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Why the rise of temp jobs is good for entry-level workers

Temporary work is filling a vital role in the modern economy, for businesses and employees alike

Young office worker brandishing a file

(Frederic Cirou/PhotoAlto/Getty)

Ours is an era of perpetual hand-wringing over the jobs market. Fretting about a lack of growth in permanent positions, stagnant wages and the rise of “precarious employment” has become a full-time job for many commentators. To give greater focus to all this worry, a new villain is being crafted: the temporary work agency.

Temp agencies provide short-notice or limited-term employees to companies that aren’t ready to hire full-time or permanent workers. Jobs on offer include everything from digging fence post holes to data entry. Temp workers are attractive to firms because they earn lower wages (although the agency has to get paid as well) and provide the ability to scale up or down quickly without the complication of severance pay or pink slips.

It’s a trend on the march. According to Statistics Canada, the employment services industry grew from $8.3 billion in 2009 to $11.5 billion in 2012; and while this category includes everything from executive headhunters to day labour, other data suggests it’s temp work driving the increase. The International Confederation of Private Employment Services, the industry’s global lobbying arm, says Canada is home to 2,400 temp agency offices hiring out 450,000 annually; TD Economics forecasts temporary employment in Canada will remain above long-term averages until at least 2018.

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Because they’ve become such a central feature of the new “on-demand” world of work, temp agencies are also finding themselves to be political targets. A report last year from the Canadian Centre for Policy Alternatives called temp agency work a “trap” that ensnares low-income workers in bad jobs forever. Of particular concern are buyout clauses that require a bounty to be paid to the agency if a firm hires a temp worker permanently. The Toronto-based Workers Action Centre recently accused the temp industry of evading labour standards, lowering wages and worsening working conditions. And the Ontario NDP has called for pay hikes plus caps on the number of temps. So do temp agencies deserve their burgeoning reputation for workplace villainy?

There’s no arguing their role in facilitating staff cuts. “We provide entrepreneurs with a flexible staffing system,” says Bob Funk, CEO of Express Employment Professionals, a franchised North American temp chain with 34 offices in Canada. “If  business turns down, he has us lay off workers. When business is going well, he can hire them permanently. We allow them to breathe.” Yet Funk, former chairman of the Federal Reserve Bank of Kansas City, points out benefits to workers as well employers.

“We are in the opportunity business,” Funk says. “We provide a chance for people to get their foot in the door.” As red tape, regulation and economic uncertainty leave firms reluctant to take on the responsibility of training new permanent staff, it has fallen to temp agencies to offer workers the chance to learn on the job. Agencies also provide a crucial stepping stone into the job market for groups that tend to have trouble finding their first jobs, such as young workers and new immigrants. Research shows workers with temporary job experience are more likely to find permanent jobs.

As for those bounties, Funk argues they’re fair payment for creating a better match between worker and job. “Most companies know the value of a good employee,” he says. “If they can get themselves a known quantity for $500 or $1,000, that’s pretty reasonable.” Funk agrees with his critics, however, on the need for a cap on temp workers. “You really need your core employees to constitute 80% of your workforce if you want to have a real culture in your corporation,” says Funk. “It’s hard to build a strong culture if most of your employees are coming and going all the time.”

Temp agencies didn’t create the new realities of the work world—blame that on globalization, generational change and governments. But they’re making it fairer and more efficient for employers and employees alike. Why should that make them the bad guys?