03/27/2017

In the year of its 50th anniversary, the World Employment Confederation, publishes its annual economic report, which contains data on an unequaled range of HR services ranging from labour market intelligence to talent acquisition and from placement to advisory services. The year-long research conducted in 50 countries addresses the challenges of a changing world of work and illustrates the role of the employment industry in enabling work, adaptation, security and prosperity. By constantly expanding its footprint and diversifying its range of services, the employment industry contributed to creating 50 million jobs worldwide. Across the markets covered in the report, current trends show a diversification of the employment industry, which regroups 169,000 agencies and 1.5 million HR specialists.

The employment industry enables 50 million people to find work

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 some 3 million individuals through their career management or job search. Managed Services Providers (MSP) and Recruitment Process Outsourcing (RPO) continue to gain acceptance and penetration as a tool for more effective recruitment with 2.5 million people worldwide involved. Finally, direct recruitment totaled 2.1 million placements in 2015.

Employment agencies enable adaptation by closing skills gaps and placing unemployed youth in work

While the report clearly 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”, says Denis Pennel, Managing Director at the World Employment Confederation.

The employment industry reduces frictional unemployment and has an impact on public budgets

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 striking 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”, comments Annemarie Muntz, President of the World Employment Confederation.

RPO and MSP usage have a big impact on HR KPIs

Outsourcing of the recruiting function has risen steadily in the past few years. Notably, RPO adoption has grown by 32% from 2011 until today. This practice is especially beneficial for organizations 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 a Managed Services Provider.

The full Economic Reprt can be read here