Unique collective agreement for Sweden's staffing agencies

A few weeks back the staffing agency trade introduced a critics' prize. It will be awarded someone whose views on the trade have contributed to pushing the debate on staffing agencies' roll and development forward.

"It might sound like a joke but it most definitely is not. On the contrary, we want to hear from people who have constructive views on how the trade should develop," says Henrik Bäckström, head of Swedish Staffing Agencies, an employer and trade federation for staffing, outplacement and recruitment companies operating in Sweden.

A unique agreement

The staffing agency trade has provoked strong feelings, not least during last year's collective bargaining process during which the hiring out of personnel was one of the major issues. This came as 14 unions within Sweden's Confederation of Trade Unions joined forces to demand regulation of the staffing agency trade. There were claims that businesses hire staff to bypass employment protection legislation - something employers deny. The trade unions wanted to make sure employers can't take on external staff in cases where there are already people on redundancy with reinstatement rights. Temporary staff are already covered by an agreement from the early 2000s with Swedish Staffing Agencies, which stipulates that hired workers should receive the average pay at the workplace they come to. This means hired staff are 35 percent more expensive compared to permanent staff, and this serves as protection against salary dumping.

Little by little the trade union IF Metall reached an agreement with the Association of Swedish Engineering Industries and Industriarbetsgivarna - an umbrella employers' organisation covering major Swedish industry employers. It says a company cannot hire staff for six months as long as there are redundant workers with reinstatement rights. There are two exceptions: the employer can hire staff for a maximum of 30 days during the six months, or if there is a local agreement which allows for the hiring of staff. If an employer breaks the rules he must pay compensation to people with reinstatement rights.

Trade unions also take part in the hiring process and have the right to provide hired staff an introduction to the union. Veli-Pekka Säikkälä from IF Metall is content with the agreement. 

"We have a unique agreement for Sweden's staffing agency trade," he says.

A chance for a job

Veli-Pekka Säikkälä points out that in a perfect world everybody would have a permanent job and work Monday to Friday, but that's not the world we're living in. So staffing agencies are needed, and many workers with foreign heritage and young people enter the labour market through agencies. At the same time hired staff have less job security than permanent staff because economic downturns tend to hit the staffing trade first.

"This is a group which to a degree remains on the outside, even though we try to include them. They're more vulnerable than permanent employees, since a business can easily tell them 'we don't want you'. In that case it might not be that easy to make the demands you should be able to make as a union member. This is one of the negative aspects with staffing agencies," says Veli-Pekka Säikkälä. 

Trade unions are now encouraging the setting up of union chapters within staffing agencies and want hired workers to take part in chapter meetings where they work, even if they have no voting rights. IF Metall sees an increasing number of members from staffing agencies, with an increase from two to five thousand just over the past year.

The Confederation of Swedish Enterprise is positive to staffing agencies. Being able to hire temporary staff helps companies be flexible, says Christer Ågren, the confederation's deputy managing director.

"Companies need more flexibility. They can maintain a smaller permanent staff and deal with labour intensive periods by hiring in staff. It's a way of rationalising and keeping companies effective," he says.

Bright future  

Christer Ågren does not accept trade union criticism saying companies use staffing agencies to bypass the Employment Protection Act (LAS), and especially the reinstatement right which follows a redundancy. This is not a correct criticism, expect perhaps for in a small number of cases, he says.  

Christer Ågren predicts a bright future for staffing agencies, especially within certain trades. He holds up one Stockholm clothes store as an example - it is completely staffed with workers from staffing agencies. The company did not want to take on personnel responsibilities, and outsourced this to a staffing agency. The workers ended up with a safer job, with a collective agreement and regulated terms. 

"But I doubt we'll see that kind of development within industry. For them it is more about being able to hire temporary staff in order to stay flexible."

Wanting a strong opponent  

How does a high number of hired staff in a workplace affect the dialogue between the social partners?

"When there is no permanent staff it can impact on local trade union activity. It is good that this issue is being looked at and a consequence affecting many employers, yet we cannot allow it to be an argument for companies not to run their businesses in an efficient way. At the same time our members want a proper union opponent, many tell us so," says Christer Ågren.   

He believes the staffing agency trade will grow while pointing out that Sweden uses fewer hired staff than many other European countries. There is also a limit to how many hired staff a company will want to take on, since they are more expensive than permanent staff. 

"The future challenge is to make sure growth within the staffing agency trade happens in an orderly way, and I feel we're succeeding. Sweden also enjoys one of the most advanced agreements for how staffing agencies must adapt to businesses," he says.

A young and dynamic trade

Sweden's staffing agency trade is relatively young. The market only opened in 1993, when it became legal to hire temporary staff. A few major players still dominate the market, for instance Manpower, Proffice, Poolia and Adecco but there are also several smaller, specialised companies. Staffing agencies work first and foremost with the hiring out of temporary staff, recruitment and retraining, and the hiring out of staff remains the main part of business. New players are still entering the field. 

Securing the health sector

One person who saw the need for hired staff was Hidayet Tercan, founder of Zemrete - a staffing and recruitment agency specialising in heath workers. She left her job as a business development manager at the department store Åhléns with a vision to hire out health workers who would really focus on the patient. She knew nothing about the issue and began by reading everything she could find. One of the things that struck her was Europe's demographic development and she realised there already was, and increasingly will be, a battle over health workers in European countries. In order to motivate health workers even the permanent staff must be prepared to move around and be willing to work extra in new settings. And that is dependent on someone who can match up employers and job seekers.

"We have no choice in future. There's a massive lack of health personnel and it will get worse. If health workers aren't prepared to do extra work we will not be able to offer health care," she says.

Her company launched in October 2007 and the first workers were posted in June 2008. today Zemrete has contracts with 3,000 doctors, nurses, enrolled nurses and nursing auxiliaries. In reality they're already employed but can put in extra hours at short notice. Everyone has gone through an interview process and all credentials have been thoroughly checked. The idea is for them to share the company's view that caring for the patient is the most important thing. All workers are also offered courses in ethics. 

No replacement for permanent jobs

But can a hired person meet patients needs if the rest of the workplace doesn't? Hidayet Tercan reckons most health workers will do a good job. Sometimes some of their hired-out health workers will complain about bad working conditions, in which case the company will discuss this with the customer. The idea is not to deliver a service at any price. They have enough business Zemrete is not taking on new customers at the moment. Tercan has not heard anyone complaining the hired workers are taking jobs from permanent staff.

"That might be a problem within other sectors, but in the health sector you hire if you can. We fill a hole and the staff we hire out get positive reactions from permanent workers wherever they go," she says.

The Swedish Association of Health Professionals, which organises nurses, has registered the rise of staffing agencies within the health sector and acknowledges that the staffing agency trade probably will grow further as the lack of health professionals growths.

Competition is good

"It's positive that our members get more employers to chose from. As there is a shortage of nurses they often get better pay than if they had permanent jobs. So we see no risk of salary dumping," says chief negotiator at the Swedish Association of Health Professionals, Kerstin Persson.

Yet it would not be good if too many temporary staff are being hired. 

"You loose the ability to develop and the commitment to creating a better health sector if too many people work there on a temporary basis," she says.