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Bringing the undeclared economy out of the shadows: the role of temporary work agencies

In early 2014, Professor Colin Williams of Sheffield University Management School (pictured above) was commissioned by Randstad, one of the leading HR service providers in the world operating in 39 countries, to provide the central feature article for their annual global report, Flexibility@work 2014.

Professor Williams, in collaboration with Piet Renooy, director of Regioplan, an Amsterdam-based consultancy company, explore a key facet of international employment trends in the flexible labour market, namely the causes of undeclared work and how to prevent businesses not declaring work for tax, social security or labour law purposes. It is now widely acknowledged that the large and growing undeclared economy lowers the quality of work and working conditions, undermines the business environment through unfair competition, and puts at risk the financial sustainability of social protection systems.

Clearly then, undeclared work practices should not simply be discouraged, but should rather be transformed into regular work. The study on undeclared work for Randstad – and conducted by the University of Sheffield and Regioplan – shows that in advanced economies the size of the undeclared economy varies widely, from under 10 per cent of GDP in countries such as the US, the UK, Japan and the Netherlands to more than 25 per cent of GDP in parts of southern and eastern Europe.

The study also reveals that countries with a smaller undeclared economy are those in which it is easier for companies to resort to temporary employment opportunities to meet labour demands and in which, at the same time, there is greater intervention (in the form of labour market policies that protect and support vulnerable groups of workers). Its finding is that by creating the right business environment for temporary employment and temporary work agencies, these relatively successful economies reduce the supply and demand of undeclared work by providing both workers and employers with better alternatives.

The report therefore advocates the use of active labour market policies, with a move away from unjustified restrictions on temporary work being lifted and relevant interventions stepped up. Governments, it concludes, need to create a mature system of social protection that not only supports workers who are ill or temporarily out of work, but also encourages an accessible, well-regulated market for temporary employment and temporary employment agencies.

In order for businesses, and indeed economies, to remain innovative and competitive in today’s environment, it shows that flexibility – and therefore flexible labour – will be imperative. The debate, therefore, should not be about whether we want to allow flexible labour and temporary work. Instead, there is a need for a debate on how best flexible labour and temporary work can be regulated to create a win-win situation for both businesses and workers.

Flexibility@work 2014: bringing the undeclared economy out of the shadows: the role of temporary work agencies (Flexibility@work2014) is released on 1 April 2014.


Randstad specialises in solutions in the provision of flexible labour and is one of the leading HR services providers in the world with top three positions in Argentina, Belgium & Luxembourg, Canada, Chile, France, Germany, Greece, India, Mexico, the Netherlands, Poland, Portugal, Spain, Switzerland, the UK and the United States, as well as major positions in Australia and Japan. In 2013, Randstad generated revenue of €16.6billion and had approximately 28,000 corporate employees and around 4,600 offices in 39 countries. On average, Randstad employs 567,700 candidates per day and places over 85,000 candidates in permanent positions.


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