Employers opt for temps during Brexit uncertainty

The use of temporary staff has grown sharply as the EU referendum looms, new research has revealed.

The Recruitment & Employment Confederation’s (REC) latest Report on Jobs shows a seasonally adjusted index reading of 59.1 for the billings received by agencies from temporary and contract staff in April.

This was up from 56.4 the previous month, and represented the fastest growth in more than a year. Vacancies for temporary positions also grew at a sharper rate than in the previous month.

The confederation said economic uncertainty ahead of next month’s leave or remain vote was a key factor behind the trend.

“Our members are telling us that employers are concerned about the referendum,” said REC’s chief executive, Kevin Green. “That is leading to a slowdown in the decision-making process for permanent hires and a significant switch to the use of contractors, temps and freelancers.”

Temporary staff provide a more flexible resource for employers that want to benefit from the strengthening economy but also want to be able to react to any downturn after the EU vote on 23 June, said Green.

“We expect to see a pick-up in temporary and permanent jobs in July and August if the UK remains in the EU,” he added. “If we leave I think there will be a lot of waiting and seeing. Employers may look to use more flexible resources until things become clearer.”

Last month’s introduction of a higher minimum hourly rate for most workers aged 25 and above was another factor behind April’s figures, REC said.

Organisations may be hiring temporary rather than permanent staff and paying them the national living wage as required, but using them for fewer hours, it suggested. “Employers are being clever about matching supply to demand,” said Green. “They are just having staff there when they need them.”

Recruitment consultancies polled for the report also indicated a rise in the number of people placed in permanent jobs during April.

However, the rate of growth of such job offers eased to a seven-month low, while the increase in vacancies for permanent staff was the smallest in almost three years.

Demand for staff remained stronger in the private than the public sector. The strongest growth in demand for permanent employees was in the accounting/financial sector, while the slowest growth was for construction workers.

The fastest rate of expansion in demand for temporary staff was signalled in the health and care sector, while the slowest was for IT staff.

The Association of Professional Staffing Companies (APSCo) said it had also seen a slowdown in demand for permanent workers, and a rise in temporary and contractor vacancies – albeit only 1 per cent year-on-year.

“The fact that all hiring activity has close to flatlined is indicative of the extent to which uncertainty linked to the EU referendum is deterring companies from taking on new staff,” said APSCo’s chief executive, Ann Swain.

Story via – http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2016/05/10/employers-opt-for-temps-during-brexit-uncertainty.aspx

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