Political Economy of Agency Employment: Flexibility or Exploitation?

Abstract

The proliferation of agency employment in Pakistan is a serious labour problem and a public policy concern because of the potentially negative implications for agency workers' basic statutory rights. Agency workers are normally given a vastly different, often negligible, package of benefits from their permanent counterparts. They are especially vulnerable to instant dismissal and are generally excluded from collective bargaining arrangements. Unions regard the use of agency employment as exploitative, and a threat to their jurisdiction and membership. This article reports on an in-depth study of “payrolling” agencies. Pay-rolling agencies are a particular form of employment intermediaries through which employers attempt to bypass statutory obligations concerning workers' benefit entitlements and trade union rights, simply by paying workers through an agency. A total of 97 interviews, undertaken in six case studies across three industrial sectors with employees, employers, agency and union officials, and industry specialists revealed sufficient evidence on the use of pay-rolling agencies. The results confirmed the anecdotal evidence that some employment agencies are not truly genuine. The evidence suggested that there is a growing trend for agencies to be simply a sham arrangement, refuting the notion that temporary agency work has only been a natural and inevitable response to changes in the economy.