After two years of growth the number of hours in the Dutch flex sector, consisting of temporary employment agencies, job brokers and payrollers, is expected to shrink by 2%, according to research from ING.

The flexible employment sector is highly dependent on the development of the economy, in case of economic growth, the demand for flex workers also increases and vice versa. With economic growth expected to drop sharply from 4.2% in 2022 to 0.4% in 2023, the demand for flexible workers is also declining. Moreover, the structurally tight labour market is putting a brake on growth. New regulations are also putting pressure on the earnings model of many flex companies.

The ING noted that it remains difficult for many flex companies to find suitable candidates. At the same time, the decline is tempered somewhat because, partly due to the shortage of personnel, as there is still demand for recruitment & selection services, including from the government and the semi-public sector. 

Due to an increased risk of a recession, flex organisations expect that companies will initially remain reluctant to hire flex workers in the first half of 2023. Less than half of the entrepreneurs in the temporary employment sector therefore expect to realise a higher turnover in 2023. It is expected that specialist temps and secondments in tight occupations will continue to do ‘good business’ in 2023.

Meanwhile, the number of bankruptcies and business terminations in the temporary employment sector is expected to increase further next year. Not only because of the economic headwinds and the tight labour market, but also because of the repayment of the tax debt accumulated during the Covid-19 pandemic, despite the fact that companies have several years to do this.

Overall, the biggest challenge for the temporary employment sector is the shortage on the labour market, the ING noted. Despite the fact that unemployment is expected to rise slightly in 2023, the labour market will remain structurally tight in the coming years, partly due to the aging population.