan, 2000). The easing of labour laws in New Zealand during the 1990s may have had the opposite effect to that experienced by Australia and Spain (as indicated by Brosnan and Walsh’s (1996) survey data showing that the proportion of casual, temporary and fixed-term employment remained unchanged between 1991 and 1996), possibly because the Employment Contracts Act 1991 made it less costly for employers to have full-time permanent employees work longer hours. In the US, Houseman (2000) argues that wage and benefit regulations have the effect, probably unintended, of increasing employer demand for flexible staffing arrangements as a way of avoiding the costs associated with standard employment (Houseman, 2000). In summary, determining the predominant causes for the extent and growth of nonstandard employment is an extremely complex empirical question that requires further research. The effect of regulatory arrangements on the extent of non-standard work is another issue which further research will need to address.

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6. Potential policy concerns This section addresses the fifth research question: “Why are we concerned?” It looks at what some of the possible implications for non-standard precarious workers might be – both economically and socially. It summarises the issues and concerns with respect to earnings, employment relations, health and safety and training in the workplace; the implications for trade unions; for workers’ mobility; and for family and other social issues.

6.1 Earnings differentials There is a general consensus in the international literature regarding the association between precarious non-standard work and low income. Again, it is important to note the distinction between the ‘higher end’ and ‘lower end’ non-standard work arrangements in terms of the economic consequences. According to the Bureau of Labor Statistics (BLS), independent contractors, who are likely to be white, male, and educated, do not suffer an earnings penalty and may in fact experience an earnings premium. Yet the employees of temporary agency firms are more likely to be black, female, poorly educated, and single mothers and to suffer earnings penalties (BLS, 2001; Hipple and Stewart, 1996).36 The US General Accounting Office (GAO, 2000) finds that workers in most of the categories that could be considered part of the contingent workforce share a common characteristic – they are more likely to have low incomes than similar workers in standard full-time work arrangements. Likewise, Houseman (2000), using data from a survey of US employers, found that workers on temporary jobs were paid significantly less than permanent workers. Hipple and Stewart (1996) of the BLS examine the compensation data from the Contingent Worker/Alternative Work Arrangement Supplement to the Current Population Survey in 1995. They conclude that overall, contingent workers earn less income than noncontingent workers37 and are less likely to receive health insurance and pension benefits through their employers than are noncontingent workers. Whites are much more likely than are blacks or Hispanics to have health insurance from any source; minority workers in contingent jobs are not as able to rely on family members or other non-employment-related sources for their health insurance coverage; and only one in ten Hispanic contingent workers has employer-provided health insurance (ibid). An area that receives less attention in the literature is the possible explanatory factors for the difference in pay and shorter tenure, such as the different demographic characteristics of the workers, as opposed to the nature of the work. In New Zealand Carroll (1999) addresses this in an analysis of part-time employment, using regression techniques to control for a variety of background variables. He finds that certain characteristics of workers (such as age, education, ethnicity and occupation) account 36

(http://stats.bls.gov/opub/mlr/1996/10/art3exc.htm; ftp://ftp.bls.gov/pub/news.release/conemp.txt) For contingent workers, median weekly earnings were $285, compared with $416 for noncontingent workers (Hipple & Stewart, 1996).

37

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for much of the raw differential between part-time employment and full-time employment earnings and concludes that the demographic and occupational differences are more than sufficient to explain the observed part-time/full-time wage differences. Likewise, the economic impact for those in ‘lower end’ non-standard work depends on a number of demographic variables and job characteristics such as age, education and industry. Dillingham (2000) in his analysis of CPS data found that youth and lower education levels largely account for lower earnings among contingent workers. This was due, firstly, to younger workers being more likely to be in school and to work part-time and, secondly, that education and age are positively correlated with productivity, “which in significant ways drives wages”. Thus the effects of age, education and work status on wages needs to be taken into account. Lane et al., (2001) also suggest the possibility that differences in education attainment may contribute to some of these discrepancies in earning. On-call workers and agency temporaries have the lowest educational attainment while independent contractor and contract workers are most highly educated, which indicates a high correlation between earnings and education. In a study that controlled for differences such as education and hours worked per week, Segal and Sullivan (1998) 38 find that a 15 to 20 percent wage differential exists between wages earned in temporary work and the wages that would be expected from traditional work based on the work history of the individuals in the sample. But, up to half of this effect appeared to be due to factors associated with temporary work (such as workers turning to temporary work after having suffered a career setback) rather than to temporary work per se. The differential dropped to about 10 percent when wages were compared to those earned at the types of jobs that the individuals would probably find, during the same period, if not involved in temporary work. The OECD (2002) used multivariate regression techniques to provide an estimate of the independent impact of holding a temporary job on pay, by standardising for pay differences due to other individual and job characteristics. The results showed that the wage penalty associated with holding a temporary job was reduced but not eliminated. There were still statistically significant wage penalties for temporary workers in all of the countries considered. However, the OECD (ibid) notes that the regressions may still provide a biased estimate of the wage penalty to temporary jobs because they do not control for all potentially important characteristics. Furthermore, national differences in the estimated wage penalties may reflect not only different economic and institutional contexts, but also differences in data quality.

6.2 Employment relations Non-standard working arrangements impact upon employment relations in a number of ways. According to Mangan (2000), on the supply-side they have the potential to remove third parties, such as unions, from the industrial relations process. Workers 38

http://www.chicagofed.org/publications/workingpapers/papers/wp98_23.pdf

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are more likely to choose to make arrangements for individualised contracts or, in the case of casual or marginalised workers, may not feel part of the union process. The New Zealand Survey of labour market adjustment under the Employment Contracts Act (Department of Labour, 1997) found that casual employees tended to be less informed than permanent employees on minimum conditions. Seventy-two percent of casuals were not able to identify any minimum conditions during unprompted questioning compared to 57 percent of permanent staff. The 1993 survey found that over 40 percent of casual employees answered ‘never had/ not applicable’ in response to questions about changes to their annual and sick leave provisions (Department of Labour, 1993). In subsequent case study work of firms in the accommodation, winemaking and brewing industries (Whatman et al., 1999), it was found that conditions for casual staff, as well as the way they were treated, tended to be less favourable than for the core of permanent staff. In addition, some casuals did not receive their entitlements, such as holidays as they were entitled to under the Holidays Act. Employers usually believed that they had significantly less risk of a personal grievance complaint if the employment relationship was temporary, because the ending of that relationship did not amount to a ‘dismissal’. Sometimes employees worked as ‘casuals’ for long periods when they were effectively full-time employees without a clear expectation of the relationship ending. Permanent staff generally had written contracts in large and medium-sized enterprises as they presented the greatest risk for employers. Casual staff in these enterprises, however, might not have written contracts (ibid). Whatman et al. (1999) found that small employers generally conducted relationships in a highly informal manner. On the other hand, large and medium-size employers in all firms studied were more bureaucratic and had systems in place for handling employees in a consistent manner that were compliant with regulatory requirements. The increasingly complex mix of hiring practices and employer-worker relations within any one enterprise, which is associated with non-standard employment arrangements, complicates employment relations issues. For example, as Barker and Christensen (1998) argue, workers are being hired in larger numbers on a variety of different bases: temporary hires made directly by the firm; temporary hires made through an agency; and self-employed independent contractors who are hired on a project basis. In addition, entire functions of organisations, ranging from data analyses to janitorial, cafeteria, and security services, are being outsourced, that is, subcontracted out to other companies. The amount of control the firm exercises over this range of workers can vary greatly (Barker and Christensen 1998). In the case of independent contractors, the firm pays for the job that is contracted for but typically bears no responsibility for providing training or benefits. In the case of outsourcing of entire functions, the worker becomes an employee of the subcontracting firm, and the original organisation abdicates any direct responsibility for compensation, training, benefits, or liability (ibid).

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The situation for temporary agency hires is more complex. Whilst they are technically employees of the temporary agency, which is responsible for setting compensation and for providing training, they are supervised by the client firm to which they are assigned. This ‘co-employer’ relationship can make the handling of issues such as sexual harassment and worker safety quite complicated, particularly in terms of liability. Likewise, the dependent contractor can be part of a co-employment relationship where the boundaries for liability become unclear (ibid).

6.3 Health and safety The impact of changes of labour hiring procedures on workplace health and safety is an issue in need of further research (Mangan, 2000). Some results are available from Spain, which has the highest percentage of temporary workers and contracted labour in the European Commission with just over 36 percent of all workers on contract. A Spanish Labour Ministry study of 1993 showed that 48 percent of all industrial accidents in Spain involved employees on temporary contracts. The Spanish Trade Union Confederation found that 88 percent of all fatal accidents involved workers on temporary contracts and 44 percent of all accidents involved employees with less than one year of service. They argued that these accidents occurred more frequently with temporary staff because: It is generally more difficult for employees to become familiar with and trained in labour practices of a particular industry if they are employed on a contract of only a few month’s duration (European Industrial Relations Review, 1995, cited in Mangan, 2000: 143).

Rebitzer (1998) looks at the US petrochemical industry, which in the six months of January to June 1991 had 11 major workplace accidents, nine involving contract workers. He concludes that host plants offer more effective safety training and supervision to their employees than to contractors. Rebitzer (ibid: 243) argues that despite the increasing importance of contract and temporary employment relationships, very few studies have examined the implications these have for the operation and regulation of labour markets. He writes, At the level of the firm, little is known about the manner in which contract employees are trained and supervised. At the economic policy level, little is known about how laws and legal concepts developed for conventional employment relationships work when applied to contract employment relationships … Organisations that use temporary or contract workers disavow health and safety responsibilities for such workers by assigning the primary responsibility for their safety training and supervision of contract employees to individual contractors.

A report from the European Agency for Safety and Health at Work finds that case study research indicates a transferral of work-related risks to non-permanent employees and to subcontractors.39 The report concludes, 39

The report has sought empirical evidence of changing contractual relationships within the European Union in order to assess the occupational safety and health (OSH) implications. It is based on the study of relevant literature and on the consulting of experts by means of a questionnaire and expert seminar.

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[These] are the people who do the dirtiest, the most dangerous and the most monotonous jobs under relatively poor ergonomic conditions. They are not as well protected as permanent employees since they often fall outside the jurisdiction of committees that monitor working conditions or labour unions. This is not always necessarily intentional; sometimes they are simply not around long or often enough to participate in safety training or employment negotiations (European Agency for Health and Safety at Work, Goodswaard et al, 2002: 29).40

Quantitative analysis supports this view to some extent, but some of the differences can also be explained by differences in age, occupation or background. Both case study research and data indicate a segmentation in the workforce based on differences in conditions of employment. Employees with a temporary or fixed-term contract (or a part-time contract) have less access to training (this includes OSH training), less control over their working time, fewer career prospects and perform less skilful tasks. There are gender differences in contractual relationships and in health outcomes but more research is needed. Another of the European Agency’s research information reports, Research on the changing world of work – implications on occupational safety and health in some Member States of the European Union,41 found common trends which are summarised below: Workplace changes Employment status changes: Increased part-time work Temporary workers Self-employed workers

Precarious general

workers

Possible OSH changes/implications

May experience social isolation May miss out on OSH training Many jobs less skilled and potentially monotonous Possible stress from insecurity May not receive OSH training Coverage by OSH systems not always clear Some are technically self-employed for tax reasons but in practice work under the control of the parent company in Evidence that they are more exposed to physical work hazards and have less access to training May experience insecurity (stress) More difficult to reach to provide OSH services such as information or occupational health services 42

(Source: Forum, European Agency for Safety and Health at Work)

6.4 Training If temporary and casual workers receive fewer opportunities for training and skill development from their employer than permanent workers, then the impact this may have in the longer-term on their future career prospects needs to be considered.

40

http://agency.osha.eu.int http://agency.osha.eu.int/publications/reports/205/en/index.htm 42 http://agency.osha.eu.int/publications/forum 41

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Non-standard employment does not entail any formal impediment in access to training. The issue, therefore, is centred at the level of employment practice (Campbell, 2001). In Australia, ABS data on the training experience of casual and permanent employees for 1989, 1993 and 1997 gives an insight into the employment practice. The differences in 1997 were greatest for in-house training courses, with 40.5 percent of permanent employees but only 16.7 percent of casual employees participating in such courses. The data also indicate a marked difference in relation to employer-supported external training courses and, in the case of unstructured on-thejob training, casual employees are less likely to participate. Campbell (ibid: 73) concludes, In short, as many researchers note … the aggregate data point to a significant deficit in participation in training, especially employersupported training, between casual employees and permanent employees. … Aggregate data suggest that the gap is not narrowing. Indeed, given that an increasing proportion of employees is involved in casual employment, the impact of this deficit may be assuming greater importance.

Mangan (2000) refers to Romeyn (1992) and a survey of women public servants undertaken in 1991 by the Australian Public Service (APS) bipartite consultative group that found that ‘training was generally designed for and required full-time participation’. Romeyn has identified a number of factors that actively block the human capital development of part-time and casual work. These are: •

Institutional – the cultures of most workplaces still see non-standard workers as peripheral and as a result do not fully include them in their training and development plans.

•

Organisational – the concentration of these workers into low-ranking jobs tends to be reinforcing and prevents access to advancement and the training required for advancement.

•

Attitudinal – management presumptions about the motivations of non-standard workers and their level of commitment to the firm.

•

Structural (particularly the provision and delivery of training) – access to training and promotion may be constrained by the structure and timing of courses which are organised around a full-time schedule (Romeyn, 1992 cited in Mangan, 2000: 139).

The OECD (2002), using probit models of training participation that control for individual and job characteristics, found that temporary workers are significantly less likely than permanent workers to receive formal training from their employers in 12 European countries. However, they argue that taking account of informal (on-the-job) training would probably give a more positive picture of the amount of training received by temporary workers. The OECD (ibid: 159) stresses that temporary jobs offer work experience, irrespective of whether formal training is offered, and thus contribute more to human capital accumulation than “many forms of nonemployment”. Likewise, industry organisations maintain that temporary help workers receive a considerable degree of training (Lenz, 2001). This view is supported by some survey

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evidence in the US, according to Segal and Sullivan (1998).43 In addition to technical skills that temporary workers may be able to acquire, for instance in the use of computer software, they may also be able to acquire useful information about how well they are suited to a particular field. They may therefore acquire more human capital more rapidly than workers in standard jobs (ibid). The implications of the ‘training deficit’ also depend on the mobility patterns associated with these jobs. In other words, if the temporary jobs are ‘stepping stones’, then less training may not be a concern. If the worker is ‘trapped’ in a temporary job, however, then their longer-term career prospects may be compromised as a result of limited training opportunities. Implications also depend on the characteristics of the worker. For example, a student whose primary source of training or skill development is derived from their study will not be affected adversely in the way a non-student without qualifications might be.

6.5 Trade unions – their relationship with non-standard work There is little empirical information available on the relationship between unions and the level of non-standard employment. Mangan (2000) argues that trade unions are struggling to cope with the changing labour market. Unions are less attractive to nonstandard workers than traditional workers, and unions themselves are uncomfortable with the concept of non-standard work. Mangan (2000) argues that the increase in non-standard working arrangements has helped in the decline of trade union membership, although he acknowledges that it may be difficult to establish a direct causal effect. The inverse might also be true, in that declining union membership or, more importantly, union influence may have contributed to the increase in non-standard working arrangements. Most unions have only recently begun to consider how non-standard employment could be made to work for, rather than against, workers and unions (ILO, 1997). Wooden and Hawke (1998) measure the level of union influence by way of a multivariate analysis, taking account of a number of explanatory variables. They then assess the association between the level of casual employment and unions. As they hypothesised, the presence of ‘active’ unions in the workplace appears to impede the use of casual employment, with the estimated probability of hiring casuals at such workplaces about 80 percent less likely than at comparable workplaces where unions are either absent or not active. Carroll (1999) argues that changes in unionisation in New Zealand may affect the supply of non-standard workers, given it is often suggested that unions encourage standard employment. Trade union membership has declined quite steeply over the last 15 years and Carroll (ibid) suggests this may have contributed to the rise in supply of non-standard workers. It is envisaged that the Department of Labour’s evaluation on the ERA will give further insight into the relationship between casual workers and unions. 43

Krueger (1993) and Bureau of Labor Statistics data analysed in Autor (1998) (see Segal and Sullivan, 1998: 2).

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6.6 Mobility It is necessary to look at mobility into and out of casual and temporary jobs in order to assess whether they are a ‘stepping stone’ towards gaining access to permanent employment, an ‘interlude’ between spells of unemployment, for example, which may or may not be desirable for the worker, or a ‘trap’. Determining this will make the significance of precarious work, in terms of labour market inequalities, clearer. In other words, if mobility from precarious jobs to permanent jobs is high, then implications arising out of these jobs may be less significant. If, however, there is a tendency for people, or particular groups of people, to be ‘trapped’ in these jobs, then the longer-term effects, which might include poverty, lack of training and career progression, or stress caused by insecurity, may be considerable. The issue of precarious employment and job mobility is extremely important in terms of lifetime worker welfare. The consequences of precarious employment are quite different if it is the same group of workers in those jobs throughout their working careers, compared to a situation where all workers during their careers ‘cycle’ through those jobs for a short amount of time. This issue is the focus of considerable research internationally. In the UK there is evidence for both the ‘stepping stone’ and the ‘interlude’ propositions. Employment in temporary work has been found to be associated with multiple spells of unemployment (Casey, 1988), but it is also likely to be a stepping stone out of unemployment or non-employment (Rubery, 1989). Likewise the OECD (2002: 25) finds evidence consistent with the both the ‘stepping stone’ and the ‘trap’ metaphor. Overall, many temporary workers “manage to keep a foot in employment over the medium term” and furthermore, a “considerable share of temporary workers move into permanent jobs over a relatively short time period”. However, evidence also suggests that others stay in temporary employment or become unemployed. The OECD states that it is difficult to judge how many in this latter group are ‘trapped’ in temporary jobs, because some people may choose to stay in these jobs and the test period of two years is a relatively short time horizon. The OECD (2002) draws together a number of studies and presents new evidence. However, data is only analysed for European countries and, as they acknowledge, differences in data sources and methods limit the comparability of their research findings. Some of their results indicate the following: • Mobility into permanent jobs is highest for medium to highly educated persons between the ages of 25 and 34 who have not been unemployed in the previous five years. Typically, worker and job characteristics associated with lower mobility into permanent jobs are also associated with an increased risk of falling into unemployment. • Less educated workers in Mediterranean Europe are 17-24% less likely than highly educated workers to move from temporary to permanent jobs.

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• Having been unemployed in the previous five years particularly reduces the probability of moving into permanent jobs in Austria and Germany (by 23% and 33%, respectively). • Temporary workers in small firms are less likely than those employed by larger firms to find permanent jobs. Key empirical studies from the US include Houseman (1997) and Lane et al. (2001). Lane et al. – looking at temporary agency work as opposed to temporary work per se – found survey-based evidence suggesting that few temporary agency jobs lead to permanent employment. Only five percent of companies report hiring agency temporaries to fill positions for more than one year. However, this does not take into account the desire of the employee which may be to remain in temporary employment. Unemployment Insurance wage record data also suggested that few temporary jobs become permanent. Roughly six percent of persons with temporary agency jobs may have obtained full-time non-temporary employment through a temporary job (ibid). Houseman (1997), on the basis of data from the US employer survey, also found that a very small number of temporary work positions – including fixed-term contract, oncall, contracting out and seasonal workers – are transformed into permanent jobs. Nonetheless, 40-55% of the establishments surveyed reported that they occasionally moved temporary workers to permanent jobs. However, these studies are based upon the question of whether the individual moves from temporary employment to permanent employment in the same firm. Whether or not a temporary worker has gained a permanent job at another firm does not appear to have been considered in either of the studies. Moreover, with respect to ‘seasonal workers’, it could not be considered that a firm would turn a seasonal job into a permanent one. Lane et al. (2001) suggest that the alternative to work in temporary help agency work might not be standard employment, but rather nonemployment. Thus, in an examination of outcomes such as wages, employment duration, and benefits a year later, they suggest it might be more appropriate to compare temporary help workers with nonemployed workers rather than workers to standard employment. They found that individuals who had a spell in temporary help work had worse earnings and employment outcomes a year later than did similar individuals with a spell in standard employment. On the other hand, individuals who had a spell in temporary help work fared substantially better a year later than did similar individuals who had a spell in nonemployment – for example, they were nearly twice as likely to be working one year later than were their counterparts. “Although temporary workers do fare worse than those employed in standard work, their outcomes one year later are much closer to those of standard workers than those of nonemployed workers” (Lane et al., 2001: iii). In contrast to Lane et al.’s work on temporary help workers, Stewart (2000) and Richardson et al. (2002)44 find evidence to suggest low wage jobs in general are not 44

A literature review for the NZ Treasury by the National Institute of Labour Studies.

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necessarily pathways to better outcomes. While low wage jobs per se are not the focus of this paper, some commentators argue that people in low end non-standard jobs are the same people that other studies identify as receiving low pay (Brosnan and Scully, 2002). The movement between low wage employment and unemployment in the UK is examined in detail by Stewart (2000). His work empirically controls for a range of observed and unobserved characteristics that predict unemployment/low wage, such as age and education.45 He argues that a large part of the reason for the persistence in unemployment is the quality of the jobs that re-entrants get, which tend to be low paid and unstable, or ‘dead-end’ jobs and he finds evidence of a “low pay – no pay cycle” (ibid: 1). In short, Stewart (ibid) presents evidence that the low paid are more likely to become unemployed in the future and the unemployed are more likely to be low paid on reentry to employment. He finds the impacts of unemployment and low pay to be similar, both on the probability of unemployment in the next period and on the probability of low pay, and that low paid jobs act as the main conduit for repeat unemployment and considerably increase its probability. He concludes: The policy objective, rather than simply being to get an unemployed individual into any job, should be to get him or her into a “good” job … typically low paid jobs are not “good” jobs in this sense. The results of the paper are consistent with the hypothesis that a low paid job does not augment a person’s human capital significantly more than unemployment. If unemployed individuals’ employment prospects are to be permanently improved, they need to gain access to jobs where they can augment their skills, raise their productivity and move up the pay ladder (Stewart, 2000: 28).

Data from the US on temporary help workers, albeit a narrower group than low wage workers in general, contradicts these findings. Heinrich et al. (2002)46 explore the effects of temporary help firms on the labour market outcomes of welfare recipients (compared to welfare recipients who are hired directly by the firms in which they work) by looking at the characteristics of welfare recipients who go to work for temporary service firms and by examining their subsequent employment and welfare dynamics. They use administrative data on all welfare recipients in Missouri and North Carolina and all employment covered by unemployment insurance in these two states. Their results show that, although welfare recipients in temporary help jobs receive lower earnings and have less promising prospects for movements from welfare than those who have jobs in other industries, these differences are small once individual characteristics are controlled for. Overall, they find that those in temporary help jobs have significantly better future prospects than those who are not holding jobs; they are no more likely to be unemployed than those taking jobs in other industries; and are only slightly more likely to remain on welfare. 45

Stewart (2000) looks directly at the comparison between being unemployed and holding a low wage job, on both wages and employment one and two years later, while holding constant a range of personal attributes. He uses UK data from the BHPS and includes people aged 18-about 65. 46 http://cep.lse.ac.uk/seminarpapers/22-11-02-TRO.pdf

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Consistent with Stewart’s (2002) overall findings and in contrast to Heinrich, et al’s (2002), Richardson et al.’s (2002) review of the literature argues that there is little support for the view that any job is better than no job in improving prospects for future employment or escape from low wage jobs. She argues that the conclusion from the psychological literature about the consequences for mental well-being of unemployment compared with employment in a poor job supports this finding. “Studies consistently suggest that ‘bad’ or unsatisfactory employment is no better for a person’s psychological well-being than having no job at all”. Psychologists report that employment prospects are better if you come from a high socio-economic status, well-adjusted two-parent family and are confident, motivated, intelligent and have good relationships with your peers when you are young. These factors work on employment prospects both directly and indirectly via achievement in the education system (Richardson et al., 2002). The main sources of upward mobility are finding a better job match, obtaining wage growth on the job as a result of accumulating skills, and undertaking formal education courses off the job. The opportunity to move up the wage ladder through on-the-job training or job mobility differs systematically among low wage workers (ibid). Richardson et al. (ibid) find that upward mobility is higher for men than for women, and for more educated workers. Teenagers employed on or near the minimum wage have high rates of upward wage mobility. In contrast, for older, less educated and female workers, low wages are likely to be a trap rather than the first step on the ladder. An important group that is particularly prone to low wages is mothers of young children, and sole mothers in particular. Instead of providing a pathway into higher-wage jobs, sole mothers appear to become stuck in low wage jobs indefinitely because these jobs do not provide opportunities for skill development. In addition, older workers who have lost reasonably well paid jobs face substantial wages losses that last for a long time, indicating that training and mobility are not effective pathways for them. An important policy issue is not only mobility out of temporary work into permanent work, but also the interface between the benefit system and temporary or casual work – how does the benefit system currently interact with these jobs? There is limited information from the US on this issue and a New Zealand study, referred to below. Some states in the US have begun to refer unemployment insurance and welfare recipients to temporary help agencies with the implicit assumption that these placements will provide avenues for permanent jobs (Houseman, 2000). While, as Houseman argues, it is possible that temporary placements will provide workers with job experience that will help them find permanent jobs with other employers, very few are likely to find permanent jobs with the client firms, given that these jobs intrinsically have little security. Others may argue, however, that the objective of US campaigns such as “Get a Job, Get a Better Job, Get a Better Life” is not about placing welfare recipients into permanent jobs with a client company; rather it is about helping people find a job through which they can gain experience, confidence and motivation. In turn, this would enable them to find a ‘better job’.

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6.6.1 New Zealand research on mobility New Zealand data from the Ministry of Social Development on trends in benefit exits into work over a five year period, from 1996 to 2001, showed evidence of a ‘cycling’ effect with workers moving between temporary employment and unemployment. Further, the findings showed a large and consistent discrepancy between the major metropolitan cities and the rural areas with the latter more likely to experience a cycling effect. Over the past five years, urban areas have clearly offered very strong opportunities for sustainable work options while most rural areas offer the opportunity for more frequent but shorter intervals off benefit (Gilbert, Haig and O’Rourke, 2002: 18).

The authors looked at the amount of time people stayed off benefit after having gone into work – the overall national average was 30 percent returned within three months; 11 percent returned between three to six months; 13 percent returned between six to 12 months; and 46 percent were off benefit over 12 months and may never have returned. There were significant variations occurring between regions – Nelson on average had 45 percent of exits over this period return to benefit within three months and 58 percent of all exits return within six months. Data for the East Coast was very similar. The authors suggest that the reason for these high proportions is the labour markets, the way resources are used, and the seasonal short-term labour demands in these regions. All Auckland regions and Wellington, on the other hand, had low proportions of ‘cycling’.

6.7 Work-family and other social concerns This last section looks at the human concerns of working in casual and temporary employment arrangements for the worker and their family. The considerable degree of research interest in economic implications has not been matched by research interest in the social consequences. It is an area in need of further research. There is some evidence to suggest that non-standard work is more likely to take place in non-standard work hours than is standard work. According to the OECD (2002) temporary workers are somewhat more likely to work night and weekend shifts, as discussed earlier. In addition, the incidence of inflexible work schedules is significantly higher among temporary workers (ibid). Evidence from the May 2001 BLS Current Population Survey tells us that flexible schedules were most common among managerial and professional specialty occupations. Shift work, on the other hand, was least common among managers and professionals, and greatest among workers in service-orientated professions (where we know the highest proportion of temporary jobs exist). Over half (53.3 percent) of those in shift work did so because it was the “nature of the job”. Other reasons for working a non-daytime schedule included “personal preference” (13.3 percent), “better arrangements for family or child care” (8.9 percent), “better pay” (6.9 percent), and “because it allows time for school” (3.3 percent). Below is evidence from two New Zealand reports, the first looking at inequality in non-wage employment conditions, such as the times of the day when work must be 54

carried out, and the second examining the impact of shift patterns on workers in the process manufacturing industry. 6.7.1 Evidence from New Zealand Callister and Dixon (2001) analyse the timing and location of paid work in New Zealand47 and argue that, from the perspective of workers, the timing of a job’s hours of work is an important attribute that can raise or lower well-being. Given that the majority of paid work takes place during daylight hours from Monday to Friday, people who work outside these times are likely to face reduced opportunities for social interaction with friends and family in their leisure time. Those who work at nights or on rotating shifts also face greater risks of experiencing health problems such as fatigue or sleeping difficulties. People working in the agricultural, forestry and fishing occupations; in the retail, restaurants and hotels industry sector; and in the services and sales occupational group all recorded much higher average levels of weekend work than did other occupations (ibid). These sectors are where the highest proportions of temporary and casual work are located. Overall, Callister and Dixon (ibid) find that the data suggest a high proportion of workers undertake small or moderate amounts of work at non-standard times of the day and week – typically early in the morning, in the evening or on weekends. Very few people work in the hours that are usually considered to be most problematic – between midnight and 5am. In addition very few workers do all of their paid working hours at unconventional times of the day. It is also important to note the distinction between non-standard work for higher end workers and lower end workers. Higher end workers may be able to take advantage of ‘flexible’ hours (such as allowing paid work to be more readily combined with other activities like education or childcare). Lower end workers are less likely to have choice over hours and may have uncertain and irregular hours, which creates its own attendant problems for themselves and for family relations. A 12-year longitudinal study of process manufacturers in New Zealand, undertaken to document shift patterns and establish their impact on organisational performance and employee well-being, found that shiftwork had increased dramatically prior to 1994 (Wilson, 1994). This was mainly due to the expansion of service industries and extended hours of operation. Wilson argued that manufacturing was still a dominant shiftwork employer in order to meet variable demand levels, but that this productivity came at a high human cost in terms of health, safety and quality of life. The majority of the shiftwork industry was still the eight-hour, reverse rotating shift, with frequent overtime and a low level of training and support. Across the sample, shiftworkers demonstrated significantly more health, social and related problems such as sleep disruption, family and social problems, sleep disorders, digestive problems, use of prescription and non-prescription drugs and depression, than standard workers. 6.7.2 Evidence from overseas The Australian ACTU survey of union members (Employment Security and Working Hours, 1998) found that over half the respondents placed increased job insecurity (54 percent) and greater control over working hours (53 percent) as the major 47

The report uses data from the New Zealand Time Use Survey 1998/99.

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employment issues that are impinging upon family issues and personal well-being (Mangan, 2000). Data in Canada point to the same concerns amongst workers when it comes to job insecurity. In repeated polling in the 1990s between 42 and 48 percent of Canadians fear they will lose their jobs in the next five years. This fear is reported as having an effect upon marriages, family relations and the quality of life (Canadian Labour Ministry, 1997). There are significant issues around the social and psychological consequences of insecure work arrangements. Barker and Christensen (1998) note the effect that tenuous attachments to employers and insecure futures within an organisation must have on workers, given the high premium many workers place on job tenure. Some writers are of the view that many features of unemployment are similar to those of precarious work (Rodgers and Rodgers, 1989). On the other hand, the work of Lane et al. (2001) finds that outcomes one year later for temporary workers are better than those of unemployed workers.

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7. Conclusions The international literature is in agreement that non-standard work forms an increasingly significant proportion of employment. The OECD (2002: 25) concludes that temporary employment has grown in a considerable number of OECD countries in the past two decades. The portrait that emerges, with respect to the growth in temporary employment and its implications for the welfare of workers, is complex and confirms “neither the most optimistic nor the most dire assessments”. There is general concern about some of the implications of this growth and the possible effects on the quality of working life, both in terms of working conditions and longer term worker welfare. For New Zealand, given part-time and self-employment arrangements are considered to be included in non-standard work, we can state with certainty that non-standard work has increased over the past 15 years. It is difficult to assess trends in other forms of non-standard work, however, due to lack of data. With respect to the international empirical evidence, some of the overseas trends may apply in a New Zealand context and some anecdotal evidence supports the findings of a number of the international studies. However, drawing comparisons and finding commonalities between these international findings and the New Zealand situation should be approached with caution. There are significant differences in terminology used, widely varying country definitions and methods of measuring the many forms of non-standard work, not to mention the different labour markets and regulatory arrangements. What is precariousness and how can we measure it? One of the key problems with the concept of precariousness, as with non-standard employment, is that there is no commonly accepted definition and the literature recognises this, referring to its inherently ‘fuzzy’ nature. There is a commonly held view that in order to decide whether a job might be considered precarious, criteria are required. The set of criteria generally include: work with low wages, low job security, higher health and safety risks, little or no control over workplace conditions or hours of work, and limited opportunity for training and skill development. It is not any single criteria but the combination of them that influences the level of precariousness. The elements involved are therefore multiple and there are different dimensions and degrees of precariousness. There is also considerable ambiguity. For example, an unstable job or a low paid job is not necessarily precarious, given that there may be other compensatory characteristics of the job. Rather it is some combination of these factors which causes precariousness. One way of responding to this problem is to develop a set of indicators that we consider relevant in a New Zealand context. The review has suggested ten indicators (see Section 3). In addition, an important issue to consider in assessing precariousness is worker preference. Students are more likely to have a higher

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preference for temporary or casual jobs than adults who are ‘primary’ earners in a household with dependents. It is the interaction of the nature of jobs and worker preferences that determine what constitutes precarious employment. The welfare impacts also depend on the preferences of those affected – the precarious characteristics of a job would have greater adverse welfare consequences for older workers with dependents than for young full-time dependent students. Where is ‘lower end’ non-standard work located and what are the characteristics of people associated with these work forms? International research indicates that the highest concentrations of temporary jobs are to be found in agriculture and the unskilled, predominantly manual jobs that are conventionally held by men and in less skilled service jobs conventionally held by women. In New Zealand, results from the two workplace surveys in 1991 and 1995 found the Community and Personal Services sector had by far the highest proportion of casual workers at 30 percent. The result was even higher in a US study (Houseman, 2000), which found that casual workers made up 44 percent of the services industry; the incidence of contract workers was highest in the mining and construction industries at 61 percent. An Australian study (Wooden and Hawke, 1998) found that workplaces where demand was seasonal had an average 25 percent higher share of casual workers than workplaces where demand was not seasonal. Apart from the New Zealand workplace surveys, there is little empirical information about occupational profiles of casual and temporary jobs in New Zealand. A number of sectors have been investigated, including retail, forestry and the accommodation, winemaking and brewing industries. These studies report some evidence of precarious non-standard work. However, while informative, they are not quantitative and therefore not statistically generalisable. With respect to location in the public and private sector, evidence from Australia indicates that, with the exception of some part-time work, casual work is disproportionately contained within the private sector. For New Zealand, nonstandard workers overall were evenly spread in the private and public sectors in 1995 (as opposed to 1991 where there was a higher proportion of non-standard workers in the public sector than the private sector) (Brosnan and Walsh, 1996). The authors suggest that the change resulted from a combination of public sector restructuring having slowed since 1991, whilst the private sector’s capacity to reshape its workforce was enhanced following the Employment Contracts Act 1991. In terms of enterprise size, research evidence from the OECD (2002) and Australia (Wooden and Hawke, 1998) found that smaller firms are more likely to hire workers on casual or temporary contracts than are medium-and large-sized firms. The overseas literature is in agreement on the characteristics of workers in precarious work – they are more likely to be women, young, of an ethnic minority, and lessskilled and -educated. The OECD (2002) finds that, whilst there are gender differences, they are only large in a few countries. The difference is minimised given that the highest concentrations of temporary jobs are in manual jobs that are conventionally held by men. They stress that, despite temporary jobs being

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disproportionately held by younger and less-educated workers, temporary workers are nonetheless a diverse group. International and New Zealand evidence suggests that men are more likely to be in higher end forms of non-standard employment such as contracting and consulting, as opposed to women who are predominant in the lower end forms such as casual work. What determines the extent of non-standard/precarious work and what factors contribute to its growth? The overseas literature indicates that the explanatory factors contributing to the extent of non-standard employment – supply-side, demand-side and institutional factors – do not interact in equal ways. Supply-side factors are more likely to predominate for the higher end non-standard arrangements, such as self-employment and part-time work, as opposed to lower end non-standard jobs whereby evidence suggests that demandside factors are more likely to predominate. At the same time, US evidence indicates that most workers in these jobs take them for personal rather than financial reasons, that is, family or personal obligations, school, training, or the need for a flexible schedule. In the main, the literature tends not to emphasise the supply-side explanations for temporary and casual work. We know that the increased participation of women in the workforce and the need for both parents to combine family responsibilities with paid work may lead to a preference by some for work in non-standard hours (or alternatively, lack of availability of childcare may necessitate it). Likewise, those suffering from ill-health or injury, or workers wishing to make a gradual transition from work to retirement may find casual or temporary work a good option,48 although part-time employment may be more attractive than casual or temporary work. Students also may opt for casual or temporary work as a way of supplementing income while studying. The increase in the share of tertiary students may contribute to numbers of temporary and casual workers overall. The work skills gained from these kinds of employment arrangements are likely to be less important than the educational qualifications. The same could be said for mobility out of these jobs. The concern over whether they are stepping stones or traps may not be an issue for students who view them as short-term jobs whilst studying. Temporary jobs can also be useful for those workers who wish to ‘job shop’ as a way of gaining work experience in different sectors and assessing available work opportunities or potential employers. Of course, the benefits offered by temporary jobs, including hours flexibility, may only be beneficial to a particular demographic such as the young and/or well-educated. For older workers, or those with young children, ‘hours flexibility’ may simply signify ‘unpredictability’ and all the attendant problems this causes. Motivations of employers for using non-standard work arrangements range from minimising costs and accommodating fluctuations in workload to avoiding the designation of an individual as an employee and thereby avoiding provision of and 48

The Department’s recent firm visits provided examples of both these scenarios. One worker who had been unwell for an extended period was choosing to return on a casual basis; and a retired person was keen to work on a casual basis and maintain some contact in an industry he was familiar with.

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payment for work-related benefits and regulations around dismissal. To a lesser extent, trialling new workers was also found to be a motivating factor behind the use of temporary contracts, although evidence suggests that the proportion of workers making the transition from temporary to permanent contract within the same firm is extremely low. The Department’s recent firm visits found some results not captured in the international research, namely the distinction between large and small firms and the limited choices facing small firms looking to expand. Achieving growth by increasing permanent staff was not financially viable according to many small firms. Small firms also felt compliance issues around dismissal procedures were considerably more onerous than the larger firms and this led to the desire to employ new staff on a trial basis on temporary contracts. In thinking about the determinants of precarious work, other factors to consider include firm production technologies, bargaining power and union influence. Temporary and casual jobs are more likely to have a higher proportion of people with limited personal bargaining power as well as limited expectations of improving conditions through collective bargaining. The form of their employment also makes it hard for trade unions to organise them – their workplace and the labour force may be constantly changing. Furthermore, bargaining power over wage and non-wage conditions may have greater credence at the higher end of the non-standard labour market, but at the lower end the choices are more limited. Workers in these jobs have little to bargain with if they are low skilled, have no qualifications, have skills that are widely available, or (particularly for women with young children) are only available at certain hours. If their only alternative is an equally poor job or unemployment, there is little incentive for their employer to offer better pay or other compensating features. Explanations for the growth of non-standard employment, as with its existence at a point in time, relate to a combination of supply-side, demand-side and institutional factors. Supply-side factors include the substantial increase of female participation in the workforce and their propensity to work in non-standard, particularly part-time employment; changing family structures; the need to combine family responsibilities with paid work; the need to access childcare; and an increase in the share of young people who are students. Demand related reasons include the desire of employers for a more flexible labour force in response to changing product market conditions such as customer’s requirements of individual and just in time production. An increase in competitive pressure may also have led to greater product demand uncertainty. In addition, the economy has shifted away from the production of goods, and toward services, in which part-time and casual work has always been more important. Quantitative research suggests that demand-side factors provide more likely explanations for changes in the level of lower end non-standard employment than supply-side characteristics. Institutional factors such as minimum wage requirements and other regulatory arrangements may also affect the extent of precarious employment. Greater labour

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market flexibility in Australia and Spain was seen to encourage an increase in nonstandard employment. However, the easing of labour laws in New Zealand in the 1990s did not appear to result in the expected increase of casual and temporary jobs, at least in the first half of the decade for which we have data. This may have been due to the Employment Contracts Act making it less costly for employers to have full-time permanent employees work longer hours. In summary, determining the predominant causes for the extent and growth of nonstandard employment is complex and requires further research, as does the effect of regulatory arrangements. Why are we concerned with precarious work … what are the implications? A number of concerns are highlighted in the literature around the potential economic and social implications of precarious work. With respect to economic concerns, earnings differentials for ‘lower end’ non-standard workers are well researched internationally, although no New Zealand evidence is available. The distinction between the economic consequences for higher end as opposed to lower end nonstandard work is significant. For example, the US Bureau of Labor Statistics figures finds there is no earnings penalty and maybe even an earnings premium for the independent contractor (who is likely to be white, male and educated), whereas temporary agency workers (likely to be black, female, poorly educated and single mothers) are at particular economic risk. An area that receives less attention in the literature is the possible explanatory factors for the difference in pay and shorter tenure, such as the different demographic characteristics of the workers as opposed to the nature of the work. As Lane, et al (2001) argue, the impact of alternative work on employees depends on a number of factors, such as the type of work arrangement the worker is in, the reason the firm hired the worker, and the demographic characteristics of the worker. The OECD (2002) found that temporary jobs pay less than permanent ones. By controlling for differences in individual and job characteristics they found the wage penalty associated with temporary employment was reduced, but that it was still statistically and economically significant. The wage penalty for temporary work was similar for women and men. There is considerably less information on the employment relations implications for workers engaged in non-standard/precarious work arrangements. While this area may be the focus of a number of overseas studies, the findings are less relevant because of the widely varying regulatory arrangements in other countries. We do have some information from New Zealand case studies (such as Whatman, et al, 1999), which suggests that non-standard employees (with the exception of the higher end group) fare worse than standard employees in the negotiation of employment contracts. Access to minimum code provisions such as wage and holiday provisions and other entitlements also tends to be lower than for standard workers. In addition, it is argued by international commentators that the increase in nonstandard working arrangements may be associated with the decline of trade union membership, and trade unions are less likely to be involved with the non-standard workforce (for example Mangan, 2000). This may impact on the bargaining power of

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some non-standard workers, particularly those who may already be at a disadvantage in terms of their educational background and occupational skill level. Changes in unionisation may affect the supply of non-standard workers, as it is often suggested that unions encourage standard employment. Results from empirical research in Australia show that the presence of ‘active’ unions in the workplace appears to impede the use of casual employment – to the extent that the estimated probability of hiring casuals at such workplaces is about 80 percent less likely than at comparable workplaces where unions are absent or not active. There is no empirical research information available in New Zealand. The overseas literature indicates that the impact of increased non-standard work on workplace health and safety is an area greatly in need of further research. Both case study and quantitative research indicate that employees with a temporary or fixedterm contract have less access to training, including OSH training. It also indicates that these employees have less control over their working time, have fewer career prospects and perform less skilful tasks (The European Agency for Health and Safety at Work 2002). The European Agency (ibid) found that precarious workers in general are more exposed to physical work hazards, they do the dirtiest and most dangerous jobs, they may experience stress from insecurity, and they may be more difficult to reach in order to provide OSH services such as information or occupational health services. With respect to workplace training, overseas data point to a shortfall in training for temporary and casual employees, compared with permanent employees. The gap in access to training does not appear to be narrowing. Given that most reports into the issue of non-standard work and training in the workforce are pessimistic, the possible implications this has for the future skill level of the workforce are significant. Again, the disadvantages are greater for ‘lower end’ non-standard workers who may experience difficulties self-funding training, as opposed to ‘higher end’ non-standard workers (such as independent contractors) who are more likely to be able to self-fund their own training. Furthermore, the implications are dependent to a large extent on whether there is high or low mobility out of these jobs and into permanent work. To assess whether precarious non-standard jobs are ‘stepping stones’ towards standard employment or long-term ‘traps’, it is necessary to look at mobility into and out of temporary and casual jobs. The issue is the focus of considerable international research currently and it would seem there is evidence for both these propositions. US studies in particular (Houseman, 2000; Lane et al., 2001; Segal, 1996) find evidence suggesting that few temporary jobs lead to permanent employment with the same employer, and there may be a ‘cycling’ effect with temporary workers moving back and forward between the states of unemployment and temporary work. New Zealand data on benefit exits into work illustrate this cycling effect in some rural areas where seasonal employment is a significant part of the labour market. However, as with pay differentials, comparing outcomes of non-standard workers with standard workers may be misleading because certain characteristics such as skill levels, education and age will be different.

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Lane et al. (2001) argue that assessing the outcomes of ‘at-risk’ non-standard workers depends on whether the comparison group is standard workers or nonemployed workers. They find that individuals in temporary work had worse earnings and employment outcomes a year later than individuals in standard employment; yet individuals in temporary work fared substantially better a year later than did similar individuals in nonemployment. In contrast, Stewart’s (2000) UK study on low wage employment and unemployment, which controls for a range of observed and unobserved characteristics such as age and education, finds that the impacts of unemployment and low pay are similar and that the low paid are more likely to become unemployed in the future. Likewise, Richardson et al.’s (2002) review of the literature argues that there is little support for the view that any job is better than no job in improving prospects for future employment or escape from low wage jobs. She finds that the conclusion from the psychological literature is that ‘bad’ or unsatisfactory employment is no better for a person’s psychological well-being than having no job at all. Research interest in economic implications of non-standard/precarious work is not matched with interest in the non-wage employment conditions, such as times of the day when work must be carried out and the social consequences of this. Non-standard working schedules can be beneficial for workers who wish to combine their paid work with other activities such as study. However, at the other end of the spectrum is the scenario where the flexibility is enjoyed solely by the employer, and workers experience uncertain and irregular work hours. Overseas evidence and limited New Zealand evidence indicate that shiftwork and nightshifts (as well as job insecurity) all impact negatively on a worker’s health, well-being, family relations and quality of life.

Where to from here? In presenting a framework for analysing precarious work, and evidence on its location, this review lays the groundwork for future research in the area. It is clear from the review that an area for further consideration is the very limited quantitative and qualitative data on casual, temporary and fixed-term employment in New Zealand. Findings from the international studies indicate that there are potential policy concerns for lower end non-standard workers around earnings differentials, health and safety issues, workplace training, career progression, employment relations, and family and other social and psychological issues. Unfortunately this is an area where there is a considerable knowledge gap in New Zealand, therefore further research would be needed in order to reach any sound conclusions. Information on demand and supply issues, factors that drive employer/employee behaviour, and issues around bargaining power and worker preference would be useful in helping to understand the New Zealand situation. Other key areas where information gaps exist include the impact of union influence and whether or not there is a relationship between unions and the level of non-standard employment; what the impacts are on the wage progression and skill acquisition of precarious non-standard

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workers and, more generally, on the labour markets where these forms of work are prevalent. The effect of institutions and regulatory arrangements on the incidence of nonstandard/precarious work is another issue which further research will need to address. It would be useful to compare New Zealand with other countries in terms of how nonstandard work is regulated and to examine how shifts in regulations and labour market flexibility have influenced the level and growth of non-standard/precarious employment over time. Other questions centre around whether increased regulations lead to increased or decreased demand for non-standard/precarious workers; what the costs and benefits of policy responses in this area are; and whether targeted measures to shield workers from undesirable employment conditions are more or less effective than general measures. In order to address these knowledge gaps, one-off and repeated cross-sectional surveys would be useful to collect quantitative information (and possibly qualitative information on outcomes and preferences). The most important starting point would be to determine the incidence and scope of non-standard/precarious jobs in New Zealand. It would be useful for data collection to have a longitudinal dimension to track patterns over time and examine issues such as occupational mobility and the degree to which these jobs may be traps or stepping stones. The issue of precarious employment and job mobility is extremely important in terms of lifetime worker welfare. Cross-section perspectives, such as information on the percentage of casual jobs at a point in time, can provide only a limited perspective on this issue. The consequences of precarious employment will be quite different if the same group of workers are in these jobs throughout their working careers, as opposed to a situation where all workers during their careers ‘cycle’ through these jobs for a short amount of time. Longitudinal data could enable longer-term impacts of scarring effects of precarious employment to be measured. It could also capture information on whether the outcomes for lower end non-standard workers are relatively better or worse than for those who are unemployed or in standard employment and what the transition paths are that people take between these states over time. The OECD’s (2002) thoughts on future work in this area include the following: [P]olicies to shield temporary workers from the undesirable employment conditions sometimes associated with temporary jobs – especially, longterm traps in precarious employment – deserve serious attention. However, such measures would have costs as well as benefits and specific policy options would need to be analysed carefully. Accordingly, studies of whether access to benefits should be eased for temporary workers or policies implemented to facilitate transitions from temporary to permanent jobs would be of great interest. It would also be important to assess whether such policies are best targeted at certain disadvantaged categories of temporary workers, along the lines of what is already done for unemployed persons in some OECD countries, or if more general measures would be more effective, such as modifying rules concerning minimum

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qualification periods for fringe benefits, maximum allowable durations of temporary jobs or access to training (OECD, 2002: 26).

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Appendix One Definitions of temporary employment in selected OECD countries’ labour force surveys Coverage

Questionnaire ask whether the job is:

Australia Belgium

Employees All working (including selfemployment)

Casual Temporary job or fixed-term contract

Canada Denmark Finland

Paid workers, employees Employees Employees

France

Employees

Germany

Employees

Greece

Employees

Ireland Italy

All working (including self-empl’t) Employees

Job with a specific end-date Temporary job Fixed-term contract for a specific task, replacement contract or job creation participants Agency work, apprentices, trainees (including those on special measures), timelimited or seasonal contracts Time-limited contracts including apprenticeships Temporary job or fixed-term contract Occasional or seasonal job

Japan

Employees

Luxembourg

Employees

Netherlands

Employees

Portugal

All working (including self-empl’t) Employees

Spain

United Kingdom

Employees not in special measures

United States

All working (including selfemployment)

Is agency working included?

Special categories identifiable

Are fixed-term contracts separable from agency working? Not applicable No

Not known Yes

Not applicable Yes

Yes Not known

No Participants special measures

Yes, time-limited and seasonal also separable

Yes

Temporary employees in the public sector

Not applicable

No (have openended contracts)

Apprentices

No

No permitted) Yes

(not

Probationary contracts No

(not

Probationary contracts Day workers

No

Probationary contracts and participants in special measures

Temporary job

Not applicable

Employed on a contract lasting more than 1 month, but less than 1 year Time-limited contracts, including apprenticeships Agency work, on call contract or replacement contract

No

No permitted) Not known

Not applicable

Yes

Yes

Yes

Non-permanent contract

Not applicable

Yes

Temporary contract or job

No

Allowed recently, very strict limitations

Seasonal job, fixed-term contract, agency work, casual work, and other temporary work Lack of an implicit or explicit contract for ongoing employment

Yes

Yes

Not applicable

Yes

in

Probationary contracts and apprentices Probationary contracts and temporary contracts, unless there is no time limit No Probationary contracts, seasonal or temporary work Participants in special measures and temporary workers (no time limit on contract) Workers who do not expect their job to last

Source: (OECD, 1996: 7)

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Appendix Two Definitions of temporary employment used in the OECD (2002) report Temporary employment Australia Austria

Belgium Denmark France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain United Kingdom

Canada Czech Republic

Finland Hungary

Iceland

Japan

Korea

Mexico

Norway

Poland Sweden

Workers with a fixed-term contract; employed by temporary agencies; seasonal workers Employees with a fixed-term contract; interim work through a temporary work agency; apprentices and trainees; probationary period; contract for a specific task; daily workers. In the majority of the European Union countries most jobs are based on written work contracts. A job may be regarded as temporary if it is understood by both employer and the employee that the termination of the job is determined by objective conditions such as reaching a certain date, completion of an assignment or return of another employee who has been temporarily replaced. In the case of a work contract of limited duration, the condition for its termination is generally mentioned in the contract. To be included in these groups are also: a) persons with a seasonal job, b) persons engaged by an employment agency or business and hired out to a third party for the carrying out of a “work mission” (unless there is a work contract of unlimited duration with the employment agency or business), c) persons with specific training contracts. A temporary job has a pre-determined end date or will end as soon as project is completed (including seasonal jobs). Workers with a fixed-term contract; employed through a temporary work agency; apprentices and trainees; on probationary period; occasional, casual or seasonal workers; individuals carrying out community work as unemployed; workers with a contract for a specific task. Workers whose main job is with a fixed-term contract; trainees; workers on probationary period; other jobs that are considered as temporary by respondents. Workers whose main job is with a fixed-term contract; apprentices and trainees; workers on probationary period; individuals carrying out community work as unemployed; workers with a contract for a specific task; individuals employed on jobs lasting less than 12 months; daily workers and others. Workers whose main job is with a fixed-term contract; doing interim work through a temporary work agency; apprentices and trainees; workers on probationary period; occasional, casual or seasonal work. Workers whose main job is with a fixed-term contract lasting not more than one year; doing occasional, casual or seasonal work; working on a job lasting less than 12 months. Workers whose main job is with a fixed-term contract; temporary agency workers; on-call workers; seasonal workers; workers who do not expect their job to last for involuntary, non-economic reasons. Workers whose main job is with a fixed-term contract; occasional, casual or seasonal work; workers with a contract for a specific task; employed in a job lasting less than 12 months. Workers whose main job is with a fixed-term contract; interim work through a temporary work agency; apprentices and trainees; workers on probationary period; occasional, casual or seasonal work; workers with a contract for a specific task; individuals with a job lasting less than 12 months; daily workers. Workers whose main job lasts less than 12 months. Workers whose main job is with a fixed-term contract; apprentices and trainees; workers on probationary period; occasional, casual or seasonal work; individuals carrying out community work as unemployed; individuals with a contract for a specific task; daily workers.

Data source Forms of Employment Survey, 1998 (data relate to 1997). Austrian Labour Force Survey

Eurostat, European Union Labour Force Survey

Canadian Labour Force Survey Czech Labour Force Survey

Finnish Labour Force Survey Hungarian Labour Force Survey

Iceland Labour Force Survey

Japanese Labour Force Survey

Summer 2001 Supplement to the Korean Labour Force Survey Mexican Labour Force Survey

Norwegian Labour Force Survey

Polish Labour Force Survey Swedish Labour Force Survey

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Temporary employment Switzerland

Turkey

United States

Workers whose main job is with a fixed-term contract; interim work through a temporary work agency; apprentices and trainees; occasional, casual or seasonal work; individuals carrying out community work as unemployed; individuals with a contract for a specific task; daily workers. Workers whose main job is occasional, casual or seasonal work; daily workers or other persons who depend only on an employer and do not work regularly and for unlimited duration; seasonal or temporary workers or on-call workers (ex. Construction workers, etc). Dependent workers, temporary help and contract company workers who do not expect their job to last.

Data source Swiss Labour Force Survey

Turkish Labour Force Survey

Contingent and Alternative Work Arrangements Supplements to the Current Population Survey, 1995 and 2001.

(Source: OECD, 2002: 172).

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Appendix Three Regulatory Framework for Employment Relations (Employment Relations Service, http://www.ers.dol.govt.nz/)

The Employment Relationship Who is an employee and who is not? An employee is: • anyone who has agreed to be employed, under a contract of service, to work for some form of payment. This can include wages, salary, commission and piece rates. This includes: • homeworkers • people who have been offered and accepted a job • fixed-term employees • seasonal employees • casual and part-time employees • probationary and trial employees. An employee is not: • a self employed or independent contractor • a sharemilker • a real estate agent whose agreement says they are an independent contractor • a volunteer who does not receive a reward for working. The fact that volunteers receive some payment to cover their expenses does not make them employees. (If people are called by a different title, e.g. temporary rather than fixed-term, it still does not change their status as an employee). People intending to work are employees The Employment Relations Act 2000 says that people who have been offered and have accepted employment are employees from the date of acceptance. They have the rights of employees. This applies even if the employees have not actually started to do the work. Fixed-term and seasonal employees Sometimes employers and employees agree that employment will be for a set period of time (e.g. for six months) or until a certain event occurs (e.g. until a particular project ends) or until work is completed (e.g. until the fruit is picked). The basic rights and obligations of employees and employers apply to fixed-term and seasonal employment, except that the employment relationship ends at the end of the fixed term.

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Casual or part-time employees Sometimes employment is on a “casual” basis. In other words, the employer and employee agree that the employer will offer the employee work when work is available. Temping agencies often employ people on this basis. At other times, employers employ employees on a “part-time” basis. The basic rights and obligations of employees and employers apply to casual or part-time employment. Employee or self-employed contractor? The term “employee” does not include self-employed people who work for others under contracts to do particular jobs or services. These people are often referred to as “contractors” or independent contractors. The law is different for self-employed contractors. Sometimes, though it is not clear whether a person is an employee or a self-employed contractor. Extra rights for fixed-term employees under the ERA An employer can only offer a fixed-term employment where: • there are genuine reasons for doing so (such as seasonal work, project work, temping work, or filling in for a permanent employee on leave), and • the employer advises the employee of those reasons and how or when the employment will end, and does so at the outset. A fixed-term agreement cannot be used simply to make it easier to get rid of someone without using normal disciplinary procedures or as a trial period. Trials or probationary periods Trials or probationary periods must be made clear to the employee in their written employment agreement. During the trial period, the employee must be actively ‘coached’ so that they can reasonably know the employer’s performance expectations and receive adequate training to try to meet them. Also, if the trial is not successful, the employer is still required to go through proper performance management and exit/termination procedures.

Minimum employment conditions in legislation There are a number of provisions that are established by legislation. These form the foundation of all employment agreements, and an employer and employee cannot agree to waive them. Annual leave The Holidays Act 1981 sets out the minimum entitlements for annual holidays and gives all employees rights to paid annual leave, whether they are full-time, part-time, fixed-term, temporary or casual employees, adults or young employees. Employees are not lawfully able to give up these rights. All employees are given three weeks’ paid annual leave after one year’s continuous employment with the same employer. At least two uninterrupted weeks of these holidays must be allowed within six months of the holiday entitlements falling due. The rest must be allowed within the next six months.

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Holiday pay at the end of employment All holiday pay due to an employee (ie, total entitlement less any holiday pay already received) should be paid to the employee at the time the employee leaves the job. Employees who work for less than three weeks are entitled to holiday pay of 6% of their total ordinary pay. Public holidays All employees (including casual employees, part-timers and employees on fixed-term agreements) are entitled to 11 public holidays on pay if they fall on days the employee would normally work. The employment agreement can provide for alternative days, but not for less than 11 public holidays. Where an employee works on a public holiday, other than Waitangi Day or Anzac Day, they must receive a paid day’s holiday in lieu, regardless of any penal payments paid for the day worked. If penal payments are paid on Waitangi Day or Anzac Day there is no requirement to grant a day in lieu. Special leave By law, after working for the same employer for six months, an employee has the right to five days paid special leave for each subsequent 12-month period. Special leave can be used by an employee for any of the following: • sick leave • domestic leave to care for a sick spouse, dependent child, or dependent parent of the employee, or of the employee’s spouse • bereavement leave on the death of a spouse, parent, child, brother, sister, grandparent, parent-in-law, and also when the employer accepts that the death of any person means that the employee has suffered a bereavement. Parental leave Parental leave is time off work available by law to new parents if they are employees and meet the eligibility criteria. Employees who have been employed by the same employer for 12 months and have worked at least an average 10 hours per week are entitled to 12 months which may be shared between them if they are both eligible. There is also a tax funded payment available to parents eligible for parental leave. If the employee works an irregular employment pattern the normal pattern of hours over the period is used to establish the average hours.

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