Considerations to know when searching for temporary workers from abroad
An electrical components factory in Finland, a meat processing factory in the Netherlands, a logistics company in Belgium or a mushroom farm in France may periodically or systematically be faced with two interconnected problems
- Shortage of workers
- No workers or not enough workers available in their own countries to deal with this problem
The difficulty or inability to find workers with the right profile willing and able to take up vacant job positions that desperately need to be filled can have a crippling and devastating effect on companies. Finding quick and effective solutions to chronic or occasional labour shortages is often a question of life or death for the growing number of companies faced with this problem.
In broad terms, employers faced with labour shortages adopt one of 2 distinct approaches to deal with the matter:
- Direct hire – the aim is to attract, recruit and select workers that will be directly employed by them. Companies often turn to recruitment agencies or entitles (private and public) to achieve this goal. However, several other direct hire methods and strategies exist.
- Outsourcing/leasing – in this scenario the employer searches for a contractor (service provider), an employment agency or a temporary work agency to help them overcome their manpower needs.
In this article, we will focus only on the second approach or option for dealing with labour shortages – outsourcing/leasing.
The terms “outsourcing” and “leasing” in themselves provide a good indication of what this approach entails. In simple terms, it is when an employer decides to contract or to engage a third party for the purpose of addressing and overcoming labour shortages – in practice, for delivering the solution to the human resource problems it is faced with.
Employers search “outside” the confines of their own company for a solution to their manpower needs. Outsourcing and labour leasing are quite similar in nature and share many common characteristics, but there is one significant feature that sets them apart.
With Labour Leasing, workers are temporarily hired out by temporary work agencies to employers who are responsible for the direction, control, supervision and day to day management of the workers. Just as ladders, tractors, photocopiers, vehicles, and a wide range of other products are leased to third parties that are totally free to decide on how to put them to use (of course, they must do so in a responsible manner), so too are workers.
With outsourcing (often referred to as “Externalization”) the third party is expected to take responsibility for the management of an entire department, sector or unit of an organization – not only workers are provided, but anything else needed to achieve objectives and provide the desired results. Direction, control, supervision and day to day management of the entire unit (including the workers) is outsourced to the third party that will be judged according to its ability or failure to achieve objectives or the expected results.
Outsourcing is a more complete solution, but it is considerably costlier since the third party not only has to provide workers, but everything else required to effectively manage the sector, department or unit and ultimately reach the objectives agreed to between the parties.
Depending on the specific context and on a wide number of factors, there are situations where Outsourcing or Externalization is the most appropriate or advisable solution and others where labour leasing makes more sense. Usually it is self-evident – a degree in rocket science is not required.
For example, if a bank or a university requires personnel to provide security, it is clearly more appropriate to outsource the responsibility and management for security than to lease labour for this purpose from a temporary work agency. Providing security is completely alien to a bank or a university – it´s an activity in which they have no direct interest. Focusing on addressing security needs would cause these institutions to divert attentions from their core businesses which could have serious consequences. A lot of learning would be required and the risk of failing to provide adequate security would be considerable if these institutions decided to lease labour. Therefore, in this case, outsourcing or externalization is the obvious choice.
On the other hand, if a fish processing factory requires workers for the production line, labour leasing appears to be, quite obviously, the most appropriate solution to address this need for manpower. In this case, processing fish is the core activity. Outsourcing or externalizing this function would be absurd. The employer has all the equipment and know-how. What the fish processing factory needs is manpower. If it is looking for an external solution to deal with the labour shortage it faces, it would only make sense to hook up with a temporary work agency.
Given the fact that Work Supply – Trabalho Temporário Lda has considerable experience in hiring out workers to clients across the EU and EEA interested in leasing them, we believe it is essential to make some truly important considerations and provide valuable advice to potential clients considering the possibility of leasing workers from abroad.
Our assessment is based on what we see happening on a regular basis, on our day to day experience.
The first thing virtually all companies (or employers) in other EU or EEA countries (including those in Portugal, where we are based) do, when seeking to attract and recruit badly needed workers with suitable profiles, is search for solutions at home. It makes perfect sense.
- Why spend so much time, go through all the hassle and deal with the uncertainties of securing manpower from abroad, if solutions exist within their own countries?
- How do we know if temporary work agencies established in jurisdictions often several thousand kilometres away can be trusted? How can we perform reference checks?
- How can we be certain that the foreign temporary work agencies pay the mandatory social security contributions and taxes?
- How can we be certain that the workers who are coming from abroad will be provided adequate accommodation and settlement services?
- Are temporary work agencies from abroad allowed to provide services in my country?
We understand.
When adopting considerably different approaches to deal with everyday challenges anxiety and uncertainty take root. Any other reaction would be surprising.
However, what if solutions at home (domestic solutions) are nowhere to be found?
Then, obviously, companies must consider searching for solutions abroad. It´s either that or trying to get by with the little manpower available. However, this approach could lead to a reduction in sales and in increase in unsatisfied clients. It would likely result in loss of competitiveness and market share and, ultimately to financial difficulties and possible bankruptcy.
It is at this time that the figure of the trusted mediator springs into action offering to find a solution.
These mediators are often connected to local temporary work agencies or the temporary work agencies themselves act as mediators.
They offer to provide a bridge connecting companies (or employers) to temporary work agencies abroad able to supply workers with suitable profiles that will solve the labour shortage problem.
What advantages (real or perceived) do mediators offer companies looking to lease workers from abroad?
- Speak the same language, are from the same background and possess a strong understanding of the contextual factors and legal framework
- A feeling of greater assurance and trustworthiness
- An experienced third party to whom the company can transfer the responsibility and the risk, as well as with all the hassle and headaches that comes with searching for atypical and unconventional solutions in places far away and totally alien.
However, companies outside Portugal often overlook the fact that working with mediators comes with a price – frequently a very heavy one!
The cost of the service will be higher, often much higher, than if the company in need of works located outside Portugal had contacted and negotiated directly with the temporary work agency in Portugal – for example, Work Supply – Trabalho Temporário Lda.
Let´s use Belgium, the Netherlands or Germany, as an illustration.
When using a mediator, job positions such as mason, a reach truck operator, a semi-skilled production worker, ground worker, etc. are offered at around 37-39€/per hour.
Without a mediator, working directly with the temporary work agency established abroad, the rate offered for these same positions is often around 31-33€/per hour.
When using a mediator positions such as certified ship welder, industrial electrician, diesel machine mechanics are offered at around 47-50€/per hour.
Without a mediator, working directly with the temporary work agency established abroad, the rate offered for these same positions is often around 42-44€/per hour.
The cost of leasing a mere 10 workers from abroad for a period of just one year can easily be 100.000€ more expensive if a company located outside Portugal decides to rely on a mediator in his home country.
That´s a HUGE difference.
Sometimes companies pay 15€/per hour extra (and even more) simply because they choose to work with a mediator (or broker) instead of working directly with the foreign temporary work agency.
But, what if the temporary work agency established abroad that is leasing workers to company (or client) located in Belgium, the Netherlands or Germany (or any other EU or EEA country):
- Has a representative office in these same countries
- is licensed to work in these countries
- has an accountant and a lawyer located in these foreign countries
- has a bank account as well
- is registered as a foreign employer with the local tax office
- has experience working in that market and a good reputation with clients and state authorities
- provides all the documentation requested and demonstrates complete compliancy?
Why even consider a contacting an agent or a temporary work agency in the home country? It would make no sense whatsoever.
To companies (or employers) and potential clients who are unable to enough find workers with suitable profiles within their own borders we say: caveat emptor!
Instead of looking for an easy, more practical, cosy and convenient solution at home that involves partnering with a mediator, why not take a more proactive role and contact temporary work agencies located abroad directly?
You can save a fortune and be provided with even better service.
A true win-win situation.
If you have any questions or would like to learn more do not hesitate to contact the Work Supply – Trabalho Temporário Lda team!
We are more than happy to help.
Marcelo Araújo
Director of Operations
