CWS 3.0: July 30, 2014

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ManpowerGroup head optimistic about German staffing industry despite proposed legal changes

Herwarth Brune, managing director of ManpowerGroup Germany outlined his hopes for the German staffing industry in an interview with Staffing Industry Analysts. Brune is optimistic about the staffing industry in Germany, but critical of 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 would be limited to 18 months, except when formally negotiated in collective bargaining agreements. Workers will be granted pay equal to that of permanent staff after nine months.

 “It is not yet clear as to how these changes will fit with collective labor agreements but it would be preferable if the collective agreements supersede the new coalition requirements,” he says. “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 percent of all temporary workers in Germany during 2013 were previously unemployed, an increase of 8 percent from 2012.

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

Like many other advanced economies, the German economy is experiencing skills shortages in specific sectors, notably in engineering and IT. According to the ManpowerGroup "Talent Shortage Survey 2014" report, 40 percent of German companies have difficulty in finding qualified candidates for vacancies. This compares to 40 percent in the United States, 21 percent in France, and 12 percent in the U.K. 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, Brune says certain German firms are still reluctant to employ foreign workers, perhaps for cultural reasons, “unlike international firms that look to workers from abroad to fill positions,” he says. “The number of Spanish workers traveling to Germany has reached its highest level and will continue to decrease as the local economy improves.”

According an article in the Frankfurter Allgemeine newspaper, "Deutschland zieht Osteuropäer an" (Germany attracts Eastern Europeans), only 14 percent of immigrants are from Portugal, Spain, Ireland, Italy and Greece.

Brune says that surcharges placed on the use of temporary workers, which began in November 2012 in certain industries, had not lowered demand for temporary agency work, as the flexibility the industry provides is crucial for the German economy.

Sector-specific surcharge collective labor agreements between bargaining partners in the staffing industry allow for a reduction in the wage gaps between agency workers and permanent staff, in case of long-term job assignments to user companies.

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

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 Jan. 1, 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 percent in 2013, according to statistics from BA. However, Brune says higher wages as a result of industry surcharges have driven revenue growth across the German staffing market.

Clients are also increasingly looking for specialization; Brune highlights 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.

“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.”

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