The employment industry reached €417 billion in global sales revenues and helped 50 million people find work in 2015, according to the World Employment Confederation’s annual economic report.

The WEC figure is slightly higher than Staffing Industry Analysts’ own estimate of $409 billion for the staffing market in 2015 although the methodology used by both organisations is slightly different. While the WEC measures the “employment industry”, SIA defines “staffing” revenue as revenue generated from the provision of temporary workers to business clients, as well as from “place & search” services (direct hire/permanent placement and retained search). SIA also estimates that the staffing market grew by 5% to reach $431 billion in 2016 and will grow by 5% again in 2017.

The WEC estimates that agency work accounted for €279 billion of global employment industry sales revenues. This was followed by MSP (€95 billion), Direct Recruitment (€36.8 billion), RPO (€3.3 billion) and career management (€3 billion). The data used by the WEC for the size of the MSP and RPO markets were sourced from Staffing Industry Analysts.

The year-long research conducted by the WEC in 50 countries showed that 50 million people globally accessed the labour market via an employment agency in 2015.

“The employment industry enables work adaptation, security and prosperity, contributing to a better society,” Denis Pennel, Managing Director at the WEC, said.

Across the markets covered in the report, current trends show a diversification of the employment industry: agency work had a net employment impact of more than 43 million jobs created with the USA, China, Japan and India leading the ranking. The highest-placed European country is France in 5th place with 2 million hires. In terms of penetration rate, agency work represents a limited part of the global working population averaging just 1.7%. The USA leads the field at 2.2%, followed by Japan (2%) and Europe (1.9%).

Employment agencies also guided about 3 million individuals through their career management or job search. Meanwhile, MSP’s and RPO’s continue to gain acceptance and penetration as a tool for more effective recruitment with 2.5 million people worldwide involved. Furthermore, direct recruitment totalled 2.1 million placements in 2015.

The WEC states that while the report demonstrates that change is underway, forecasts vary in different industries and regions: on average, before entering into agency work, 33% of workers were unemployed while just 21% returned to unemployment a year later. On another note, 43% of people starting agency work were previously employed and 71% remained employed a year later. Almost one third of agency workers are under the age of 25 and declare upskilling via agency work is key to staying employable.

“These numbers show two things: first, agencies provide both an entry point to the labour market and a stepping stone to permanent hiring. Second, the industry creates decent jobs that would otherwise not exist. In India for instance, 92% of companies would not make permanent hires if agency work was not available”, Pennel said.

A further finding from the report shows that employment agencies contribute to reduce frictional unemployment by shortening the inevitable time delays in finding a new job and ensuring better and faster matching of supply and demand for work. The report finds an inverse correlation between the evolution of hours worked via an agency and the EU unemployment rate in the EU-28. There is also evidence that high rates of agency work penetration tend to reduce undeclared work. The report highlights facts in India where unemployment rates have been cut by up to one half in states where the agency penetration rate is above 0.5 %.

“By reducing frictional unemployment, the employment industry contributes to public budgets. This saves governments the cost of unemployment benefits while the provision of flexible workforce solutions leads to a reduction of undeclared work, increasing social charges and corporate tax being paid”, Annemarie Muntz, President of the WEC, said.

Meanwhile, outsourcing of the recruiting function has risen steadily in the past few years. Notably, RPO adoption has grown by 32% from 2011 until today. The WEC states that this practice is especially beneficial for organisations that fill roles with high turnover and consistently require specific skill sets. Companies that invest in an RPO provider declare they are able to reduce hiring costs by 38%. While 71% of “best-in-class” organizations are more likely to use an MSP.