Netherlands (% 40 20 0 -20 -40 40 20 0 -20 -40 40 20 0 -20 -40 5 MONTHS (%) 4 2 0 -2 -4 4 0 -2 -4 4 2 0 -2 -4 S1 pain (% ) 40 20 0 -20 -40 60 40 20 0 -20 25 0 -25 -50 3 > 3 > 9 MONTHS NA 4 2 0 -2 -4 6 4 2 0 -2 2.5 0.0 -2.5 -5.0 J M AM J J AS O N D J F M AM J J AS O N D -75 J F M AM J J AS O N D J F M AM J J AS O N D -7.5 2009 2010 2009 2010 Months between recovery Total employment year-on-year growth (quarterly) of AW vs. employment Agency workers (FTE) year-on-year growth Data only available until August 2010 Source: Ciett national federations, Eurostat, BCG analysis % S
Figure 14 In many countries agency work is being recognised as a lifestyle choice WOULD YOU RECOMMEND AGENCY WORK? CAN AGENCY WORK HELP IN HAVING A BALANCED LIFE? of respondents agreeing with the statement, 2010 100% 83% agreeing with the statement, 2010 100% 80% 60% 40% 20% 76% 74% 69% 62% 55% 49% 42% 80% 60% 40% 20% 60% 58% 38% 35% 35% 0% UK PL BE FR NL IT ES DE 0% NL BE FR IT ES DE Note: AW – agency work Source: Regards croisés sur l’intérim, l’Observatoire des Métiers et de l’Emploi, July 2010 CHAPTER SUMMARY In the new reality of volatile, unpredictable and complex labour markets, the need for private employment agencies to identify openings and manage the transition of workers is has grown The private employment sector offers an array of added-value services to help companies to adapt better and faster to economic cycles and to be able to focus on their core business. They reduce time-lag between recovery and job creation and increase the range of choices and work opportunities for people. 52 66
% 15 10 5 0 % 3 15 2 5 0 0 % % 2.0 15 1.5 10 1.0 5 0.5 0.0 0 % 2.0 1.5 1.0 0.5 0.0 7 the Conference on the Future 1996 1998 2000 2002 2004 2006 2008 2010 1996 1998 2000 2002 2004 2006 2008 2010 1996 1998 2000 2002 2004 2006 2008 2010 of European Labour Source: Ciett, OECD rate TAW penetration rate Markets, Brussels: 2011, 1
would not exist and is particularly effective in placing disadvantaged and groups in society, thereby providing a way for them to start to access job markets and join the world of work. 8 Source: User organisations survey & BCG analysis – April 2011 9 Source: personal inhyrningen sverige, En studie av 500 arbetsgivares anlitande av bemanningsföretag, Almega The research underlines that 74% of user would not consider hiring permanent workers as an alternative to taking on agency workers. In addition, 62% of the companies would choose internal solutions (such as overtime) or not to do the work if they had no access to agency work, resulting in a “no job creation” situation (Figure 16).8 The average length of as- signments (around 3 months) and the high turnover of agency workers prove that these jobs are not substituting permanent ones, but correspond to new ones. A similar survey carried out in Sweden backs up this analysis. Only 19% of respondents considered hiring a permanent employee to be a viable alternative to hiring an agency worker (Figure 17).9 represented flexibility
Figure 18 2010 shows increase of agency workers in the world Agency workers (FTE, '000) 10000 9000 8000 7000 6000 5000 4000 3000 2000 1,000 0 5882 2002 2003 2004 2005 2006 2007 2008 Consistent group with previous strategic report; includes Austria, Belgium, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, UK 2. Rest of the World includes Argentina, Australia, Brazil, Chile, Japan, Mexico, South Africa, South Korea, USA 3. 2009 data estimated for Spain 4. 2010 data estimated on the basis of available data and extrapolated to all other countries 4. Forecast base on analyst revenue estimates for the industry Note: Some data points for individual countries are based on industry estimates; Aworker figures measured in daily average numbers [in full-time equivalents] Source: Ciett national reports; industry estimates; Analyst estimates; BCG analysis Figure 19 Number of agency workers in Europe is expected to reach pre-crisis level in 2011 European agency workers1 (FTE, '000) 4000 3500 3000 2955 +15% 3535 3925 2500 2739 2000 1500 R 260 41
Approximate number of locations 6,000 + ~3,000 4,000 employment service 2,000 3,500 RESULT Job seekers see the system as complex due to the contractual agreements that are in place, but clearly see and value the advantages and benefits arising for them Satisfaction levels in general are very high among all stakeholders and especially governments clearly value the of the system and the positive impact it has on the public budget Compared to the situation before outsourcing, the current system is showing about three times the output performance with approximately one third of costs Australia among OECD countries with lowest level of public funding of employment services 0 Before system Source: Expert interview S. Sinclair, CEO NESA (Australian National Employment Services Association), Australian Government discussion paper "The future of Employment Services in Australia", 2008
CHAPTER SUMMARY As a labour market intermediary, the private employment sector is able to better match sup- ply with demand in the workplace by creating jobs, undeclared work and reducing both frictional and structural unemployment. The industry supports governments in implementing active labour market policies, especially through cooperation schemes with the public employ- ment services.
Through the effect agency work provides access to for many people and thereby increases labour market and reduces Based on Ciett and The Boston Group in 2010 more than 12 million workers in Europe used the services of private agencies to enter the labour market, change jobs or move upwards towards positions (see Figure 33). segment tion stone
Figure 39 PrES help deal with seasonality in construction sector Illustration: Switzerland FLUCTUATIONS OF AGENCY WORK IN LINE WITH EMPLOYMENT IN CONSTRUCTION Employment in AGENCY WORK AS IMPORTANT FACTOR FOR FUNCTIONING OF CONSTRUCTION SECTOR IN SWITZERLAND Agency work is an important element of the Swisstempindex Construction ('000) construction sector in Switzerland 300 340 320 300 100 companies are able to balance their strong seasonal variations in demand The importance of agency work for the construction sector can be observed when looking at different figures – Agency work penetration rate in the construction Swisstempindex (indexiert) Employment in construction sector (’000) 0 280 in main construction industry) compared to only 1.5% in the total Swiss labour market About 19% of agency work assignments are within the construction sector Source: Swissstaffing CASE STUDY 8: PRIVATE EMPLOYMENT SERVICES AND SEASONALITY IN THE NETHERLANDS The Netherlands postal service experiences a surge in demand and mail volumes during the Christmas and New Year period and is not equipped to
Figure 45 Agency workers receive more training than term workers Netherlands example SHARE OF WORKERS UNDERGOING TRAINING TRAINING DIFFERENCES BETWEEN WORKERS in a given year 20 15 13% 10 +86% 7% 5 0 +23% a structure hence get less training benefits Agency workers are usually less qualified than permanent workers when starting Agency workers and permanent employees starting without qualification undergo the same amount of training Agency workers in training mainly hold intermediate positions and undergo training to new job opportunities Agency workers often undergo longer training 70% of agency workers undergoing training are younger than 35 whereas only 50% of permanent workers trained are younger than Fixed term workers Temporary agency workers Permanent employees years Note: Students that simultaneously work as AW are excluded from this statistic Source: Trainingmonitor agency work sector – Research commissioned by STOOF – April 2010 INCREASING SKILLS MOBILITY TO ADDRESS DEMOGRAPHIC CHANGES The coming decades will see an increasing global mismatch of talent and employment as ag- ing populations in some parts of the globe are balanced by newly emerging economies in other regions. The northern hemisphere will experience a talent shortage with the USA needing an extra 25 million workers by 2030 in order to sustain economic growth, while Europe will need 35 million extra workers by 2050. Meanwhile, in many southern hemisphere countries, there will be workforce surpluses, with a projected 45 million new entrants in global job markets each year. This will be compounded by a talent gap in developing countries with untrained work- ers available (see Figure 46). Private employment services increase mobility in the labour market and in doing so help to meet the diverse needs of labour markets. Thanks to their global presence and network of branches all around the world, they can deliver geographic mobility and organise work migration in a secure way. Through their extensive knowledge of local labour markets, private employment services are able to source existing talent in almost any country and arrange for these workers to work abroad. They provide this service swiftly and if the workers do not have all the skill sets needed they will arrange for immediate training to bring them up-to-speed. The ability to provide mobility across geographies is well illustrated by the case of the private employment services in Poland supplying skilled workers to Norway
Figure 55 A voucher system for self employed cleaning workers PrES play a central role in this innovative system created and implemented in Belgium CITIZEN CAN BUY 500 VOUCHERS PER YEAR2 TO USE FOR HIRING WORKERS AGENCY PROVIDES WORKERS, TAKES CARE OF ADMINISTRATIVE TASKS AND CONTROLS COMPLIANCE PROVIDE SERVICE AND CONVERT THE VOUCHERS INTO MONEY (INCLUDING A GOVERNMENT SUBSIDY) USER AGENCY WORKER Advantages for the user Fulfil a need of users Tax deductible vouchers Trust and transparency provided by agency intermediary without administrative hassle Diminution of risks (legal, social) Role of PrES1 PrES do all the administrative handling and employ the workers Through extensive experience and network, PrES ideally positioned to play the agency role PrES companies recognition bring trust and reliability to the system Advantages for the worker The worker is hired by the agency and get an official working contract Transparent salary Socially protected (i.e insurance, retirement benefits,...) 1: 70% of workers go through commercial agencies dominated by PrES. The other 30% go through social action centres, communal centres, physical persons and local PES 2: Except certain groups who can get up to 2000 vouchers per year (single parent families, handicapped persons,...) Source: Onem, Federgon, 2010 Figure 56 The voucher system is a great success in Belgium 97 million vouchers reimbursed in 2010 OUTCOMES OF THE PROGRAM GROWTH IN DEMAND AND USERS UNTIL 2009 143,950 active workers in 2010 2,499 authorized agencies in 2009 97 million vouchers reimbursed in 2010 Reduce unemployment and provide stepping stone to permanent employment Avoid illegal labour and abuses – 67% of users were using illegal labour before this system existed # of vouchers reimbursed (M) 80 60 40 20 # ('000) 800 600 400 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Figure 62 Results of Regulatory Index Significant differences between countries regarding index score PrES Regulatory Index score 100 93 89 Right to: Contribute to labour market policies 80 30 86 27 24 85 83 80 79 19 20 76 76 76 76 75 74 73 23 15 14 69 67 66 60 20 18 15 40 18 24 20 15 10 20 18 18 19 24 15 18 18 20 21 16 15 18 22 14 19 13 15 17 63 59 58 10 21 9 17 11 8 57 57 56 13 13 17 3 54 49 13 46 10 3 45 4 41 38 Ø 17 14 20 20 13 14 18 17 13 8 13 12 10 15 18 17 14 11 3 11 15 16 12 4 8 15 3 6 12 11 27 30 30 0 27 30 30 27 25 30 30 23 23 27 27 30 23 27 27 23 23 27 17 22 23 20 2 20 20 18 3 8 Note: Further clarification outstanding for Eastern European countries Source: National federations, BCG analysis 1
Figure 64 The six types of environment where PrES operate Important sub-groups based on nuances of social systems MARKET TYPE 1 Europe •UK CHARACTERISTICS •Rapid AW development, with appreciable drop-off in the crisis Market driven Social 2 Western Europe 3 •US, New •Netherlands •Switzerland, Austria, Germany •Sweden, Norway, •Open regulatory environment with limited restrictions •Liberal economies favoring over security •Significant degree of AW penetration in relatively mature markets •Moderately regulated, varying balances of and security •Labor market organized and regulated by collective agreements between social partners •Historically low AW penetration and slow industry development based Nordics 4 Asia 5 Western Denmark, Finland •Japan •France, Belgium, •Unique Nordic social and economic system •Generally liberal economies but high value on security and social acceptance challenges •Penetration depending on level of industry development, ranging driven 6 markets Europe Medi- Eastern Europe Lat Am Asia Luxembourg •Italy, Greece, Spain, Portugal •Eastern Europe •Latin America •India, China from below to above average •Highly regulated, weighted towards job security over •Historically labor markets with high unemployment relative to Social dialogue peers •Nascent industries with AW legally recognized only recently •Regulatory policies still in development •Economic policies and market dynamics still evolving The legislator driven model, characterised by countries in Western Europe and the Mediterranean where average agency work penetration is low with a focus on job security over and his- torically high unemployment compared with countries operating within the social dialogue model. The Emerging Markets model could be seen in countries across Europe, Asia and Latin America and was characterised by a very recent recognition of private employment agencies and still evolving regulatory policies as well as economic and market dynamics. LABOUR MARKET EFFICIENCY IS RELATED TO THE LEVEL OF DEVELOPMENT OF PRIVATE EMPLOYMENT SERVICES To assess overall of labour markets, the Boston Consulting Group and Ciett jointly developed the “Labour Market Index”. The index rankings are based on 6 criteria calculated for each country: overall employment rate (% working age population 15-64), em- ployment rate 15-24, population15-24), Employment rate (% population 55-64), annual hours worked (per person employed), labour participation rate (% of working age population) and unemployment rate (% of labour