Temporary Hiring Trend Signals New ‘Industrial Revolution’ : Employment: Experts say business is turning more to part-timers because of specialized skills, cost savings and work habits.

Hiring temporary workers is part of the business strategy at Silicon Graphics. At any time, between 10 and 12% of the computer company’s work force is employed on a short-term basis.

“It makes good business sense,” said Leilani Gayles, vice president of employee relations. “It allows us to be responsive, access people with specific skills and saves us money.”

Nationwide, it’s estimated that employees who work part-time, on a temporary basis or as free-lancers or consultants, now make up about a quarter of the work force. And the fastest-growing category is that of temporary workers.

“There is nothing short of another industrial revolution going on out there in terms of how work is being structured and people are being paid,” said David A. Hofrichter, managing director of The Hay Group, a consulting firm.

Hofrichter estimates that in the not-too-distant-future, three out of every seven workers hired will be on a short-term basis. A company’s work force will consist of a small core of highly skilled permanent workers aided by temporary employees brought in during peak periods or for special projects, he said.

Companies have found that hiring temporary workers saves them a lot of money. Temporary employees usually work without health care or pension benefits and save companies on payroll expenses and administrative costs as well as office and plant space.

“There is now an incentive for employers to hire temps and part-timers as a permanent solution,” said Ellen Bravo, executive director of 9 to 5, National Assn. of Working Women.

But, she said, “That’s often at the expense of workers and their families.”

The bulk of people taking short-term jobs do so because they have no choice--they can’t find full-time work, analysts say. And many find themselves having to take both night and daytime jobs to earn the salaries they need.

“It’s the best I can do at the moment,” said a systems engineer who has worked a series of short-term assignments at IBM. She asked not to be named for fear of jeopardizing future employment with the company.

The systems engineer was offered incentives by International Business Machines Corp. to quit her job of 13 years, then took a temporary assignment at the company after 10 months of unemployment. The job ended after a year, but she has since taken shorter assignments at the company.

But some workers do seek part-time or temporary jobs that give them more time to spend with family. At Uniforce Services, an employment agency, 30% of temporary employees aren’t looking for a permanent job, said Rosemary Maniscalco, the company’s chief operating officer.

The hiring of temporary workers has grown with the pace of corporate restructurings, even expanding as the economy has recovered, said John Challenger of Challenger, Gray & Christmas Inc., an employment consultant.

With more people left unemployed by layoffs, more workers are available for short-term assignments. Increasingly, they include highly skilled and professional employees whose jobs were eliminated in restructurings.

At the same time, after companies have laid off permanent workers they have often turned to temporary employees to meet their needs during the ebb and flow of the work cycle and to reduce employment costs, Hofrichter said.

“Companies want to have a work force that can flex with demand,” he said.

IBM found the need for temporary workers after having eliminated 150,000 permanent jobs since 1986. However, the company says it does not know how many of its former employees are working there on a temporary basis.

With the economy changing rapidly, companies often aren’t sure what their staffing needs will be and by contracting for shorter periods, they can hire workers to fill gaps.

Because of the circumstances of their employment, many temporary workers have qualities and work habits that companies want. For example, they can be more productive because they don’t have the social relationships at the office that permanent employees enjoy, Maniscalco said.

“They are paid by the hour. There’s no chatting around the water cooler, they don’t spend time on personal calls,” Maniscalco said. “They are only paid for the time they work, not for lunches or other breaks.”

Temporary work can have some positive results for employees. Hiring someone for a specific period allows companies to take a look at a prospective full-timer. Recent college graduates are now frequently hired on a short-term basis, business consultants say.

“Companies are skittish about taking on new full-time employees,” Challenger said. “This is a way to select the cream of the crop.”

The increase in temporary hiring has also been a plus for employment agencies, whose business has grown to meet the demand for short-term employees.

Workers hired through temporary help firms make up 1.4% of employees, up from 0.5% in 1983. Meanwhile, annual payroll for temporary agencies last year was $19.6 billion, up from $4 billion a decade ago, according to the National Assn. of Temporary Services, a trade group.

Although maintaining a just-in-time labor force offers advantages to business, it isn’t necessarily good for workers or for the economy, said David Chu, research director of the Service Employees International Union.

“I don’t think companies have given adequate thought to the issue,” Chu said. “There will be grave long-term consequences of working people into the economy in a more narrow sense.”

Chu said companies risk ending up with a large portion of the labor force that makes less money and lacks basic benefits. If people have less money, they spend less and that hurts economic growth.

“That’s a problem for an economy built partly on consumer spending,” Chu said.

The growth of the temporary work force, Challenger said, has also helped weaken bonds between employer and employee. While employees in past decades started with a company they might reasonably expect to work with for their entire working life, now the average tenure is about seven years, he said.

That means temporary workers may not have the loyalty to a firm that permanent employees have. And there may be friction between the short-term worker and the permanent staff--often, in higher skilled professions, the contract workers who receive no benefits are paid higher hourly wages than their permanent colleagues.

Challenger says the old structure of the workplace has changed completely in today’s business world.

“You can have nostalgia for the past, but it doesn’t exist anymore,” he said. “There is new management and new people, a new set of rules and that’s what the marketplace is about.”

But at Dell Computer Corp., executives found after relying heavily on temporary workers that a permanent staff often made more sense, according to Kevin O’Conner, director of human resources.

Permanent employees, Dell found, had a higher commitment to the company, produced higher quality work and improved morale. The company is converting about 150 temporary jobs into permanent positions.