Making a virtue of necessity once again: assessing the effect of temporary labor on lean practices in highly routinized environments

Abstract

Purpose The purpose of this paper is to evaluate how temporary labor moderates the relation between two well-known lean initiatives (process flow and process quality) and line productivity. This paper focuses on high-volume, low-variety (HVLV) shop floors, where work experience may not be as relevant as expected and extrinsic motivation of the temporary workforce could become a key driver of individual performance. Design/methodology/approach The authors follow an insider econometrics approach based on panel microdata (1,793 observations) from nine lines over two years in a Spanish manufacturing plant. The authors selected this setting for two reasons: Spain has traditionally had one of the highest levels of temporary employment in the world, so it perfectly represents labor market trends in OECD countries. Simultaneously, the authors also searched for a type of shop floor that could be representative of one of the most common manufacturing environments: a shop floor with highly repetitive and low-complexity work tasks. Findings The results of this paper suggest that in HVLV environments, temporary labor could contribute up to a 1.4% improvement in line productivity, provided there is a strong lean implementation. Otherwise, the use of temporary labor could undermine the positive effects of both process flow and process quality on plant productivity. Originality/value External incentives derived from high levels of unemployment, coupled with manufacturing’s increasing automation and specialization, may be minimizing the weaknesses traditionally associated with temporary workers in lean environments. By contrast, those shop floors lacking lean standards face serious productivity consequences from adjusting to global trends by using temporary work.