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France – Labour reform brings opportunities to staffing firms

25 January 2013

Staffing firms have broadly welcomed the labour agreement between unions and employers earlier this month as this will increase flexibility in the county. France is one of the most important single markets for large recruiters such as Adecco, Randstad and ManpowerGroup, all of which have recently suffered from poor trading conditions in the country.

Last week, the head of Adecco France, Alain Dehaze, said reforms to overhaul the French job market were good news. Now his counterpart at US-based ManpowerGroup followed suit. In a recent interview with Bloomberg he said the much-needed reforms will bring major changes to the staffing industry.

Alain Roumilhac said that staffing firms will, in the future, be allowed to hire agency workers on permanent contracts. This is a first in the country, but common practice in other staffing markets such as Germany, Italy, Sweden or the Netherlands where suchpermanent contracts are used foragency workers at higher skill levels.

“If we get staff on permanent contracts, they’ll be our employees, so we’ll be able to invest much more on training them, and we hope to be able to monetize that and have better margins,” said Mr Roumilhac to Bloomberg.

This will also impact pricing levels. “It will allow us to move up-market and provide clients skills they’re struggling to find. Our clients will pay more for them,” he said.

Staffing companies should also benefit from the fact that companies choosing to directly hire fixed term workers will have to pay higher surcharges for them

However, the new labour accord is mainly aimed at stimulating permanent job growth so, while there are benefits for staffing companies, this also has to be tempered by the fact that permanent hiring on indefinite contracts could grow at the expense of temporary staffing.

Dutch recruiter Randstad meanwhile said that the prospect of offering permanent contracts to jobseekers could also make the staffing industry more attractive to young professionals.  But François Béharel, president of Randstad France, told Bloomberg that unions and employers still need to discuss the details about introducing permanent contracts in the French staffing market. 

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