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Temporary agency work is more strictly regulated and offers more employment protection compared to fixed-term contracts, according to the latest Economic Outlook Report by the Organisation for Economic Cooperation and Development (OECD).
The report finds that among OECD countries regulation of temporary agency worker contracts is greater than fixed term contracts. This is due to the fact that agency workers face more legal restrictions; such as maximum length of assignment, limitation on the number of renewals of assignments, and reporting obligations. Turkey, South Korea, Belgium, Poland, and Luxembourg are the OECD countries with the highest levels of legislation.
“These findings shed more light on the strictness of regulation on temporary agency work across OECD countries and confirm what Ciett has been advocating for many years; that temporary agency work suffers from many more legal restrictions compared to fixed-term contracts. As a result, the number of direct fixed-term contracts has exploded over the last decades while the use of temporary agency workers remained rather low. Resulting in many countries in a segmented labour market,” said Fred van Haasteren, president of Ciett, commenting on the report.
The increased regulation of temporary agency workers and the deregulation of fixed-term contracts occurred in the 1990s. This has led to a massive growth in the use of fixed-term contracts. In Span and Poland fixed-term employees account for 27% of the workforce, whereas temporary agency workers account for 1.9% and 0.6% respectively.
“In this continued employment crisis, it is key for OECD countries to rebalance regulation in favour of temporary agency work. [It] has a clear advantage over fixed-term contracts in facilitating access to employment and in reducing labour market segmentation. Temporary agency work offers an easy entry point into the labour market for young people and contributes to increase[d] labour market participation; by quickly and effectively connecting labour demand and supply,” added Denis Pennel, Ciett managing director.