About two million people in the European Union work for private employment agencies, which make them available to other companies. Such agencies constitute a major and rapidly growing sector: in 1999, they had revenues of €59 billion—a figure that is rising by more than 10 percent a year.

Yet in some parts of Europe—particularly Southern Europe—employment agencies are strictly regulated because they have a bad reputation among trade unions and the general public. In these countries, many people believe that such firms help businesses to circumvent the spirit of strict employment protection laws and to cannibalize permanent jobs. Furthermore, it is thought that those who accept agency work do so in desperation because they can’t find permanent positions and that agency jobs are precarious dead ends.

To develop a comprehensive fact base on the sector’s social and economic value, the International Confederation of Private Employment Agencies commissioned a study.¹ It concludes that private agencies could create 4.3 million new jobs in EU countries by 2010 and make a contribution to overcoming two major economic problems in Europe: low labor force participation rates and high unemployment.

Moreover, the findings of the survey of workers contradict the idea that people...