The Brink of Change

VIEW FROM WEC – Sebastian Lazay, president of the Federal Employers' Association of Staffing Services (BAP) in Germany on agency work.

Agency work companies in Germany first started to work together in 1969 and the industry is celebrating the 50th anniversary of associations of agency work this year.

Q: What are the main challenges and opportunities currently facing your labour market?

A: For a number of years now the German labour market has been challenged by a continuing lack of specialised employees and a labour shortage in general. Employers have to actively attract candidates and in doing so find themselves in tough competition for the greatest minds. In certain regions and sectors in Germany it is proving impossible to fill vacant positions with suitable workers. Manufacturing, skilled trades, logistics, nursing care and medicine are particularly affected and according to a recent DIHK-Study, the lack of specialised workers is the number one issue for more than 60 per cent of companies. This trend will intensify in the coming years, as approximately one million people are retiring every year, while only 700,000 pupils are leaving school. 

The lack of specialised workers and the trend away from an employer’s market and towards an employee’s market is turning tailor-made, professional recruiting into an increasingly sought-after, key competence. In the future, staffing agencies will assume the function of a human resources department for companies to an ever increasing extent: consultancy, placement, specialisation. The right people in the right place at the right time; this is the key factor and this is where our strength lies. 

However, it is not just personnel bottlenecks, but also digitalisation and automation that are changing workflows, professional profiles and production processes. Nor should we underestimate the impact of generations Y and Z who are storming onto the labour market and who are choosey and prefer flexible working hour models that allow greater work/life balance to full-time employment. In particular, the idea of working for the same employer for your entire life is one that appears absurd to many high potential performers from these generations. Instead, they demand flexibility and fulfilling tasks with which they are able to identify. Attention must also be paid to the cultural differences between non-European workers – particularly when recruiting specialists from third countries. This poses an enormous challenge, first and foremost for small and medium-sized companies. 

It is important to note that staffing agencies have performed well above average in addressing one of the central challenges facing the German labour market since 2015 – namely the integration of the refugees. Between November 2017 and October 2018 more than 31,700 asylum seekers from the eight most important non-European countries of origin started working for staffing agencies. More than one-third of the 88,800 refugees who succeeded in finding employment during this period, and took up a positions subject to obligatory social security contributions, found work in the temporary sector. 

Q: What is the diversification of HR services in your country?

A: Appreciation of the role of agency work has increased in Germany in recent years – not least due to the common tariff schemes developed by the DGB trade unions and the two employers’ associations which set a minimum wage for agency workers that is highly competitive compared with the standard minimum wage. We are, nonetheless, still a long way away from enjoying conditions such as in Great Britain, the Netherlands or Scandinavia, where agency work receives the recognition it deserves as a supporting element of the economy. 

The structure of temporary employment in Germany differs from the majority of EU Member States. Whereas in France, amongst other things, the agency principle is practised, in Germany it is the employer principle that applies. Agency workers are permanent employees of the personnel services companies and enjoy the full protection of German labour law. It is also noteworthy that both the share of employment relationships subject to social insurance contributions – namely 93 per cent – and of those who work full-time – 78 per cent – is above average in temporary employment compared with the overall labour market. 

Q: What are the main issues related to the future of work discussion?

A: Three key issues will be significant for the future of work in the coming years. 

Firstly, personnel management will undergo significant change. Traditional working models are being increasingly challenged by digitalisation and networked working cultures. Working conditions, corporate cultures and personnel management must be redefined as a result. In many companies nowadays, the workforce no longer consists entirely of internal employees but of agency workers, freelancers, employees on fixed-term contracts and other external staff. In order to manage this new diversity effectively, companies must create new organisational structures that make cooperation between all types of employees easier and possible. The flexible employment of workers will grow in significance as part of the complex process of change in the working world and the need for qualified personnel that assume project-related tasks and close competence gaps will increase accordingly. 

The staffing services sector is well positioned to play a key role in realising this broader personnel strategy and supporting companies in their recourse to external expertise. The sector already offers a broad portfolio of services supporting the needs-oriented deployment of workers ‘just-in-time’. As a result, the focus is not only on competence and qualification strategies, but also on the opening up and managing of new recruiting networks such as so called silver workers. 

Secondly, working hours will become more flexible and, thanks to the increasing possibility in many professions to perform at least a part of one's duties independent of a particular location, employees are enjoying increasing flexibility in shaping their daily working routine. Indeed flexibility is no longer a one-way street that favours companies – employees too are increasingly calling for flexible working hours and want to make greater use of the opportunities offered by digitalisation – especially in harmonising their professional and family lives. Work-life balance is increasingly important – particularly for the forthcoming generation. 

Today, the German temporary employment work model already accommodates both the needs of the companies for greater flexibility and the interests of the employees in more security. This best possible balance between increasing demands for flexibility on the one hand and the need for high levels of job security on the other can be provided by the staffing services sector in Germany with its predominantly unlimited full-time employment relationships subject to an obligation to pay social security contributions. 

Thirdly, the ‘normal employment relationship’ is being redefined. In the staffing services sector this relationship between employer and employee – subject to social insurance contributions, unrestricted and full-time – is the rule these days. However, the question of redefining this ‘normal employment relationship’ is also increasingly being posed to staffing services providers. We already see that well qualified employees are more selective and some have no interest whatsoever in a permanent job – particularly not in the staffing services sector. Employees prefer to keep their options open and re-orient themselves after having been leased to a client company. 

However, this is still the exception and surveys show that job security still ranks number one among what people attach most importance to in their work. Agency work offers this security in the midst of a fast changing working world and can turn this into a competitive advantage compared to traditional employment relationships – on the one hand, guaranteeing employee security in a fixed contractual relationship in the midst of constant renewals and increasing flexibility pressure, and on the other hand offering a high degree of flexibility in the form of different assignments.

In all three areas above, the staffing services sector has already proven that it is able to meet the challenges of the future of work. 

Sebastian Lazay is president of the Federal Employers' Association of Staffing Services (BAP) elected unanimously in 2017. Sebastian is managing director of Extra-Personal service GmbH, Hamburg, and has been closely involved with agency work for more than 20 years. Sebastian is also a member of the executive committee of the BGA, the Federal Association of Wholesale, Foreign Trade, Services, and since 2015 he has been vice president of large-scale services for the BGA.