Comment by Matthew Partridge, Senior Manager at Zeva, a leading Lancashire based Service Company
In times of economic uncertainty, it is a common view that more people will enter the workplace through temporary contracts. The majority of employers consider ‘temporary workers’ as a low risk workforce strategy, while workers themselves, who previously would only consider permanent positions, are using temporary contracts as a way of getting back into the job market.
According to a recent survey and official statistics within the recruitment market, findings reveal that there is a growing trend in the number of employers using temporary contracts for new employees and that this is driving the decline of permanent fees for many recruitment agencies.
As the evidence suggests, temporary contracts are used not only to give the employer flexibility, but they are also a way of providing an interim method of employment which allows an employer more time to assess whether or not to offer an employee a permanent contract.
The temporary employment market is growing, with 1.3 million ‘temporary workers’ in the UK, compared to 1 million in 2008. Whether this has come about simply due to the current state of the economy or because UK employers are increasingly looking to minimise their responsibilities towards employees is not transparent.
In a recent survey, the findings revealed that a quarter of employers when questioned, expect to increase the number of temporary workers they use within the next six months. Those questioned stated economic instability as the main reason for this and that using temporary workers gives them greater flexibility, allowing their businesses to react quickly to new opportunities in a changing market.
Recruitment consultants, who have identified an increase in temporary desk revenues, also appear to be capitalising on the temp-to-perm opportunities. The temporary/contract share of the total market, according to REC statistics, is 84.2% and permanent share of the market, is 15.8%, showing a significant increase of 1.6% on the previous year. From this it can be suggested that by capitalising on clients’ hesitancy to commit to permanent contracts, recruitment companies are able to maximize revenues on fewer opportunities in a highly competitive market. The temp-to-perm option clearly satisfies any immediate requirement for the client and makes use of the readily available labour market.
Employers support this theory by constantly taking advantage of having access to the flexible, short term recruitment option that has less of an immediate impact on headcount costs. When considering the costs associated with recruiting for a permanent position and any associated costs of redundancy thereafter, this has to have contributed to a more “try before you buy” strategy now in operation.
According to the Department of Trade and Industry, the UK is the third highest user of temporary agency labour in Europe. As such the DTI has real concerns that this growth is an effort by the employer to shirk responsibilities for payments such as sick pay and holiday pay for employees.
The UK seems committed to agency workers making up a significant percentage of its total workforce and this is in part a reaction to current high rates of unemployment (2.2 million by the end of the 2009’s first quarter). From a candidates perspective however, temporary vacancies can not only provide an income but also offer a route into work in areas perhaps previously not considered. Temporary work can provide an opportunity to change career direction or alternatively make lifestyle changes.
Additionally, temporary work placements tend to be filled quickly and with less bureaucracy than in securing a permanent role, which can minimise the time employees are out of work and earning money.
In April 2009, the number of people claiming unemployment benefit was 1.51 million, the highest figure since August 1997. The largest number of temporary placements according to the REC, was in the industrial and blue collar sector (18%) followed by construction (14%) and education/teaching (11%). The technical and engineering sector has also experienced a significant increase in the number of permanent placements at around 11%.
Given the changes in the temporary worker market, it has become increasingly important that ‘temporary workers’ are aware of their rights. It is necessary that the temporary contract worker takes personal ownership of how and by whom he/she will be paid on each contract they undertake, in order to safeguard that they are paid accurately and on time.
In summary, it appears that reactions to changes in economic stability have benefited the recruitment industry. Clients can make quick decisions about changes to their workforce, recruitment agencies can capitalise on maximising revenues from both temporary and permanent placements and candidates are finding new ways into work.
For those candidates finding themselves on a temporary contract for the first time, ask your recruitment consultant about the payment options available to them.
Zeva is a leading Lancashire based Payment Services Company specialising in the construction, engineering, driving, teaching and IT sectors. For further information on Zeva, its products and services – go to www.zeva.co.uk.
