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January 20, 2009 - Wolfgang Clement
A year ago the Adecco Institute (London), think tank on the future of work and funded by Adecco SA, the world’s largest Human Resources (HR) provider also active in the Chinese market, presented in Shanghai an analysis of the new Chinese Labor Laws to both international and domestic companies. The feedback was overwhelmingly unanimous: what the new Chinese economic superpower is lacking are skilled workers and experienced managers in sufficient numbers to meet the requirements of a globalized economy.
A year ago the Adecco Institute (London), think tank on the future of work and funded by Adecco SA, the world’s largest Human Resources (HR) provider also active in the Chinese market, presented in Shanghai an analysis of the new Chinese Labor Laws to both international and domestic companies. The feedback was overwhelmingly unanimous: what the new Chinese economic superpower is lacking are skilled workers and experienced managers in sufficient numbers to meet the requirements of a globalized economy.
A year ago the Adecco Institute (London), think tank on the future of work and funded by Adecco SA, the world’s largest Human Resources (HR) provider also active in the Chinese market, presented in Shanghai an analysis of the new Chinese Labor Laws to both international and domestic companies. The feedback was overwhelmingly unanimous: what the new Chinese economic superpower is lacking are skilled workers and experienced managers in sufficient numbers to meet the requirements of a globalized economy.
In the meantime not the skill shortage but a different topic is keeping government and business leaders alike busy: the global financial crisis and its consequences for the global economy. What does this sudden change of subject mean for the Chinese labor market? Will the implementation of the new Chinese labor laws stall? Will the planned or already initiated projects meant to reform the Chinese labor market, to better protect Chinese workers, and to improve education and training will disappear into oblivion again?
In Germany in the past years temporary work has become a successful labor market instrument creating the much needed flexibility in a highly regulated labor market, thereby lowering unemployment. This is a fact and holds true even in times of economic downturn when companies have to reduce their workforce because of shrinking demand and often separate from their temporary employees first before considering to actually lay off their own workers with open-ended labor contracts.
This behavior is apt to illustrate some basic rules. Temporary work is a policy instrument allowing companies to flexibly react to changes in the market. And change is inherent to a market-driven economy. You cannot have the one without the other. In times of economic upswing first the demand for temporary work is increasing; companies would not hire workers with open-ended contracts to the same extent and at the same pace. Once an upswing has proven to be sustainable, companies will increase their own workforce. This means that economies recover quicker if companies can employ temporary workers.
It is true that temporary work acts as a cushion to soften the impact of changes in demand. So providers of temporary work provide a flexible workforce by employing temporary workers (in many countries with open-ended contracts as their own permanent employees) that is needed when demand picks up in times of economic upswing and that is redundant when demand slows down. Looking at an economy as a whole, temporary work has a balancing effect, leveling out market volatility. The balancing effect wanes both in times of a sustainable boom and in times of a long-lasting recession when the cushioning effect is used up and companies reduce their workforces in large numbers. Depending on the severity and tenacity of a recession also providers of temporary lay off their workers at some point.
Forward-looking providers of temporary workers though should prepare their workforce for the to-be-expected rise in demand for temporary work as a consequence of the next economic upturn by training and qualifying them for future assignments. This would be a true investment into the future and would prevent economic downturns to hit those that provide the much needed flexibility, a scarce good in every economy. Government and businesses have a common interest in further developing temporary work in that direction and should act accordingly.
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