A new report from the Recruitment and Employment Confederation revealed that the number of employers planning on increasing their temporary/contract headcount doubled in August 2018, year on year. This occurred despite falling confidence in the economy because Brexit remains uncertain. Let’s look at the report’s findings in greater detail and what it means for the future of the British workforce.
Employer Confidence and the Shift in Hiring Practices
The most recent Jobs Outlook report showed that employer confidence had tipped over into negative territory. The balance of survey respondents shifted from positive predictions of the future to negative. The overall shift was seven points for a total of -1.
Despite this economic gloom, employers were continuing to hire from services like temp agency Staff Heroes and invest in their businesses. In fact, the uncertainty may be why they are hiring from staffing agencies instead of looking for permanent hires.
There was a more modest increase in the number of companies hiring permanent staff. A quarter said they’d hire more permanent staff, an increase of eight points. Just over a quarter said they’d hire more permanent staff in the medium-term, an increase of nine points. But the number planning on increasing contracting and temporary head counts doubled to 35%. That figure reflects at least a doubling of firms planning on hiring more temps and contractors both in the short-term and the medium-term. This is because they can hire people faster through agencies and maximise their flexibility in the face of economic uncertainty. And they can also benefit from a pre-screened pool of talent as well, which relieves a lot of stress on their human resource departments.
In the latest Jobs Outlook report, the number of firms choosing to remain steady was +15, a one-point decline from the prior month. This may be due to challenges finding suitable candidates because of high overall employment rates. Half of the survey respondents said they had concerns trying to fill permanent openings. This was particularly acute in construction.
Fear of Labour Shortages
However, employers are also afraid of a shortage of temp and contractor labour. In August 2017, about a third of employers surveyed were concerned about a temp/contract candidate shortage. This also had a direct effect on hiring practices as well. In the August 2018 survey, it was two-thirds.
The shortages employers anticipated were in temporary marketing, media, creative industries, and drivers. Drivers, especially in food supply, are probably going to be badly hit by changes caused by Brexit. Shortages in a number of sectors are forcing employers to work hard to attract key personnel. This, too, is resulting in companies relying on temp services to find qualified people fast. But the quality of temporary workers has also improved over the years as many more qualified candidates are choosing temporary work, either out of necessity or to test the waters.
Recruitment and Employment Confederation CEO Neil Canterbury said that uncertainty about the terms of Brexit was pulling down employer confidence. The EU summit in June didn’t answer many questions about mobility, migration, and trade. However, that anxiety was not having a significant impact on their hiring intentions since those remained firmly positive. Once the uncertainty over the UK’s exit from the European Union is resolved, employers will be able to invest and create new jobs at a higher rate.
In short, uncertainty about the future relationship between the UK and EU isn’t stopping businesses from hiring. However, they’re relying more on contract labour and temporary hires than permanent hires to meet their need for talent.