DBA Act: What Is the Impact on the Labor Market?

The market for assignments targeting self-employed professionals and seconded workers is extremely volatile. At the start of the fourth quarter, companies were still quickly bringing in additional self-employed professionals for Q4 and work extending into 2025. This trend reversed in November and December. Demand for self-employed professionals relative to demand for seconded workers has never been this low, while demand in the overall market has begun to decline.

Source: permanent/flex data from the Intelligence Group

Demand is starting to decline

Throughout 2024, the number of orders was still 4.6% higher than in 2023. In the fourth quarter as well, demand was still 4% higher than in the fourth quarter of 2023. Compared to the peak in the summer of 2024, demand in the fourth quarter was nearly 20% lower, indicating a downward trend. The number of assignments in the public sector (government, healthcare, education, etc.) as well as in the rest of the market continues to decline. Moreover, demand is falling more sharply among private companies. As a result, the public sector’s market share for all flexible assignments now stands at 85.2% (rising from 78.7% in November to 85.2% in December). This is also the highest share since early 2022 and the start of this survey. Demand for self-employed professionals and seconded workers in the public sector was nearly 5.7 times greater in December than in the rest of the market. This volatility is exceptional and partly the result of the panic that arose at the end of the year, as self-employed workers can no longer be deployed but work schedules still need to be filled.

Source: permanent/flex data from the Intelligence Group

Enforcement of the DBA Act is shifting the market in favor of staffing agencies. Demand for self-employed professionals is declining. Demand for secondment (and temporary staffing) is increasing.

The share of secondment assignments has been rising sharply relative to self-employed workers since October 2024 (from 60.7% in October to 75.2% now in December). This 75.2% is also the highest share of secondment in assignments since tracking began in 2022.

Source: permanent/flex data from the Intelligence Group

It’s not so much that demand for flexible work has decreased; rather, there is demand for a different type of flexible work, namely secondment. The decline in the number of assignments is due, among other things, to uncertainty surrounding the DBA Act, a shift toward temporary staffing and permanent employment, and a labor market that is becoming slightly more relaxed. Incidentally, the labor market is still tight, and enforcement of the DBA Act is likely to make the labor market even tighter in the short term because there will be fewer workers available.

For employers, more secondment means it becomes more expensive to hire staff. Absenteeism and turnover will also rise because, unlike self-employed professionals, seconded workers are more likely to leave and are also sick more often, partly because their job satisfaction is significantly lower than that of employees working for employers who do not use secondment. Enforcing the DBA Act does not serve the interests of the labor market as a whole—and workers, self-employed individuals, and employers in particular.

A Strategic Approach Is Needed

The volatility of the figures, as well as feedback from employers and clients, point to a certain degree of panic in the market. On the one hand, this is the result of late preparation, a lack of policy and vision, and employers’ inability to manage their own resources and capacity. On the other hand, it is the result of mixed signals from the government, with key ministries currently failing to comply with their own DBA Act. Employers who are currently following the law are complaining about an uneven playing field compared to employers who are delaying implementation for the time being. This uneven playing field is exacerbated by the ongoing labor shortage. As a result, both employers and self-employed workers are at a disadvantage. This situation will undeniably lead to friction and a reduction in the overall labor supply. In the healthcare sector, it is therefore only a matter of time before problems arise, which can be expected around the first vacation period in February and March. Employers with a strategic and data-driven, integrated approach to human resources, on the other hand, have the advantage, as do those who are currently ignoring the DBA Act or merely complying with it on paper.