More employers opt for agency workers and fixed contracts

A survey by the German Metalworkers’ Union (IG Metall) has shown that temporary agency work is increasingly replacing regular permanent employment in the industry. The union conducted a works council survey on the impact of the financial crisis on recruitment in September 2010, and the results show that most companies prefer to recruit agency workers and employees on fixed-term contracts. The survey is part of a broader campaign by the union for new laws on temporary work.

Background

The survey (in German) conducted by the German Metalworkers’ Union (IG Metall) focuses mainly on the metalworking and steel industry, although it does cover, to a much smaller degree, the textile and woodworking industries. The union wrote to 8,274 works councils asking how their company dealt with recruitment after the financial crisis. The union received 5,159 responses, of which 2,997 came from works councils in companies with fewer than 200 employees.

Responses showed that:

  • 85% of works councils said their companies needed more staff;
  • 43% of companies which needed extra staff preferred to recruit agency workers;
  • management in 42% of those companies preferred to hire workers on fixed-term contracts with only 15% of them predominantly taking on permanent staff;
  • 66% of establishments had temporary agency workers in September 2010;
  • in 20% of companies agency work had already reached the same level as before the crisis in 2008;
  • in another 20% of cases it exceeded the 2008 level – see Table below.
Level of companies’ agency work in 2010 in comparison to 2008

More agency workers than in 2008

20%

Same level as in 2008

20%

Fewer than in 2008

23%

Agency workers used for the first time in 2010

3%

Currently no agency workers

34%

Source: IG Metall works council survey, September 2010

When works councils were asked if they thought temporary agency work would replace permanent workers 20% said yes, with 27% of councils in companies employing more than 2,000 workers saying yes.

The survey also showed that, in 23% of companies, between 10% and 50% of the employees are agency workers.

IG Metall referred to the survey results as alarming. It said temporary agency work has changed from being a limited tool for dealing with particular peaks of production to an instrument of wage dumping. The union revealed it had negotiated agreements in 500 companies to improve terms and conditions for agency workers, but that works agreements were only second best to a sound re-regulation – which, according to IG Metall, must include a legal limit on the duration for which agency workers can be hired. It also wants new regulations to ensure that agency workers are paid on an equal footing with other employees. The union is also asking that temporary work agencies should no longer be allowed to employ workers only for the period during which they are hired out.

Reactions

The Employers’ Associations for the Metal and Electrical Industry (Gesamtmetall) emphasised in a press release (in German) that, following the economic crisis, it was not unusual for employers, uncertain about the future, to opt for agency workers and those on fixed-term contracts. Gesamtmetall rejected the claim that agency work would replace standard employment. It also warned against tighter regulation of temporary agency work and rejected the calls for equal pay.

Commentary

IG Metall’s survey is part of its broader campaign for new laws on temporary agency work. The union also campaigns on behalf of temporary agency workers, focusing particularly on equal pay. The works council survey came shortly before the union concluded a new collective agreement in the steel industry securing the right for temporary agency workers to be paid according to levels which apply to directly employed workers (DE1010019I). The union faces strong opposition from employers as it aims to negotiate similar agreements for other industries.

Heiner Dribbusch, Institute of Economic and Social Research (WSI)

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