How the social impact of private employment services facilitates labour markets

16, December

An opinion by Denis Pennel, managing director, World Employment Confederation Structural changes brought about by ...

An opinion by Denis Pennel, managing director, World Employment Confederation

Structural changes brought about by an ageing population, the increasingly automated workplace and more frequent job creation and destruction are a fact of life in today’s labour markets.   For society to function well however, labour markets also need to remain inclusive, provide jobseekers with quality work, ensure skills maintenance and offer workers adequate social protection.

The private employment services industry is not only acknowledging this evolution but is also creating socially inclusive solutions that support labour markets around the world.  A new report from the World Employment Confederation explores the social impact of private employment services. “Labour market activation, transitions and inclusiveness: The contribution of the private employment services industry”, provides insights into the sector’s contributions in facilitating labour markets and provides examples of initiatives from different countries and regions.

A key finding is that private employment services raise labour market participation. Acting as intermediaries, specialised in matching supply with demand, the global industry found jobs for 54 million people worldwide in 2017, contributing to the UN Sustainable Development Goal 8 of ‘promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’. By reducing barriers to job entry, employment agencies reduce unemployment and support jobseekers in finding their way back into the labour market.

Without temporary work agencies, unemployment rates would be significantly higher – in the Netherlands research shows there would be a 9% rise in unemployment without agency work. The sector is also responsible for a sizeable proportion of job creation. Figures for 2017 show agency work accounted for 24% of new positions in Brazil, 19% in Germany and 12% in France.

Keeping people in employment is in everyone’s interests as long periods of unemployment have been found to have significant detrimental impact on economic wellbeing and future employability. The private employment services sector has introduced schemes around the globe to raise labour market participation. For instance, in the Philippines, a national Job Fair Caravan tours the country offering human resource development activities, training modules and information campaigns.

Working as an agency worker has a positive impact on employment prospects compared to unemployment and almost three-quarters of agency workers are still employed 12 months after their assignment. Agency workers themselves rate it highly – in Switzerland 46% are likely to recommend it to a friend and 92% of agency workers in the US are satisfied or extremely satisfied with their work situation.

A second area where the sector is well placed to support labour markets is in facilitating transitions and mobility. Flexibility is a key feature in today’s workplace reality and efficient labour markets must ensure workforce flexibility and ease transitions between sectors and types of employment contract. Companies appreciate agency work as it allows them to adjust to economic cycles and also to screen potential staff before hiring them full-time. Agency work can provide an effective stepping-stone from part-time to full-time work e.g. in Spain, during the first six months of 2019, over 37% of all new, open-ended contracts were converted from fixed-term contracts. On average one-third of all agency workers are eventually taken on by the client company – 46% in the US.

The industry has expanded its service offering to include services that help people transition between employers and jobs. Career management services such as outplacement are increasingly popular and in 2017 Brazil and Sweden each placed more than 40,000 people and Belgium 13,000.

The sector has a strong record of transitioning workers across sectors: initiatives in the US focus helping military veterans build careers outside of the armed forces; while a scheme to transition athletes into the labour market at the end of their sporting careers has helped over 30,000 individuals in 185 countries.

The third area where private employment services make an important contribution to work is in driving inclusiveness.  Young people, older workers, women, immigrants and the disabled often suffer from discrimination and find it more difficult to enter the labour market. Private employment services are there to support them and ensure that they don’t get left behind. In Japan, where the demographics of an ageing population is putting severe stress on the labour market, agencies have been instrumental in luring older people back into work; in Norway, a dedicated programme aimed at people with disabilities, brings together employers, trade unions, private employment services and the Labour and Welfare department in providing jobseekers with support and training; for young people looking to get a first foot on the employment ladder, the sector provides a bridge into the labour market;  and for students looking to finance their studies, the sector provides part-time work – 20% of agency workers in Belgium and the Netherlands are students, and in Brazil they represent more than one half.

While the majority of agency workers in nearly all markets has a high school diploma or higher, the upskilling of workers is nonetheless an essential service offered by the sector.  World Employment Confederation member companies run schemes to bring disadvantaged people into work – including workers in deprived neighbourhoods in Argentina and refugees and asylum seekers in Europe.

As societal, technological, demographic and economic shifts change the job landscape, so intermediaries such as private employment services will be vital in finding new solutions to smooth labour market transitions and maintain high levels of labour market participation.

About Denis Pennel

Managing Director of the World Employment Confederation, Denis Pennel is a labour market expert with deep knowledge and years of experience relating to employment at global and EU levels. He has published several books in French & English”, describing the new trends in the changing world of work and is a regular keynote speaker at major international conferences.

Follow Denis on Twitter @PennelDenis

About WEC

The World Employment Confederation is the voice of the employment industry at global level, representing labour market enablers in 50 countries and 7 of the largest international workforce solutions companies. The World Employment Confederation brings unique access to and engagement with international policymakers (ILO, OECD, World Bank, IMF, IOM, EU) and stakeholders (trade unions, academic world, think tanks, NGOs). Its main objectives are twofold: to help its members conduct their businesses in a legal and regulatory environment that is positive and supportive; to gain recognition for the positive contribution the industry brings to better functioning labour markets.

Follow WEC on Twitter @WECglobal