By Denis Pennel for staffingamericalatina

The global employment and recruitment industry is recording strong growth and has bounced back following the economic crisis. Data from the recently released Ciett 2015 Economic Report shows the sector grew by 9.6% in 2013 and enabled over 60 million people to gain access to the labour market. The industry recorded €415bn in annual global sales revenue for 2013 with almost €36 billion coming from South America.

The findings demonstrate how the sector plays a pivotal role in getting people into work and keeping them there. This is good news for labour markets and the economy and the report underlines the importance of the employment and recruitment industry as labour market intermediaries, operating at a global level to match supply with demand in the workplace.

Diversification of services

As well as showing growth the sector is also broadening the range of HR services that it offers, moving into permanent recruitment, outplacement, recruitment process outsourcing (RPO) and on-line recruitment. This increasing diversification reflects the industry’s role as an HR solution provider and labour market specialist.

A total of 60.9 million people gained access to the labour market through the employment and recruitment industry in 2013. 40.2 million were engaged in agency work (up from 36 million in 2012); 17.6 million were directly recruited via search and selection services; 1.9 million through Recruitment Process Outsourcing and 1.2 million from outplacement services. As data collection for these services is still nascent, the actual figure is likely to be even higher.

In South America, 4.2 million people were employed as agency workers with Brazil, Colombia and Argentina representing 613,000, 595,590, and 300,000 respectively. Data was also collected for Peru, Chile and Uruguay where the industry continues to mature. In Brazil, a total of 2,5 million individuals found work through a form of private employment services in 2013, while in Mexico a total of 137,000 individuals were working through RPO.

Labour market specialists

There are 39,000 private employment agencies in central and South America – with a total of 260,000 worldwide. They represent a widespread network of labour market specialists who increasingly offer the full range of HR services. The sector employs more than 330,000 internal staff in the region as recruitment consultants, branch managers and back office staff, out of a total 1.66 million staff globally. These consultants stay close to the workplace and every branch has a deep knowledge of the local labour market dynamics.

Providing social protection and better quality work

The Ciett 2015 economic report shows that agency work not only acts as a stepping stone to longer lasting employment but also offers individuals good access to social security and protection in the form of healthcare, pension, unemployment benefit etc. As agency work is well regulated in most markets, it offers high job quality and security. Protection is greater than with fixed term employment, almost comparable with open-ended contracts and significantly higher than self- employment.

Crucially too, less restrictive regulation on agency work helps to reduce the size of undeclared work and expand labour market participation. In markets where agency work is appropriately regulated there is a clear reduction in undeclared work which brings more people into the formal labour market, including more vulnerable groups who would otherwise have found it more difficult to secure work regular work.

Opportunity for growth

The employment and recruitment industry is focused in a limited number of countries with the top 10 markets – USA, China, Japan, UK, Brazil, Germany, France, Canada, the Netherlands and Australia – accounting for 90% of revenues.

Despite ongoing growth, penetration of private employment services around the world remains relatively modest. The USA is the most developed with the industry commanding 2.1% of the labour market (the so-called penetration rate) and employing 11 million people. Japan has some 2.4 million agency workers and a 2% labour market penetration while in Europe, agency work has a 1.7% market penetration and employs some 8.7 million people each year.

Penetration rates (only counting agency work) in South America remain low with Colombia and Uruguay the highest at 3% and 1% respectively; Brazil and Peru both at 0.6%, and Chile and Argentina at 0.5% and 0.4% respectively. Agency work commands 68% of our industry’s sales revenue globally, so there is also opportunity for growth as the industry increases its operations in other HR services.

Looking to the future there is opportunity for the industry to expand into other geographies and emerging markets. Brazil holds a significant share at 7% of the global market, largely due to outsourcing, with 767,000 placements through search and selection activities in 2013. The industry has significant potential for further expansion in the region in response to the needs of business and workers and the ever-changing world of work.

For more information you can download the Ciett economic report here.