Published on 11th July 2018
The 2018 update of the World Employment Confederation’s Smart Regulation Index confirms that smart regulation encouraging the growth of private employment services makes labour market more efficient and overall increases a country’s competitiveness. The Netherlands ranks first – again – falling short of the maximum score by only two points; reflecting a deep and decanal social involvement of the sector in the local labour market and in society in general.
Private employment services – and agency work in particular – notably play an important role by reducing the informal economy, allowing on the one hand people to get into the legal labour market and to secure social rights and on the other hand society to gain taxes and social contributions that would be lost otherwise.
The Smart Regulation Index measures how smart and appropriate regulation on the employment industry is in different countries around the world. The top ten is dominated by European countries but with three Anglo-Saxon models included – UK (4th), USA (6th) and Australia (7th) – it also shows that different regulation systems can be equally efficient. Emerging markets are led by India (24th).
The World Employment Confederation has developed the Smart Regulation Index together with the Boston Consulting Group since 2011; and is regularly updating it since then. The Index is based on the WEC members’ responses to a survey measuring the right of establishment, the right to provide services and contracts, the right to negotiate and the right to contribute to labour market policies.
Right of establishment
The Smart Regulation Index measures how easy it is for a private employment company to start business in any given country. Private employment agencies are now acknowledged as an important labour market player, as indicated by the high average obtained for that section of the index. Thirteen countries have the maximum score. Yet, unjustified barriers to access the market remains a concern, especially administrative conditions.
Right to provide services and contracts
This index section is specifically focused on agency work, which is the core to private employment services. In the past, agency work was restricted and it is still the case in some areas, for example with regard to types of contracts offered. To date, only Denmark has been able to achieve access to both the complete range of contracts and services for PREAs. The most common form of legal restriction is maximum lengths of assignments and 10 countries are still facing sectoral bans for agency work.
Right to negotiate
This index section measures the level of recognition of private employment services as a sector on its own in any given country. With a rather low average, the results prove that there is still some work to be done in order to achieve representatives recognition around the world.
Right to contribute to labour market policies
The last indicator looks at the degree of involvement of the private employment sector in labour market policies and also the level of social responsibility practices developed by the industry, for example, establishing code of conduct and providing access to training for agency workers. Partnerships with public employment services are identified as a key area for improvement.