It's not a solution to unemployment, it's an exploitation of people unable to find a job in societies where not having a job means living in poverty.
They're not entrepreneurs either. They're workers who have the liberty of employees with the legal requirements of entrepreneurs. It's the worst of both worlds.
They generally have to enter into non-competes, prohibiting them from working for other agencies or companies. They are only paid when the temp agency actually has work for them. They generally get zero benefits compared to regular employees. They also tend to be paid pennies and don't benefit from labour agreements (because unlike their regular employee co-workers they're not allowed to unionize). Basically, they're like independent contractors, except they're not independent.
Temp agencies in this form weren't even legal in Germany until a few years ago (well, about a decade now).
http://money.cnn.com/2015/02/03/technology/innovationnation/...