The temporary staffing industry is generally well-regulated. Regulation varies by market. On a global level, ILO Convention N°181 on private employment agencies, adopted in 1997, defines common minimum standards for private employment agencies. The convention has been ratified by 24 countries worldwide.
Temporary staffing at the national level is often regulated on the one hand by specific regulation regarding the establishment and provision of staffing services and on the other hand by general labour and employment law provisions, complemented by Collective Labour Agreements concluded by representative social partners and self-regulation of the industry by their national, European and global associations. The shared principle and aim of all temporary staffing regulation should be to balance protection of workers and flexibility within the labour market.
Changes to employment and staffing regulation have historically shown to have an impact on the competitiveness and the costs of the staffing industry as temporary staffing can often be substituted easily by other forms of internal and external flexible labour and vice versa. Furthermore, there is a correlation between liberalisation and the size of the professional/executive recruitment sector in each market; in principle the more relaxed the legislative environment, the larger the size of the professional/executive recruitment market. Social acceptance by all stakeholders of temporary staffing is key to further liberalisation and subsequently the development of alternative work arrangements and additional, complementary HR-services.
From time-to-time, legal developments have had an adverse impact on our industry. However, over the last decade the overriding worldwide trend is for further liberalisation of legal restrictions. Legal restrictions for the temporary staffing market can be divided into four categories: maximum length of assignments, reason of use for the assignment, set levels of pay and other benefits or sector prohibitions. The positive contributions – in terms of job creation and economic growth – that the staffing industry brings to the labour market are being recognised more and more. However, in several countries outdated restrictions are still in place, often dating back to the sixties and seventies. The industry is actively calling to lift these restrictions.
The UK, USA and Australian recruitment markets are the most liberal in the world. Northern continental Europe has long-established recruitment markets. Here social partners, especially unions, play a more active role in labour market regulation. In the Netherlands and Germany, Collective Labour Agreements for the staffing industry are in place which, given the structure of these markets, are essential in that they set wage levels for temporary workers and, thereby, help to promote flexibility in labour conditions. Without such an agreement the wage level would be on a par with permanent workers, as is the case in Southern and Central European markets. In these regions, as is the case in Japan, India and China, recruitment is a relatively new industry sector and legislation is still maturing.
In 2007 several legislatory changes and initiatives have taken place. In Europe, Portugal has passed legislation that lengthens the duration of the temporary work contract. However, it also brings some new administrative burdens. Poland has put in place legislation – in line with the relevant EU-directive – that shares responsibility of health and safety measures between the staffing industry and its clients. In the UK, Managed Service Company legislation has been introduced. This impacts the ability of temporary workers to use certain limited company arrangements. It could mean more temporary workers opting to be contracted directly by agencies. Furthermore, a foreseen change in the Working Time Regulation means that temporary workers will be entitled to 24 days holiday annually instead of the regular 20 now in place.
At an EU-level, the Portuguese Presidency tabled the draft Directive on Agency work for the Council meeting of December 2007. The last discussion on the draft in Council had previously taken place in 2004. However, the Council remained divided on the draft and didn’t reach an agreement. The main bone of contention is the introduction of the equal treatment principle at the user company level, unless there is a Collective Labour Agreement. This principle does not fit the UK and Irish legislative systems. The discussion in Council is expected to continue under the Slovenian and French presidencies in 2008. While an EU Directive might impair the liberal UK and Irish markets, the positive aspect of the draft Directive could be the obligatory revision of all unjustified restrictions on temporary agency work elsewhere in Europe.
In Australia there have been increased regulations on employers who seek to sponsor foreign skilled labour, with penalties for being party to a breach of workers’ visa conditions or employing those not without work rights. Furthermore, recruitment companies have been subjected to greater controls on how many skilled workers they can sponsor and are required to meet and/or maintain a certain level of spending on training and education of local workers. This has placed pressure on the staffing industry and some sectors of the economy like nursing and healthcare.
* Industry does not include the construction sector as employment agencies face restrictions.
Source: EuroFound, EuroStat, Ciett, Federgon, Prisme, BZA, ABU, REC, AGETT, German State Statistics, ONS, Prognos
