Transnational nature of temporary agency work

The number of temporary agency workers has risen steadily in Luxembourg since 1999. This development can be explained by the increasingly cyclical and seasonal nature of labour demand, which is also observable in other countries. Temporary agency work reflects the country’s upwards trend in employment, but at a much faster pace. Cross-border workers often participate in this form of work, and external companies frequently source their workers in Luxembourg.

About the study

Temporary agency workers – meaning workers who are employed through temporary work agencies – in Luxembourg were the subject of a study (in French, 3.4Mb PDF) by the Centre for Population, Poverty and Public Policy Studies (Centre d’Études de Populations, de Pauvreté et de Politiques Socio-Économiques)/International Network for Studies in Technology, Environment, Alternatives, Development (CEPS/Instead). This organisation is the Luxembourg representative of the European Employment Services (Eures).

Set up in 1993, Eures is a cooperation network between the European Commission and the public employment services of the Member States within the European Economic Area (EEA). The purpose of Eures is to provide information, advice and recruitment or placement services for the benefit of workers and employers, as well as for any citizen wishing to benefit from the principle of the free movement of workers.

Study findings

Overall, temporary agency work in Luxembourg grew by 16.1% over the year to the first quarter of 2007, whereas other forms of employment increased by 4.1% during the same period. This pronounced growth in temporary agency work, which accounts for about 2% of paid employment in Luxembourg – or 7,328 people out of 309,405 workers in the first quarter of 2007 – is also affecting overall trends in employment. Thus, paid employment in Luxembourg rose by 4.3% in the first quarter of 2007, a growth figure of which 0.2 percentage points was attributable to temporary agency work.

Workers of French nationality are the most numerous in the temporary agency work market in Luxembourg. French citizens are followed by Belgians, whose proportion of the market has remained more or less constant, then by Luxembourgers – in declining numbers – and finally by Germans, whose numbers, although low, are on the increase (Figure 1).

Trends in average proportion of temporary agency workers, by nationality (%)

Source: General Social Security Inspectorate (Inspection Générale de la Sécurité Sociale, IGSS)

Resident and cross-border workers

Luxembourg employs a significant number of cross-border or frontier workers. These are workers who live in neighbouring countries such as Belgium, France and Germany, but work in Luxembourg. Temporary agency workers of French nationality are almost exclusively cross-border workers (Figure 2). Historical reasons can explain the large proportion of frontier workers of French nationality. The French region of Lorraine has been particularly hard hit by unemployment in recent years, giving rise to an influx of workers from that region into the temporary positions available in the neighbouring country. The unemployment benefit system in France is another factor: up to July 2002, benefit payments decreased with the number of years being unemployed, pushing claimants into temporary jobs in Luxembourg. This system changed after that date (FR0207102N, FR0106161N), resulting in a slight decline in the number of French cross-border workers.

Residential and frontier temporary agency workers (%)

Note: *second half of 2001. The proportions for each year represent average values.

Source: IGSS

As regards cross-border workers of Belgian nationality, their relatively low numbers can be accounted for by the generally solid performance of the economy in Belgium, as well as by the length of time during which unemployment benefits are granted. The latter situation creates less of an incentive to look for work, even of a temporary nature.

The lower proportion of cross-border workers of German nationality is due to the way in which temporary agency work is organised in Germany. There, workers are attached to the temporary work agency, which continues to pay them even when it does not send them out on contractual assignments at a company. Thus, temporary agency workers in Germany have greater job security of a certain kind than in Luxembourg. However, the national temporary agency work system in Germany is changing fast, and the effects of this will need to be monitored over time.

The proportion of cross-border workers who are Luxembourgish is limited. Nevertheless, this is an increasingly prominent feature of the conventional employment market, which can be accounted for by Luxembourgers’ desire to live beyond their national frontiers due to the high property, rental and land prices in their own country.

Companies using temporary agency workers

Most of the companies using temporary agency workers are located in Luxembourg itself. However, the number of companies from outside Luxembourg using temporary agency workers has increased substantially since 2000 (Figure 3).

Companies using temporary agency workers in Luxembourg and other countries

Source: IGSS

Cases can be found where, for example, a temporary agency worker is living in Belgium, registers with a temporary work agency in Luxembourg and is then sent on a work assignment to France. Such international placements are a common occurrence, as companies located outside Luxembourg use temporary agency workers registered in Luxembourg; indeed, over the period 2002–2005, this practice of assigning workers in another country has grown. In 2002, 7% of temporary agency workers were sent on assignment to a foreign country, and the proportion increased to 11.1% in 2003, 14.2% in 2004 and 17% in 2005. This development is related to the level of employers’ social security contributions, with companies located outside Luxembourg seeking temporary agency workers in Luxembourg, where these contributions are lower.

Reference

Clément, F., Le travail intérimaire au Luxembourg: Les evolutions les plus récentes (3.4Mb PDF), Centre de Ressources et de Documentation (CRD) Eures Luxembourg – Relations Professionnelles et Emploi (REPREM), CEPS/Instead, Les cahiers transfrontaliers d’Eures, Luxembourg, No. 1/2008.

Véronique De Broeck, Prevent