Temp chief: ‘Agencies will see early green shoots’

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An upturn in activity for temporary job agencies will be one of the first signs of recovery in the employment market, according to Denis Pennel of Eurociett, the European Confederation of Private Employment Agencies. But with business currently down 40% in some countries, there is no hint of an upturn.

Denis Pennel is managing director of Eurociett, the European Confederation of Private Employment Agencies.

To read a shortened version of this interview, please click here.  

How has the downturn affected your members? 

The agency work industry has been severely affected by the crisis, but with significant discrepancies according to countries. The most-affected markets are the ones where the use of agency work is most developed in manufacturing and construction, such as Spain, France and Germany. On the other hand, countries where the job market is more services-oriented – like Belgium, the Netherlands and the UK – have fared better. 

Is it likely that your industry will be among the first to feel the recovery when it happens? 

By providing external workforce flexibility, agency work helps companies to face global competitive pressure, allowing them to adapt their cost base and workforce level. Temporary job agencies can quickly draw on their large pool of workers to help fill unpredictable staff requirements and provide organisations with appropriate workers’ profiles to adapt skills. 

As a result, the agency work industry will be the first one to be able to create jobs as soon as the economy recovers. As agency work is the preferred choice of companies to manage their output fluctuations (seasonal and cyclical peaks), they will first recruit agency workers to meet their increase in orders, waiting to see whether these are short-term or long-term ones. 

You contribute to the EU’s monthly jobs monitor. What kind of trends have you seen over the past 12 months? 

The monthly figures provided by Eurociett to the European Commission show a decrease of the total number of agency workers (reaching -40% in some countries). 

However, it should be kept in mind that the agency work industry still employs three million people on a daily basis (full time equivalent jobs) and that 80% of these jobs would not have been created if agency work were not available as a flexible workforce solution for companies. 

Agency work keeps on creating jobs that would not exist otherwise and continues – even if it is to a lesser extent – to provide new employment opportunities for thousands of workers. 

What kind of clients are most likely to use the services of a recruitment agency? SMEs or big companies?

On average, the use of agency work is today more developed within large companies than SMEs (with the exception of the UK market). However, it is first and foremost a ‘proximity’ business, meaning that even though your customer is a large multinational company, you have to deliver services at the local level of its plant. 

This is why temporary work agencies have an unmatched knowledge of the supply and demand of work at local level. Thanks to their network of tens of thousands of branches, they can immediately identify job vacancies and source candidates to fill them. 

What are the benefits for SMEs of using temporary workers? 

The use of agency work within SMEs is probably under-developed because of its price perception. However, when you take into account all the hidden costs of recruitment (an advert placed in a newspaper, a review and selection of CVs, interviews with candidates, the administrative burden), the use of an agency as a way to recruit a temporary worker is not more expensive than recruiting a person with a fixed-term contract. 

In addition, temporary work agencies are able to react quicker and to find the right person with the right skills at a very short notice. 

What about the drawbacks? How does this trend affect employee loyalty and organisational memory? 

Private companies and public organisations have no choice today but to have part of their workforce flexible. Compared to other forms of flexible work, agency work is the one which provides the most security for both workers and companies. As a recently published Eurofound report* shows, agency work is a “highly regulated industry involving a mix of legislation, collective labour agreements and instruments of self-regulation at national level”. 

As a result, agency workers benefit from rights and working conditions that are unmatched: end-of-assignment compensation, better access to vocational training (especially for low-skilled people) through the setting up of sectoral bipartite training funds, complementary health and pension schemes. These unique benefits help to make up for their temporary contracts and have increased their loyalty. 

*’Temporary agency work and collective bargaining in the EU’ – January 2009 – Eurofound. 

Is it likely that more companies will use temporary agency workers in future, and what are the implications of this for society? 

Today, the penetration rate of agency work (i.e. the ratio between the total number of agency workers and the working population) reaches 2% in the EU. This rate will indeed probably increase in the future, but not to the detriment of permanent contracts. History shows that agency work has developed over the last years over the number of fixed-term contracts (i.e. people directly employed by a company on a temporary basis). 

Because agency work has become more cost-efficient and is more reactive compared to other forms of external flexibility, companies are most likely to use more intensively the services provided by temporary work agencies in the future. And people willing to work flexibly will also more and more turn to agency work, as it provides a more secure solution to do so. 

How can jobs agencies help get people back into the permanent workforce? 

In most EU countries, a significant share of agency workers were unemployed prior to working through agencies; after 12 months of agency work, their employment rate increases massively (e.g. from 6% to 64% in France, from 44% to 70% in Belgium). 

Agency work acts as a stepping stone to the labour market, facilitating transition between unemployment and work. In addition, a significant part of agency workers (33% is the EU average) obtain an open-ended contract after temping for one year. Agency work also facilitates transitions between temporary and permanent contracts. 

If you could change one policy at EU level, what would it be? 

Despite a growing recognition of the positive role played by agency work at both macroeconomic and individual levels, several outdated and discriminatory regulatory barriers remain, severely hampering the industry’s contribution to a more efficient labour market: sectoral bans (e.g. use of agency work forbidden in the construction sector or in public administrations) and limitations to the range of services provided by temporary work agencies (e.g. prohibition to deliver permanent recruitment services). 

The implementation of the Agency Work Directive, adopted last December, will force EU member states to review their regulations on agency work and to lift the unjustified restrictions. 

In times of economic crisis, policymakers should integrate temporary work agencies into the implementation of their active labour market policies, and promote cooperation between public and private employment services in order to fight unemployment. 

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