Temp workers lead EU, US recovery

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A sharp increase in temporary work – a traditional leading indicator of in the early phase of recovery – shows that many European countries and the United States are pulling out of recession, an industry association said yesterday (23 June).

The temporary work data give an advance snapshot of how the economy is likely to develop and are typically followed some six months later by similar moves in overall employment numbers, said Denis Pennel, managing director of the European Confederation of Private Employment Agencies (Eurociett).

In many European countries hours worked by temporary workers are showing double-digit growth over a year earlier, although they are still below pre-crisis levels. "Definitely you can see green shoots of recovery, now even double-digit figures," he said.

"Since summer 2009 we are now experiencing positive trends for the largest markets in Europe and the US," he said.

The latest US jobs data showed unemployment at 9.7% in May. Recent US statistics have been skewed by temporary hiring for the national Census, but the representative organisation said that did not affect their data because those workers are employed directly by the federal government.

Euro zone employment stabilised in the first three months of the year after a series of falls and was unchanged from the previous quarter. The year-on-year contraction slowed to 1.2% from 2.0% in the last quarter of 2009.

Latest data showing the hours worked by temporary workers – and hence changes in business activity – show increases for April over a year earlier of 16% in France, 10.7% in Belgium and 18.1% in Italy.

In Germany, the year-on-year increase in March was 23.6%, and in Spain it was 13% in February.

The Netherlands posted its first increase in one-and-a-half years in May, with a 9% rise.

Pennel said the classic recovery affected industry first then services, and the Dutch economy's greater concentration on services meant it was lagging the recovery in its neighbors.

Increased demand meant companies were taking on more staff, but typically they prefer the flexibility of temporary workers in the early phase of a recovery, he said.

Once the recovery appears permanent, such temporary employment will translate into permanent jobs over the subsequent 6-12 months, he said.

Comparable data are not available for Britain, the biggest European temporary employment market, but it is clear there is no positive trend there yet, he said.

For the United States, which entered the recession in late 2007/early 2008, the recovery is more advanced, and temporary hours worked in May were 19% higher than a year earlier.

Eurociett does not have data for Greece, where tight regulation means temporary work accounts for only 0.2% of the workforce against an EU average of 1.7% in 2008. But Pennel said he hoped this would change under an EU directive of 2008 due to be translated into national law by the end of 2011.

(EURACTIV with Reuters.)

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