The American temporary staffing market is booming. In 2010, a year when US growth peaked at 3.9%, temporary workers accounted for about one third of the 1 million private sector hires and are thought to have played a key part in the economic story for that year.
The popularity of temporary workers in America is not waning as a report from the American staffing association suggests the numbers of temporary workers in the US increased by 8% in 2011. This enthusiasm for temporary workers is set to continue through 2012 according to a Harris Interactive Survey which reveals that 36% of companies are planning to hire contract or temporary workers in 2012, up from 28% in 2009.
Thanks to low levels of regulation and there being no requirement to provide healthcare and other benefits, temporary workers give American employers the flexibility to quickly hire and lay-off workers and therefore the confidence to grow or simply take chances on growth.
But, how does the US approach to contingent labor compare to that from markets around the world? In this increasingly global economy where international resourcing strategies are top of the boardroom agenda, we thought it might be useful to outline the approaches that some of the major economies outside America adopt to deal with their contingent labor. And I have described these below.
Europe Union More Regulated
In 2008, Federal Europe agreed a new EU Directive to regulate contingent labor, known as the EU Temporary and Agency Workers Directive, which now underpins and determines temporary worker arrangements across Europe. What does it do? Well, it looks to guarantee temporary workers equal pay, benefits (with some negotiated exceptions) and conditions with permanent employees in the same company who do the same work.
EU Members have been slowly integrating the principles of this Directive into their national employment law structure, with the UK being one of the latest countries to adopt it, having brought in the UK Agency Workers Regulations 2010 which took effect on the 1st October 2011.
This means that there is now some level of harmonization on how temporary workers are treated across Europe in terms of employment law, but clearly this a higher level of regulation around temporary work than we see in the US. Within EU members states there are even more regulations, for example in Italy the use of fixed term contracts is only permitted in certain roles and situations, and if you renew a fixed term contract once in Italy, it automatically becomes permanent.
EU Temp Market Buoyant Despite Tight Regulation
Even with a much more highly regulated contingent labor market in the EU, than in the US, most of the countries in Europe are experiencing a growth in usage and demand for temporary workers. For example in the UK, use of temp workers had increased by 21% in the year to July 2011, with some sectors such as business and logistics showing increases of 56% and 36% respectively.
While in Germany, nearly 3% of the work force are now temporary and this use of contingent labor was deemed crucial to helping Germany negotiate the 2009 downturn. In Italy, temping agencies have been growing at a rate of 20% a year on average
What about China?
China’s temporary worker is characterized by the concept of the ‘Dispatch Worker‘. So called ‘Labor Dispatch’ firms hire temporary workers and contract them out to factories as temporary labor. Currently, about one fifth of China’s 300 million urban employees are labor dispatch workers.
While their ‘Dispatch’ workers are entitled to some benefits such as social welfare insurance, many employers choose not to provide it, and the government is trying to change this. Also, Chinese dispatch workers are not meant to hold positions for more than six months, or be involved with main operations roles.
So, while China’s use of contingent labor is more regulated than the US, (more comparable to Europe), its numerical dependence of contingent labor is comparable to the US and Europe.
Brazil’s exponential growth has also been underpinned by a booming contingent labour market, and like Europe they also have strict regulations around the use of temporary labor, with there being a similar emphasis on treating temporary workers in a comparable way to permanent workers in terms of pay and conditions.
Russia has a highly regulated contingency labor market, which is characterized by the idea of ‘Staff leasing’ (where staffing providers supply employees to companies for at least 3 months). They also have a ‘Temporary Staffing’ market which is similar to the US and EU notion of temporary staffing although there are restrictions on how you can use temporary workers. Like with the US and the EU, staff leasing and temporary staffing has offered much needed labour flexibility to Russian employers during a difficult economic period.
The temporary staffing industry in India is growing at 17% a quarter, however, it is not very well regulated with 95% of the temporary workforce not really being organized within a labor regulation framework.
Last but not least, Japan
Japan operates a Dispatch Labor framework not unlike China and they have limitations of up to one year for dispatch work although it can be extended to three years for special reasons. Even so the use of temporary labor in Japan has been rising dramatically over recent years in line with the rest of the world.
In general, it seems that the economic downturn of 2009 coupled with ongoing uncertainty in the global economic environment has fueled the rise of the contingent labor market in the US and throughout the world.
The US seems to be one of the most deregulated markets in the world in relation to contingent labor, but even though there is more regulation in international markets, the demand for contingent labor in these markets has been irresistible, resulting in increasing dependence on contingent labor throughout the global market place.