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Are agency workers exploited?

14 January 2015

Agency workers are commonly used in warehousing and logistics. Here, logistics professional Carey Jebb asks should they get the same pay and conditions as permanent workers?

The use of agency workers is common but sometimes controversial. For example, in the run-up to Christmas, the union GMB staged a demonstration outside the Marks & Spencer Store in Slough protesting that warehouse workers on agency contracts had less favourable pay and conditions than permanent colleagues.

An Agency Worker (AW) is an individual supplied theoretically on a short term basis to cover a temporary need. Why does the company have a need for ‘short-term’ labour? There can be rational business reasons: 

1) Seasonal variation in throughput volume.

2) Key employees are unavailable, through maternity leave, sickness etc.

3) Other unexpected events, flood recovery etc.

In these genuine circumstances, the hours and end point are clearly predictable. But these are not the type of AWs we are talking about. Many employers believe it is acceptable to employ individuals on zero hours contracts and or as AWs for protracted periods, often years. The business models that attempts to justify this, argues that labour is an overused resource and as such a drain on the business. It goes on to argue the use of AWs gives two benefits:

i) Labour use flexibility.

ii) Reduced labour costs.

These arguments, which rely on giving AWs worse conditions and / or wages rest on two flawed assumptions: 

a) All labour resources (LR) are equal and; 

b) all LR are available for the same market price. 

LRs are by their nature unequal. These inequalities form the basis for why one individual is paid more than another. Like all resources different qualities of LR should attract different market prices. Business fails to see the true inequality of their workers because the ‘acceptable’ grounds for wage discrimination are concrete evidence of skill coupled with legislation prohibiting irrational discrimination. 

Part of the argument is that employers are paying a ‘market wage’ which has become confused with the ‘minimum wage’. The level of this ‘market wage’ is artificially low being subject to indirect subsidy from central government, for instance Working Tax Credit. 

The inequality of labour resource does not stop at those individuals making up just the pool of AWs. Many permanent employees are poorer at their jobs than the AW working alongside them. 

So what messages do you portray to your permanent employees when you pay AWs less than your permanent staff?

a) Your permanent job is not secure.

b) You are expendable because cheaper AWs can do your job.

c) I do not respect industrial relations or labour law, why else do you need the four main advantages of AW labour to the employer? These are that AW labour cannot:

1) Claim unfair dismissal if you’re sacked without notice or good cause.

2) Claim statutory redundancy pay.

3) Claim maternity, paternity, adoption and parental leave.
4) Demand a written statement of main terms and conditions of employment (Points 1-4 from Citizens Advice Bureau). 

There may be genuine reasons why a) and b) are true. The problem is the message is un-targeted, if your permanent staff are so poor AW labour is better / more reliable you should be having one-to-one conversations with your weak links. 

What are you saying to your customers: 

a) My business model is uneconomic without being exploitative.

b) I cannot guarantee the long term quality of my product / service. 

Along with the negative messages you are giving your permanent employees and your customers you have the temerity to complain that the AW does not show you any loyalty or ‘commitment’ despite the fact that a third or more of their income is coming from the state (based on couple with two children and one 48 hour job).

Do not mistake this for a Socialist argument for equal wages for all. LRs come in all qualities. No LR owes you a special fealty; it is their duty to those dependent on them to maximise their worth within the market. If your ‘market’ wage is underminable by a pittance you will regularly lose your LR to another business paying closer to the ‘market’ rate for that resource. 

Should you pay your AWs the same as your permanent staff? Yes. If you are consistently losing your permanent staff then you need to review your employment strategies not treat your AWs worse.

The author:

Carey Jebb MSc, CPC is a versatile Strategic Logistics & Operations Professional currently contracted as Logistics Manager (Engineer) at Total.