Due to persistently low economic growth, the number of flexible employment hours, in the Netherlands is expected to shrink by 5% in 2024, according to research by ING.

In 2023, the Dutch flexible sector, which consists of temporary employment agencies, labour brokers and payrollers, saw a decline of 7% in hours worked.

The flexible industry is highly dependent on the development of the economy and is immediately impacted when client companies put on the brakes on and hiring and investing in staff.

ING added that the decline in temporary employment hours is somewhat tempered by the fact that, partly due to the personnel shortage, there remains a demand for recruitment and selection services, including from the government and semi-public sector.

The declining demand for temporary workers in particular is clearly visible in the development of the number of temporary jobs. In the first quarter of 2023, the number of temporary jobs shrank by over the quarter by 52,000. In the second and third quarters this increased further to a quarterly contraction of approximately 60,000. A further decline in the number of temporary jobs is expected this year.

ING put forward three reasons for the decline:

1. Companies are slowing down their hiring of staff due to relatively low economic growth and persistent uncertainty. 

2. In a structurally tight labour market, temporary workers are offered a permanent contract more quickly, also by the flex companies themselves.

3. Legislation and regulations make temporary work more expensive and less flexible. This leads to a substitution effect towards other forms of flexibility, such as self-employed persons.

Despite the decreasing demand for temporary workers, the sector was still able to achieve turnover growth, although this weakened throughout 2023. In the second quarter of 2023, the double-digit sales growth of the previous eight quarters came to an end. Over the first nine months of 2023, the sector achieved an average turnover growth of 7%. These are mainly specialised flexible organisations that saw their turnover grow. Due to the tight labour market, the demand for recruitment & selection, mediation of self-employed persons and secondment remained somewhat intact. On the other hand, ABU figures show that turnover at the larger generic broadcasters will have shrunk by an average of 3% in 2023.

ING also noted that, despite a significant increase in rates in the temporary employment sector, both in 2022 and 2023, this did not lead to better profit margins for many companies. This is because the higher costs cannot always be fully passed on to the customer.

Meanwhile, due to relatively high interest rates, the number of acquisitions in the first nine months of 2023 was more than a quarter lower than a year earlier. The expectation is that acquisitions will continue in the coming years.

ING’s data also showed that self-employed people are gaining ground at the expense of temporary workers. The shares of self-employed people in the employed labour force increased from 11% in 2019 to 13% in 2023. At the same time, the share of employees with a flexible employment contract has decreased. On the one hand, this was because they had switched to permanent employment, and on the other hand it was because they have started working as a self-employed person. 

SIA’s global staffing markets forecasts, including for the Netherlands, are available here.