The German temporary staffing industry: growth, development, scandal and resistance

• Published date: 01 March 2016
• Author: Jennifer Ferreira
• DOI: http://doi.org/10.1111/irj.12133
• Date: 01 March 2016

The German temporary staffing industry:

growth, development, scandal and

resistance

Jennifer Ferreira

ABSTRACT

In Germany the size of the temporary agency workforce has almost doubled between

2002 and 2012 prompted by deregulation and expansion of temporary staffing agency

networks. This article examines the growth of the temporary staffing industry in Ger-

many revealing important milestones in the regulatory framework transformation.

The article then explores the role of key actors in the development of temporary

staffing industry in the Germany labour market, in particular the shifting positions

of trade unions in relation to temporary agency work, as well as intervention from

the state with re-regulation in order to mitigate for exploitative affecting temporary

agency workers. The findings highlight that while the growth of the German

temporary staffing industry has been substantial, and that the state has been an active

agent, it has not been without its controversies and challenges, and that features of the

industry remain potential barriers for its future development.

1 INTRODUCTION

In 2012 a minimum wage for temporary agency workers was introduced in Germany,

a year before the country’s national minimum wage was approved for all sectors

(BBC, 2014; Stettes, 2012), indicating a recognition of the importance placed on reg-

ulating for ‘decent work’(ILO, 1999) in the Germany temporary staffing industry

(TSI). The development of this legislation revealed the key relationships and tensions

that surround the issue of temporary agency work (TAW) in Germany. After a series

of deregulatory measures since 1972 when TAW was legalised, the industry has

grown significantly, almost doubling between 2002 and 2012 (Bundesagentur für

Arbeit, 2015). Despite significant growth in the number of workers, the proportion

of TAW in overall employment did not reach higher than 2.1 per cent (slightly higher

than the EU average of 1.7 per cent) suggesting that there were potential barriers to

growth (Bundesagentur für Arbeit, 2015).

Since the late 1980s the TSI has experienced a substantial increase in size and pres-

ence in labour markets across the globe (Coe et al., 2007). By 2010, Europe repre-

sented the largest regional entity for the TSI, constituting 38 per cent of the

industry’s€247 billion global revenue, and a 25 per cent of the global number off tem-

porary staffing agencies (Ciett, 2012a). The TSI traditionally concentrated in the

❒Correspondence should be addressed to Jennifer Ferreira, Centre for Business in Society, Coventry

University, Jaguar Building, Priory Street, CV1 5DL; e-mail: Jennifer.Ferreira@coventry.ac.uk

Industrial Relations Journal 47:2, 117–143

ISSN 0019-8692

© 2016 John Wiley & Sons Ltd

manufacturing and service sectors has expanded into many different areas of the

economy, evolving from a small-scale service provider, located in a handful of large

industrial and major administrative centres, to a near ubiquitous and diversified

business sector (Jahn and Bentzen, 2012; Neugart and Storrie, 2006; Spermann,

2011). Growing to over 9,400 agencies and over 838,000 temporary agency workers

by 2014 (Bundesagentur für Arbeit, 2015), the growth of the TSI in Germany has

been rapid, but not without controversy or resistance. The wider institutional context

contributed to a national system for temporary staffing which had previously been

largely shaped by interactions between trade associations, trade unions and

government through processes of collective bargaining (Coe and Ward, 2014; Coe

et al., 2009).

This paper provides insights into the German TSI to examine the importance of re-

lationships within the wider institutional framework of the industry in determining its

characteristics. First, the key growth dynamics of the TSI are explored, followed by

an overview of how the current regulatory framework developed. The issue of regula-

tion is then used to explore important drivers of change in the Germany temporary

staffing agencies, revealing a number of controversies and challenges. Changes to

the landscape of trade associations and trade unions relevant for the temporary

agency worker sector are explored before discussion of an important event related

to the use of in-house temporary staffing agencies which began to raise the profile

of exploitative practices affecting temporary agency workers. The article then moves

to chart the developments which led to the minimum wage for temporary agency

workers in Germany, a significant milestone in the regulatory history of TAW in

the country. Together these issues reveal how the state has acted as both a de-

regulator and re-regulator at different times, and in doing so has made efforts to mit-

igate exploitative practices in the temporary staffing sector, but also how other key re-

lationships present challenges for the growth of TAW in Germany.

2 RESEARCHING TEMPORARY AGENCY WORK IN GERMANY

TAW involves a triangular relationship between an employer (firm), an agency (a sec-

ond firm) and a worker, whereby an agency hires workers for the purpose of placing

them in contracted placements (often open-ended) provided by client firms (House-

man, 2001; Mitlacher, 2007a; 2007b; Nielen and Schiersch, 2014). But beyond this tri-

angular relationship there are a range of key actors (and interactions) which

constitute a national TSI: regulations on temporary staffing agencies and mainstream

employment; welfare provision; involvement of the state in employment; national and

international trade bodies; trade unions; domestic temporary staffing agencies; trans-

national temporary staffing agencies and the composition of the wider economy (Coe

and Ward, 2014; Coe et al., 2009).

The research for this article was conducted as part of a wider project which exam-

ined different institutional contexts for the TSI in three countries to represent different

socio-economic systems as well as TSIs of different size, form and maturity. Informed

by wider discussions around national systems of production, ‘varieties of capitalism’,

business and welfare systems (Becker, 2009; Boyer and Hollingsworth, 1997; Esping-

Andersen, 1990; Hall and Soskice, 2001; Hancke, Rhodes, and Thatcher, 2007; Lane

and Wood, 2009; Whitley, 1999), Germany, the Czech Republic and the United

Kingdom were selected in order to reflect broadly different socio-economic systems.

Here Germany represented an exemplar of a corporatist policy regulatory context

118 Jennifer Ferreira

© 2016 John Wiley & Sons Ltd