According to the most recent CIPD UK Labour Market report, most employers are projecting a steady-as-it-goes and ‘business as usual’ approach when it comes to recruitment.
However, the indications are towards a deterioration in hiring intentions over the next few months as a result of the Brexit vote. Significant numbers of employers are also signalling higher costs, greater recruitment difficulties and lower investment in the future as a result of Brexit.
Interestingly, this view is not necessarily supported by the latest Office for National Statistics UK Labour Market Report. Between January and June 2016, the number of people in work in the UK increased. There were 31.75 million people in work – 172,000 more than for January to March 2016 and 606,000 more than for a year earlier.
Furthermore, a recent report by the Association of Professional Staffing Companies indicated that this increase in market demand was fulfilled by both permanent and temporary placements, with temporary job placements up 8% and permanent positions up 6% on the previous year.
With such a backdrop of uncertainty, the labour market shift towards a more flexible approach to staffing, including temporary labour, is likely to continue so that companies can scale their business performance.
This change is being driven by a number of factors, and for businesses the benefits are clear. Labour is one of the biggest costs for businesses and, in an uncertain economy, the last thing they want is a high headcount when orders are falling. A workforce including temporary staff enables businesses to have greater flexibility in managing changes in demand for products or services. It also enables businesses to quickly inject talent to meet specific shortfalls or competitive challenges, without incurring the costs and time delays of training. This also opens the talent pool – temporary workers can be drafted in to fill positions left open by any skills shortage.
Having a more transient workforce can also keep a business innovative. New and different injections of ideas bring with them fresh thinking, new approaches to problem solving and varied experience. It can also be a screening device for potential recruits to their permanent workforce.
Research findings from the UK Commission for Employment and Skills suggests a projection of strong growth in construction, information technology, health & social work and service sector positions over the next five years. These sectors are typically considerable areas for temporary labour usage.
With the recent Brexit vote, the temporary labour industry is likely to evolve further. Recent changes to government legislation around minimum wages and pension contributions will increase temporary staff rates and put a further pressure on the bottom line for businesses. Typically the average cost of temporary labour to the business is greater than the equivalent permanent member of staff, so it does require an element of planning and process to ensure the contractors arrive when needed and depart once the requirement has passed.
Streamlining the HR processes supporting recruitment, succession planning and internal skills development, in support of the business strategy, will also help increase staff engagement. Improving demand and supply resource forecasting processes will help reduce the reactive demand for recruitment, including temporary labour, which can sometimes lead to uncompetitive commission rates being charged.
In our experience, which includes a wide range of UK and International workforce planning, ERA are well placed to provide independent advice and guidance around all aspects of recruitment with a focus on improved value for money.
Feel free to contact us for more information.