Contracting-out employment services: temporary agency work in Germany

Since 2003, the German Public Employment Service has been experimenting with the contracting-out of various services. One of the new labour market programmes is Personnel Service Agencies (PSAs), which provide client firms with jobseekers on a temporary assignment basis and are responsible for integrating jobseekers into non-subsidized employment. By contracting-out employment services, the Public Employment Service seeks to exploit efficiency gains characteristic of enterprises that compete in quasi-markets. In order to integrate jobseekers as rapidly as possible, a result-oriented system of incentives has been developed. This article describes the institutional setting and examines its appropriateness for efficient job placement services.