The President of the Board of Trade, Margaret Beckett, told the festival that the growing number of contract staff had not been well-managed; their potential had "not blossomed as it should".
Instead, she noted, many such workers - whose contracts vary between two months and a few years - have given up science altogether or moved overseas.
Dr Tom Whiston, from the Science Policy Research Unit at the University of Surrey, said yesterday: "The particular problem that short-term workers face is that they haven't got any career prospects ... A lot of contract researchers feel they are treated as second-class citizens." He puts the number of scientists on short-term contracts at around 5,000.
Anecdotal evidence also suggests that many people with science training abandon it and move to other professions which have more stable career structures and clearer promotion paths. Though Britain's universities turn out thousands of engineers and scientists every year, companies frequently complain of a shortage of appropriate staff.
Even for those who stay in the business, the contract renewal process may also be counter-productive: Dr Whiston's research shows that people are more productive (in terms of papers published) in the second half of their contract than the first, irrespective of the length of contract. That means the settling-in period at the start of a contract is largely wasted - which implies that fewer changes of contract would be more beneficial.
Mrs Beckett said that a review is now under way to identify "best practice" in "managing and developing a valuable resource". She held up staff management costs, maternity benefits and long-term sickness pay as important elements of contracts which should be borne by universities, not the researchers.
Dr Whiston said, "There are some possible benefits to contracting: it means you aren't tied to one area, as happens with academic tenure. It also encourages entrepreneurship." But he agreed that the disadvantages include the loss of crucial knowledge when people move out of science.
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