In the US, staffing agency revenues have grown by an average of 4.7% in the last 5 years, almost double the rate of the GDP growth. In the UK, the growth of the industry is even more rapid; in 2018 alone the number of agencies grew from 5,824 to 8,448, a 46% increase.
During the course of 2018, America’s staffing companies hired nearly 17 million temporary and contract employees. 94% of the net employment growth in the U.S. economy from 2005 to 2015 has occurred in alternative work, which includes temporary workers, on-call workers, independent contractors and freelancers. In the UK, the number of temporary agency workers is expected to reach one million by 2020.
The business model is very simple - agency markup ranges from 20% to 100%.
Agency workers face many obstacles - such as insecurity, lower pay and fewer benefits and protections. The benefits include flexibility - but cooperatives can help make this trade off between flexibility and insecurity more beneficial to the workers.
There is a growing sector of worker owned staffing agency cooperatives. For example, the Staffing Cooperative consists of two staffing agencies - the Core Staffing Cooperative and the Tribe.
The Core Staffing Cooperative consists of formerly incarcerated individuals. This is a group of people who typically have difficulty finding employment and when they do, it's often found through staffing agencies. The workers elect 7 of the 9 board of directors, with investors having the two remaining seats. So far, the recidivism rate of the workers stands at 0%, and the markup fees are lower than the industry average.
The Tribe is a digital on-demand staffing platform owned by the workers, specialising mostly in software development.
For cooperatives, temporary agency workers can often make sense business wise, but can be questionable in light of cooperative principles. In order to solve this conflict, whenever cooperatives use temporary agency workers, they should prefer to do so through worker owned agency cooperatives.
In the UK around 9% of temporary agency workers work in retail, while the Co-operative Group is one the major retailers. Could the retail cooperatives help establish staffing agency cooperatives by using them when recruiting temporary workers?
The use of agency workers is also increasingly common in the public sector. The local authorities spent at least £335m on agency staff in 2017/2018. The Preston Model, where local authorities in the city of Preston have used public procurement to buy from local small and cooperative businesses has had some promising results; the city was ranked as the most improved in the UK by the Good Growth For Cities Index in 2018. Could local councils help staffing agency cooperatives by hiring the temporary workers through them?
Next year I will be standing as a candidate in the elections of S-Group, a cooperative that is also the largest Finnish retailer and private employer. One of my campaign proposals will be that the coop should try to recruit its temporary workers using Tulos Osk, a Finnish cooperatively owned staffing agency.