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The impact of job insecurity and

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Hans Witte, Nele Cuyper

Journal of Occupational and Organizational Psychology

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395

The
British
Psychological
Journal of Occupational and Organizational Psychology (2006), 79, 395–409
q 2006 The British Psychological Society
Society

www.bpsjournals.co.uk

The impact of job insecurity and contract type

on attitudes, well-being and behavioural reports:
A psychological contract perspective

Nele De Cuyper* and Hans De Witte

Research Group Stress, Health and Well-being, Catholic University Leuven, Belgium

Research on the impact of job insecurity for temporary employees has been largely
exploratory and atheoretical in nature. This paper addresses this issue by considering
the role of job insecurity on job satisfaction, organizational commitment, life
satisfaction, and self-rated performance among permanent employees (N ¼ 396) as
compared with temporary ones (N ¼ 148). Hypotheses are formulated using the
tradition of transactional versus relational psychological contract types. Psychological
contract theory assumes (1) that job insecurity effects are due to a violation of the
relational psychological contract, and (2) that permanents as compared with
temporaries engage more in relational psychological contracting. As a result, job
insecurity is expected to be problematic in terms of outcomes for permanents, but not
for temporaries. Results validate the assumptions made in psychological contract
theory. Furthermore, job insecurity proved problematic for permanents but not for
temporaries when job satisfaction and organizational commitment are concerned.
No such differential effects are observed for life satisfaction and self-rated performance.
Implications for future research are discussed.

Along with the increased incidence of temporary employment throughout Europe

(Brewster, Mayne, & Tregaskis, 1997), a growing body of psychological literature has
warned against its detrimental effects for the individual. This has been described in the
flexible firm model (Atkinson, 1984) where temporaries are associated with the
organization’s periphery, which, in turn, has been associated with less favourable job
characteristics (e.g. Beard & Edwards, 1995; Saloniemi, Virtanen, & Vahtera, 2004;
Millward & Brewerton, 1999). Furthermore, general theoretical frameworks (e.g. the
vitamin model; Warr, 1994) include stressors that are exacerbated in temporary
employment arrangements, the most prominent of which is job insecurity (Büssing,
1999; Klandermans & Van Vuuren, 1999; Pearce, 1998): temporaries as compared with
permanents are consistently higher on job insecurity (De Witte & Näswall, 2003;
Kinnunen & Nätti, 1994; Parker, Griffin, Sprigg, & Wall, 2002). These observations have

* Correspondence should be addressed to Nele De Cuyper, Research Group Stress, Health and Well-being, KU Leuven,
Tiensestraat 102, 3000 Leuven, Belgium (e-mail: nele.decuyper@psy.kuleuven.be).

DOI:10.1348/096317905X53660
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396 Nele De Cuyper and Hans De Witte

resulted in the suggestion of impaired well-being, and less desirable attitudes and
behaviours among temporary employees.
However, studies have failed to establish a conclusive link between contract type and
a range of outcomes, such as psychological well-being (Aronsson, Gusafsson, & Dallner,
2002; Paoli & Merllié, 2002; Sverke, Gallagher, & Hellgren, 2000), job satisfaction (De
Witte & Näswall, 2003; Guest & Conway, 1997), organizational commitment (Pearce,
1993; Van Breukelen & Allegro, 2000), and self-rated performance (Van Breukelen &
Allegro, 2000).
In addition, first evidence suggests job insecurity has a moderating rather than a
mediating role between contract type and outcomes: job insecurity has been found
problematic for permanents but not for temporaries. For example, when adding the
interaction term between contract type and job insecurity in the studies of De Witte and
Näswall (2003) and of Guest and Conway (2000), significant differences were found in
the permanent group only: insecure permanents were less satisfied with their job, and
less committed to their organization. Virtanen, Vahtera, Kivimäki, Pentii, and Ferrie
(2002) as well as Sverke et al. (2000) in a similar way found a stronger relationship
between high levels of job insecurity and a poorer health state among permanents as
compared with temporaries.
Traditional psychological explanations for the consequences of temporary employ-
ment cannot account for these interaction effects, or for the absence of clear-cut
contract-based differences. Accordingly, this paper aims to extend previous research (1)
by providing an alternative to traditional stress theories, based on the concept of the
psychological contract; and (2) by considering multiple outcomes: job satisfaction, life
satisfaction, organizational commitment, and self-rated performance. These outcomes
cover the four major categories of potential outcomes of job insecurity, as identified by
Sverke, Hellgren, and Näswall (2002); the categories are distinguished based on the
dichotomies immediate versus long-term reactions and individually versus organiza-
tionally oriented (see Table 1).

Table 1. A classification of possible consequences of job insecurity (Sverke et al., 2002)

Individual Organizational

Immediate Job attitudes Organizational attitudes

(e.g. job satisfaction) (e.g. organizational commitment)
Long-term Health and well-being Work-related behaviour
(e.g. life satisfaction) (e.g. self-rated performance)

A psychological contract perspective

The psychological contract refers to ‘the idiosyncratic set of reciprocal expectations
held by employees concerning their obligations and their entitlements’ (McLean, Parks,
Kidder, & Gallagher, 1998, p. 698). During the last decade, it has captured the attention
of organizational researchers, as its content has proved crucial in shaping employees’
attitudes and behaviour, and in predicting employees’ well-being (Anderson & Schalk,
1998). Moreover, the non-fulfilment or violation of the psychological contract has been
found to elicit intense attitudinal and emotional responses (Robinson & Rousseau,
1994).
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Contract type and job insecurity 397

Much of the research into the content of the psychological contract has been based
upon the distinction between transactional and relational psychological contracts
(Rousseau, 1995; Millward & Brewerton, 2000). The relational psychological contract
focuses upon socio-emotional exchange, with job security in exchange for loyalty as
core elements. It includes dynamic and subjective content terms, and is long term in
duration. The transactional psychological contract focuses upon economic and short-
term exchange of benefits and contributions, with pay for attendance as prototypical
example. Its content is precisely defined, and its time frame is finite and short-term.

Temporary employment: A psychological contract perspective

The employment contract has particular resonance within this context. Rousseau and
Schalk (2000) argue that the formal employment contract gives the framework for, and
defines the zone of negotiability of, the psychological contract. More specifically,
contract duration is considered crucial in differentiating relational from transactional
psychological contracts (Rousseau, 1995). Similarly, in their theoretical contribution,
McLean Parks et al. (1998) have linked the descriptions of relational and transactional
psychological contracts to different types of employees. At the most aggregate level,
they suggest that transactional psychological contracts dominate amongst temporary
workers, while relational psychological contracts are thought to be dominant for
permanents. Empirical studies on the content of the psychological contract align with
these expectations: temporaries perceive their psychological contract as narrower
(Coyle-Shapiro & Kessler, 2002; Van Dyne & Ang, 1998) and more transactional
(Millward & Brewerton, 1999) than permanents. Unlike permanents, they may even
perceive their psychological contract as transactional rather than relational (Millward &
Hopkins, 1998). Hence, we hypothesize the following:

Hypothesis 1a. The psychological contract of permanents includes a higher number of relational
promises as compared with the psychological contract of temporaries.

Hypothesis 1b. The psychological contract of temporaries includes a higher number of

transactional promises as compared with the psychological contract of permanents.

This psychological contract perspective may explain the absence of clear-cut effects of
contract type on psychological outcomes. It suggests that permanents and temporaries
hold different expectations with regard to their employment relationship. Therefore,
the impact of temporary versus permanent employment should be assessed taking the
appropriate set of expectations as a reference. This implies that temporary employment
may not be perceived as inferior to, but rather as different from, permanent
employment. Accordingly, it does not follow that predictions on how contract type
relates to outcomes are to the disadvantage of temporaries. Rather, job reports of
temporaries and permanents may not yield significant or meaningful differences. This
interpretation is at variance with common expectations on the detrimental impact of
temporary employment for the individual. We will assess the extent to which we can
accept this hypothesis of adverse effects. When not validated, this may underline the
importance of the psychological contract framework.

Hypothesis 2. Temporaries as compared with permanents report lower job satisfaction, life
satisfaction, organizational commitment, and performance.
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398 Nele De Cuyper and Hans De Witte

Job insecurity: A psychological contract perspective

Psychological contract theory defines job security as a key element of the relational
psychological contract (Millward & Brewerton, 2000). Consequently, job insecurity
represents a major violation for those holding predominantly relational expectations. In
this regard, Pearce (1998) and Rousseau (1995) suggest that adverse reactions could be
related to an unwelcome change in the psychological contract, rather than to job insecurity
per se. This suggests that the harmful effects of job insecurity are mediated by the violation
of the relational psychological contract, evidence for which has been reported by De Witte
and Van Hecke (2002) and De Witte, De Cuyper, and Van Hecke (2004).
No such predictions are made for mediation by the violation of transactional
psychological contracts. These do not guarantee job security as a basic promise.
Accordingly, job insecurity does not imply a transactional psychological contract
violation. In sum, job security is considered an important criterion against which the
employment relationship is evaluated for those holding relational expectations, but not
for those holding transactional expectations. Accordingly, our third hypothesis reads:

Hypothesis 3. The violation of the relational, but not of the transactional psychological contract
mediates the relationship between job insecurity and job satisfaction, life satisfaction,
organizational commitment, and self-rated performance.

This interpretation of job insecurity has important consequences when applied in the
context of temporary employment; it suggests that job insecurity is detrimental in terms
of outcomes for permanents, as they may hold a relational psychological contract.
However, job insecurity is probably not associated with negative outcomes for
temporaries, because they may hold a transactional psychological contract. These
assumptions conflict with previous research. The dominant approach has been to start
from the established harmful effects of job insecurity, as found among samples largely
dominated by permanents, or even excluding temporaries from the analyses. These
observations served to predict similar effects for temporaries (Connelly & Gallagher,
2004). However, our predictions fit the observations as reported at the outset of this
contribution (De Witte & Näswall, 2003; Virtanen et al. 2002; Guest & Conway, 2000;
Sverke et al., 2000). In line with psychological contract theory, we hypothesize the
following:

Hypothesis 4. Job insecurity negatively affects job satisfaction, life satisfaction, organizational
commitment, and self-rated performance for permanents, but not for temporaries (interaction
effect).

In order to rule out alternative explanations, a range of important individual and work-
related factors, which proved crucial in previous research regarding temporary
employment and job insecurity (e.g. Näswall & De Witte, 2003; OECD, 2002), have been
controlled for in all hypotheses, including age, gender, education, number of
dependents, weekly working hours, and job status. In addition, the organization in
which respondents operate is added as covariate.

Method
Procedure and data collection
During spring 2002, we contacted two organizations from the industrial sector, the
service industries and the government sector, respectively. Considering our special
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Contract type and job insecurity 399

research interest, two organizations did not participate because they employed few
temporary employees. The choice of organizations as well as sectors was made based on
their possibilities of generalizing findings, and on the expected variation of employment
contracts (Table 2). Of respondents, 135 are employed in an industrial setting (response
rate 80%). The second organization is part of the service industries (N ¼ 55; response
rate 51%). Furthermore, a research institute (N ¼ 45; response rate 76%), and a hospital
(N ¼ 309; response rate 76%) are part of the public sector. Altogether, our cross-
sectional dataset is based on four Belgian organizations, totalling 544 respondents.

Table 2. The organizational contexts: distribution of contract type and job status

Job status % (N) Contract type % (N)

Blue collar White collar Permanent Temporary

Organization 1 (N ¼ 135) 83.3% (110) 16.7% (22) 52.6% (71) 47.4% (64)
Organization 2 (N ¼ 55) 0% (0) 100% (55) 60.0% (33) 40.0% (22)
Organization 3 (N ¼ 45) 0% (0) 100% (45) 40.0% (18) 60.0% (27)
Organization 4 (N ¼ 309) 10.3% (31) 89.7% (271) 88.5% (269) 11.5% (35)

In all organizations, the questionnaires were distributed during group sessions,

facilitated by the research team. In these sessions, employees were informed about the
aim of the study. More specifically, we explained our interest in contemporary
employment relationships and how these are experienced. The participants completed
confidential questionnaires during working time. The questionnaire was accompanied
by a letter from the human resources (HR) manager, stressing confidentiality as well as
the importance of the study for all parties involved.

Respondents
More than one out of four respondents (27.5%; N ¼ 148) was employed temporarily.
The vast majority of those (92.7%) had a fixed-term contract. In line with the OECD
(2002, p. 170), this refers to jobs for which ‘the termination is determined by objective
conditions such as reaching a certain date, completion of an assignment, or return of
another employee who has been temporarily replaced’. The remainder of this group
was temporarily employed by an agency. These employees were instructed to fill out
questions regarding the organizations they performed work in at that time. Permanent
employees are those employed on open-ended contracts.
White-collar workers dominated the sample (73.2%). More specifically, 23% of the
total sample was employed as clerical staff (e.g. secretaries), 45% as professional
(e.g. nurse), and only 5% had a management function. About one in four employees
(26.8%) were employed as blue-collar workers. More than half of the respondents (55%)
went to college (higher education or university). The percentage of respondents across
age groups was balanced, with a mean age of 37 years. Finally, more women (60%) than
men (40%) participated. This may reflect the large hospital sample, typically employing
a majority of female workers.
The permanent and temporary sample differed on important background
variables. First, the mean age for permanents was 39 years, for temporaries 29,
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400 Nele De Cuyper and Hans De Witte

Fð1; 524Þ ¼ 112:73; p , .01. The percentage of non-permanent workers strongly

decreased with age, with a breakpoint at age 30. The groups also differed with regard to
average weekly working hours, Fð1; 535Þ ¼ 7:60; p , .01, with permanents and
temporaries working 36 and 38 hours per week, respectively. Furthermore, fewer
people were largely dependent on the income of temporaries (M ¼ 0:88) as compared
with permanents (M ¼ 1:58), Fð1; 465Þ ¼ 4:19, p , .01. Mean age at completion of
education did not differ between the contract-based groups, Fð1; 537Þ ¼ 1:57; ns.
Furthermore, no gender differences were found, X 2 ð1; N ¼ 539Þ ¼ 1:14; ns.
Measures
Unless stated otherwise, all scales reported in this section were found to have single-
factor structures (PCA, varimax rotation). Information about means, standard
deviations, and correlations between scales is reported in Table 3.

Table 3. The correlation matrix

M SD 1 2 3 4 5 6 7 8 9

1. Type of contract 0.28 0.45

(temporary)
2. Job insecurity 2.41 0.91 .54**
3. Job satisfaction 4.04 0.65 .00 2 .14**
4. Life satisfaction 5.51 0.95 .03 .01 .27**
5. Organizational 5.33 0.96 .02 2 .07 .61** .21**
commitment
6. Self-rated 4.07 0.43 2.10* 2 .10* .33** .26** .34**
performance
7. Relational PC 3.15 1.67 2.11* 2 .13** .10* .01 .13* .09*
(content)
8. Transactional PC 2.44 1.51 .05 .05 .18** .18** .23** .19** .56**
(content)
9. Relational PC 4.99 1.15 2.07 2 .23** .42** .19* .34** .24** 2 .03 2.11
fulfilment
10. Transactional PC 4.98 1.37 .31** .14* .42** .30** .41** .22** 2 .06 .06 .72**
fulfilment

**p , .01; *p , .05.

Control variables
Age (years), educational level (age at completion of fulltime education), weekly working
hours (average working hours per week), and number of dependents (number of persons
that are largely dependent on the respondent’s income) were continuous variables.
Gender (1 ¼ female; 2 ¼ male), and job status (0 ¼ blue-collar worker; 1 ¼ white-
collar worker) were dichotomous variables. Organization was dummy-coded.

Type of contract
A dichotomization was used with permanent employees contrasted to temporary
employees (0 ¼ permanent; 1 ¼ temporary).

Job insecurity
Job insecurity (a ¼ :89) was measured using 4 items (De Witte, 2000), with responses
varying between 1 (strongly disagree) and 5 (strongly agree). The scale includes
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Contract type and job insecurity 401

affective (e.g. ‘I feel insecure about the future of my job’) and cognitive items (e.g. ‘I am
sure I can keep my job’).

Dependent variables
The items of Price (1997) were used to assess job satisfaction (e.g. ‘I find enjoyment in
my job’). Respondents indicated the extent (1 ¼ strongly disagree; 5 ¼ strongly agree)
to which they agree with each of the four items (a ¼ :84).
Life satisfaction (a ¼ :83) was measured with five items, developed for the purpose
of this study (Isaksson et al., 2003). On a scale from 1 (very dissatisfied) to 7 (very
satisfied), respondents answered to the following or similar questions: ‘How satisfied do
you currently feel about your family life?’
Organizational commitment (a ¼ :78) was measured on a scale ranging from 1
(strongly disagree) to 7 (strongly agree), using six items from Cook and Wall (1980), for
example, ‘I am quite proud to be able to tell people who it is I work for’.
Self-rated performance was measured on a scale from 1 (very badly) to 5 (very well),
relying on the items of Abramis (1994). Respondents rated the quality of their work
performance during the last working week on nine work related aspects (a ¼ :74), for
example with regard to making decisions, or taking initiatives.

The psychological contract

We developed 14 items on the psychological contract content for the purpose of this
study, based on factor analyses of earlier instruments (Isaksson et al., 2003).
Respondents were asked to indicate whether (yes ¼ 1) or not (no ¼ 0) the
organization promised or committed itself to a diverse range of promises. Factor
analyses (principal components, varimax rotation) on these items revealed a three-factor
structure, together accounting for 56% of the variance. The first factor included five
items that were relational in nature, with alpha equalling .74. The items related to
promises with regard to interesting work, a reasonably secure job, good pay for the
work you do, a job that is challenging and career prospects. The second factor (a ¼ :78)
included four transactional items: pay commensurate with the level of your
performance; fair treatment by managers and supervisors; a safe working environment;
and possibilities to work together in a pleasant way. The third factor was difficult to
interpret. It included five promises (a ¼ :79): organizational flexibility in matching
demands of non-work roles with work; help in dealing with problems you encounter
outside work; participation in decision-making; allowing to participate in important
decisions; and opportunities to advance and grow.
When answering ‘yes’ to an item, a question on fulfilment followed: ‘To what extent
has this promise or commitment been kept?’ Answers could vary from 1 (not at all) to 7
(totally). A mean value was calculated for each person as an indicator or degree of
contract fulfilment. This was done separately for the relational (a ¼ :70) and the
transactional (a ¼ :90) scale. A higher score points to a higher degree of fulfilment.

Analyses
ANOVAs were used to test for contract-based differences on psychological contracts
(H1), and on the outcomes (job satisfaction, life satisfaction, organizational
commitment, and self-rated performance; H2). Hypotheses 3 and 4 were tested using
regression analyses, applying list-wise deletion with slightly smaller samples as a
consequence. Regressions are performed separately for all dependent variables.
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402 Nele De Cuyper and Hans De Witte

The third hypothesis, that relational but not transactional psychological contract
fulfilment mediates the relation between job insecurity and outcomes, was tested by
regressing (1) psychological contract fulfilment on job insecurity, (2) the outcomes on
job insecurity, and (3) the outcomes on both job insecurity and psychological contract
fulfilment variables (Baron & Kenny, 1986). Conditional for mediation is that (1) job
insecurity predicts psychological contract fulfilment; (2) the third regression equation
shows job insecurity to have a smaller effect on the outcomes than in the second
regression, while (3) psychological contract fulfilment has a significant effect. When the
regression was indicative of a mediator effect, the Sobel test (Sobel, 1982) was used to
assess the extent to which psychological contract fulfilment carried the effect of job
insecurity on the dependent variables.
For the fourth hypothesis on the interaction between contract type and job
insecurity, the control variables were entered in the first step, type of contract in the
second, and job insecurity in the third. In the final step, the interaction between
contract type and job insecurity was included. The procedure recommended by Aiken
and West (1991) was followed. First, the variables were centred, and then they were
multiplied. When interactions proved significant, job insecurity levels were
distinguished using a median-split, resulting in either ‘low’ or ‘high’ insecurity.

Results
Type of contract and psychological contract types
A one-way ANOVA of the relational scale yielded significant differences between
temporaries and permanents, Fð1; 492Þ ¼ 5:70, p , .05. With the maximum score
being 5, permanents and temporaries reported on average 3.25 and 2.85 promises,
respectively. No significant difference was found for the transactional scale,
Fð1; 492Þ ¼ 1:04, ns, with permanents reporting on average 2.39, and temporaries
2.56 transactional promises. As age might be crucial in explaining differences between
temporaries and permanents, it was included in an ANCOVA. We observed similar
effects: we found significant differences between temporaries and permanents for the
relational scale, Fð1; 492Þ ¼ 11:81, p , .01, but not for the transactional scale,
Fð1; 487Þ ¼ :08, ns. Hypothesis one is partially corroborated.

Type of contract and outcomes

No significant differences between temporaries and permanents were found for job
satisfaction, Fð1; 533Þ ¼ :00, ns; Mtemporary ¼ 4.04; Mpermanent ¼ 4.04), life satisfaction,
Fð1; 523Þ ¼ :33, ns; Mtemporary ¼ 5.55; Mpermanent ¼ 5.50), and organizational commit-
ment, Fð1; 527Þ ¼ :26, ns; Mtemporary ¼ 5.38; Mpermanent ¼ 5.33). The confidence
intervals strongly overlapped, suggesting that differences between groups are probably
not meaningful. Traditional expectations on the detrimental effect of temporary
employment were validated for self-rated performance only, Fð1; 522Þ ¼ 4:86, p , .05.
Permanents scored on average 4.10, while temporaries scored 4.01.

Psychological contract fulfilment and job insecurity

Job insecurity was negatively associated with the fulfilment of relational promises
(b ¼ 20:27, p , .05), but not with the fulfilment of the transactional psychological
contract (b ¼ 0:02, ns). In addition, job insecurity was negatively related to all outcomes
(job satisfaction: b ¼ 20:17, p , .01; life satisfaction: b ¼ 20:16, p , .01; organiz-
ational commitment: b ¼ 20:16, p , .01; self-reported performance: b ¼ 20:14,
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Contract type and job insecurity 403

p , .05). Furthermore, relational psychological contract fulfilment was positively related

to job satisfaction, life satisfaction, organizational commitment, and self-rated
performance after controlling for contract type (Table 4). In line with conditions for
mediation, job insecurity no longer predicted the outcomes when adding relational
psychological contract fulfilment (Table 4). The Sobel test was significant at the 0.05 level,
which supported the indirect effects of job insecurity through relational psychological
contract fulfilment on all outcomes ( job satisfaction: z ¼ 22:24; organizational
commitment: z ¼ 22:13; life satisfaction: z ¼ 21:98; self-rated performance:
z ¼ 22:19). No mediation was found for transactional psychological contract fulfilment,
since it was not related to job insecurity.

Table 4. Summary of hierarchical regression analysis: mediation by relational psychological contract

fulfilment between job insecurity and outcomes

Job Life Organizational Self-rated

satisfaction satisfaction commitment performance

Step 1
Organization 1 2.07 .45** 2 .07 .16
Organization 2 .00 .39 .07 .23
Organization 3 .10 2 .00 .21 .05
Job status .10 .03 .09 2.09
Working hours 2.11 2 .06 .07 .03
Age 2.05 2 .22* 2 .07 .09
Gender 2.13 2 .09 2 .03 2.07
Education 2.20 .08 2 .19 2.10
Dependents .22* .07 .21 2.00
Step 2
Job insecurity 2.13 2 .07 2 .07 2.03
Step 3
Relational PC fulfilment .49** .30** .38** .29**
R2 adj .23 .19 .13 .03
R2 .31 .26 .22 .12
R2 change step 1 .09 .17* .10 .04
R2 change step 2 .04* .02 .01 .01
R2 change step 3 .19** .08** .11** .07**

**p , .01; *p , .05.

Type of contract, job insecurity, and outcomes

Regression analyses found temporary employment to be an important predictor of job
insecurity (b ¼ 0:39; p , .01). However, contract type did not predict job satisfaction
(b ¼ 0:06; ns), life satisfaction (b ¼ 20:07; ns), organizational commitment (b ¼ 0:04;
ns), or self-rated performance (b ¼ 20:09; ns). Moreover, controlling for control
variables and contract type, regression analyses revealed the adverse relationship
between job insecurity and all outcome variables (job satisfaction: b ¼ 20:23, p , .01;
life satisfaction: b ¼ 20:17, p , .05; organizational commitment: b ¼ 20:20, p , .01;
self-rated performance: b ¼ 20:16, p , .05).
However, our hypothesis concerned the interaction between contract type and job
insecurity. The regression analyses are summarized in Table 5. The interaction term
proved significant for job satisfaction and organizational commitment, but not for life
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404 Nele De Cuyper and Hans De Witte

Table 5. Summary of hierarchical regression analysis: interaction of contract type and job insecurity on
the outcomes

Job Life Organizational Self-rated

satisfaction satisfaction commitment performance

Step 1
Organization 1 .05 .38** .05 .07
Organization 2 2.06 .18 2.00 .02
Organization 3 .06 .07 .11 .03
Job status1 2.04 2 .02 2.00 2.10
Working hours .01 2 .04 .16** .00
Age 2.02 2 .21** 2.03 2.02
Gender2 2.17** 2 .07 2.12* 2.07
Education .04 .01 2.11 2.07
Dependents .10 2 .01 .07 .03
Step 2
Contract3 .03 2 .05 .03 2.08
Step 3
Job insecurity 2.29** 2 .18* 2.24** 2.19*
Step 4
Contract* job insecurity .28** .10 .19** .12
R2 adj .10 .09 .06 .02
R2 .13 .12 .09 .06
R2 change step 1 .05 .10** .05* .03
R2 change step 2 .01 .00 .00 .01
R2 change step 3 .03** .02** .02* .02*
R2 change step 4 .05** .01 .03* .01

**p , .01; *p , .05.

1
0 ¼ blue-collar worker, 1 ¼ white-collar worker.
2
1 ¼ female, 2 ¼ male.
3
0 ¼ permanent, 1 ¼ temporary.

satisfaction and self-rated performance. The impact of job insecurity still was significant
after introducing the interaction term. Furthermore, some control variables added in the
prediction of the outcomes: gender proved important in predicting job satisfaction and
organizational commitment, with males reporting lower scores. The number of working
hours was positively related to organizational commitment. Age was negatively related
to life satisfaction, while membership to the first organization was positively associated
with life satisfaction.
A next step is to investigate the direction of the interaction effects. We expected job
insecurity to be problematic for permanents but not for temporaries. On the job
satisfaction scale, permanents experiencing low job insecurity scored on average 4.12,
those experiencing high job insecurity scored 3.87. This difference proved significant
(t ¼ 3:70, df ¼ 380, p , .01). For temporaries, job satisfaction scores did not differ
according to the level of job insecurity (low insecure: M ¼ 4:01; high insecure:
M ¼ 4:04; t ¼ 2 .21, df ¼ 143, ns). This is illustrated in Figure 1.
Similarly, high insecure permanent workers were significantly (t ¼ 2:79; df ¼ 387,
p , .01) less committed (M ¼ 5:12) as compared with their low insecure colleagues
(M ¼ 5:41). In contrast, feelings of insecurity did not affect temporaries (low insecure:
M ¼ 5:26; high insecure: M ¼ 5:40, t ¼ 2:72, df ¼ 141, ns).
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Contract type and job insecurity 405

4.15

4.12
4.1

4.05
4.04

4 4.01

3.95

3.9
3.87
3.85
Low job insecurity High job insecurity
permanent non-permanent

Figure 1. The interaction between type of contract and job insecurity for job satisfaction.

Discussion
Overall, this study aimed to advance understanding of the consequences of being
temporarily versus permanently employed, and to consider job insecurity as perhaps the
most important variable intervening in this relationship. To this end, multiple outcomes
were considered. Traditional theoretical frameworks suggest a mediation model:
predictions are based on the established harmful effects of job insecurity, and its high
association with temporary employment. In contrast, psychological contract theory is
based on a moderation model that may explain (1) the inconsistent and inconclusive
observations of the effects of contract type and (2) the puzzling role of job insecurity in
this respect.
Psychological contract theory predicts contract-based differences in perceptions of
what the employer is obligated to provide. Our results validated the hypothesis of more
relational promises among permanents (Hypothesis 1a). The number of transactional
promises did not differ between groups (Hypothesis 1b). However, this does not change
our argumentation that permanents and temporaries hold different expectations against
which the employment relationship is evaluated. Accordingly, and in line with previous
research, we did not find clear-cut differences between temporaries and permanents on
job satisfaction, life satisfaction, organizational commitment, and self-rated performance.
In fact, given the highly overlapping confidence intervals, we suggest that contract-based
differences, if existent, may not be meaningful. Results validated our third hypothesis on
the indirect effects of job insecurity through the violation of the relational psychological
contract. Job insecurity was found to be unrelated to the violation of the transactional
psychological contract. Considering the results related to Hypothesis 1, job insecurity
was expected to be highly detrimental for permanents. We observed interaction effects in
the expected direction for job satisfaction and organizational commitment: permanents
feeling highly insecure were lower on job satisfaction and organizational commitment as
compared with their low insecure colleagues. No such differences were found for
temporaries. However, our results did not support a moderating role of job insecurity to
life satisfaction and self-rated performance.
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406 Nele De Cuyper and Hans De Witte

Although the balance of evidence in this study supports a psychological contract

perspective, some of the issues raised need to be addressed in future research. First, the
assumption of distinct psychological contract types that match employment status was
not validated. Rather, results point to a layered model of psychological contract content.
We observed transactional promises to be shared by permanents and temporaries. This
suggests that these promises may be at the core of all psychological contracts, whereas a
long-term engagement results in the formulation of relational promises. It could be
argued that the psychological contract of permanents is preferable to that of
temporaries based on its broader content (e.g. Beard & Edwards, 1995). At the same
time, however, the risk of perceived non-fulfilment may increase with range, especially
so since criteria to define fulfilment for relational promises are open to interpretation
(e.g. De Witte, De Cuyper, Isaksson & Bernhard-Oettel, 2005). To date, the relative
importance of content versus fulfilment is unclear. Possibly, both are crucial and interact
in some way, which may explain mixed results of contract type as found in literature,
and in this study. It might also be that transactional psychological contracts yield
detrimental effects only in the long-term. In this case, transactional psychological
contracting may become harmful with prolonged contract duration. More specifically,
permanents but not (short-term) temporaries may react negatively to transactional
psychological contracts.
Second, the interaction term between contract type and job insecurity added
significantly to the explained variance of job satisfaction and organizational
commitment. However, no such interaction was found for variables reflecting long-
term consequences: life satisfaction and self-rated performance (Table 1). In this regard,
it might be important to take into account the trade-off relationship as reflected in the
outcomes. In the relational deal, job security is exchanged for employees’ loyalty. The
effects of job insecurity may be most pronounced for outcomes related to this deal, such
as job satisfaction and organizational commitment. In contrast, performance and life
satisfaction are not crucial to the relational deal. In fact, performance is fully part of the
transactional psychological contract, possibly explaining the non-significant interaction
term. This interpretation is consistent with the findings reported by Sverke et al. (2003)
in their meta-analysis; job insecurity had a moderate to strong negative relationship with
job satisfaction and organizational commitment, whereas its effect on variables similar
to life satisfaction was weak to moderate, and on self-rated performance non-significant.
Limitations
There are some drawbacks to this study. First, fixed-term contract workers dominate the
sample of temporary workers. While this accurately reflects the Belgian situation, we
should be careful in generalizing results to countries with a relatively high share of for
example on-call workers, temporary agency workers, day contractors, and so on.
Compared with these workers, fixed-term contract workers generally have contracts of
relatively long duration. Therefore, they might be more familiar with the relational
psychological contract as compared with those occupying very short positions. This
implies that results may be more pronounced in samples dominated by short-term
contractors. Future research may want to take into account the heterogeneity of the
temporary workforce, with contract duration as crucial dimension. Based on this study,
we feel that the varied organizational contexts offer some good possibilities of
generalizing findings.
Second, a longitudinal research design is preferable to a cross-sectional design.
Nevertheless, the problem of high turnover among temporaries may hamper the
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Contract type and job insecurity 407

realization of a longitudinal design. The long-term effects of transactional versus relational

contracting may be studied in other populations that are more suitable for follow-up
studies.
Third, the explained variance is low for most outcome variables, especially so when
analysing the combined impact of contract type and job insecurity. Covering employee
perceptions referring to core aspects of both the relational and transactional
psychological contract might enhance explained variance levels.
Furthermore, our data rely on self-reports, which may increase the risks of inflated
relationships due to common method variance. This is especially problematic when
measuring performance. However, it was interesting to observe that contract-based
differences emerged only on this scale. Furthermore, it may not be a major concern
when testing for interactions: common method effects are likely to attenuate rather than
to strengthen interaction (Conway & Briner, 2002). Furthermore, type of contract as
one of the central variables in this study is descriptive in nature, which may at least
partially counteract the threat of common variance.
Finally, we are well aware that using the median split procedure to identify high
versus low levels of job insecurity may distort the results: the upward level of job
insecurity as defined for the whole group may be too severe for permanent workers. In
line with psychological contract theory, job insecurity standards should be constructed
to reflect differential standards. Here, however, the median split procedure merely
aimed to illustrate the consequences of applying a single standard.

Conclusions
This study may further the debate on temporary employment. We found evidence that
temporary employment does not need to be problematic in terms of psychological
outcomes. Its impact should not be assessed using the traditional permanent
employment relationship as a reference. That is, expectations related to open-ended
employment cannot serve to develop a standard applicable to other contract types.
Similarly, we found evidence that job insecurity does not need to be universally
problematic in terms of psychological outcomes. Although temporary workers were
found to be more job insecure as compared with permanents, job insecurity did not act
as a stressor for these workers with regard to job satisfaction and organizational
commitment, whereas it did for permanents. Psychological contract theory suggests
that the absence from detrimental job insecurity effects can be generalized from
temporary employment to all workers holding predominantly transactional psycho-
logical contracts. This might challenge future research, as Millward and Brewerton
(1999) assume transactional, rather than relational, psychological contracting to
become increasingly important for all types of employees. In this respect, investigating
long-term effects of transactional psychological contracting might prove fruitful.

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Received 25 August 2004; revised version received 9 May 2005