, the largest provider of temporary unskilled, manual labor in the U.S., has begun finding jobs for people in the U.K. It may, however, find working conditions over here a little harsher.
The company, a favorite of Wall Street, opened its first European office last week in the north English city of Manchester. The reason for choosing the U.K. rather than another European country with higher unemployment is because Britain is an English-speaking country, although Labor Ready executives say they have no plans to Anglicize the spelling of the first part of the company's name.
Choosing the U.K has "to do with the ease of execution of expansion," explains Lee Fossey, the manager of Labor Ready's U.K. operations. "France would be a good market, but we'd have to translate all our programs into French, which is a much larger operation."
The evolution of the U.K.'s labor market over the past decade to one more resembling that of the U.S. is also an attraction for Labor Ready. Compared with the rest of Europe, the U.K.'s labor market is relatively flexible, and there has been a steady increase in the number of British workers employed in temporary and part-time work.
Sonia McKay of
The Labour Research Department
, an independent trade union and labor movement organization, says the number of men who now work part time grew 138% between 1988 and 1998 to 1.32 million.
A preliminary study by the
Department of Trade & Industry
estimates that 500,000 people are employed in temporary work at any one time, and it reckons a total of about 1 million workers engage in such work, which would represent around 3% of the total workforce.
This should prove rich pickings for a company that has grown from one store in 1989 in Tacoma, Wash., to 646 offices in 46 states, Puerto Rico and Canada. Earnings growth in 1998 was a huge 179.3%, and
estimates earnings growth for 1999 at 55.0%.
On Tuesday, Labor Ready reported that after a one-time charge, net income in the first quarter was $3.2 million, or 11 cents per diluted share, compared with $145,000, or 1 cent per share, for the year-earlier period. The stock closed Tuesday down 0.2% at 29 5/16, giving a forward price/earnings ratio of 27.4.
Labor Ready's success is attributed to its ability to send out a replacement employee for a company within an hour, and it also handles all the paperwork normally done by employers. The advantage for the worker is that he or she gets paid the same day. After months of negotiations with the British government, Labor Ready says it has cleared all the necessary payroll, taxes and benefit hurdles to pay workers daily.
An Ill-Timed Start
While the worker's payday may be timely, Labor Ready's arrival in the U.K. was not particularly well timed.
The company opened its office in the same week as the one-year anniversary of the highly publicized death of a student who was engaged in casual work at the time. The student was killed on his first day doing a skilled and dangerous job on a ship when he had no training or experience.
The Department of Trade & Industry's refusal to prosecute the employment agency involved has been widely criticized in the press, and the
highlighted the student's death in a story about casual labor on its
In addition, the government has recently created new labor regulations. Last month saw the introduction of a minimum wage in the U.K. At 3.60 pounds an hour ($5.76), the level is higher than the $5.15 minimum wage in the U.S.
However, the government's implementation of the
Working Time Directive in October of last year may inflict the most damage on Labor Ready's bottom line. The directive rules that if a worker is employed for 13 weeks continuously, then he or she is entitled to paid vacation. In one year, the amount of paid vacation is three weeks, and the government says this will rise to four weeks after Nov. 23.
While in some cases, agencies have deliberately halted work before the 13-week deadline to get around paying for the holiday time, Labor Ready's Fossey states categorically that the company will stick rigidly to the government's guidelines on the directive.
"We have absolutely no qualms about the guidelines. There is no point in doing things wrong," he says.
Although Fossey concedes holiday pay is not an issue in the U.S., he insists the U.K. labor market has advantages of its own for employers.
For example, in the U.S., a worker need only prove he or she was on the job to receive compensation in the case of a work-related injury. In the U.K., however, the worker must prove that the employer was negligent before receiving any compensation.
The issue of who the actual employer is in the U.K. is also something of a gray area. In the U.K., responsibility for the worker lies primarily with the contractor rather than the agency, which is only liable if the contractor cannot fulfill its obligations. In the U.S., Labor Ready is solely responsible.
It remains to be seen whether Labor Ready's business model will travel well across the Atlantic. But public worries and regulation aside, the increase in the use of casual labor in the U.K. is by all accounts set to continue growing, and somebody needs to find these people jobs.