GENEVA (ILO News) – A new report issued by the International Labour Office (ILO) says that workers employed by temporary employment agencies have been among the first to lose their jobs as a result of the financial and economic crisis.

At the same time, the report also observes that ratification of ILO Convention No. 181 on private employment agencies can help to promote Decent Work and ensure better functioning labour markets.

The report – “Private employment agencies, temporary agency workers and their contribution to the labour market” – points to a direct correlation between economic growth and the state of the employment agency industry, with the strong performance and expansion seen during the boom years mirrored by the weakness and contraction of the industry today.

The report will be discussed at a global tripartite meeting on October 20-21 at ILO headquarters titled “Workshop to promote ratification of the Private Employment Agencies Convention, 1997 (No. 181)”. Convention No. 181 balances enterprises’ needs for labour flexibility with workers’ needs for employment stability, a safe work environment, decent conditions of work and social security.

“Private employment agencies play an important role in the functioning of contemporary labour markets. They act as intermediaries in modern labour markets, allowing enterprises greater flexibility to increase or decrease their workforces, while ensuring for the workers sufficient security in terms of job opportunities and employment standards, including pay, working time and training”, the report says.

“The private employment agency industry has grown at an incredible pace over the past three decades due to the increasing need to provide workers and services to a growing and flexible labour market. User enterprises hire temporary agency workers to be able to rapidly adjust to the shifting economic realities. Since mid-2008, enterprises have used this pressure-valve function to lay off temporary workers, while often leaving their core workforce intact”, said John Myers, industry specialist from the ILO’s Sectoral Activities Department and author of the report.

The biggest temporary job losses were recorded in the manufacturing sector of developed countries, most noticeably in the car industry. The report cites the example of Germany, where it is estimated that between 100,000 and 150,000 temporary agency workers lost their placements in the four to six months after October 2008. Similar trends were seen in Japan, United States, Spain and France.

”Many of the largest private employment agencies are saying that it will be 2010 at least before they see any upturn in business. This would generally happen after overtime hours and the length of the working week begin to rise among the core workforce of user enterprises, and companies’ slack capacity begins to fall. When firms consider turning to agencies to meet their needs, this will be one of the first signs that the economic crisis is beginning to end”, said John Myers.

Meanwhile, the industry itself is introducing measures to cut costs and increase the efficiency of its services. According to the report, these measures will only be effective if the following challenges are addressed:

“Countries that have not yet ratified Convention No. 181 are encouraged to do so, as its implementation can be an engine for job creation, structural growth, improved efficiency of national labour markets, better matching of supply and demand for workers, higher labour participation rates and increased diversity. It also sets a clear framework for regulation, licensing and self-regulation, thereby encouraging reliability; ensuring effective protection of workers against unfair practices; discouraging human trafficking; and promoting cooperation between public and private employment services. Finally, ratification could help to promote and implement the Decent Work Agenda by ensuring protection of the rights and working conditions of agency workers”, says the report.

In recent months, several international-level policy statements have highlighted issues surrounding agencies and temporary agency work. For example, the June 2009 Global Jobs Pact refers to “establishing or strengthening effective public employment services and other labour market institutions” and “providing adequate [social protection] coverage for temporary and non-regular workers”.

According to the report, “governments have come under pressure from a range of social actors to make changes to the benefits and social assistance provided to workers placed through agencies, although reform has been slow and piecemeal where it has occurred at all”.

For more information, please contact the Department of Communication and Public Information of the ILO at communication@ilo.org - +4122/799-7912.