Temporary workers and freelancers: costs, savings potential and immigration of skilled workers

When it comes to companies needing flexible solutions so that they can bridge staff shortages and also increase their efficiency, the use of freelancers and temporary workers is just right. The Skilled Immigration Act is having a major impact on the demand for skilled workers in Germany. It will create new opportunities for recruiting foreign workers.

However, companies must carefully analyze the financial aspects of employee leasing and the resulting recruitment costs.

Estimated reading time: 8 minutes

What costs are incurred when using temporary staffing and personnel placement?

Companies must be aware in advance that temporary employment and the services of a recruitment agency are not free of charge.

If a company works with a recruitment agency, a commission is usually charged. This ranges between 15 % and 30 % of the gross salary of the employee being placed. This percentage difference is due to the different specializations and qualifications of the specialists.

Companies must also pay their temporary workers the agreed hourly rate. In addition to the agreed wage, social security contributions, insurance and any surcharges for overtime or shift work are also paid. The costs here can vary greatly depending on the specialization of the workers.

The company also incurs administrative costs. This includes legal protection, contract processing and organizational work. This can be particularly costly for companies that regularly use temporary workers.

There are also other costs that must be paid. These are, for example, transportation costs or daily meal allowances. Companies also have to take into account that they have to offer training, equipment and accommodation, especially for specialist staff.

Of course, the total costs for companies vary depending on the type of contract and the duration of employment. The industry is also decisive for the total costs. It is important for companies to know their costs so that they can calculate. They need to know whether short-term flexibility with higher hourly rates or a long-term staffing strategy is economical for them.

How much do temporary workers in various professions and industries cost?

The hourly rates for temporary workers vary considerably depending on the occupational group, qualification and industry. The following is an overview of typical costs for various professions:

• Electrician: 25 to 45 euros per hour. This hourly rate depends on the employee's specialization and experience. In the case of large construction projects or the energy industry, these hourly rates can be even higher. 
• Locksmith: 22 to 40 euros per hour. Above all, this depends on the locksmith's area of application. For high-precision work, such as in the aerospace industry, hourly rates of up to €50 per hour are paid.
• Welder: 20 to 35 euros per hour. Here it depends above all on which welding techniques are used and what certification the employee has. For example, there are welders who work on pipelines and expect an hourly rate of up to €60 per hour.
• Fitters: 25 to 50 euros per hour. Companies often have to calculate additional costs for travel time and expenses.
• Production assistant: 15 to 25 euros per hour are the basic hourly rates here. If production assistants are deployed at peak times, the hourly rates can also increase.

These hourly rates also include non-wage labor costs. However, additional expenses are incurred for travel costs and accommodation if employees are deployed on projects outside the company headquarters.

Where is the savings potential between emporary work and permanent employment?

A definite advantage of temporary work is that employees can be deployed at short notice. It is also possible to use them only for the duration of a specific project. For companies, this means that they are not making any long-term commitments to employees. They are able to react more quickly if they need staff at short notice due to fluctuating order situations, or if they no longer need them. This is a clear advantage, especially in industries that are subject to seasonal fluctuations.

Overall, companies react more quickly to fluctuations in orders by using temporary workers. They do not have to face any financial hurdles if the order situation drops. Compared to permanent employees, temporary workers generally have a shorter notice period or no notice period at all; companies also do not have to pay severance pay or residual salaries.

However, there are companies that want to take on their temporary workers as permanent employees. If this is the case, the recruitment agency will have to make a transfer payment. However, the costs for the company are lower than the costs that would be incurred if the company introduced its own recruitment process. Depending on the employee's qualifications, the transfer fee can be between €2000 and €5000.

It is important for companies to know that the hourly rates for temporary workers are usually higher than the costs for permanent employees. It is therefore important that companies keep a clear eye on their costs and weigh up the pros and cons. For example, if a company has a long-term project and the order situation looks stable, it makes more sense to work with permanent staff. However, if you have a staffing emergency, for example due to parental leave or employee illness, you can react quickly with the help of temporary workers. Even if the order situation fluctuates greatly, it is better to use temporary workers at short notice than to try to cover this with permanent staff.

How is the evolution between German temporary workers and temporary workers from Eastern Europe?

The use of temporary workers from Eastern Europe has increased significantly in Germany in recent years. Personnel from Poland, the Czech Republic and Hungary in particular are being deployed. The use of Eastern European temporary workers has significant advantages for the user company.

One clear advantage is the lower hourly rate. For example, the hourly wage of a Polish welder is between €18 and €30. A German welder with comparable qualifications usually receives between €25 and €35. Similar differences can also be observed for electricians and production assistants.

In sectors affected by a shortage of skilled workers, the use of temporary workers from Eastern Europe is very popular. In many Eastern European countries, there are qualified specialists who would like to work in Germany. The level of education in these countries is generally very high - the school-leaving qualification there is comparable to a German qualification.

If companies decide to work with an agency that places Eastern European staff, the temporary employment agency often takes care of social security contributions and insurance. This reduces costs and the administrative burden for German companies.

Another advantage for German companies is that many European employees have already worked in Germany and have a knowledge of German. They are very familiar with the German labor market and cultural customs. As a result, there are no major problems when integrating employees into the company, which makes the integration process much easier.

What influence does the Skilled Immigration Act have?

The Skilled Immigration Act (FEG) aims to make it easier for workers from third countries to gain access to qualified jobs in Germany. It also aims to finally overcome the shortage of skilled workers.

For Eastern European workers in particular, the recognition of their professional qualifications has been significantly simplified. This significantly shortens the processing times for visas and work permits. A German company is therefore able to react more quickly to a staff shortage.

Access to an expanded labor pool enables German companies to search specifically for skilled workers from Eastern European countries. In this way, they can anticipate the shortage of skilled workers in the care sector, electricians or welders, for example. Such skilled workers are also particularly in demand in IT.

Even if a German company decides to hire foreign specialists directly, this reduces costs considerably. They are then independent of a recruitment agency and can, for example, also resolve long-term staff shortages.

Government initiatives promote the integration of new employees through language courses and further vocational training. These are costs that the company does not have to bear itself.

There are a number of different financial incentives and tax benefits for companies that specifically support the integration of foreign skilled workers.

Related topics:

• Personnel placement production
• Temporary work in Eastern Europe
• Skilled workers in production
• Temporary workers from Poland
• Temporary work – success through flexibility

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