1. Introduction

This paper presents a descriptive profile of temporary work in New Zealand, using information that was collected by Statistics New Zealand in the March 2008 quarter in the Survey of Working Life (SoWL), a supplement to the Household Labour Force Survey. The main objective of the paper is to examine the extent to which the employment conditions and outcomes of temporary workers differ from those of permanent workers. A secondary objective is to investigate the factors contributing to disparities between temporary and permanent workers in key employment outcomes, such as pay levels and participation in training.

The SoWL is a new survey which was designed specifically to measure aspects of employment and job conditions that have never been rigorously measured in New Zealand before. It is intended that the survey be repeated every few years, so that trends in work patterns can be monitored. In future, it should be possible to identify whether temporary work or particular types of temporary work are growing, stable or declining, by comparing SoWL results from different years.

The term 'temporary' is used to denote all types of short-term employment that are undertaken by employees, including fixed-term jobs, casual jobs, seasonal jobs, and jobs arranged through temporary employment agencies. Self-employed people who work on short-term contracts are not considered in this paper. A job is temporary if the worker does not have any expectation of continuous long-term employment. A temporary employee is an employee who is working until the completion of a specific project, temporarily replacing another worker, has been hired for a specific time period, is filling a seasonal job, or is employed only when needed by their employer.

Temporary employment has historically played an important role in the New Zealand labour market. Temporary jobs have always been common in industries that experience seasonal fluctuations in activity, such as agriculture, fishing, forestry, food processing, construction, transport, accommodation, cafes and restaurants, and retailing. In recent decades, temporary jobs have often been created in service industries that provide services outside of standard business hours, such as health care, retail trade, hospitality, and recreational services. Employers use casual and temporary work arrangements to better match staffing levels to work flows in situations where work flows and labour demand vary across days, weeks, or the year. Employers also use temporary employees to increase staffing levels for short-duration projects and to fill positions that are temporarily vacant, for reasons such as illness, parental leave, or recruitment difficulties.

The consequences of temporary employment for both the welfare of temporary workers and the performance of the labour market have at times been the focus of concerns. An OECD review published in 2002 noted that the short-term nature of temporary jobs is potentially a source of emotional and financial insecurity for the people who work in them. Because temporary jobs are on average associated with lower pay than permanent jobs, there are concerns that temporary workers face discrimination due to their relatively poorer bargaining power. Another persistent concern is that temporary jobs reduce the incentives for employers to provide training and the incentives for employees to acquire job-specific skills. A lower level of training could limit employees' opportunities for skill development, career progression and wage growth, and constrain productivity growth within firms. Some OECD governments have responded with regulations that restrict the use of temporary job contracts, or require employers to equalise the pay and fringe benefits of permanent and temporary employees who perform equivalent work (OECD, 2002, p129).

Casual work, an employment arrangement in which workers are typically employed at short notice for relatively short episodes of work to meet the needs of their employer and do not have a guarantee of ongoing work, has been the focus of some specific concerns in New Zealand. Case study research into the use of casual and other non-standard forms of employment contracting in selected industries has identified a number of issues (Innovation and Systems Limited, 2007). These include:

• lack of training opportunities or pathways into permanent work;
• shift work patterns that are potentially disruptive to personal and family wellbeing;
• workers receiving inadequate notice of changes to their shifts or hours;
• a need for employers to clarify whether turning down particular shifts will adversely affect a worker's access to future work;
• limited knowledge of the legal entitlements of casual workers, particularly their holiday entitlements;
• difficulties in accessing sick or bereavement leave.

This paper uses information from the Survey of Working Life to address some of the above issues. It focuses particularly on the following questions:

• How common is temporary employment? How does the prevalence of temporary employment in New Zealand compare with other OECD nations?
• Which types of employees are most likely to be employed in temporary jobs, and how do temporary workers differ from permanent workers?
• Why do people work in temporary jobs? Is temporary work the preferred type of work for persons doing it? Are temporary employees as satisfied with their jobs as permanent employees?
• Are temporary workers more likely than permanent workers to be underemployed - to be working fewer hours than they would prefer?
• How stable and predictable are the working hours and working time patterns of temporary employees?
• Are temporary employees more likely than permanent employees to work at non-standard times of the day and week?
• How do the wages paid to temporary workers compare with those paid to similar workers in permanent jobs?
• Do temporary workers receive less employer-funded training than similar workers in permanent jobs?
• Do temporary workers tend to have limited or poor knowledge of their legal entitlements, such as their paid holiday entitlements?

The SoWL data were gathered from a point-in-time survey, in which respondents were interviewed just once about their current work situation. Work history data was not collected, and therefore the survey results do not reveal whether respondents had worked in temporary jobs for a short period of time only or had done so for many years, moving from one temporary job to another. Because it lacks a longitudinal dimension, the study is not able to answer questions about the longer-term consequences of temporary work, such as the impact of working in temporary jobs on future employment rates and pay, or the frequency of transitions into permanent work.

The paper is structured in the following way. Section 2 provides information on the definition and measurement of temporary work in the SoWL, and some basic information about the survey. Section 3 analyses the frequency and incidence of temporary work in the New Zealand labour market. Section 4 provides a descriptive profile of temporary workers, including their job characteristics, working patterns, and conditions of employment. Information on permanent employees is also provided for comparative purposes. Section 5 reviews the reasons that are given for working in a temporary job, and temporary employees' preferences regarding their type of employment arrangement. Section 6 examines the pay and training rate gaps between temporary and permanent employees in more depth. It discusses the reasons why pay and training disparities may exist and uses regression models to assess their size and significance, taking into account the differences between temporary and permanent workers in characteristics, skills and distribution across jobs. Section 7 offers some concluding comments on the scope for further analysis.