Information technology and the push from internal employees to temporary workers

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Information technology (IT) does not erode the quality of jobs. But it doesn’t improve jobs either. Managers do it. As Adam seth litwin and Sherry M. Tanious write, employers can manage relationshipally or contractually, and that determines whether or not IT facilitates the destruction of conventional labor relations.


Employers have, since the 1970s and 1980s, deployed information technology (IT) to fundamentally restructure the employment relationship. Employers, who now seek flexibility rather than stability in a globalized and highly competitive market, have used IT to replace full-time employees with temporary workers employed by third-party recruitment agencies, independent contractors, freelancers. or even machines – a phenomenon known as the “outsourcing” of labor.

IT facilitates the outsourcing of work by enabling employers to (1) supervise and monitor the productivity of employees around the world in real time, (2) segment work into simpler discrete tasks, and (3) coordinate work. Labor relations scholars have speculated that employers have adopted information technology to reduce labor costs, with the end result being the erosion of the traditional employment relationship in favor of More flexible alternative employment arrangements that do not offer employees the same salary, benefits, job security, discretion or long-term opportunities that traditional employment has always offered. In a recent journal article, we set out to quantify how the adoption of IT enables, drives or compels the reallocation of work from internal employees to temporary workers, or “contract workers” who are employed by third-party recruitment agencies and are leased to traditional employers.

We rely on data from the Workplace Employment Relations Study (WERS), a representative sample of over 2,500 UK companies administered by the UK government. Using linear probability models, we find, consistent with the existing literature, that IT adoption is positively correlated with job reallocation, both before and after controlling for company size, industry and other factors. Some companies are more likely than others to reassign work – for example, large companies are more likely to reassign work to temps, and workplaces with at least one union negotiating on behalf of at least some workers are more likely to have reassigned work to an employment agency than non-unionized workplaces.

Although neither foreign ownership of the company nor independence of the company appears to favor job reassignment in the UK, workplaces with concentrated ownership are less likely to report job reassignment. This implies that work ties may be more relational than contractual – bosses who know and actually work with their employees are less likely to reassign their jobs to temps. Finally, we find a positive relationship between downsizing and job reassignment after controlling for adoption of information technology: managers who cut their jobs in the previous year were 5% more likely to ” have outsourced the work once done internally.

We then examine the relationship between adoption of IT and downsizing with reallocation of work to agency temps. It is important to note that downsizing companies in the absence of IT adoption is essentially not correlated with reallocation of work to agency workers, but IT adoption is strongly correlated with reallocation of work from internal employees to temporary workers when done in conjunction with downsizing.

Again, using linear probability models, we then assess whether management’s choices about business strategy – whether the company competes on price or quality – affect the purposes for which they deploy the business. IT, that is to say towards the reassignment of work to temporary workers or towards the maintenance of work. to house. We find that while employers who choose to compete on price rather than quality are more likely to reassign work to temporary workers, employers who rely on quality-oriented strategies are in fact relying on quality. technology to avoid work reassignment and keep work in-house. In addition, employers who manage to use a price-driven business strategy while maintaining a “high-end” employment model are significantly less likely to reassign work to temporary workers. Therefore, it is possible for employers competing on quality or price to avoid reassignment of work if they wish. That is, the adoption of IT allows, but does not oblige, employers to transfer work traditionally done by internal employees to temporary workers. In sum, our results provide the first statistical evidence that recent technological changes have in fact facilitated the erosion of the conventional and mutually obligatory dyadic model of employment.

These findings have important implications for labor policy and legal rights. Temporary workers, the majority of whom would prefer standard jobs, have less job security, economic stability and poorer health outcomes than those directly employed by client companies. In addition, temporary workers are deprived of employers’ investments in skills development, which has negative long-term implications both for workers and their families, but also for the human capital stock of an economy. The erosion of the traditional employment relationship in favor of these atypical working arrangements tilts the power imbalance between employers and workers further in favor of employers. Policymakers should be aware of the multitude of staffing options now available to employers in light of technological advancements and adoption, some of which allow employers to maximize their profits without providing any of the social or political-economic benefits of hiring workers.

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