Proportion of contract workers in Israel similar to other developed countries, study shows

Not all agency workers are actually contract workers, says Taub Center researcher

August 3, 2015 04:59
4 minute read.

WORKERS IMPROVE their skills at the Rayan South employment center in Rahat last week.. (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)

Contrary to popular belief, the share of “agency workers” in Israel is similar to in other developed countries, a study the Taub Center for Social Policy Studies in Israel is to release on Monday says.

The study by Dr. Noam Gruber, to be published in the upcoming annual State of the Nation Report 2015, rejects the claim that the number of such workers in Israel is especially high. The claim is prevalent because the term “agency worker” has become a catch- all term for temporary staff of all sorts, whether directly or indirectly employed, the report says.

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“This lack of clarity, which is only made worse by the dearth of organized research findings, makes it difficult to estimate the scope of the phenomenon in Israel and compare with the rest of the world, and leads to exaggerations and inaccuracies,” said Gruber.

The study distinguishes between two types of workers – those hired through employment agencies who work under the supervision of the client, and contract service workers who are out-sourced or subcontracted, a method whereby the client buys the service but does not directly supervise the workers.

Employees of employment agencies can benefit from this mode of employment, according to the study, while contract workers are a weaker, more vulnerable group.

Israeli estimates regarding the number of agency workers include both those types of workers, while data from other countries refers primarily to employment agency workers alone.

When comparing only employment agency workers against OECD data from other countries, Israel’s rate of agency workers out of all employed persons in the country is relatively low, at about 0.8 percent, using data from 2011 and 2012.

When contract service workers are added to the data, despite different employment characteristics than employment agency workers, the rate rises to 4.9% of those employed in Israel.

According to the report, the distinction between employment agency workers and contract service workers includes essential differences in the socioeconomic profile of the workers.

The two groups are distinguished by the age of the workers, with employment agency workers relatively young in comparison to workers overall. In 2011, the median age among all employed persons in Israel was 39, while the median age of employment agency workers was 33.

In contrast, the median age of contract service workers was 46.

Moreover, the share of students working as contract service workers in 2000-2011 (7.9%) was lower than their share among all employed persons (9.2%), while their representation among employment agency workers was substantially higher (11.9%).

“One could claim that the employment experience and the flexibility of [employment through employment agencies is] useful to both employer and employee, and in the more rigid labor market this type of employment fills a serious need,” explained Gruber.

Another characteristic of agency workers is the relatively high proportion of female employees, especially among contract service workers, where women make up 57.4% of the workforce.

The proportion of immigrants is also relatively high among agency workers. In 2011, olim made up 61.4% of the contract server work-force, double the representation of olim in the general workforce (32.3%).

An additional characteristic of agency workers is that they generally work in part- time positions; many of them would like to work more hours, the study showed.

Gruber concluded that the different characteristics of the two types of agency workers require different policy steps.

“Employment agency workers are, in general, a younger group made up of a relatively high proportion of students. Relative to contract service workers, they are closer to the general employed population in terms of education level, the rates of women and immigrants, and their number of work hours,” explained Gruber.

Gruber went on to discuss the possibility of lengthening the permitted employment period through an agency, which is currently no more than nine months, to allow these workers “employment continuity and the chance to gain more work experience.”

In contrast, Gruber said that contract service workers is generally an “older and weaker group of workers, who in most cases do not have the ability to unionize and stand up for their rights.”

To protect their legal rights, Gruber suggests requiring transparency. The contractor would be obligated to submit payment information both to the client and the worker so that the client shares the legal responsibilities for employment law violations and can also better evaluate the option of directly employing the worker.

The Taub Center warned against what it called “populist steps” that are likely to cause more harm than good to the workers. “If a law requiring public agencies to hire contract service workers as permanent employees is implemented, it is reasonable to assume that many of these workers will end up unemployed, as their employment will not pay off for the employer.”

Gruber recommended broadening the legal definition of “service contractor,” which today includes only those employed as security, guards, or cleaners in homes and businesses.

He also recommended improving flexibility in the labor market, saying that “if we wish to lessen the harm to weaker employees, employment terms in the labor market must be made more flexible, especially in the public sector, and the rights of agency workers must be enforced, particularly those of the contract service worker.”

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