Summary.

In the past years we can observe major changes in economic

environment. New companies emerge; existing companies strengthen
their position on the market, facing the turbulent changes in the field; and
the third category of companies which keep their conservative views are
being ruined. Flexibility has become one of the most critical indicators.
The companies are searching for ways to reduce company costs. As we
know, the labour costs have a major proportion in setting company costs,
this is why decreasing these costs have positive effects on the company.
One of the ways to decrease them is to hire contingent workers, this
becoming a major economic tool and representing a segment of labour
market that is developing fast (Jeroen, 2007).
Table of Contents
Introduction...
..2 Literature
Review2
Conclusion.
.5 References..
6

Introduction
The economic, political, social changes in the world oblige the companies
to respect new rules and a certain degree of flexibility while developing
their activities. The companies should be constantly searching methods to
increase

their

productivity

and

efficiency.

This

helps

them

stay

economically competitive on the market. In order to maintain or obtain an

economic growth, companies use new opportunities to reduce the costs
and increase the efficiency. Economic crisis showed that if companies do
not improve the quality of goods and services, do not focus on innovations
and do not work with their costumers they do not have many chances to
survive. The purpose of this literature review is to determine who are
contingent workers, their role in organizations and to find out if they
represent the tool that may help companies to perform in extreme working
condition.
Literature Review
Contingent (temporary) workers are persons which are paid by companies
for a certain period of time (one week, a month, a season) in order to
accomplish specific kind of tasks (George and Jones, 2011) contingent
workers include contract company workers, agency temps, on-call
workers/

day

laborers,

direct-hire

temps,

self-employed

workers,

independent contractors, and standard part-time workers (Martin and

Sinclair, 2007; Way and Lepak, 2010, p. 110).

Contingent workforce represents a component of the total company staff,

being a part of labour market that is developing fast. Using the temporary
workforce allows companies to fill in the number of workers that are
temporary absent, to protect core workforce (Cappellari and Leonardi,
2012); to change the number of workers to perform a certain tasks, to face
the market demand (Cardon, 2003; Boeri and Garibaldi, 2007; Way and
Lepak, 2010); to increase the number of hired people in a boom (Boeri and
Garibaldi, 2007); to provide organizations with labour flexibility, reductions
in labour costs (Jeroen, 2007; p. 492., Uzzi and Barsness, 1998); start work
after an inactive period (Heinrich, Meuser and Troske, 2005). According to
Antoni (2009) the temporary workers demand is focused in factories where
low-skilled workforces needed, but in the research of Way and Lepak
(2010) we discover a different approach that examines the way companies
get access to the specific skills of the contingent workers for a specific
period of time.
The temporary employment is considered secondary to a permanent job,
as a result there appeared the governmental dilemma in treating fairly
the workers rights based on non-discrimination principles on one side and
keeping labour market flexibility on the other side (Jeroen, 2007;
Nienhuser, 2005). Because the position of temporary workers was unstable
in the last decades and UE undertook political and legislative measures in
setting international labour laws. This set of laws has the purpose to treat
equally all type of workforce. As a consequence the number of contingent
workers increased in EU ( Jeroen, 2007, p. 493).

Oppositely to the above mentioned idea, Cappellari and Leonardi (2012)

assumed that temporary employment protection can cause negative
effects. The high protection of temporary workers may lead to their
redistribution in companies, as a result the workers with specific skills are
replaced by workers with general skills (Wasmer, 2006); to lessen
employees outcome (Ichino and Riphahn, 2005; Riphahn and Engellandt,
2005; Dolado et al., 2012, Cahuc et al. 2012, Cappellari and Leonardi,
2012); reduces the possibility to perform high profit activities (Bartelsman
and Hinloopen, 2005; Cappellari and Leonardi, 2012).
It is difficult to make a general conclusion about temporary workers
efficiency

without

making

an

analyses

organizations. Being limited in time and

of

their

impact

on

the

by economic environmental

changes, the companies face a dilemma regarding their process of

adapting to external technological, competitive, and labour market
pressures through a motivated and skilled permanent workforce

or

flexibility and labour-cost reduction (Jeroen, 2007, p. 502). According to

the Autor and Houseman (2009) the companies turn to part-time workers
in order to improve the quality of goods and services or to increase
product quantity. However, because the temporary workforces have
general skills and this may cause companies income decrease. This type of
workforce represent challenge for Human Resource Management as they
can not be stimulated with career promotion, compensation and other
benefits (George and Jones, 2011). The companies have start to adapt to
the situation, depending on the complexity of the specific services needed.
They use this type of workforce in cases when do not need high skills
4

(Autor and Houseman, 2009) or can offer short term training in order to
obtain specific skills (Albert, 2005; Cappellari and Leonardi, 2012). As
result the organizations may benefit from the following advantages: (1)
temporary workforces reduce companies costs; (2) the workers can leave
when their service are not needed anymore (George

and Jones, 2011;

Llobet and Fito, 2013). With these companies started to look for solutions
in hiring contingent workforces. Way and Lepak (2010) suggest that firms
may benefits from workforce mixing, including permanent and temporary
workers; this allows the companies increase their flexibility depending on
market demand and may have positive influence on the employment
stability

of

permanent

workforce.

In

the

unpredictable

economic

environment using temporary labour has become an extremely important

tool which allows organizations

to adapt to extreme market condition

(Jeroen, 2007).
Conclusion
As we observe the contingent workers are a segment that becomes more
attractive for the companies. This growing interest is caused by benefits
by workers to the companies, e.g. reducing labour costs, access to the
specific knowledge of workforce, flexibility and possibility to choose the
best candidates for permanent work. A significant growth of workers of this
segment is caused by the process of implementing the set of laws which
promote non-discrimination principles. The companies face challenge
because the irrational usage of this type of workforce may cause negative
effects and instead of increasing the performance, they may register
losses. And in order to minimize these risks the companies try workforce
5

mixing that leads to the employment of both temporary and permanent

workers. We can surely add the fact that contingent workforce represents
an important economic resource that may help companies to strengthen
their position in the market.
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