Labour Market Segmentation Revisited: A Study of the Dutch Call Centre Sector

Abstract

Employment in the call centre sector in the Netherlands, similar to the trend in other European countries, is expanding greatly. In 2001, Datamonitor (2002) estimated that 1,266 call centres were operating in the Netherlands. This number is expected to have risen to roughly 2,000 in 2006. An estimated 188,000 people work in this sector at the moment, representing 2.5% of the entire working population in the Netherlands. This represents the highest percentage in Europe with the exception of Ireland. The call centre workforce is employed by in-house and subcontractor call centres. In-house call centres are part of the firm for which they handle customer contacts, whereas subcontractor call centres, which provide customer contact services for other firms or institutions. The call centre sector features a large number of employees working in so-called atypical employment contracts, in particular ‘agents’ who handle the actual customer contacts (De Grip, Hoevenberg & Willems, 1997). Agents are often hired into temporary appointments, part-time contracts, irregular shifts, stand-by contracts, et cetera. The use of such atypical contracts is closely related to the great need for flexibility in the deployment of staff (Kalleberg, 2000). Such workforce flexibility is necessary in order to negotiate peaks and valleys in call volumes. In addition, many call centres prioritize on cost reduction, and this approach constrains investment in personnel. Call centres are therefore often classified as ‘electronic sweatshops’ offering only ‘dead-end jobs’ (Taylor, et al., 2002; Deery & Kinnie, 2004).The labour market for call centre agents could thus be characterised as a ‘secondary labour market’ of insecure, poorly paid jobs without any career opportunities (see e.g. Dekker, De Grip & Heijke, 2002). However, the call centre sector is heterogeneous with respect to employment conditions. For example, agents who work in in-house call centres have better employment conditions than their counterparts in subcontractor call centres. The Dutch industrial relations system offers one explanation for this difference. Agents working in in-house call centres have protections defined by the collective labour agreement (CLA) of the firm the call centre agents work in. In contrast, the subcontractor call centres did not have any comparable protections or their own CLA until 2003. The establishment of a CLA that covers agents employed in Dutch subcontractor call centres in 2003 is a unique phenomenon in the European call centre market (Roland, 2000b).The difference in working conditions between in-house and subcontractor call centres raises the following research question addressed in this paper: To what extent is the labour market for call centre agents a dual labour market, with a secondary segment in the subcontractor call centres, and a primary segment in the form of a ‘professional labour market’ in the in-house call centres?To answer this question, we analyze survey data collected from a national survey of call centre managers in the Netherlands. Moreover, we investigate whether the aforementioned need for workforce flexibility may provide an explanation for the labour market segmentation in the call centre sector and if this segmentation is embedded in Dutch industrial relations. We begin with a brief overview of labour market segmentation theory. Next, we describe the dataset, and provide some brief background about the Dutch call centre sector and its workforce. Then, we investigate the differences between employment conditions in in-house and subcontractor call centres, to determine whether there is a segmented labour markets. Finally, we assess the influence of industrial relations in the call centre sector, and determine whether these reflect the labour market segmentation.