With temporary workers, flexibility’s the name of the game
The modern temp industry began in a simple office in Detroit in 1946, where a businessman named William Kelly hit upon the idea to loan one of his typists for a day, billing a local company $6.75.
Today, Kelly Services has grown into a staffing giant that arranges employment for about 530,000 people a year. The industry, meanwhile, generates global revenue of $269-billion and hires out a range of workers that now includes nurses and accountants, oil workers and chief executive officers.
Weak business confidence coming out of the global credit crisis is playing a major part in keeping jobless rates at painful levels – U.S. unemployment is nine per cent while Canada is stuck above 7.5 per cent in large part because companies are wary of hiring long-term. As a result, more companies are turning for help from services such as Kelly’s, and the industry says the labour landscape is being permanently reshaped as employers streamline their operations to survive in a post-recession world.
The three largest in the industry – Adecco SA, Randstad Holding and Manpower Inc., along with Kelly Services – topped analysts’ forecasts in the first quarter of 2011. In Canada, Randstad, the country’s largest staffing firm, and rival Manpower say activity has picked up since the recession ended. Both are expanding their range of business services to meet demand.
“There’s a lot of potential here,” Randstad Canada president Jan Hein Bax said in an interview. “The companies that demand more flexibility in their work force, those companies will grow ... and you also see a lot of candidates who want more flexibility, so both are very compatible. We’d like to play a role in meshing the two.”
As a result, the industry is booming in Canada: Statistics Canada estimates that revenue has surged to $8.7-billion in 2009 from $1-billion in 1993. Companies such as Randstad are seeking a greater role in Canada in everything from advising governments on future work force planning to taking over corporate HR functions and negotiating with unions to create a more flexible work force.
“Our ambition is going further,” said Mr. Bax, who took over his post in Canada in January after running Randstad’s operations in Spain, where the company had regular contact with unions and government. “We’ve got a lot to bring to the market. Have we done that in the past enough? We should strive for more, and that’s on my agenda.”
Canada’s employment-services industry is mostly temporary staffing along with permanent placements and contract staffing, according to Statscan. Revenue has climbed steadily in the past decade, and employment in the sector has jumped six per cent in the past year alone, to 158,000 people.
But as the industry grows around the world – staffing firms are expanding in Europe and in emerging markets such as India and China – there’s an intensifying debate over the merits of an increasingly fluid work force. Proponents say it helps both employers and workers be nimble in globally competitive markets; opponents argue it’s part of a shift toward precarious, lower-pay work.
Temporary workers tend to earn less than permanent staff, they get little or no benefits and many can be fired without notice. The earnings gap between a permanent and a contract worker is about 13 per cent, while between a permanent and casual worker the gap is about 34 per cent, Statscan figures. The disparity persists even after the agency adjusts for demographic differences like education levels, immigrant status and gender.
Olga Cordeiro has seen a proliferation of contract jobs on offer, particularly since 2008. She has worked for six different temp agencies since the 1980s in accounting, administration and research, and some positions morphed into permanent placements. She loves the variety, training opportunities and sense of completing projects.
“It can be a stepping stone towards securing a more permanent type of position,” says the Hamilton, Ont. resident, who is the mother of four boys. “It also works well for people just starting out in their careers.”
Still, it’s difficult to make long-term plans for things like summer vacations. She’d rather have benefits – all her kids need orthodontic work – and longer notice periods. “Every Friday,” she says, “I would have to ask, ‘Would you like to see me on Monday?’ It’s a little stressful.”
Staffing firms tend to be leading indicators for economic activity – shrinking when the economy starts to tank, and growing with the recovery. Business at Manpower Canada has picked up “significantly” since the recession, says Byrne Luft, vice-president of operations. He has seen shifts in the industry – recruiting now encompasses social media, and there’s more competition from online upstarts.
Staffing agencies like Manpower are working more closely with governments to help retrain unemployed people and identify skills that will be most in need in the jobs market. The firm has been working with the province of Alberta, for example, to address labour shortages there.
Outsourcing HR functions is another change. “Companies are now outsourcing their full recruiting function to a third party like Manpower,” Mr. Luft says. “Companies are saying, ‘This isn’t our core business.’ Using a contingent pool helps them be more agile when it comes to company economics.”
Labour is typically a company’s most expensive cost, and a contingent labour force helps reduce costs, he said.
Not everyone shares that line of thinking – particularly those in the union movement. What staffing agencies dub “flexible” work, unions call “precarious.”
“With the recession and the resulting slackness, employers are in a position where they can offer no security, no benefits, unreliable hours and lousy pay – and still have people apply. And that will persist until either the labour market picks up or we put some restrictions in place on how precarious employment works,” said Jim Stanford, economist at the Canadian Auto Workers, the country’s largest private-sector union.
Temporary work carries an economic impact, he adds: Lower pay leads to weaker consumer spending, restricts workers’ ability to get a mortgage and makes it more difficult to save for the future.
There may be areas where unions and staffing firms can work together. One issue both sides seem to agree on is that workers – particularly new parents or older employees – should have more flexible work arrangements. Employees will also need to be more nimble and keep their skills fresh, and Mr. Stanford sees nothing wrong in discussions on how to use labour more effectively.
Randstad’s Mr. Bax predicts a massive shift in how society views work, with tasks divvied up according to projects and workers gaining a broader range of skills by working for multiple employers.
“Asia is there, we can’t deny it,” he says. “People work for less money there than here. But do you want to go back 50 years? It’s there and it’s a reality. Flexibility is a reality, and we should make flexibility as good as flexibility can be.”
BY THE NUMBERS
Annual global revenue of temporary staffing industry.
Revenue from temp industry in Canada in 2009 (up from $1-billion in 1993).
Number of Canadians employed in temp services in the past year, up six per cent from year earlier.
Estimated earnings gap between a permanent worker and a temporary contract worker.