The cost of the Temporary Work can be considered from a financial perspective, but also in terms of work quality and team spirit within the company. These costs are offset by the benefits, which in turn stem from the fundamental nature of temporary work. To enable individual industries and companies to ultimately decide for or against the use of temporary workers, it makes sense to weigh the costs against the benefits.
The Costs of Temporary Employment
From a financial perspective, the costs of temporary work can be calculated very easily in theory. This involves comparing the direct and indirect labor costs for a permanent employee with the costs incurred for a temporary worker and the provision of that worker’s services.
For many companies, this already works out in their day-to-day operations. Thanks to the rock-bottom wages in the temporary staffing sector, this option is more cost-effective for them—even when factoring in the rates charged for hiring temporary workers.
That's why temporary work is cheaper
- Thanks to the Dumping wages In the temporary staffing industry, even when factoring in the rates charged for hiring temporary workers, using temporary staff is more cost-effective.
- The Staffing Level can be kept smaller and adjusted to the order volume.
- Labor costs end, when the workers are no longer needed.
- The administrative burden The cost of hiring and firing is low.
All of this means that, on the whole, a temporary worker is still less expensive than a permanent employee.
Temporary Employment – Industry-Specific Costs
However, these direct financial costs vary greatly by industry. If the labor pool in a particular sector—such as nursing care—is not large enough, labor costs generally rise. In that case, even savings achieved during periods with fewer orders don’t amount to much, if such periods exist at all.
Even cost savings on the administrative side—such as recruitment and termination—do little to alleviate the burden of rising costs. In fact, there are industries where a temporary worker costs up to 92 % more than a permanent employee. Care services and hospitals, for example, are particularly vocal about this issue. Once the workforce is under severe strain, it becomes even more difficult to find permanent staff to replace the temporary workers. This may be due to general working conditions. For instance, working in the care sector is a particularly „grueling job." There aren’t many highly motivated employees who are willing to subject themselves to this strain willingly and over the long term. This circumstance also leads temporary workers in this sector to not necessarily seek permanent employment.
Compensation for Temporary Workers
If temporary workers are in such high demand that the pool of available workers is insufficient, their wages rise, making it financially unattractive to switch to a permanent position. This creates a vicious cycle in which, for example, hospitals increasingly rely on temporary workers because they cannot expand their permanent staff accordingly. As a result, the importance and pay of temporary workers rise, which ultimately makes temporary work more attractive than a permanent position. This, in turn, makes it more difficult to hire permanent staff.
At the same time, this situation is associated with a decline in the quality of work. This is due to the fact that the temporary agency workers simply do not have the necessary qualifications for certain tasks. Furthermore, their work experience is often insufficient in some areas, which leads to poorer work results and lower overall productivity.
Attempts to counteract this trend by hiring more temporary workers increase the pressure on the existing workforce, which has a further negative impact on the respective facilities and hospitals. Ultimately, this means paying more for less productivity, which makes it even harder to find good permanent staff.
Reimbursement for Additional Costs
To date, there has been no reimbursement for the additional costs associated with temporary agency work, which in turn undermines the competitiveness of some businesses. In response, calls for stricter regulation or even a ban on temporary agency work are growing louder in some industries.
Along with this, the lack of reliability among staffing agencies is sometimes criticized. These agencies fail to honor agreements or are unable to provide the required number of temporary workers with the necessary qualifications. As in any industry, there are always a few bad apples, so it’s important to ensure that the chosen staffing agency is reliable and trustworthy.
In some sectors—such as hospitals—the situation is extremely critical. Without temporary workers, the majority of hospitals would no longer be able to provide patient care at all, or only to a limited extent, which makes it considerably more difficult to re-regulate or even ban temporary work in these sectors. A complex interdependence has developed that has negative long-term consequences and is very difficult to break.
Temporary staffing incurs particularly high costs, especially in specialized fields where training requires a significant investment of time and resources. The effort required to train new temporary workers with little or no qualifications is particularly high in these situations. It also generally takes longer for a temporary worker to add value as part of the workforce. This gap must be bridged, for example, by training another temporary worker while the previous one is still performing the actual work. This doubles labor costs, and training the new employee creates additional expenses that must be offset.
Temporary Employment from Abroad
As costs rise, conflicts sometimes arise between temporary workers and permanent staff. These conflicts stem from differences in pay and working hours, as well as, in some cases, from the use of temporary workers from abroad.
Stronger regulations are therefore being called for, for example, in the form of a cap on temporary staffing costs. In addition, there is a desire for temporary workers to also cover late-night, night, and weekend shifts without incurring additional costs. These regulations should, of course, also apply to temporary workers from other EU countries. This means that temporary workers provided by foreign agencies must be subject to the same rules as German workers.
The Benefits of Temporary Work
When you look at the costs associated with temporary work in some industries, the question arises as to what benefits justify these costs. But as is so often the case, everything is relative here as well. Let’s take nursing services and hospitals as an example.
For a long time now, low wages and poor working conditions in this sector have been causing problems when it comes to recruiting new employees. Unreliable staffing agencies have not resolved these problems—instead, they continue to operate based on outdated business models characterized by inadequate pay and excessive workloads.
The additional time and capacity gained through the deployment of temporary workers are not used to improve working conditions and pay—the established employment model continues as before. In the past, this has led not only to hospitals and care services becoming increasingly dependent on temporary labor, but also to them having virtually no chance today of remedying existing problems.
In other words, the benefits of temporary work—which often lie in flexibility and cost savings—can be expanded through reforms in this area. If a work model is being phased out, it can be supported by temporary staffing until the reformed work model is in place and replaces temporary staffing. However, if the transition does not take place, then even temporary staffing will no longer be of any help.
In general, companies can simplify their workforce planning by using temporary staffing. They save on labor costs and reduce administrative burdens. This allows them to respond flexibly to market changes and reposition themselves with the help of temporary staffing.
Benefits at a Glance
- Flexibility: Companies can respond quickly to order spikes, seasonal fluctuations, and short-term staff absences without making long-term commitments.
- Cost savings: In industries with a sufficient labor pool, temporary work remains more cost-effective than a comparable permanent position—including social security contributions and administrative costs.
- Less administrative work: Recruitment, human resources management, social security contributions, and termination of employment are the responsibility of the staffing agency—the client company focuses on its core business.
- Bridge Model: Temporary work can bridge a transitional period during which an outdated employment model is replaced by a reformed one—it gives companies the time they need to undergo this transformation.
- Access to specialists: For short-term projects, temporary staffing provides quick access to qualified professionals who are not available in-house.
Frequently Asked Questions About the Costs and Benefits of Temporary Work
In many industries, yes—due to lower wages, reduced administrative overhead, and the ability to eliminate labor costs when workers are not needed. However, in industries with a tight labor market—such as nursing care—a temporary worker can cost up to 92 % more than a permanent employee. Cost calculations therefore vary greatly by industry.
When the pool of available workers in an industry is too small—such as in the nursing sector—supply and demand shift to the detriment of employers. The salaries of temporary workers rise until it becomes financially unattractive to switch to a permanent position. A vicious cycle ensues: Companies become increasingly dependent on temporary labor, are barely able to build up a permanent workforce, and end up paying more and more for lower quality.
No. To date, there are no government reimbursements for the additional costs incurred through temporary staffing. This undermines the competitiveness of smaller businesses in particular in industries with a high demand for temporary workers and fuels calls for stricter regulation or caps on temporary staffing costs.
The main benefits are flexibility, cost savings, and reduced administrative burden. Companies can adjust their staffing levels to match order volumes, eliminate payroll costs during periods of inactivity, and outsource time-consuming hiring and termination processes. In addition, temporary staffing serves as a transitional model to bridge a period of reform during which an outdated employment model is replaced by a more modern one.
Common sources of conflict include pay disparities between temporary workers and permanent staff, as well as differing policies regarding working hours, late shifts, and night shifts. When temporary workers are assigned from abroad, cultural differences and language barriers are added to the mix. These tensions can be significantly reduced through transparent communication and clear organizational guidelines.
In principle, yes. The temporary staffing services provided by foreign agencies must be subject to the same rules as those provided by domestic agencies—including the minimum wage, equal pay after nine months, mandatory social security contributions, and the provisions of the Temporary Employment Act (AÜG). Stricter regulations—such as a cap on temporary staffing costs or the mandatory assumption of late-shift work at no additional cost—are currently being debated at the political level.