Global Spotlight on Germany
23 January 2015
The recruitment marketplace may be seen as a land of opportunity by some, but recognising cultural differences is integral to success in the country.
Mon, 26 Jan 2015 | Colin CottellThe recruitment marketplace may be seen as a land of opportunity by some, but recognising cultural differences is integral to success in the country.
The growth of professional services company SThree’s business in Germany puts the evolution of that market into a dynamic perspective. “A couple of years ago SThree’s German business was half its UK market. Next year it may be bigger than the UK,” says Dave Rees, SThree’s managing director for DACH (Germany, Austria, Switzerland), whose brief includes the Teutonic economic powerhouse.
“There has been a big change in Germany,” says Rees, where an ageing population, job growth and low unemployment, as well as liberalisation of the labour market that began in 2003, have produced what many recruiters see as fertile ground for staffing firms.
What makes it even more attractive is that German employers “have more of a propensity to pay a quality fee for a good service and candidates”, adds Rees. Looking ahead, he sees only further upside. “The German recruitment market has no way near reached the maturity of other Western countries, so there is a huge opportunity here,” he says.
However, Wolfgang Brickwedde, director of the Institute for Competitive Recruiting, a firm providing consultancy services in Germany, offers a more sombre assessment. He points out that the temporary market reached its peak around two years ago and has since fallen, as “more firms start to source people themselves”. Indeed, German Federal Government statistics show that the number of temp workers in 2014 remains below the 2013 monthly average of 838,820. Alongside direct sourcing, Brickwedde says the big trends are for fees based on success, research-based services and self-employment.
Thomas Leister, partner and director of German operations at law firm Osborne Clarke, agrees that the temp market has declined, but says the prospects for the staffing industry are good. However, he warns that promised legislation due to come into effect during 2015 is casting uncertainty over the sector. Under a Coalition Agreement between the CDU and SPD ruling parties, temporary assignments will be limited to 18 months, and pay between temp workers and their non-temp worker colleagues is set to be equalised after nine months. A planned crackdown on the use of employment contracts for workers that should come under AUG (labour leasing) legislation that give them better rights and protection is also expected. “Employers are worried,” says Leister.
That said, Leister doubts the changes will have damaging long-term consequences for the staffing sector. “It’s not a case that the German market will become less attractive, because the German economy is doing well,” he says.
Nor is he concerned about the threat from Germany’s first National Minimum Wage of €8.50 (£6.76) an hour, which took effect from 1 January. “We have collective bargaining in almost all areas, which already includes a minimum wage,” he says.
Richard-Emanuel Goldhahn, MD of Cobalt Recruitment, says the potential changes won’t affect companies such as his. “We aren’t a temp agency; we supply interim mangers and self-employed on a day rate.” And in any case, Cobalt like many other UK recruiters in Germany operates at the professional end of the market, where wages are generally above the new minimum wage.
Connor Roughneen, MD of Roc Search, says one of Germany’s attractions is that it is less saturated with recruiters than markets such as the UK. That said, there are challenges. “It’s a much more passive market for candidates,” he says. This means recruiters have to spend a lot of time finding candidates. Recruiters must also tailor their approach to German cultural norms that includes a preference for face-to-face meetings, and long-term relationships. “It takes a bit longer to get to know clients in Germany,” says Rees, though he adds that once a relationship is established it is “usually stronger, and harder to break”. Aggressive ‘sales tactics’ such as sending unsolicited CVs are not perceived well by clients, says Brickwedde.
“It’s understanding the subtle differences that will make recruiters successful in Germany or not,” says Rees. “It is quite easy to get five or six recruiters from London to do the German market, but getting to 40, 50 or 100 staff — that is more difficult.”
The growth of professional services company SThree’s business in Germany puts the evolution of that market into a dynamic perspective. “A couple of years ago SThree’s German business was half its UK market. Next year it may be bigger than the UK,” says Dave Rees, SThree’s managing director for DACH (Germany, Austria, Switzerland), whose brief includes the Teutonic economic powerhouse.
“There has been a big change in Germany,” says Rees, where an ageing population, job growth and low unemployment, as well as liberalisation of the labour market that began in 2003, have produced what many recruiters see as fertile ground for staffing firms.
What makes it even more attractive is that German employers “have more of a propensity to pay a quality fee for a good service and candidates”, adds Rees. Looking ahead, he sees only further upside. “The German recruitment market has no way near reached the maturity of other Western countries, so there is a huge opportunity here,” he says.
However, Wolfgang Brickwedde, director of the Institute for Competitive Recruiting, a firm providing consultancy services in Germany, offers a more sombre assessment. He points out that the temporary market reached its peak around two years ago and has since fallen, as “more firms start to source people themselves”. Indeed, German Federal Government statistics show that the number of temp workers in 2014 remains below the 2013 monthly average of 838,820. Alongside direct sourcing, Brickwedde says the big trends are for fees based on success, research-based services and self-employment.
Thomas Leister, partner and director of German operations at law firm Osborne Clarke, agrees that the temp market has declined, but says the prospects for the staffing industry are good. However, he warns that promised legislation due to come into effect during 2015 is casting uncertainty over the sector. Under a Coalition Agreement between the CDU and SPD ruling parties, temporary assignments will be limited to 18 months, and pay between temp workers and their non-temp worker colleagues is set to be equalised after nine months. A planned crackdown on the use of employment contracts for workers that should come under AUG (labour leasing) legislation that give them better rights and protection is also expected. “Employers are worried,” says Leister.
That said, Leister doubts the changes will have damaging long-term consequences for the staffing sector. “It’s not a case that the German market will become less attractive, because the German economy is doing well,” he says.
Nor is he concerned about the threat from Germany’s first National Minimum Wage of €8.50 (£6.76) an hour, which took effect from 1 January. “We have collective bargaining in almost all areas, which already includes a minimum wage,” he says.
Richard-Emanuel Goldhahn, MD of Cobalt Recruitment, says the potential changes won’t affect companies such as his. “We aren’t a temp agency; we supply interim mangers and self-employed on a day rate.” And in any case, Cobalt like many other UK recruiters in Germany operates at the professional end of the market, where wages are generally above the new minimum wage.
Connor Roughneen, MD of Roc Search, says one of Germany’s attractions is that it is less saturated with recruiters than markets such as the UK. That said, there are challenges. “It’s a much more passive market for candidates,” he says. This means recruiters have to spend a lot of time finding candidates. Recruiters must also tailor their approach to German cultural norms that includes a preference for face-to-face meetings, and long-term relationships. “It takes a bit longer to get to know clients in Germany,” says Rees, though he adds that once a relationship is established it is “usually stronger, and harder to break”. Aggressive ‘sales tactics’ such as sending unsolicited CVs are not perceived well by clients, says Brickwedde.
“It’s understanding the subtle differences that will make recruiters successful in Germany or not,” says Rees. “It is quite easy to get five or six recruiters from London to do the German market, but getting to 40, 50 or 100 staff — that is more difficult.”
