Published on 29th February 2020
The 2020 World Employment Confederation Economic Report reveals that the global private employment services sector is continuing to grow by providing services that bring positive value to labour markets worldwide. Based on latest available data, the report demonstrates how the sector is responding to the challenges of the changing world of work and crafting innovative and socially inclusive solutions that make labour markets more efficient.
The global employment services industry placed a record of almost 58 million individuals in work in 2018. Global turnover grew nearly two percent compared with the previous year to reach €473 billion, with almost all service segments experiencing growth despite global trade tensions, skills shortages and economic slowdown across some markets.
Direct Recruitment and Recruitment Process Outsourcing (RPO) experienced the strongest growth, with the global Direct Recruitment market expanding 5.4% in terms of sales revenues, amounting to € 63 billion. Managed Service Provider (MSP) and RPO grew by 2.8% and 8.4% to reach market values of €110 billion and €4.6 billion respectively.
The agency work sector, which represents over 80% of the industry’s entire sales revenues, maintained earnings at €377 billion. This constant position is in part due to the negative impact of exchange rate variations between the dollar and euro. It has long been recognised that there is a strong correlation between a country’s agency work penetration rate (i.e. the ratio between number of agency workers in full-time equivalents and total working population) and its competitiveness. Those countries that enjoy the highest penetration rates include the UK (3.4%), the Netherlands (3.3%) France (2.9%) Australia (2.7%) the USA (2.1%) and Japan (2.0%). The global average penetration rate remains 1.6%.
Growth in the MSP market was strongest in Europe, the Middle East and Africa, with sales revenues up 13.7%, while global market growth was slowed down by subdued growth in the Americas – including the USA which represents over 50% of the global market. Direct recruitment fared well with nearly all major markets expanding and China and the UK enjoying particularly pronounced growth – up 15.2% and 12.6%. Career management services contracted by 5%, declining to an estimated €1.9 billion.
The performance of our industry is of course a reflection of the status of the economies and labour markets in which it operates. This is evidenced by how the sector fared in the different regions around the world in 2018. North America remains the strongest region in terms of people placed and revenues in direct recruitment, MSP and RPO. In South America, economic crisis and currency depreciation across the region caused a downturn – particularly in Brazil, the region’s largest market for private employment services. Europe maintained a strong position in agency work, with nine out of the 15 largest markets globally. With the exception of Germany, all European agency work markets grew in 2018. The Asia-Pacific region enjoyed a positive performance in both agency work and direct recruitment.
Global labour markets have been transformed in the past 20 years: with an ever faster cycle of job creation and destruction; diverse forms of work that have supplemented the mid- 20th century model of open-ended, permanent contracts; and the rise in individualism and growing gig-economy which have spawned demand for more flexible working conditions among both workers and employers.
As labour market intermediaries, private employment services smooth the whole process of not only matching people with work, but also supporting workers to navigate a changing world of work by providing career guidance – all via the industry’s unique network: 2.4 million internal staff globally across 160,000 agencies, in 39 countries.
Indeed, the industry’s contribution goes far beyond finding people a job to embrace a host of added-value services that meet the needs of today’s increasingly diverse labour markets: facilitating work transitions by moving people between sectors and jobs and ensuring that they remain constantly employed; upskilling the workforce to train people with the skills they need to access the jobs available; securing inclusive labour markets and providing people with quality work that brings them into the workforce; and providing both workers and companies with predictability and a balance between flexibility and security that encourages active labour markets. This is illustrated further in the WEC Social Impact Report.
I am confident that it is well placed to seize the growth opportunities offered by the transformational trends affecting the world of work and with an appropriate enabling environment we expect these positive trends to continue in the years ahead.