Transcript 1 - Amazon Web Services

Private employment services’ contribution to more
efficient labour markets
James Gribben, Ciett Communications and
Economic Affairs Advisor
0
Ciett at a glance
•
Founded in 1967
•
Gathers 176,000 branches and employ more than 10 million agency (TES)
workers on a daily average (FTEs)
•
Only association representing agency work:
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at large (brings together 49 countries)
-
in its diversity (uniting 9 of the largest multinational staffing companies as well as hundreds
of thousands of SMEs)
•
Recognised as such by international organisations (e.g. ILO, European Union,
OECD), key stakeholders (e.g. IOE, BusinessEurope, ITUC) and national
governments
•
Represents the full spectrum of HR services: temporary agency work,
recruitment, interim management, executive search, outplacement, training
Key messages of Adapting to Change
The world is undergoing fundamental structural shifts
•
•
•
•
•
Globalization
Volatility
Demographic evolution
Sectoral shifts
New attitudes to work
This brings a new set of challenges to the labour market
•
•
•
•
•
Persistent high level of unemployment
Stronger segmentation of the labour market
Increasing mismatch between supply and demand of skills
Unpredictability and lack of visibility
New forms of labour contractual arrangements not well regulated
nor organised
The role of labour market intermediaries to enable change
is crucial
•
Private employment services industry offers solutions to these
challenges
Source: Ciett RfP, BCG/Ciett discussion
Rise in firm instability clearly visible
Expectations-based
Fundamental-based
Market cap volatility
Revenue volatility
Operating margin volatility
5-year firm mkt cap growth volatility (%)1
5-year firm revenue growth volatility (%)2
5-year firm op margin volatility (%)2
60
25
4
50
20
3
40
15
2
30
10
20
5
1
1960 1970 1980 1990 2000 2010
1960 1970 1980 1990 2000 2010
1960 1970 1980 1990 2000 2010
Increase
1990-2010 vs.
1960-1979
32%
26%
1. Weighted average across all firms, based on market cap 2. Weighted average across all firms, based on revenue
Note: Based on all public U.S. companies
50%
1
Adaptation to change
Providing flexibility is main reason of use of PrES
Main reasons to make greater use of AW
Can respond quicker to business demands
76%
Desire for greater flexibility
65%
Can try out potential permanent hire
52%
Desire to keep fixed cost low
35%
Uncertainty over payroll taxes
9%
Uncertainty over medical costs
4%
Other
4%
0
20
40
60
80
(%)
Besides the overarching topic of flexibility companies also
use AW to hire permanent staff (extended trial period)
Source: Morgan Stanley Research (interviews with 200 HR managers in the US and Europe)
1
Adaptation to change
Companies using agency work accelerate faster out of downturn
Germany: higher revenue growth when agency work is used
Revenue growth 2009 – 2010
20
Using AW
Not using AW
16%
15%
15
13%
13%
11%
11%
11%
10%
10
10%
10%
8%
6%
7%
8%
7%
5%
5%
Service1
No export
activities
5
6%
6%
> 5% of
revenue
TOTAL
5%
0
Small (< 50 Medium and
employees) large (> 50
employees)
Company size
Industry
Sector
With export
activities
Export activity
No R&D
spendings
< 5% of
revenue
R&D expenditures
Ability to react quickly results in higher revenue growth
1. Including construction and other sectors
Source: IW Consult GmbH study "Zeitarbeit in Deutschland" 2011
1
Adaptation to change
Agency work a key lever in creating flexibility
Critical to managing seasonality and
economic cyclicality ...
Share of companies using AW to
absorb activity fluctuations (%, 2009)
100
100
... as well as allowing flexibility for workers
who need it, i.e. sick or maternity leave
75% of companies
are using AW to
deal with
fluctuations e.g. in
demand
Share of companies using AW to replace
absent permanent staff (%, 2009)
80
87
65
80
Ø 76
69
60
49
60
49
Half of companies
temporarily replace
absent permanent
staff with the help of
AW
46
40
Ø 49
35
40
20
20
0
0
Netherlands
Source: Ciett national reports
Germany
Switzerland
Sweden
Netherlands
Sweden
Germany
Switzerland
2
Reducing structural & frictional unemployment
Agency work ensures job creation
Most companies would not have created jobs without agency work
Alternatives to agency work
Conclusions
% of responses (total = 101)
100
80
No job
creation
54%
62%
60
100%
No
substitution
74%
8%
40
12%
20
26%
0
Total
Internal
flexibility
Source: User organization survey, BCG analysis
Not do
the work
Other external Hire permanent
flexibility solution
workers
• 74% of companies do not consider
hiring permanent workers an
alternative to agency work
• In 62% of the cases there would
be no jobs created: companies
chose internal flexibility or not to
do the work
2
Reducing structural & frictional unemployment
Agency work helped reduce unemployment in Italy
Regulatory changes in favor of AW and their positive impact on the level of unemployment
Unemployment rate (%)
AW penetration rate (%)
15
1.5
Unemployment rate
TAW penetration rate
Legal recognition
of AW in Italy
1.0
10
0.5
5
0.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Unemployment rate started to decline right after
introduction of agency work work
Source: OECD, Ciett national reports, GiGroup
Regulatory changes
in favor of AW
PrES allow lower level of GDP growth needed to create jobs
Analysis of longer time series for Belgium
GDP / employment year-on-year growth (quarterly, %)
AW year-on-year growth (quarterly, %)
10
40
GDP
AW
Employment
5
20
0
0
-5
-20
Employment recovery
AW recovery
-40
01/1991
03/1991
01/1992
03/1992
01/1993
03/1993
01/1994
03/1994
01/1995
03/1995
01/1996
03/1996
01/1997
03/1997
01/1998
03/1998
01/1999
03/1999
01/2000
03/2000
01/2001
03/2001
01/2002
03/2002
01/2003
03/2003
01/2004
03/2004
01/2005
03/2005
01/2006
03/2006
01/2007
03/2007
01/2008
03/2008
01/2009
03/2009
01/2010
03/2010
-10
Agency work performs in line with GDP and starts
significantly ahead of total employment
Note: GDP YoY growth figures for 1995 estimated
Source: federgon
3
Driving down segmentation
The diversity of agency workers’ profiles increases labour market
participation
Students
Workers
reentering the
labour market
Workers
looking for a
permanent job
First time
entrants
Flex
Professionals
(make money to
fund studies
and/or
vacations)
(work as temps
after period of
unemployment/
maternity leave)
(Second best
choice but see
AW a stepping
stone)
(enter the labour
market and gain
first work
experience)
(not looking for a
permanent
contract)
Senior workers
(remain
employed to get
additional
incomes)
2
Reducing structural & frictional unemployment
Agency workers in South Africa are predominantly young
Agency work provides needed opportunity for young people
60%
Percentage of young people (<25) in 2009
50%
49%
47%
40%
40%
37%
33%
29%
30%
26%
25%
24%
20%
15%
16%
13%
9%
10%
7%
10%
11%
9%
6%
0%
South Africa
Netherlands
Switzerland
Belgium
TAW
Italy
France
Sweden
Employed Population
Agency workers under 25 years strongly overrepresented
in agency work vs. total labour market in all countries
Source: Ciett national reports, Euromonitor, ILO Kilm
Poland
Germany
Driving down segmentation
Agency work provides a stepping stone into employment
Bringing people into employment reduces the segmentation of the labour market
Population (%)
85%
65%
Temporary agency worker
Employed fixed-term
34%
47%
68%
16%
11%
66%
59%
50
70%
71%
100
50%
Employed open-ended
0
France
Netherlands1
% working
before AW
Previous situation
of Aworkers
Note: 2010 data if not otherwise stated
1. 2009 data
Source: Ciett national reports 2009, 2010
Norway
Sweden1
Switzerland
% working
after AW
65%
Czech Republic
45%
3
Post situation of
Aworkers
Other
Student
Unemployed
Inactive
Reducing structural & frictional unemployment
Stepping stone effect also applies in South Africa
South Africa 2009
Other
Temporary agency worker
Unemployed
Employed fixed-term
Student
Employed open-ended
Findings
•
If you are employed as an agency
workers, you are more likely to have
an open ended contract than still be
an agency worker on year later.
•
Situation before Agency work was
15% employment
•
One year after beginning as agency
worker 61% are in employment
Inactive
%
100
80
61% working
60
40
15% working
2
20
0
Previous Situation
of Aworkers
Source: APSO
Post situation of Aworkers
3
Driving down segmentation
Stepping stone effect largely recognised
Is AW effective to find a first job?
Is AW effective to find a permanent job?
% of respondents agreeing with the statement, 2010
% of respondents agreeing with the statement, 2010
100%
100%
92%
86%
85%
84%
82%
80%
80%
78%
80%
71%
77%
69%
59%
60%
90%
61%
60%
40%
40%
20%
20%
0%
52%
43%
40%
DE
IT
0%
UK
BE
PL
FR
ES
NL
IT
DE
UK
NL
PL
High perceived value of AW both to get into
the labour market and find a full-time job
Note: AW – agency work
Source: Regards croisés sur l’intérim, l’Observatoire des Métiers et de l’Emploi, July 2010
BE
FR
ES
5
Providing decent work
Reduction in illegal economy correlates with increase in AW
Increase in illegal economy, decrease in AW in 2009 dues to the crisis
Changes in the level of illegal activity ...
... correspond with changes of AW levels
European average1
% Illegal economy
18
% Illegal
economy2
%
19
AW 3
2.0
% AW
3
2
Germany
16
1
18
1.5
14
0
16
5
14
4
12
3
10
2
17
UK
16
1.0
18
15
14
1999/00
2003
Illegal economy
2005
2007
0.5
2009
AW penetration
1: Average of 16 countries, for full list see appendix 2. Measured as % of total GDP 3. AW penetration
Note: Two year averages for 1997/98, 1999/00, and 01/02
Source: Prof. Dr. Friedrich Schneider, Department of Economics, Johannes Kepler University of Linz, 2010
18
2
16
1.5
14
1.0
12
0.5
Ireland
5 Providing decent work
Agency work contributes to the fight against undeclared work
Countries with high agency work have lower levels of illegal economic activity
TAW penetration (% of workforce)
5
R2 = 0.41
United Kingdom
4
3
Netherlands
Japan
2
U.S.A.
France
Belgium
Germany
Austria
Ireland
Switzerland
Finland
1
Sweden
Norway
Portugal
Italy
Spain
Denmark
Greece
0
5
10
15
20
25
Illegal economy (% of GDP)1
1. Calculated using the currency demand approach and the MIMIC method; for more information see "The Influence of the economic crisis on the underground economy in
Germany and the other OECD-countries in 2010: a (further) increase" by Dr. Friedrich Schneider
Note: 2008 figures used in order to remove impact of crisis
Source: Prof. Dr. Friedrich Schneider, Department of Economics, Johannes Kepler University of Linz, 2010
5 Providing decent work
A sector committed to social dialogue
Countries/
EUROPE
Crosssectoral
AW
sector
AW
company
(own staff)

Austria

Countries/
Rest of
World
Crosssectoral

Denmark



Finland



Brazil

France



Chile2
Germany



Colombia3

Japan4
New
Zealand

Italy


Luxembourg


Macedonia

Netherlands


Norway
Poland

Spain






Switzerland
UK




-
-
-
-
-
-
-
-





()
Peru3
-
-
-
-
South Africa

-
-
-

Portugal
Sweden

User
companies

Australia
Mexico

AW
company


Ireland
AW
sector
Argentina

Belgium

User
companies
()



Notes
1) in the UK, cross-sectoral level refers to a single agreement between CBI and
TUC rather than to collective bargaining as such.
2) Collective agreements are not allowed for agency workers (20.123 law, art.
304 & 305).
3) There are no CLAs in these countries
1) in Japan, AW sector refers to a single agreement between Rengo and
JASSA rather than to collective bargaining as such.
Source: Eurofound & Ciett
6
Need for appropriate regulation
Key dimensions of PrES Regulatory Efficiency Index
Assesses degrees of flexibility to operate and security for workers
A – Right of establishment
1. Legal recognition of the triangular work
relationship in all countries
2. No limitation of services to be delivered
(real private employment agencies)
3. No unjustified and disproportionate
barriers to enter the market
C – Right to negotiate/social protection
6. AW recognized as a sector on its own
7. Ability to implement social protection
for agency workers that can be
capitalized and portable
B – Right to provide services/ to contract
4. Ability to offer the full range of labour
contracts (no limitations or restrictions)
5. Removal of key restrictions on the use of
AW1
A
B
C
D
D – Right to contribute to labour policies
8. Access to training for agency workers
to be as broad and easy as possible
9. Existence of public-private partnerships in terms of employment services
10.PrES are committed and involved in
the fight against illegal practices and
unethical agencies
1. Sectoral bans, caps on number of agency workers, reasons of use, maximum length of assignment, obligations to consult trade unions, renewals
Source: Ciett, BCG analysis
Need for appropriate regulation
Results of regulatory efficiency index
Significant differences between countries
Right to:
Contribute to labour market policies
PrES Regulatory Index score
100
Provide services and to contract
89
80
60
40
20
Negotiate and social protection
93
30
86 85
83
27 24 19
20
Establishment
80 79
76 76 76 76 75
74 73
69 67
66
63
16
21
24
59 58 57
22 14
57 56
10
19
54
20 15
21
15
9
20 18
9
18
10
49
18
15
13 13
15
46 45
13
17 13
20
17
18
8
11
15
10 6 4 41
3
7
20
38
17
3
18
18 18
6
14
14
3
20
13
13
17
17
17
11 15 3 8
18
14
12 10 15 18
10
15 16
8
13
12
8
8
8 6 12 11
11
4
14
23 24
19 15
27 30 30 27 30 30 27 25 30 30 23 23 27 27 30 23 27 27 23 23
27
17
Ø 65
14
20 22 23 20 20 20 18
3
8
Note: Further clarification outstanding for Eastern European countries
Source: National federations, BCG analysis
Turkey
Estonia
Argentina
Chile
Greece
Czech Republic
Lithuania
Luxembourg
Slovenia
Spain
Ireland
Switzerland
Mexico
Hungary
Italy
South Africa
Poland
Japan
Austria
France
Germany
Norway
New Zealand
Belgium
Australia
United Kingdom
Denmark
United States
Sweden
0
Netherlands
6
2
6
Need for appropriate regulation
4 main types of environment where PrES operate
Important sub-groups based on nuances of social systems
Market type
1
Countries
Europe
Market driven
Non-Europe
2
Social
dialogue
based
Legislator
driven
4
Emerging
markets
• US, Australia, New
Zealand
• Rapid AW development, with appreciable drop-off in the crisis
• Open regulatory environment with limited restrictions
• Liberal economies favoring flexibility over security
Western
Europe
• Netherlands
• Switzerland, Austria,
Germany
• Significant degree of AW penetration in relatively mature markets
• Moderately regulated, varying balances of flexibility and security
• Labor market organized and regulated by collective agreements
between social partners
Nordics
• Sweden, Norway,
Denmark, Finland
• Historically low AW penetration and slow industry development
• Unique Nordic social and economic system
• Japan
• Generally liberal economies but high value on security and social
acceptance challenges
Asia
3
• UK, Ireland
Cluster characteristics
Western
Europe
Mediterranean
• France, Belgium,
Luxembourg
• Italy, Greece, Spain,
Portugal, South Africa
Eastern
Europe
• Eastern Europe
Lat Am
• Latin America
Asia
• India, China
• Penetration depending on level of industry development, ranging
from below to above average
• Highly regulated, weighted towards job security over flexibility
• Historically labor markets with high unemployment relative to Social
dialogue peers
• Nascent industries with AW legally recognised only recently
• Regulatory policies still in development
• Economic policies and market dynamics still evolving
Need for appropriate regulation
Labor markets performance is related to country clusters
Labor Market Efficiency Index1
1.5
1.3
Market driven
Social dialogue based
Mean
1.0
0.9
0.8
0.8
0.7
Legislator driven
0.7
Emerging markets
0.5
0.5
0.5
0.5
0.4
0.3
0.2
0.1
0.1
0.0
-0.1
-0.1 -0.2 -0.2
-0.4 -0.4
-0.5
-0.6 -0.6
-1.0
Hungary
Chile
Spain
Italy
Belgium
Poland
France
Luxembourg
Greece
Portugal
Slovenia
Mexico
Czech Republic
Germany
Finland
USA
Austria
UK
Sweden
Japan
Canada
Netherlands
Australia
Denmark
Norway
New Zealand
1. See appendix for methodology discussion
Source: OECD, Eurostat
-0.9 -0.9 -0.9
-0.9
Slovakia
-0.8
-1.0
Switzerland
6
Right level of regulation allows AW to contribute to labour market
Clear correlation between AW penetration and Regulatory Efficiency Index score
AW penetration rate 20101 (%)
4
UK
Netherlands
R2 = 0.42
Germany
2
France
Switzerland
Japan
Belgium
Austria
USA
Legislator driven
Sweden
Social dialogue - CE
1
Spain
Czech Republic
Argentina
40
Norway
Hungary Poland
Chile
0
Italy
Social dialogue - Nordics
Denmark
Social dialogue - Asia
Emerging markets
Slovenia
Market driven
Greece
50
60
70
80
90
100
PrES Regulatory Efficiency Index
High correlation also within clusters
representing different stages of maturity
1. Only 2009 data available for Norway, Hungary, Slovenia, Greece, Austria, Czech Republic, Chile, Denmark
Note: No penetration rates available for NZ, MX, TR, AU, EE and LT; Not included in correlation due to exceptional situation or data issues: ZA, IE and LU
Source: National federations, BCG analysis
Our global pledges to better labour markets
Thanks!
Questions?
More info at:
www.ciett.org
[email protected]