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Do temporary agency workers affect workplace performance?

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Using nationally representative workplace data we find the use of temporary agency workers (TAW) is positively associated with financial performance in the British private sector and weakly associated with higher sales per employee. However TAW is not associated with value added per employee. Employees in workplaces with TAW receive higher wages than observationally equivalent employees in non-TAW workplaces. But the presence of TAW in the employee’s occupation is associated with lower wages for employees in that occupation. Furthermore, conditioning on wages, the presence of TAW at the workplace is associated with lower job satisfaction and higher job anxiety among employees. These findings are consistent with TAW having an adverse effect on employees’ experiences at work, perhaps due a more labour intensive regime, one which is only partly compensated for with higher wages.

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  1. For reviews of the reasons for the growth in temporary agency working see Forde and Slater (2005) and Forde (2008).

  2. This is not the case in all EU states (TUC, 2005) and the situation changed in the UK on 1st October 2011 when the Agency Workers Regulations 2010 came into force. After 12 weeks in a given job an agency worker is entitled to equal treatment with respect to basic working and employment conditions that would apply to a worker recruited directly by the employer to occupy the same job.

  3. This is the case with respect to productivity in Britain (Michie and Sheehan 1999, 2001) and the USA (Chadwick and Cappelli 2002).

  4. There is growing evidence that productivity growth in the US manufacturing sector has been over-estimated due to the outsourcing of labour to temporary agency firms (Houseman 2006).

  5. For full details of the survey see Kersley et al. (2006) and Chaplin et al. (2005).

  6. For full details see Chaplin et al. (2005).

  7. See Kersley et al. (2006: 287–289) and Forth and McNabb (2007).

  8. A copy of the FPQ questionnaire can be downloaded at:

  9. The mean for log sales per employee was 4.107 with a standard error of 0.072. In deriving logged value added per employee for estimation a constant was added to push the whole distribution above zero. The mean was 6.497 with a standard error of 0.0038.

  10. Most of the data provided related to an accounting period ending in 2004, the remainder providing data for a period ending in 2003. Where data did not relate to a full calendar year it was adjusted accordingly. Workplaces with values below the 2.5th percentile and above the 97.5th percentiles of the productivity distributions were classified as outliers and removed from the analyses.

  11. Managers were asked "Generally speaking, in establishments in your industry or field has the financial performance…improved, stayed the same, or deteriorated since 1998?" Depending on the response to this question managers were then asked one of three questions. Those who thought industry performance had improved were asked "would you say that, compared with the improvement in the average financial performance of establishments in your industry or field, your own establishment has improved at a faster rate, improved at a similar rate, improved at a slower rate, remained static or actually deteriorated?" Those saying industry performance had remained more or less the same were asked "would you say that compared with the stability in the average financial performance of establishments in your industry or field your own workplace has…improved, remained stable like the rest of the industry, actually deteriorated?" Those saying industry financial performance had deteriorated were asked "would you say that compared with the deterioration in the average performance of establishments in your industry or field, the financial performance of your own workplaces has actually improved, remained stable, deteriorated at the same rate as the rest of the industry, or deteriorated at a faster rate than the rest of the industry?" Where managers rated their own workplace's performance as better than the trend in the industry they scored "1" on the dummy variable, zero otherwise. There are no panel data items allowing us to track labour productivity over time.

  12. This variable is constructed by linking management level data on the incidence of TAW at the workplace in each single digit occupation to the occupational classification of employees collected in the employee questionnaire.

  13. Full models are available from the author on request.

  14. The panel analysis was survey weighted and run on 544 unweighted observations. It included the following controls measured in 1998: financial performance, industry (11 dummies), establishment aged 25 + years, single-establishment firm, foreign owned, total number of employees, union recognition. These variables were jointly significant (p = 0.024).


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The author acknowledges the Department of Business, Innovation and Skills, the Economic and Social Research Council, Acas and the Policy Studies Institute as the originators of the 1998 and 2004 Workplace Employee Relations Survey data, and the Data Archive at the University of Essex as the distributor of the data. I thank the Nuffield Foundation (grant OPD/37358) for funding.

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Correspondence to Alex Bryson.

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Bryson, A. Do temporary agency workers affect workplace performance?. J Prod Anal 39, 131–138 (2013).

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