Exploring the global regulatory mosaic of the
temporary staffing industry: temporary
agency work in BRICS
Dr Jennifer Ferreira
ILO Regulating Decent Work Conference
Geneva July 2015
Outline
• Temporary agency work
• Growth of temporary agency work in BRICS
• National Varieties of Temporary Staffing Industry
• Regulatory Approaches
• Summary
The Temporary Staffing Industry
In 2013 :
• global annual sales revenue
for the temporary staffing
industry reached €299.3
billion.
Temporary agency worker
• 12 million FTE working in
agency work.
• 260,000 temporary staffing
agencies across the globe.
Agency-Client Contract
Source: (Ciett, 2015)
Employer
Temporary
Staffing
Agency
Temporary Agency Work Global Distribution
Source: Ciett (2010)
Temporary Agency Work Global Distribution
Source: Ciett (2014)
National Varieties of the Temporary Staffing Industry
THE MULTI-SCALAR STATE
Regulation of the
Temporary Staffing
Industry
TRADE UNIONS
Resistance and
lobbying activities
Regulation of the
mainstream
employment
relationship
Welfare system
and changing
nature of job
provision
NATIONAL &
INTERNATIONAL
TRADE BODIES
NATIONAL TEMPORARY STAFFING MARKET
Client firms and workers segmented by geography, sector,
firm size and occupation
DOMESTIC AGENCIES
Market expansion
strategies (e.g.
diversification,
acquisition, organic
growth)
Competitive dynamics
Lobbying for favourable
regulation
TRANSNATIONAL
AGENCIES
Market expansion
strategies (e.g.
diversification,
acquisition, organic
growth)
Based on Coe, Johns
and Ward, (2009).
See Watts (2013) for
European case
studies.
Regulation Framework
Global: ILO
C181
Regulation of temporary agency
work focuses on:
• Obligations for temporary
staffing agencies
• Requirements of licenses to
operate
• Provisions for equal
treatment
National
Regulation:
Standard
Employment
National
Regulation:
Temporary
Agency
Work
Sub-national
regulation
Self-regulation
Global Influences – C181: Private Employment
Agencies Convention, 1997
A framework of guiding principles:
• how to improve regulation of TSI
• increase labour market flexibility
• foster development of temporary staffing agencies
Instrument for setting minimum standards for the industry
According to Ciett (2013) the benefits of ILO convention 181 for countries that ratified it:
• Lower levels of informal and undeclared work;
• High correlation with democracy
• More cooperation between public and private employment services;
• Greater protection for freedom of association;
• Full respect for the right to strike;
• Meaningful and constructive social dialogue in the temporary agency work sector;
• Better protection of agency workers by forbidding fee-charging;
• Better wages for agency workers;
• Controlled and mitigated development of the industry.
Global Influences – C181: Private Employment
Agencies Convention, 1997
Source: ILO website
Regulation Frameworks
Category
Characteristics
Examples
Type 1
Liberal industry regulation; liberal
labour market regulation
UK, US, Ireland
Type 2
Liberal industry regulation, lightly
regulated labour market
Australia, Czech Republic
Type 3
Liberal industry regulation; highly
regulated labour market
Germany, Netherlands,
Japan, Sweden
Type 4
Strict industry regulation, lightly
regulated labour market
Belgium, Italy
Type 5
Strict industry regulation; strict
labour market regulation
France
Source: Coe, Johns and Ward (2009)
Regulation Frameworks
Market Type
Market Driven
Social
Dialogue
Examples
Characteristics
Europe
UK
•
Non-Europe
US, Australia,
•
•
#western Europe
Netherlands, Switzerland, Austria,
Germany
•
•
•
Legislator
Driven
Emerging
Markets
Rapid agency work development with appreciable drop-off in the
crisis.
Open regulatory environment with limited restrictions
Liberal economies favouring flexibility over security
Significant degree of agency work penetration in relatively mature
market.
Moderately regulated, varying balances of flexibility and security.
Labour 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 and social and economic system.
Asia
Japan
•
Generally liberal economies but high value on security and social
acceptance challenges
Western Europe
France, Belgium, Luxembourg
•
Mediterranean
Italy, Greece, Spain Portugal
•
•
Penetration depending on level of industry development, ranging
from below to above average.
Highly regulated, weighted towards job security over flexibility.
Historically labour markets with high unemployment relative to
Social dialogue peers
Eastern Europe
Czech Republic
Latin America
Brazil Argentina
•
•
•
Asia
India, China
Nascent industries with agency work recognized only recently.
Regulatory policies still in development.
Economic policies and market dynamics still evolving
Based on: Ciett/BCG (2013:88)
Temporary Agency Work Restrictions
Collective
labour
agreements
Prohibition
to replace
striking
workers
Reasons
for use
Proportion
of
workforce
Licensefor
/
Option
Authorisation
derogation
Max length of
assignment
License to
operate
Obligation
to report
Quotas
Equal
pay
Sectoral
bans
Limitations
for contract
renewals
OECD Employment Protection Legislation Index – Temporary
Employment
Source: OECD (2015)
OECD Employment Protection Legislation Index –
Temporary Agency Work
Source OECD (2014)
Source: Ciett/BCG (2013: 51)
Temporary Agency Work: BRICS
Country
Number of agency
workers - Millions
(2013)
Penetration rate
% (2013)
Temporary
staffing
agencies
(2013)
Brazil
0.6
0.6
36,982
Russia
0.34
0.1
20
India
1.3
0.1
2,621
China
27
3.6
19,935
South Africa
0.8
9.2
2,621
UK
1.2
3.9
18,180
US
11.0
2.0
35,020
Source: Ciett (2015, 2014)
Brazil
•
•
•
•
Brazil identified as a region of future potential growth for agency work in early 2000s.
Transnational agencies have a long presence in the region.
Reasons for lack of expansion previously include unstable economy, high levels of informal
employment and extremely low wages.
Experienced significant increase in agency workers, 11% increase since 2006.
Temporary Employment Act (Federal Law no: 6019/74):
• Temporary staffing agencies must be registered with the Ministry for Labour and Employment.
• The agency must comply with any requests for information made by the Ministry;
• Temporary agency workers can be used to work in urban areas to meet a temporary or
seasonal need for regular and permanent employees, or to cope with an extraordinary
workload increase;
• The maximum cumulated duration of temporary agency work contracts is three months, unless
authorised by the Ministry of Labour and Employment; ·
• There are no restrictions on the number of renewals or extensions of temporary agency work
contracts within the three month limit; ·
• Temporary agency workers must receive the same pay as a worker doing the same work for
the user firm
Brazil
•
•
OECD EPL (2012): 4.125
From July 1 2014, Ministry of Labour amendment: Allow temporary workers for
longer periods of time under certain circumstances.
“Brazil has gained international prominence
as one of the leading countries in the
business of temporary employment,
reflecting the importance that labour market
intermediaries have acquired in the internal
dynamics of the Brazilian economy”
(Guimares, 2015)
“Currently the temporary agency work sector faces
significant restrictions in Brazil. Regulation
governing our sector dates back to 1974 and
provides only two instances in which temporary
agency work can be used. It also restricts the
maximum assignment length to just three months
and provides limited options for renewal. As a
result employers have no option than to turn to
other forms of flexible work which may offer less
protection to workers.” Denis Penel in Global
Recruiter (2015).
Russia
•
OECD EPL (2012): 1.125
•
•
The law does not provide any arrangements regulating the activities of TWAs.
No restrictions in the case of assignments at the user firm (no regulations in
labour law).
•
No limit for assignments. No limit for open-ended TWA contracts between the
agency and the worker. 5 years for fixed-term TWA contracts between the agency
and the worker.
•
No requirement for authorisation or reporting obligations.
•
A TWA worker must receive the same pay as a worker doing the same work for
the user firm.
Russia
•
In 2001 the Labour Code of the Russian
Federation replaces the Code of Labour Acts
of the Russia Federation 1971.
•
Temporary agency work although becoming
more common, aren’t fixed in the LC RF,
leading to both legal uncertainty and
vulnerability of those engaged in this form of
work.
•
Now the underlying principle of the draft law is
not to veto temporary agency work but
instead to narrow its scope of application
•
New law in restricting use of temporary labour
to come into force in 2016 - restricting use of
temporary staff to nine months.
According to Smirnykh and Wörgötter
(2013:25-26):
“In general, agency-work contracts were
used by a small number of enterprises
but had a very high rate of growth…
…the increase of unstable employment
segment at Russian enterprises using
non-standard labour contracts
demonstrates the transformation of
standard labour contracts for an
increasing number of employees. It
indicates the necessity to improve the
Russian labour legislation, which is still
mostly oriented to standard labour
relations considering working
conditions of employees.”
India
•
OECD EPL (2012):1.81
•
Contract labour is generally allowed for non-core activities but there is no consensus
about what is the effective regulatory environment applying to the staffing industry
and whether contract labour laws and rules apply to that industry.
No limits for assignments or contracts.
•
•
Contractors and user firms with more than 20 employees are required to obtain a
license before engaging contract workers. The license is valid for 12 months, after
which it can be renewed by following the same procedure.
•
Wage rates and working conditions of the contracted worker must be the same as
those of a worker employed directly by the user firm to do the same type of work.
India
•
Flexi-staffing
•
Estimated 600,000 new flexi-staffing
jobs to be created in 2015.
•
Sector expected to grow from 1.7
million to 9 million workers by 2025.
•
Potential to account for 10% of
India’s formal sector employment.
•
Absence of clear regulations has an
adverse impact on workers welfare.
‘with a million youth added to the workforce every
month and with barely 2% having any formal skills,
staffing in the most effective type of employment,
which bends the curve in favour of our youth and
helps them become further employable”.
ISF President, 2015
“a clear legislation on temporary staffing is critical for
reducing unemployment and the number of illegal
workers. Private staffing agencies working within the
legal framework can be key repositories of knowledge
on the labour market, and can be of great help to law
makers. Qualified agencies should also undertake
training to improve the employability quotient of the
workforce.”
GI Group President, 2015
China
•
OECD EPL (2012):1.75
•
Dispatch workers
•
•
•
Placement of temporary workers: temporary, ancillary or substitute positions.
In practice widely used in many different situations.
A temp agency shall conclude a fixed-term employment contract of at least two years
with a temporary worker.
•
There is no restriction on duration of assignments (dispatch contract) as long as it falls
within permitted work such as temporary, ancillary or substitute position.
•
•
Temp agencies need registered capital of no less than Rmb 500 000.
No obligation in the Employment Contract Law for ongoing reporting to authorities.
•
Temporary workers have the right to the same pay for the same work as the workers of
the user firm.
China
• December 28, 2012, Standing Committee of the National People's Congress
passed an amendment (effective July 1, 2013) to the PRC Employment
Contract Law.
• Labour dispatch may be used only for :
• (i) temporary (no more than six months),
• (ii) auxiliary (staff engaged in the Company's non-core business who
provide services to those involved in the core business) or
• (iii) substitute (staff hired to temporarily replace employees on fixed leave).
• Agencies need a license form a local labour bureau and registered capital
RMB 2 million
• 2013 Amendment (effective 2016):Host companies will be limited to hiring only
up to 10% of their workforce through labour dispatch.
South Africa
• OECD EPL (2012): 0.5
• Labour brokers
• No restrictions on sectors or renewal of assignments.
• No limit for contract duration.
• A temporary employment service is required to register with the Department
of Labour.
• Temporary agency workers are the employees of the agency and are bound
by any collective agreement, sectoral determination or legislation that binds
the agency.
“The temporary employment industry generates more than USD 3.3
billion each year – resulting in additional revenue for government in the
form of taxes and VAT. The industry also directly employs approximately
20,000 people.”
Mr Makhubele, VP of APSO in Staffing Industry Analysts (2015)
South Africa
Labour Relations Amendment Act, No 6 of 2014
• Those providing ‘temporary services’ will be employees of the agency.
• Section 198(1) defines temporary services as either:
• Services limited to a fixed time period of not more than three months,
• Where employee is substituting a temporarily absent permanent
employee,
• Where a work category is classified as temporary, or the temporary period
if determined by a collective agreement.
• Outside of this definition – employees of the client of the agency not the
agency itself.
Summary
• The regulation of temporary agency work is dynamic and often complex.
• Regulatory environments are affected by sector specific and wider labour
market issues.
• The BRICS countries represent a selection of countries with very different
developing regulatory environments against a range of wider labour market
contexts.
• Next steps:
• to explore the impact of regulatory changes to temporary agency work in
BRICS countries.
• to consider how the changes to temporary agency work fit into a broader
labour market environment for non-standard employment.
Jennifer.Ferreira@coventry.ac.uk
@jennywrenwatts
Key References
• Ciett (2010) Agency Work Industry around the world. Brussels: Ciett.
• Ciett (2013) Workers enjoy more protection in countries that have ratified ILO Convention No181 on private employment
agencies. Available at: http://www.ciett.org/uploads/media/Ciett_assessment_C181_and_C96_with_infographics_01.pdf
• Ciett (2014) Economic Report. Brussels: Ciett.
• Ciett (2015) Economic Report. Brussels: Ciett.
• Ciett/BCG (2013) Adapting to change. Brussels: Ciett.
• Coe, Johns, and Ward, (2009) Managed Flexibility: Labour Regulation, Corporate Strategies and Market Dynamics in
the Swedish Temporary Staffing Industry, European Urban and Regional Studies, 16(1): 65-85.
• Global Recruiter (2015) Brazil works. Global Recruiter: 12.
• Guimaraes, N. and Vieira, P. (2015) ‘Labour Flexibility in an already flexible market’ In Fu, H. Ed. Temporary agency work
and globalisation: beyond flexibility and inequality? Farnham: Gower.
• ILO (2015) Ratifications of C181. Available from:
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:11300:0::NO::P11300_INSTRUMENT_ID:312326.
• OECD (2014), Graph 1.22. Incidence of temporary agency work, Brazil, OECD and other selected countries, 2010:
Temporary agents as a percentage of active working-age population, in Investing in Youth: Brazil, OECD Publishing,
Paris. DOI: http://dx.doi.org/10.1787/9789264208988-graph24-en
• OECD (2015) OECD Statistics. Available from: http://stats.oecd.org/.
• Smirnykh and Wörgötter (2013) Why do Russian firms use fixed-term and agency work contracts? IZA Policy Paper No.
54 http://ftp.iza.org/pp54.pdf.
• Watts, J. (2013) The institutional context of temporary staffing: a European cross-national comparative approach.
University of Manchester. Unpublished PhD thesis.