CWS 3.0: February 15, 2012

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Global: Contingent Staffing Regulations

The staffing industry in much of the world is a little like the Wild West – unregulated and dangerous. There are many countries where recruitment bodies are still calling for a basic regulatory framework to be provided. This doesn’t mean to say that you can’t hire temporary agency workers in these markets — staffing vendors can happily exist in a regulatory vacuum.

CW managers who are looking to take their programs beyond the U.S. and other established markets can get a sense of a country’s climate by noting whether it has ratified “ILO Convention 181.”

The International Labour Organisation (ILO) is a United Nations agency that brings together representatives of governments, employers and workers to shape policies and programs on employment-related matters. Adopted in 1997, ILO Convention 181 recognizes the “role private employment agencies may play in a well-functioning labor market.” At the time, this represented a dramatic shift in the ILO position regarding the temporary staffing industry: from one of prohibition (Convention 96) to legal recognition and support.

The purpose of the Convention is to allow the operation of private employment agencies as well as to protect the workers using their services. The Convention established conditions governing the operation of private employment agencies through licensing and certification, defines rules and regulations which provide for penalties for those involved in fraudulent practices, endorses the creation of complaints and investigation machinery and allocates the responsibilities of private employment agencies and employers.

While not all countries have felt it necessary to ratify this Convention in order to develop their temporary staffing markets — many countries already have well-established staffing markets and a solid body of legislation already in place, such as the U.S. and U.K. — it has proven to be an important first step in many countries, especially among emerging economies. To date, more than 20 countries have ratified the Convention 181 (and the accompanying ‘Recommendation 188’), the latest being Bosnia and Herzegovina in 2010 (see list below).

The ILO continues to engage with social partners in trying to develop a better understanding of temporary agency staffing. In October 2011, it ran a Global Forum that brought together more than 50 recruitment industry representatives from around the world as well as trade unions and Government officials. However, the lack of consensus at the meeting shows just how fragile Convention 181 really is. Commenting on the meeting, Denis Pennel, managing director of the International Confederation of Private Employment Agencies (Ciett), said: “A key sticking point for the unions is the perception that agency work is being used to systematically replace permanent employment and that there is a mass ‘casualisation’ of the workforce. This is something the Ciett delegation was able to challenge through robust data — for example the fact that in the U.S., the [temporary] penetration rate has actually dropped from two percent of the workforce to 1.7 percent.”

While the lack of regulation doesn’t necessarily preclude the use of temporary agency workers, you may want to re-evaluate your appetite for risk if you want to do business in an unregulated market. Also, consider whether the lack of employment rights for temporary workers in these markets is palatable and in keeping with the reputation of your company.

Otherwise, look to those that have taken the proper steps to address CW usage, either with an established body of legislation or through the more recent adoption of the ILO Convention.

Countries that Have Ratified ILO Convention 181
Country Year Ratified
Albania  1999
Finland 1999
Ethiopia 1999
Japan 1999
Morocco  1999
Netherlands  1999
Panama  1999
Spain 1999
Czech Republic 2000
Italy 2000
Moldova Republic 2001
Portugal 2002
Georgia 2002
Hungary 2003
Belgium 2004
Lithuania 2004
Uruguay 2004
Bulgaria 2005
Algeria 2006
Surinam 2006
Poland 2008
Bosnia and Herzegovina 2010

The full text of ILO Convention 181 can be read here

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John Nurthen 02/20/2012 05:01 am

Denis

Thanks for the feedback. I'd certainly agree that the largest staffing markets around the world are well regulated (though some better than others), however, the aim of the article was to provide temporary staffing buyers with a way of gauging the regulatory environment outside of these well-established markets and I think ILO Convention 181 ratification is one such benchmark.

If we simply measure the global staffing industry by revenue, then I agree with you that the industry is mostly not like the Wild West at all. However, there are 196 countries in the world - you mention the 27 EU countries now covered by the Agency Work Directive. On top of these, I'd estimate that there are perhaps another 20 countries that have reasonable agency regulation in place. So I'm standing by my comment that the staffing industry in much of the world (three-quarters to be more accurate) is a little like the Wild West.

This isn't meant in any way to disparage the excellent work done by Ciett to encourage the development of a responsible and professional staffing industry. In fact, I think another good benchmark that could provide companies with some comfort that there is a professional staffing invironment in place is whether or not the country has a Ciett-affiliated national federation:
http://www.ciett.org/fileadmin/templates/ciett/docs/List_of_Ciett_Members.pdf

John




The staffing industry is not the Wild West !

Denis Pennel 02/20/2012 03:48 am

Dear John,
As I am quoted in your article, I have to react to some of your comments. In all the largest markets around the world, the staffing industry is well regulated. Countries like the USA, Canada, Australia & New Zealand, France, UK, Netherlands, Belgium, Germany, Italy, Spain, Poland and most of the other Eastern European countries, Japan, Brazil, Argentina, South Africa -which account for more than 70% of the global staffing sales revenues, have adopted many years ago regulation to organise the staffing business. In Europe, a specific directive on temporary agency work has been adopted in 2008 and is now in force in all EU 27 member states. It is true that some emerging staffing markets like Russia or India do not have yet specific regulation on agency work, but these countries are a minority. Actually, the real situation is that in many countries, regulation on agency work is too strict or outdated, and needs to be reviewed in order to lift unjustified restrictions. This is what Ciett is calling for, as well as further ratification of ILO Convention 181 on private employment agencies. This being said, the number of ratification of C181 cannot be seen as a good indicator of the level of regulation on the staffing industry, as many countries have adopted regulation on contigent work based on the key provisions of the convention, but without having ratified the convention. So the staffing industy is not the Wild West, it is a responsible industry already well established in most parts of the world.
Regards
Denis Pennel


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