AN ECONOMIC ASSESSMENT OF         AGENCY WORKER DIRECTIVE   A Report Prepared for National Recruitment  Federation by Jim ...
BACKGROUNDThe Directive on Temporary Agency Work (Directive 2008/104/EC) was adopted and publishedon December 5th 2008 and...
RECENT TRENDS IN THE IRISH LABOUR MARKETThe Irish economy is currently struggling to emerge from the deepest and most diff...
Table 1Employment TrendsSECTOR                            CHANGE FROM           CHANGE OVER 12             NUMBERS EMPLOYE...
rate stood at 14.5 per cent of the labour force, compared to 4.3 per cent at the end of 2006(Figure 1).The number of peopl...
THE BENEFITS OF THE AGENCY WORK MODELThe use of agency workers has become an important feature of the Irish labour market ...
It allows companies the flexibility to satisfy increased business and stronger demand in a       flexible manner until it ...
THE INTERNATIONAL EXPERIENCEAt a global level, the use of agency workers has increased significantly over the past decade....
The CBI is fundamentally opposed to the principle that the staff of one firm (the Agency) shouldbe compared to the staff o...
BUSINESS COMPETITIVENESSCompetitiveness is a key driver of economic performance and employment creation. As well asincludi...
Within the Education, Skills and Research & Development category, the key criteria areidentified as:        Access to Skil...
This reflected adverse exchange rate movements as well as sharp increases in the general costof doing business and in cons...
In overall terms, the cost of doing business and the cost of living in Ireland have improvedduring the recession. However,...
ASSESSMENT OF THE POSSIBLE IMPACT OF THE DIRECTIVE ONTEMPORARY AGENCY WORKIt is clear from the foregoing analysis that whi...
According to the multi-nationals interviewed the projected extra costs arising from theDirective could include:       Bonu...
The HSE is also a major user of agency workers and they play a key role in delivering front linehealth services. With seri...
It is far from clear what benefits amount to pay. Companies that provide benefits such       as health insurance, pension ...
CONCLUSIONSThe Directive sets out the principle of equal treatment that the ‘basic working and employmentconditions of tem...
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NRF AWD Economic Assessment

  1. 1. AN ECONOMIC ASSESSMENT OF AGENCY WORKER DIRECTIVE A Report Prepared for National Recruitment Federation by Jim Power, Jim Power Economics Limited. September 2011[Employment retention and creation must be the key objective of Irish policy makers in thecurrent very challenging environment. A flexible and competitive workforce is a keyrequirement for achieving this objective. The proposed Agency Worker Directive runs the risk ofundermining the flexibility and competitiveness of the Irish workforce and needs to beconsidered very carefully by Irish policy makers.]
  2. 2. BACKGROUNDThe Directive on Temporary Agency Work (Directive 2008/104/EC) was adopted and publishedon December 5th 2008 and is due to be transposed into law in all EU member states byDecember 5th 2011.The aim of the Directive is to establish ‘a protective framework for temporary agency workers,which is non-discriminatory, transparent and proportionate, while respecting the diversity oflabour markets and industrial relations’.1 The Directive stipulates that ‘the basic working andemployment conditions applicable to temporary agency workers should be at least those whichwould apply to such workers if they were recruited by the user undertaking to occupying thesame job’. Basic working and employment conditions are those laid down by legislation,regulations, administrative provisions, collective agreements and/or other binding generalprovisions relating to the duration of working time, overtime, breaks, rest periods, night work,holidays and public holidays, and pay. It also provides that temporary agency workers must beinformed of any vacant posts in the firm where they are working and given the sameopportunity as other workers to apply for permanent employment; and must be given access tothe amenities or collective facilities such as canteen, child-care and transport services on thesame basis as other employees unless objective reasons can be found to do otherwise.The Directive applies to workers with ‘a contract of employment or employment relationshipwith a temporary work agency who are assigned to user undertakings to work temporarilyunder their supervision and direction’. It applies both to public and private sector activities.Temporary agency work is a transparent process that involves a business relationship betweenthe Agency, the worker and the end user/client. It has become an increasingly important part ofthe workforce in many countries, including Ireland. It fulfills a very valuable role and provides alevel of flexibility for companies, which is absolutely essential in the increasingly competitiveand globalised economy. This is particularly relevant in the context of the serious economic andbusiness difficulties currently facing the global economy.The proposed legislation poses serious risks for the Irish economy as it threatens to underminethe flexibility that is so essential, particularly in the multi-national sector.1 Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency thwork. Official Journal of the European Union, December 5 2008. 2|Page
  3. 3. RECENT TRENDS IN THE IRISH LABOUR MARKETThe Irish economy is currently struggling to emerge from the deepest and most difficultrecession that the country has ever experienced. Business and consumer confidence is veryweak across the economy; the public finances are still in an unsustainable situation due to thesharp decline in the tax base and the unsustainably high cost of running the country; theproperty sector is still weakening; and the banking system is not functioning as an intermediarythat channels capital from those who save to those who want to borrow to invest. The exportperformance is the key bright spot in the economy.Not surprisingly against this very challenging economic background the labour market hasdeteriorated in a very damaging fashion - unemployment has increased sharply and significantjob losses have occurred across the private sector, and more recently in the public sector.Table 1 gives a sector-by-sector breakdown of recent employment trends across the economy.The most up to date data refer to the second quarter of 2011. Between the highest point of thelabour market in the third quarter of 2007 to the second quarter of 2011, total employment inthe economy declined by 328,500.The second column in Table 1 shows the decline from the sectoral peak to the second quarterof 2011 by sector. The construction sector has clearly experienced the most dramatic decline inemployment. However, significant job losses have also occurred in areas such as manufacturingindustry, the wholesale & retail trade, and accommodation & food services. More recently, joblosses are starting to occur in the public sector as the consolidation of the public finances hasresulted in a ban on recruitment across the public sector.It is also becoming apparent that the very negative momentum that has characterised thelabour market for the past three years is decelerating, as evidenced by the decline of 2 per centor 37,800 in the 12-month period to the end of the second quarter. In the year to the secondquarter of 2010, the annual rate of decline was 4.1 per cent. These increasing signs ofstabilisation in the labour market are consistent with growing evidence that the overalleconomy is now stabilising after a precipitous decline in activity from 2008 onwards. In the firsthalf of 2011, gross domestic product (GDP) was 1.3 per cent higher than the first half of 2010and gross national product (GNP) was 1 per cent higher. One of the key challenges is that therecovery in the economy is being driven by the external sector, with much of the export growthbeing driven by productivity improvements rather than employment creation. A meaningfulrecovery in domestic demand will be a pre-requisite for a sustainable improvement inemployment. 3|Page
  4. 4. Table 1Employment TrendsSECTOR CHANGE FROM CHANGE OVER 12 NUMBERS EMPLOYED PEAK2 MONTHS Q2 2011Agriculture, F&F -30,400 +900 85,800Industry -71,900 -6,400 233,700Construction -162,900 -19,600 105,700Wholesale & Retail Trade -48,600 -3,500 265,600Transportation & Storage -2,600 +5,000 94,700Accommodation & Food -30,600 -12,600 107,200ServicesInformation & - +800 74,900CommunicationsFinancial, Insurance & Real -5,700 +700 103,900EstateProfessional, Scientific & -14,800 +900 101,800TechnicalAdministrative & Support -16,600 +4,800 66,100ServicesPublic Admin. & Defence -7,500 -7,600 100,200Education -7,400 -3,300 146,500Human Health & Social - +3,000 237,900WorkOther -13,500 -900 97,200Total -328,500 -37,800 1,821,300Source: CSO, Quarterly National Household Survey, September 2011.The Live Register is not designed to measure unemployment in the economy. It includes part-time workers (those who work up to three days per week), and seasonal & casual workersentitled to Jobseekers’ Benefit or Allowance. However, the live register is still a good gauge oflabour market conditions. Between the third quarter of 2006 and August 2011 the number ofpeople signing on the live register increased by 321,207. In August 2011, the unemployment2 The peak of employment in various sectors may have occurred in different quarters from the peak in overallemployment. Hence the figures in the column do not add up to total decline in employment. Total employmentpeaked in Q3 2007. 4|Page
  5. 5. rate stood at 14.5 per cent of the labour force, compared to 4.3 per cent at the end of 2006(Figure 1).The number of people classified as long-term unemployed accounted for 53.9 per cent of totalunemployment in the second quarter of 2011 and the long-term unemployment rate stood at7.7 per cent of the labour force, up from just 2.6 per cent two years earlier.Figure 1Source: CSO Live Register, September 2011Clearly labour market conditions remain very difficult. In the programme for government3, theincoming administration gave a strong commitment to support the protection and creation ofjobs. It followed this commitment up with a ‘jobs initiative’ in May 2011. This is a clear andjustified recognition that from a political, social and economic perspective, the preservation andcreation of jobs has to be given key priority status.It is in this context that the proposed implementation of the Directive on Temporary AgencyWork should be judged. In this regard the question has to be asked if the proposed measurewill enhance or damage the ability of the economy to support the protection and creation ofjobs. The evidence appears to suggest that job prospects would be more likely to be damagedby the directive.3 ‘Towards Recovery – Programme for a National Government 2011-2016, March 2011. 5|Page
  6. 6. THE BENEFITS OF THE AGENCY WORK MODELThe use of agency workers has become an important feature of the Irish labour market inrecent years. There are many reasons why certain employers engage staff through agencies,but the overriding reason is the flexibility that it permits.The multi-national sector and the health service are two of the principle areas of the Irishlabour market where agency workers play an important role in the functioning of the market.However, agency workers are now being increasingly utilized in retail, telesales, credit control,office administration, human resources, industry, finance and the hospitality sector. The growthin agency workers usage reflects the fact that it is a model that works for both employers andthe majority of employees.There are a number of significant reasons why employers utilize agency workers. The keyreasons include: Adding to the permanent workforce often requires particular sanctions which limit an employer’s ability to be flexible in taking on new employees; For companies with a ‘freeze’ on permanent employment, the use of agency workers to fulfill a clear requirement for extra staff is frequently used to circumvent such limitations: They fill roles temporarily vacated by permanent employees due to a variety of reasons such as sick-leave, maternity leave, holidays or career break; The use of agency workers obviates the need for employers to engage in a time consuming and often expensive search process. It allows companies outsource recruitment and achieve cost savings; They allow new skills to be tested; They allow specialist skills to be acquired for short-term projects; Multi-national companies setting up in a country or expanding often use agency workers until they can fill all of the vacancies on a full-time basis. This allows production proceed from an early stage; The use of agency workers allows greater control over payroll costs, which is important for any company in an increasingly competitive globalised economy, but is particularly important in the current very difficult global economic circumstances; 6|Page
  7. 7. It allows companies the flexibility to satisfy increased business and stronger demand in a flexible manner until it becomes clear that the growth in business is permanent and sustainable, rather than just a temporary cyclical phenomenon. In many cases companies cannot commit to long-term hiring until it becomes clear that the increase in business is quasi-permanent; In the current very difficult and challenging economic environment, the use of temporary workers does provide greater flexibility in downsizing in order to ensure the longer-term survival of the business; and For companies that require short-term staff, the use of an agency simplifies the logistics of sourcing and paying suitable candidates.The benefits of agency workers for employers are very clear, but for the agency workersthemselves, the process can be very beneficial and positive. The reality is that the jobs createdoffer convenient, high quality employment for many workers in Ireland and worldwide andoffer a positive alternative for many. For example, in the case of workers who do not want to orwho are not able to commit to full-time employment, the agency option is very beneficial. Italso facilitates the gaining of valuable work experience and the enhancement of a C.V., whilethere is always the possibility that a temporary assignment will become permanent if thetemporary assignment is successful. It also allows agency workers work for a number ofdifferent employers and gain broad work experience. For life/work balance, the agency modelcan make a very positive contribution.In the current difficult economic and labour market environment, attaining full-timeemployment is very difficult and the agency route does provide a very valuable opportunity tomaintain existing skills and develop new ones. This could be of major benefit if and when morenormal economic and labour market conditions materialize. 7|Page
  8. 8. THE INTERNATIONAL EXPERIENCEAt a global level, the use of agency workers has increased significantly over the past decade. Itis estimated that the number of agency workers in full-time equivalents has increased from 5.2million in 1999 to 8.9 million in 2009.4 In 2009, almost 36 per cent of those were located inEurope, with the UK accounting for over 33 per cent of the European total. In the rest of theworld excluding Europe, the USA accounts for almost 35 per cent of the total. Globally, the USAand UK combined account for 34 per cent of total agency workers.During the global recession the numbers declined, but strong growth has occurred in 2010 and2011. Eurociett reports that the agency work industry, which is defined as the number of hoursworked by agency workers, increased by 8 per cent in the EU in the year to June 20115. Theagency work industry in Europe has been expanding every month over the past 15 months andis now close to pre-crisis levels again.The growth in agency work has coincided with a decline in unemployment. The inverserelationship between agency work and unemployment is quite strong. Consequently, thechallenge now is that with EU growth slowing again, agency work could start to decline.For businesses that use agency workers, the key issue is that under the Directive, the agencyworker will be entitled to the same basic working and employment conditions as if they hadbeen recruited directly by the hirer on day one of the assignment. Employers will be faced withthe choice of absorbing the extra cost associated with agency workers under the terms of theDirective, or alternatively stop using agency workers and either force existing staff to workmore overtime, hire more casual staff or eschew business expansion. The UK has obtained aderogation of 12 weeks.In the UK, the Confederation of British Industry (CBI) research6 indicates that in sectors such asenergy and water, agency workers typically represent 7 per cent of the workforce and 5 percent in manufacturing. In contrast, in lower paid and lower skilled sectors such as retail, agencyworkers account for just 1 per cent of the workforce. This contradicts the notion that agencyworkers are low skilled and low paid. Indeed the experience in the UK, Ireland and elsewherewould suggest that agency workers are generally high skilled and high paid.4 ‘The Agency Work Industry around the World’, CIETT, 2011.5 ‘Agency Work Business Indicator’, eurociett, September 2011.6 CBI News Release, September 2007. 8|Page
  9. 9. The CBI is fundamentally opposed to the principle that the staff of one firm (the Agency) shouldbe compared to the staff of another (the user)7. The CBI research suggests that the Directivecould place 252,000 agency placements in jeopardy, which is equivalent to 23.6 per cent oftotal agency workers in 2009.7 ‘CBI Response to the BIS consultation on the agency workers directive’, CBI, July 2009. 9|Page
  10. 10. BUSINESS COMPETITIVENESSCompetitiveness is a key driver of economic performance and employment creation. As well asincluding costs such as consumer price inflation, wages and the numerous non-pay costs ofdoing business, it is influenced by factors such as the quality of the labour force, labour marketregulation and flexibility, the legal system, the quality of the physical and IT infrastructure, andthe general ease of conducting business. All of these factors are particularly important forattracting mobile international investment, which has been a very important part of Ireland’seconomic development strategy for at least five decades.Attracting Foreign Direct InvestmentIreland has a strong track record in terms of attracting foreign direct investment and hassucceeded in attracting some of the world’s major corporations to the country. According tothe IDA8, the 985 companies that it supports accounted for 138,968 jobs in 2010. Of these jobs,125,432 or 90.3 per cent were full-time jobs. The remaining 13,536 jobs were Part-Time,Temporary and Short-Term Contract employees.Ireland does punch above its economic weight in terms of attracting foreign direct investment,particularly from the USA. Gray et all (2010)9 identify eight factors that influence thecomparative advantage of a country in terms of attracting mobile foreign investment. The eightfactors are: 1. Access to Markets; 2. Education, Skills and Research & Development; 3. Productivity and Labour Costs; 4. Taxation and Cost of Capital; 5. Intermediate Input Costs; 6. Ease of Doing Business; 7. Exchange Rates; and 8. Demonstration Effects.8 IDA Ireland, Annual Report and Accounts 2010.9 Gray, Alan W., Swinand, Gregory P., & Batt,William H., ‘Economic Analysis of Ireland’s Comparative Advantagesfor Foreign Investment, 2010. 10 | P a g e
  11. 11. Within the Education, Skills and Research & Development category, the key criteria areidentified as: Access to Skilled Employees; Flexible Labour Force; Creativity and Imagination of People; and Quality of Research and Development.Given Ireland’s ongoing strong track record in terms of attracting mobile foreign investment, itclearly has a number of competitive advantages, outside of the attractive 12.5 per centcorporation tax rate. According to the IMD World Competitiveness Yearbook 2011, Irelandranks 1st for the availability of skilled labour, 4th for labour productivity,3rd for the availability offinancial skills and 7th for the adaptability and flexibility of people.CompetitivenessThe environment for attracting foreign direct investment has become more challenging asmany emerging economies in particular, compete much more aggressively for mobileinvestment. Ireland’s position has also been pressurised by the sharp increase in the costs ofdoing business after 2000.At a macro-economic level, the Harmonised Competitiveness Indicator (HCI) is a key measure ofa country’s cost competitiveness measured against its major trading partners.There are three ways of measuring the HCI: 1. The nominal HCI, which includes inflation; 2. The real HCI, which is deflated by consumer prices; and 3. The real HCI deflated by producer prices.Between 2000 and 2008, Ireland lost considerable international cost competitiveness on allthree metrics. Between the end of 2000 and April 2008: The nominal HCI appreciated by 31.4 per cent; The real HCI deflated by consumer prices appreciated by 39.4 per cent; and The real HCI deflated by producer prices appreciated by 26.3 per cent. 11 | P a g e
  12. 12. This reflected adverse exchange rate movements as well as sharp increases in the general costof doing business and in consumer prices. This loss of competitiveness was instrumental in theslowdown in both service and merchandise exports, and the pressure on the capacity to attractforeign direct investment. Following the onset of recession in 2008, Ireland’s external costcompetitiveness improved as most prices and costs responded to the changed economiccircumstances.Between April 2008 and July 2011: The nominal HCI has fallen by 3.8 per cent; The real HCI deflated by consumer prices has fallen by 12 per cent; and The real HCI deflated by producer prices has fallen by 8.3 per cent.This reflects favourable exchange rate movements, a downward adjustment to consumerprices, and a decline in many of the costs of doing business.Figure 2 tracks these three different measures of Ireland’s external competitiveness.Figure 2Source: Central Bank of Ireland 12 | P a g e
  13. 13. In overall terms, the cost of doing business and the cost of living in Ireland have improvedduring the recession. However, the country remains relatively expensive in an internationalcontext. According to analysis from the National Competitiveness Council (NCC) 10, Ireland hasmade progress in terms of its overall cost competitiveness. Pay costs have improved, butIreland still has the 11th highest total labour costs in the OECD, but is in line with a number ofwestern European countries. When net wages are considered, Ireland has the fourth highestnet wage levels in the OECD-28, and is 40 per cent higher than the OECD-28 average. This ispartly attributed to the relatively small difference between before-tax and after-tax wages inIreland.Ireland has also experienced reductions in many non-pay costs, but in relative terms the impactof these decreases on Irish cost competitiveness has been reduced as there have also beensignificant cost decreases in many other countries.Ireland has a considerable challenge ahead to continue to improve the general competitivenessenvironment, but it is essential to do so in order to re-create a strong and sustainable economicmodel. Labour market flexibility is a key ingredient for national competitiveness and thetransposition into law of the Temporary Agency Worker Directive will make labour moreexpensive and undermine the flexibility of the labour market.10 Ireland’s Competitiveness Scorecard 2011’, National Competitiveness Council, Forfas, July 2011. 13 | P a g e
  14. 14. ASSESSMENT OF THE POSSIBLE IMPACT OF THE DIRECTIVE ONTEMPORARY AGENCY WORKIt is clear from the foregoing analysis that while Ireland has regained some of its lostcompetitiveness as result of the recession, the country still faces immense challenges inretaining existing foreign direct investment and attracting new investment. The mostappropriate response to this challenge is to ensure that competitiveness, broadly defined,remains top of the domestic policy agenda.The flexibility of the labour market is clearly of enormous importance in terms of overallcompetitiveness, and anything that undermines this flexibility would underminecompetitiveness and would not be positive for the economy in general and for employment inparticular.Based on interviews with a number of employers who utilize agency workers and on aconsiderable body of research, it is very clear that employers in Ireland, be they foreign-ownedor domestic employers, regard the proposed introduction of the Directive on TemporaryAgency Work as a development that will damage the flexibility of the labour market andultimately undermine employment in the economy.For the multi-national sector, where there is a significant reliance on agency workers due to theflexibility that they give rise to, the Directive as it stands with no qualifying period, is viewed asa development that would undermine flexibility and competitiveness. For multinationalcompanies and indeed for all users of agency workers, the extra financial cost and the increasedbureaucracy involved in applying the directive would be likely to force companies to questiontheir use of temporary agency workers and to evaluate from a cost perspective if a temporaryagency worker is one they can justify and maintain. The clear view is that a statutory regimethat is overly restrictive will act as a major disincentive to employers to engage the services ofagency workers. For an economy that is already under pressure to maintain existing levels offoreign direct investment and attract new investment, the application of the Directive as laidout in the legislation would not be helpful.A number of multi-nationals were interviewed in the preparation of this report, and themessage is very clear – the Temporary Agency Worker Directive will add considerably to thecost of doing business and could ultimately threaten the survival of the company in Ireland. 14 | P a g e
  15. 15. According to the multi-nationals interviewed the projected extra costs arising from theDirective could include: Bonus payments; Sick pay; Pension contributions; Health cover; Life Assurance; Disability Insurance; Service awards; Attendance Bonus Scheme; Recognition awards; Stock Options; Discount on shares purchased; Gym access; Service facilities; Social club and related events; and Study sponsorship.For a large multi-national, the additional costs incurred as a result of the Directive could exceed€5 million per annum, depending on the number of agency workers employed.One relatively small multi-national interviewed stated categorically that the use of a higherpercentage of agency workers enabled the company to hold on to a contract with a large USmulti-national. In the absence of the cost savings achieved, the company would have lost thecontract and this would have impacted directly on over 500 jobs. The use of agency workerscontributed to a very competitive contract that saved the jobs.The clear message from a number of multi-nationals interviewed is that a statutory regime thatis too restrictive would undermine competitiveness and cost jobs, if not business survival. 15 | P a g e
  16. 16. The HSE is also a major user of agency workers and they play a key role in delivering front linehealth services. With serious limitations on the recruitment of full-time staff within the healthservice, agency workers are being used in increasing numbers. The Directive will addconsiderably to the HSE’s costs and will make it much more difficult to deliver front lineservices. In an environment where the HSE’s funding is being cut back, it is very hard to see howit can possibly maintain acceptable services if it is forced to carry the extra cost burden impliedby the Directive. For non-HSE health providers, the extra costs will also prove very difficult tosustain.A number of issues arise in relation to the legislation: It could give rise to a potentially significant increase in cases brought against employers, which they would have to defend at great cost both financially and in management time; Affording agency workers the same rights as existing full time employees who would most probably have a much greater knowledge and understanding of the job would not make sense; It would seriously complicate any redundancy programme a company might be engaging in for business survival; Where employers who use agency workers have to bear the cost of the agency fees as well as the wages of the worker, the cost implication could make it uneconomic to acquire the services of an agency worker in the first place; The costs involved in the Directive for the employment agencies who supply the workers, and the likely reduction in demand for agency workers, would represent a serious threat to the recruitment industry, which currently employs over 3,000 people in Ireland. The recruitment agencies fulfill a very important role in the proper functioning of the labour market and provide a very valuable service to employers. It is hard to argue that any legislation that would undermine the recruitment industry would be in the best interests of the overall economy and the labour market; Given the changed nature in the relationship between the recruitment agency and the employer that the Directive would imply, considerable uncertainty would arise in relation to issues such as where the liability for any breaches of the legislation might rest; and 16 | P a g e
  17. 17. It is far from clear what benefits amount to pay. Companies that provide benefits such as health insurance, pension contributions and club subscriptions would have to calculate what all of these benefits are worth and add it to the rate of remuneration paid to agency workers. This would significantly increase the cost of hiring agency workers and would undoubtedly reduce demand for such workers.Agency workers play a key role in the efficient functioning of the labour market and for avariety of reasons already explained; provide considerable benefits to both employers and theagency workers themselves. It is clear that in transposing the Directive into nationalemployment legislation in Ireland, clarity will have to be provided on the exact definition ofpay, where the liability actually resides and a derogation period of up to 12 months would beadvisable.It is estimated that Ireland currently has around 35,000 actual agency workers servicingemployers. It is very difficult to be definitive about what impact the Directive if applied literallywould have on this employment. However, it is clear that the Directive as literally interpretedwould undermine demand for agency workers and make them considerably less attractive tomany employers. If the UK analysis is applied to Ireland, this could result in the loss of up to8,400 agency workers, and possibly up to another 1,000 job losses in the recruitment industry.Given the uncertainty surrounding the exact impact and the attitude of employers towards theDirective, transposing the Directive in its literal form is not a risk work taking. 17 | P a g e
  18. 18. CONCLUSIONSThe Directive sets out the principle of equal treatment that the ‘basic working and employmentconditions of temporary agency workers shall be, for the duration of their assignment at a userundertaking, at least those that would apply if they had been recruited directly by thatundertaking to occupy the same job’. The default position in the Directive is that this principleshould apply from day one of the agency worker’s assignment. However, the Directive alsoallows some flexibility as to how this principle is applied, including the possibility of a qualifyingperiod before the right to equal treatment applies, provided this is based on an agreementreached by the social partners in the relevant country. In the UK, agreement has been reachedon a qualifying period of 12 weeks.Employment preservation and creation has been laid down as one of the key priorities ofgovernment. Given the unemployment crisis in which Ireland now finds itself, employmentpreservation and creation has to be a priority from both an economic and social perspective.Unemployment is a social and economic evil – it represents a loss of economic output; itrepresents a waste of human capital; it gives rise to numerous social problems and destroysself-esteem for many; it robs the country and society of valuable social and intellectual capitalas people move elsewhere to avail of employment opportunity; and it undermines the stabilityof the Exchequer finances.Anything that is seen to potentially undermine employment in the economy should generallybe regarded as evil, and anything that is seen to enhance employment opportunity should beregarded as good.It is in this context that the proposed implementation of the EU Directive on Temporary AgencyWork should be assessed. It is clear that the Directive if applied literally will damage theflexibility of the workforce, increase the costs of employment and ultimately cost jobs. The joblosses resulting from the Directive could be as high as 9,400. In the context of Ireland’s currentemployment crisis, this is not a risk worth taking.Government needs to listen to the views expressed by employers of agency workers and applythe legislation in a more flexible manner, with a derogation of up to 12 months and greaterclarification of the issues involved. It is difficult to see how the legislation as drafted in its pureform could possibly benefit employers, the agency workers themselves and the economy ingeneral. Labour market flexibility and competitiveness are essential ingredients for Ireland’sfuture success and both must be preserved to the greatest extent possible, while at the sametime treating agency workers fairly. 18 | P a g e

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