Herwarth Brune, Managing Director of ManpowerGroup Germany, speaking to Staffing Industry Analysts, outlined his hopes for the German staffing industry. Mr Brune is optimistic for the staffing industry in Germany, but critical of the potential legislative changes outlined by the coalition in November last year. The reforms are yet to come in to effect.

The coalition agreement outlines proposed amendments to both the Employee Leasing Act (Arbeitnehmerüberlassungsgesetz/AÜG) and Employee Assignment Law (Arbeitnehmerentsendegesetz /AEntG). Assignments of temporary workers are to be limited to 18 months, except when formally negotiated in collective bargaining agreements. Workers will be granted equal pay to permanent staff after nine months. 

Mr Brune was particularly critical of the financial uncertainty for the industry: “Uncertainty is not good for the industry. It is not yet clear as to how these changes will fit with collective labour agreements but it would be preferable if the collective agreements supersede the new coalition requirements. The coalition has put forward one size fits all legislation, while the industry requires a one size fits one agreement.”

According to statistics from the Federal Employment Agency (Bundesagentur für Arbeit (BA)), 65% of all temporary workers in Germany during 2013 were previously unemployed, an increase of +8% from 2012.

ManpowerGroup offers extensive training programmes for all workers to improve their skills and such programs are particularly beneficial to those previously unemployed workers. Mr Brune stated that the training programmes would have to be terminated or limited in length if the 18 month assignment restriction is enforced. He also noted that the assignment limit would also be especially problematic for maternity leave covers given that German law ensures that parent’s jobs are protected until the child turns three years old.

The German economy, like many other advanced economies, is experiencing skills shortages in specific sectors, notably engineering and IT. According to a ManpowerGroup report, ‘Talent Shortage Survey 2014’, 40% of German companies have difficulty in finding qualified candidates for vacancies. This compares to 40% in the United States, 21% in France, and 12% in the UK. To address these shortages, international firms are increasingly looking to foreign workers and ManpowerGroup, with its global presence, is well placed to address these needs.

Despite the skills gaps, however, Mr Brune stated: “There is still a reluctance, however, for certain German firms to employ foreign workers, for perhaps cultural reasons, unlike international firms that look to workers from abroad to fill positions. The number of Spanish workers travelling to Germany has reached its highest level and will continue to decrease as the local economy improves.”

According to an article from newspaper Frankfurter Allgemeine entitled, ‘Deutschland zieht Osteuropäer an’ (‘Germany attracts Eastern Europeans’) only 14% of immigrants are from Portugal, Spain, Ireland, Italy, and Greece.

Mr Brune stated that the surcharges, introduced from November 2012 in certain industries, had not facilitated lower demand for temporary agency work, as the flexibility the industry provides is crucial for the German economy.

Sector specific surcharge collective labour agreements between bargaining partners in the staffing industry allow for a reduction in the wage gaps between agency workers and permanent staff during long-term job assignments.   

“The surcharges have, however, played a part in improving the perception of the industry in Germany,” he added.

The number of Statement of Work (SOW) contractors is increasing in Germany but not at the expense of temporary agency workers. In addition, the introduction of a national minimum wage of €8.50 per hour on 1 January 2015 is expected to have little impact, as the staffing industry has already implemented its own minimum wage.

Despite the improving market conditions, the number of temporary workers fell by -4.4% in 2013, according to statistics from BA. However, according to Mr Brune, higher wages as a result of industry surcharges have driven revenue growth across the German staffing market.   

Clients are also increasingly looking for specialisation; with Mr Brune highlighting Bankpower, a joint venture between Manpower GmbH and Deutsche Bank AG; and AviationPower GmbH, a collaboration with Lufthansa Technical Training as examples of the company’s success.

Mr Brune concluded: “Manpower will increasingly focus on workforce solutions, in the short term providing service to clients, but not at the expense of the staffing arm of operations.”

Staffing Industry Analysts 2014 German Market report will be released shortly