Issue link: https://www.e-digitaleditions.com/i/65226
Contingencies Temporary labour typically has been utilised by organisations to provide flexible support when demand requires it, but also to keep labour costs at a minimum. This, coupled with the changing demographics of today's workforce, has resulted in a skills shortage that has driven the contingent workforce into a new era. This step change has not just been driven by businesses alone. The modern-day contingent workers have also evolved out of choice, and sometimes necessity, by the individuals themselves. An increase in the percentage of women in the workforce during the past decade has required more flexibility, due to women traditionally being the main parental caregiver and additional income being required in these starker times. In the United Kingdom, the majority of Western Europe, North America, and Australia, the contingent workforce has a relatively high strategic impact on a business and consists of more highly specialised and highly paid individuals. People make an active choice to be a contingent worker, preferring the flexibility and autonomy which in turn reduces the risk of these individuals seeking to establish an employment relationship with the end client. There are other roles that people take as a stop-gap whilst they apply for permanent positions and, particularly in the world of contact centres, some companies deliberately operate a temporary-to-permanent hiring model. However, the candidate experience in the temp-to-perm situation is often poor and is reflected in attrition levels. By contrast, contingent workers in Eastern Europe, Asia, and Central America are defined as low paid and low skilled. This uplift in the more developed markets has resulted in an increase in local legislation. Local Legislation As the contingent workforce market has developed, so too have temporary labour market policies. Governments and unions are showing a greater awareness and acceptance of the benefits and added value of temporary agency work for the labour market. Globally, HR services companies are regulated by the International Labour Organization (ILO) Convention 181 and Recommendation 188. This convention defines minimum standards, especially recognising the importance of flexibility in the functioning of labour markets. Today, 23 countries worldwide—including 14 countries within the European Union (EU)—have ratified the convention. In the EU, a minimal legal framework has been introduced—the Agency Work Directive (AWD), which had to be implemented across EU member states before 2012—that on the one hand ensures that all unjustified restrictions are lifted, and on the other that temporary workers are protected via the equal treatment principle. The AWD now means that temporary workers are entitled to the same terms and conditions as permanent employees after 12 weeks of work in one assignment. EU member states were also required to perform a review of all conditions and restrictions regarding the conditions of temporary agency work, and lift those that could not be justified before 2012. Generally, these restrictions can be divided into four categories: maximum length of assignments, reason of use for the assignment, set levels of pay and other benefits, and sector prohibitions. So far, not all member states have complied— implementation of the AWD across the EU is a work in progress. The influence of the AWD on current regulation will be very limited in Southern, Eastern, and Central European markets, where wage levels are already legally on par with those of comparable permanent workers. However, in some countries, restrictions are still in place that are counterproductive to the effective functioning of labour markets and job creation. The economic crisis has shown that countries with unreformed, stagnant labour markets have exhibited higher unemployment rates and have found recovery more difficult to achieve. In the Netherlands and Germany, collective labour agreements (CLAs) are in place. These deviate from the legal equal treatment principle, as they set minimum wage levels for temporary workers and therefore help to promote flexibility in labour conditions. In the Netherlands, a grace period of 26 weeks in one assignment applies before equal pay sets in. In Germany, no time limit governs the deviation. However, CLA negotiations with an emphasis on implementing the equal pay principle are ongoing. The U.K., the United States, Australia, and Japan have the world's most liberal recruitment markets, although Japan's previous government proposed the enhancement of temporary worker rights by banning certain types of very flexible contracts. Emerging markets, such as Turkey, India, Mexico, and Malaysia have yet to establish an effective legal framework to realise the benefits of a contingent workforce. Proper regulation is necessary to develop the industry, prevent unfair competition, and distinguish good quality, well-regulated agency work (AW) from other irregular and often illegal forms of flexible labour. One of the indicators of a mature contingent market is the acceptance from recruitment agencies that they should operate an open book pricing mechanism. Whilst established as best practice in the U.K., many agencies in mainland Europe remain unfamiliar and wary of sharing with the end client the breakdown of the charge rate into contingent worker pay, statutory contributions, and agency fee. Open book pricing is one of the most effective tools a client has to ensure contingent workers are engaged, motivated, and fairly recompensed for their contribution. [18] HRO TODAY GLOBAL | WINTER 2012