Temporary and foreign labour-force in the semi-periphery in the context of industrial upgrading: race to the bottom or necessity in Polish manufacturing

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The authors address the issue of a recent, largely under-researched phenomenon of the underprivileged segment of the labour market of foreign and temporary workers in Central Europe. The aim is to capture the relationships between the employment of temporary and foreign workers and the current and future development (upgrading) of manufacturing in the semi-periphery of the European Union. The focus is on three manufacturing industries in Poland of varying characteristics: automotive, aviation, and home appliances. The research is based on a comprehensive collection of primary and secondary data from a variety of different sources including annual company reports, CATI/CAWI questionnaire survey as well as about 110 interviews conducted among CEOs and HR managers, trade union leaders and works council representatives. This allowed to carry out quantitative and qualitative analysis. Systematic differences in the share of employment of foreign and temporary workers have been identified depending on industrial sector, the size of company and the situation at the local labour market. In general, the increasing presence of foreigners, Ukrainians in the main, is related to growing labour shortages in the country stemming from demographic trends. A substantial segment of temporary foreign workforce is found among producers facing volatile demand and its seasonal changes. Company strategies are also important here. Long hours of work and time flexibility can be more easily achieved in this group than among permanent employees. As far as wages are concerned there is an indirect impact. Managerial emphasis on reducing wage growth leads to difficulties in the recruitment and retaining the permanent employees in the company, so temporary workers appear to be the only option, even though the direct costs of employing agency workers, especially from abroad, are higher, due to their rotation and training expenses. Step-wise regression confirms the link between the evolution of employment systems and industrial upgrading. The interviews suggest that, although the large share of temporary foreign workers does not affect product quality, it is negatively correlated with automatization and robotization processes. In addition, the more complex tasks prevail in production, the less room for temporary workers. Long-term competitiveness and industrial upgrading towards high value-added products and functions are interlinked with high road in employment strategies, i.e. reliance on permanent well-trained workforce with limited use of temporary workers. Companies choosing the high road make effort to stabilize foreign employees.