Let’s look at temporary work from a different angle. We’ve already discussed how temporary staffing benefits everyone involved, including the workers. However, it is precisely these workers who view temporary staffing negatively. They see themselves as the losers—the low-wage workers who are shuffled from company to company. Therefore, it’s time to take a closer look at whether temporary work is truly an opportunity or rather a risk for temporary workers.
What are the benefits of temporary work?
Let's take a look at the benefits that temporary work offers temporary workers from a different perspective.
1. Legal Protection
Work performed under a temporary staffing arrangement is carried out under an employment contract. It is not disguised as “sham employment” through a contract for services, and it is by no means a form of undeclared work. Temporary workers receive an employment contract that is valid between them and the staffing agency. To reiterate: The following applies Temporary Employment or a contract for services—not both at the same time. The employment contract for temporary work governs the terms and conditions, compensation, and more. In addition, there is a staffing agreement, which also sets out all of these terms once again. For the temporary worker, this means there is legal certainty that can be enforced in court if necessary.
Legal certainty is accompanied by the social security. The employment contracts and the work itself are Subject to social security contributions. This provides protection through appropriate benefits if the employment relationship is terminated.
2. Compensation – Minimum Wage Thresholds
There are also regulations governing compensation. These include, among other things, minimum wage thresholds. This means that there are minimum wages that can be relied upon and that, at least in general, can be considered sufficient for employees.
3. Continuing Education Opportunities
Temporary staffing agencies are required to contribute to a continuing education fund. This helps temporary workers participate in relevant continuing education programs. These include vocational training programs, forklift operator certification, crane operator certification, computer courses, language courses, and more. These programs are funded and available to employees at no cost.
4. Rapid Integration into the Labor Market
Temporary work itself offers job seekers an opportunity to re-enter the labor market quickly. Through continuing education programs, they enhance their skills, thereby increasing their chances of securing a permanent position.
5. Valuable Work Experience Through Temporary Employment
Finally, there’s the experience. The temporary worker not only gains valuable professional experience in their field, but also social experience through integration into various companies over the course of multiple assignments. And that’s not all—they also get to know the companies themselves. With each assignment, their chances of securing a permanent position—provided they perform well—increase. This opportunity may arise at the current host company, at a previous host company, or at another company to which the individual temporary worker has been recommended. Employers are also on the lookout for good staff—so it’s possible that temporary workers whose rotation has already ended may still be contacted later or recommended to another company.
Is temporary work a driver of job creation?
In a nutshell, for a job seeker to transition from unemployment to employment—whether as a temporary worker or a permanent employee—there must be a job available. In this context, it is temporary work that—out of necessity—has opened up an entirely new field of employment. In other words, temporary work has created many new jobs.
In fact, it was temporary work that served as a job engine during the economic expansion leading up to the 2008 financial crisis and the subsequent recovery. This can be attributed, among other things, to deregulation in this sector. Afterward, during the crisis, however, it was also the temporary staffing agencies that led the way in cutting back on staff. Subsequently, the number of employees in this sector began to rise again. In other words: Temporary work enables flexibility within companies, but it must also be flexible in and of itself.
As a result, during economic upturns, temporary work leads to rapid job creation, which is then just as quickly lost during a crisis. For temporary workers, however, this also means they face a greater risk of losing their jobs. The word „opportunity" must also be understood in this context. If a job seeker just sits at home, they have no chance of getting a job. If they apply diligently, their chances increase significantly—but this is not a guarantee, just an opportunity.
If he works as a temporary employee, his chances of landing a permanent position increase dramatically. Not only has his opportunity to secure a job now materialized—he also has a chance to improve his situation by transitioning from temporary to permanent employment. In such a situation, one must always factor in probabilities and opportunities.
When a crisis hits, everyone loses. It comes as no surprise that temporary work is the first sector to cut jobs. It’s only natural that staff hired to cover peak workloads are the first to be let go when orders dry up.
How do fluctuations occur in the job market?
A crisis is always an opportunity as well. In fact, crises in the financial market—or any other market—are simply the result of undesirable developments that are corrected in the course of the crisis. That is part and parcel of any healthy market.
This fact is also evident in the fact that, while a crisis can lead to overall job cuts, it rarely extends to the entire labor market. For example, while 200,000 jobs were lost within just one year during the financial crisis, there were industries in which temporary work flourished during the same period. These include the service sector—including social services and healthcare—as well as call centers.
However, this fact should not obscure the reality that the temporary staffing industry was significantly impacted by the crisis. The loss of work amounted to nearly 50%. There were also shortcomings—in particular, the opportunity to improve the qualifications of temporary workers was not taken advantage of when the job market picked up again and more temporary workers were needed.
Can temporary work be a way out of unemployment?
Temporary work is often viewed by policymakers and academics as a means of helping job seekers find employment. Studies commissioned on this topic examined the question of where temporary agency workers came from. Were they truly job seekers before taking on temporary agency work, or did they hold permanent positions prior to their temporary agency employment?
The resulting figure was 40%. This means that for 40% temporary workers, their temporary employment transitioned directly into permanent employment. While this may not seem encouraging at first glance, it’s important to take a closer look.
For about 60% workers, temporary work offers a way out of unemployment. 50% of these temporary workers had been out of work for a year or less before taking on temporary work. 10% had even been without a job for more than a year. In other words, for these 60%, the dream of moving from unemployment to a job has come true.
Even more interesting, however, is a look at the 40%, where the work within the Temporary Employment followed by a job. This suggests that workers were laid off and then found themselves in temporary agency work. In fact, however, these workers were in a precarious situation: A fixed-term employment contract had expired, or they were facing termination for operational reasons. In other words, the employees who switched from their existing jobs to temporary agency work did so as an alternative to the unemployment they would otherwise have faced.
In other words, from an overall perspective, temporary work has either helped unemployed people return to the workforce or prevented workers from becoming unemployed.
Why do staffing agencies look specifically for unemployed people rather than permanent employees?
- Permanent employees within a company usually receive better pay than temporary workers—which is why they have no incentive to switch to temporary employment.
- Unemployed people and those at risk of unemployment view temporary work as a better alternative. It is not so much the temporary work itself that attracts them, but rather the prospect of being hired by the company where they are assigned.
- These positions are filled at the host companies for jobs that often require little or no training—which makes it easier for new entrants and those returning to the workforce to re-enter the workforce.
- The legislature assigns temporary employment agencies a bridging role. To facilitate this, it is permissible to pay unemployed individuals, as part of temporary employment, a net wage that corresponds to the amount of their most recent unemployment benefits.
- This also means that staffing agencies very often receive wage subsidies when they hire unemployed people.
How do you go from temporary work to a permanent position?
Temporary staffing agencies play an important bridging role by helping unemployed workers find employment. While this is their sole business objective, policymakers and society expect them to ensure that these temporary assignments lead to permanent employment whenever possible.
The resulting figures do not seem very encouraging. Viewed purely as numbers, they indicate that the number of workers in the temporary staffing industry has fluctuated by more than 100% within a year.
However, it is in the nature of the temporary staffing industry for such fluctuations to occur. The reality, however, is much more complicated. Not all temporary workers are hired directly from temporary work into permanent positions. According to a report by the Federal Ministry of Labor, the success rate is only 8% – and this is only true when looking at temporary employment relationships over a longer period of time. According to this, only 8% of temporary workers secure permanent positions within the first two years of their employment.
There are many reasons for this, but the two most important ones are that the companies already have a sufficient permanent workforce and that the temporary workers themselves are in high demand. Specifically: Temporary workers are assigned to companies on a temporary basis from the outset—there is no intention from the start to hire them into the permanent workforce. However, if a position becomes available while they are working at the company, they have the opportunity to prove themselves through their work. But that is definitely the exception, not the rule.
In other words: There are opportunities for permanent employment, but they are not as common as policymakers would like. Workers must demonstrate their motivation and qualifications in order to secure the few jobs that are available.
Can you go from temporary work to unemployment?
The opportunity to transition from temporary work to a permanent position is offset by the risk of slipping from temporary work into unemployment. While policymakers hope for these “bridge effects,” in reality they turn out to be less pronounced. In contrast, however, temporary workers are the first to be laid off when times get tough.
Temporary work can therefore sometimes serve as a bridge in the opposite direction—from one form of employment, in this case temporary work, to unstable employment or even unemployment. This is particularly true for those who transitioned from unemployment to temporary work. It can even develop into a full-fledged career pattern in which periods of unemployment alternate with periods of temporary work. This does not provide those affected with a stable living situation, which leads to social and psychological consequences.
If we compare the current number of temporary workers with the number of those who move from temporary work into unemployment, then each year there are approximately 76% temporary workers are unemployed. However, these figures do not take into account whether individual temporary workers became unemployed more than once or returned to temporary work multiple times.
In principle, it can be said that the temporary staffing industry helps social welfare systems by providing jobs—at least temporarily—to job seekers. At the same time, the staffing industry shifts its risk onto the social welfare system—during periods of low demand, temporary workers become unemployed and receive benefits from the system.
What are the incomes of temporary workers, and is there a risk of poverty?
Temporary workers face a relatively high risk of falling into poverty. For example, 77% of them earn a wage that falls below the low-wage threshold. At the same time, temporary workers often live in households with no other working members—which means they face higher living expenses and cannot count on financial support from family members.
On average, the income of temporary workers is 24% among other employment groups. This also means that one in nine temporary workers receives benefits from the social security system.
Overall, the risk of falling into poverty for a temporary worker is 4 times as high just like any other employee covered by social insurance. However, the risk of falling into poverty is much higher than these figures suggest.
Temporary workers are at a much greater risk of unemployment than other employees. Since unemployment insurance benefits are based on income and, on average, amount to one-third less than net earnings, this is where the real danger lies. The likelihood that a temporary worker will lose a low-paying job is very high—which would then cause their income to drop even further.
Often, temporary workers do not accrue any unemployment insurance benefits at all. This is simply because their stints as temporary workers are too short—as a result, the benefits they receive from social security programs are even lower.
Are there jobs in the temporary staffing industry that match one's qualifications?
Temporary workers face another risk: the risk of losing their professional qualifications. Among the general workforce, the percentage of employees without vocational training typically ranges from 15 to 20%. In the temporary staffing sector, however, this figure is twice as high. This means that only about 60% of temporary agency workers have a vocational degree. The proportion of college graduates in this sector is as low as 3%.
Temporary workers are usually assigned to tasks that require little or no training—that is, work typically performed by unskilled laborers. As a result, a survey conducted by the Ministry of Labor of North Rhine-Westphalia 54% of the respondents stated that their current job does not correspond to the profession they were trained for.
However, if employees cannot work in the field they were trained for, they cannot maintain their knowledge and skills—and face the risk of de-skilling. This then stands in the way of transitioning from temporary work to permanent employment. This applies even if the potential permanent position requires only minimal qualifications. In other words, workers with vocational degrees who are in temporary work face the risk that, over time, their chances of securing a permanent position will decrease significantly. They will then no longer be able to compete with other qualified workers.
Conclusion
Temporary work offers a number of benefits for temporary workers. These include legal protection, social security contributions, a minimum wage, and more. Temporary work also offers new opportunities to create jobs, help companies find staff, and provide job seekers with a pathway into the workforce.
However, these advantages are offset by several disadvantages. For example, the temporary staffing industry is always the first to cut back on staff in the event of a crisis. Furthermore, it rarely offers a genuine path to permanent employment. While it does provide job seekers with a way into the workforce, making the transition from there to permanent employment is far more difficult.
Conversely, it is much easier to slip from temporary work into unemployment. This carries with it the risk of falling into poverty. While temporary workers already earn less than permanent staff, there is a danger that their reduced income will cause particular financial hardship in the event of unemployment.
Furthermore, temporary workers are often assigned to jobs outside their area of expertise. As their time on the job increases, this leads to a loss of skills, which makes it even more difficult for them to secure permanent employment.
In practice, however, companies are increasingly turning to temporary workers for cost reasons. These workers are then becoming an integral part of the workforce, without, however, becoming part of the permanent staff. This further reduces the chances for temporary workers to become permanent employees.
In summary, it can be said that temporary work does indeed offer opportunities. However, the risks associated with it make it more of a last resort than a preferred path into the workforce. Furthermore, the way the temporary work sector is changing tends to make the transition to permanent employment more difficult rather than easier.
Frequently Asked Questions About Temporary Work vs. Permanent Employment
Temporary work is based on a legally valid employment contract between the temporary worker and the staffing agency, as well as a temporary staffing agreement. It is subject to social security contributions and governed by the German Temporary Employment Act (AÜG). This ensures legal and social security—unlike in the case of undeclared work or disguised service contracts. In the event of a dispute, rights can be enforced in court if necessary.
According to a report by the Federal Ministry of Labor, only about 8% of temporary workers secure permanent positions within the first two years of their employment. Permanent employment depends on a position becoming available, the temporary worker having proven themselves, and the company generally being interested in expanding its permanent workforce. So the opportunity does exist, but it is significantly less common than policymakers had hoped.
77% of temporary workers earn below the low-wage threshold, and their average income is 24% lower than that of other employment groups. Their risk of poverty is four times higher than that of regular employees. In the event of unemployment, their income drops even further—often without sufficient entitlement to unemployment insurance benefits, since many temporary work assignments are too short to build up the necessary eligibility.
Temporary workers are often assigned to tasks that require little or no training—regardless of their actual qualifications. 54% of the respondents in a North Rhine-Westphalia study stated that their temporary work did not correspond to the profession they had trained for. Over time, professional skills fade, which increasingly reduces their chances of securing a permanent, skilled position.
For about 60% temporary workers, temporary work does indeed represent a way out of unemployment—50% had previously been unemployed for up to a year, and 10% for even longer. The remaining 40% switched from precarious permanent employment (fixed-term contract, threat of termination) to temporary work in order to avoid unemployment. Temporary work thus offers a real entry point, but no guarantee of a sustainable path to stable employment.
Companies primarily use temporary workers to cover peaks in orders or to bridge short-term staffing needs. Since temporary workers are not part of the permanent workforce and their employment is temporary from the outset, they are the first to be laid off when orders decline—without the time-consuming termination procedures that would be required for permanent employees. The risk associated with temporary work is thus directly transferred to the social security systems.