Agency workforce losing out on £400 million


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The agency pay penalty was found to vary considerably by occupation

The agency workforce is losing £400 million a year because these workers are paid less than their employee equivalents, analysis published by the Resolution Foundation has shown.

The Foundation’s study compared the hourly wage of agency workers and employees with the same personal characteristics (such as age and ethnicity), doing the same type of work (for example in the same industry and occupation). This revealed that between 2011 and 2017 the average agency worker was paid 23p less an hour than a directly comparable employee.

The research found that 85% of agency workers have been in an agency job for more than three months, entitling them to equal pay under the law in almost all circumstances. However, this subset of agency workers is still losing £300 million a year collectively.

This agency pay penalty was found to vary considerably by occupation. Agency-employed managers for example actually saw a bonus. There were also premiums for being an agency worker in less predictable sectors such as social care, where legally required staff ratios allow agencies to command a higher price to fill last minute gaps in staffing schedules.

Other than those two occupational classes, however, agency workers experience a pay penalty across the board which adds up to £990 a year for the average administrator who works through an agency, £800 a year for the average sales or customer service worker, and £285 a year for the typical worker in an elementary occupation (one that consists of simple and routine tasks).

The research suggested that this pay penalty was unlikely to be fully explained by people willingly taking a pay hit to avoid unwanted aspects of more regular work, or by agency workers being less motivated or lacking specific skills.

Lindsay Judge, senior policy analyst at the Resolution Foundation, said the government must take action. “Agency workers deserve to be paid the same as employees if they’re doing the same job, so the government should look to close the loophole that allows agency workers to sign away their right to equal pay,” she said. “With the government-commissioned Taylor Review noting this abuse, we’re hopeful that 2018 will be the year of action on fair pay for agency workers.

“Many workers prefer the flexibility that agency work can sometimes offer, and are willing to be paid less as a result, but those doing the same job on the same terms as employee colleagues deserve to take home the same day’s pay.”

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