Brexit uncertainty forces businesses to turn to agency workers

24 Apr 2019 By Lauren Brown

Dramatic increase in hiring intentions for temporary staff, while employers’ skills worries continue

UK employers have pivoted “dramatically” towards temporary agency workers this month against a backdrop of skills shortages and dwindling confidence in the economy, research has revealed. 

The Recruitment and Confederation Agency’s (REC) April JobsOutlook report found the balance of sentiment for hiring agency workers in the short term (over the next three months) was 10 percentage points higher in April than in March. 

In the three months to the end of February 2019, sentiment averaged out at -7 per cent – meaning more businesses were not intending to take on temporary labour than were. This increased to +3 per cent for the three months to the end of March. 

The uptick marks the end of a three-month decline in the use of agency workers. Sentiment had been on the rise from April 2018, reaching a peak of +25 per cent in September 2018 before plummeting to 0 per cent in January and further last month. 

Neil Carberry, REC chief executive, said the dramatic change in mood could be attributed to the delay to Brexit, which had given firms “breathing space”. He said anecdotal evidence from recruiters suggested the jobs market had improved in the past few weeks. 

“The figures on hiring temporary workers suggest that many businesses are turning to agency work to help them navigate the unpredictability they currently face. This might be driven by waiting to see whether permanent hiring is justified, or by using additional labour to meet demand rather than making big capital investments,” said Carberry.

“In the long run, however, employment will be best supported by the stability a clear Brexit outcome will bring. It’s time to get on with delivering this.”

Gerwyn Davies, public policy advisor at the CIPD, said the REC survey data was “somewhat at odds” with official statistics, which showed employment growth in the UK was coming from skilled, permanent, full-time jobs. “The number of people in temporary employment continues to remain flat while overall employment growth continues to grow sharply,” he said.

“This might be a sign that employers are having to offer more attractive and secure jobs to attract people, to help overcome rising incidences of recruitment difficulties.

“It may also indicate that employers are shrugging off any Brexit-related uncertainty, which can, at least partly, be attributed to the flexibility of the UK labour market.”

However, the REC survey also indicated employers’ confidence in the UK’s economic prospects continued to fall. According to the report, 44 per cent of employers believed prospects were getting worse, compared to just 13 per cent who said they were improving.

Almost half (46 per cent) of employers expressed concern about the availability of permanent candidates, with a lack of engineering, technical and health and social care workers continuing to cause most concern. Of those intending to hire temporary workers, more than a third (34 per cent) raised concern over the availability of skills.

To address skills shortages, the survey found four in five employers (83 per cent) planned to offer training and upskilling opportunities to their staff in 2019, and 71 per cent planned to actively promote inclusion and diversity. Just under two-thirds (58 per cent) planned to offer more flexible working practices in an effort to increase productivity.

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