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Recruitment companies expect to benefit from rising unemployment across Europe as crisis-hit governments introduce long-awaited labour reforms to create jobs.
They hope to gain from moves to liberalise labour markets to tackle the growing jobs problem, said Denis Pennel, managing director of Ciett, the global recruitment industry’s biggest trade confederation. “It’s a massive opportunity,” he said.
Unlike in the UK, where most job positions are filled by recruitment agencies, the vast majority of recruitment in continental Europe is still done in-house, in both private and public sectors.
Recruitment companies say that their growth has been held back by restrictive regulation, which in parts of Europe prevents them from working with public bodies and placing candidates in permanent roles.
Recruitment companies say they are encouraged by the quickening pace of deregulation. France opened its public sector to recruitment companies in 2009, and allowed them to work with apprenticeship schemes last year, along with Italy.
Spain lifted a ban last year on recruitment agencies placing permanent workers, while other countries including Germany, Belgium and Poland also introduced significant liberalising measures.
The reforms are coming despite resistance from trade unions, which argue that the growth of recruitment agencies can weaken workers’ rights.
Critics of the sector’s desire for a leading role in tackling unemployment point to recent allegations of “systematic fraud” at A4e, a UK agency that has worked on welfare-to-work schemes, and which denies the claims against it.
Labour market reform is a stated priority of Mariano Rajoy’s government in Spain, while Elsa Fornero, the Italian labour minister, recently attacked the country’s jobs market as “inefficient and unfair” while promising a big reform programme. “I would not be surprised if this involves a greater role for recruitment agencies. This is not just a job for the public sector,” said a person close to the Italian government.
The reforms are significantly increasing the addressable market for recruiters, meaning that Randstad, one of the biggest recruiters by revenues, expects to maintain annual turnover growth in Europe of at least 7 per cent despite the continent’s troubled economic outlook, said Fred van Haasteren, an executive vice-president at the Dutch company.
Kean Marden, a recruitment analyst at Jefferies, said that “labour market deregulation does lead to an enhanced growth opportunity for staffing agencies”, adding that the opening of the French public sector had “increased the potential available market by a third”.
However, while the groups’ long-term growth prospects were improving as a result of the reforms, they could be held back in the near term by low confidence among companies and employees, he said.
“If candidate confidence is very low, then the labour market grinds to a halt.” He also said the “political dimension” to the debate meant that some hoped-for reforms might not materialise.
Source: Financial Times
