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Industries shown to be ‘agency worker-reliant’ after stark rise in use, says study

12 Feb 2018 By Marianne Calnan

Two-fifths of HR professionals cite Brexit uncertainty as main reason for increased agency use

Huge increases in the use of agency workers have caused companies in the construction trade and the motoring, wholesale and retail sector to become reliant on them, according to new research. 

A study, commissioned by the Resolution Foundation, conducted by ComRes and published on 10 February, revealed that the construction industry increased its use of agency workers by 56 per cent over the last five years, followed by the motoring, wholesale and retail trade at 51 per cent. This compared to a 43 per cent overall rise for businesses.

The poll of 500 HR decision-makers from private sector organisations that use agency workers between November and December 2017 revealed however, that manufacturing companies were the least likely to have increased their use of agency workers over the last half a decade, with less than a third stating as much.

Although agency workers tend to be perceived as a pricey labour option, 29 per cent of HR professionals said their use of agency workers lowered their labour costs, and 39 per cent said hiring such workers cost the same as using directly employed staff.

Brexit played a huge part in these levels. Some 41 per cent of HR professionals indicated that the uncertainty surrounding Brexit was their main reason they would increase their use of agency workers over the next five years. 

Meanwhile, 37 per cent said Brexit’s potential negative impact on migrant agency workers meant they would be using fewer agency workers. A quarter revealed that they planned to increase their use of agency workers over the next five years, and more than half expected to maintain current levels.

Just 15 per cent of businesses were found not to rely on agency workers. Only 9 per cent had decreased their use of agency workers since 2012. More than one in 10 specifically said they chose to use agency workers in as many roles as possible.

Although most employers (46 per cent) said they used agency workers for ‘traditional’ reasons such as filling staffing gaps, 43 per cent used them to cover employees’ holidays and absences, and 19 per cent turned to them as a last resort. A third (34 per cent) of agency worker-reliant companies revealed they took a ‘strategic approach’ to their use of agency workers and actively planned to use such workers, rather than just to fill gaps.  

Close to half of the organisations surveyed in the business administration, professional and real estate industry said they used a strategic approach, followed by nearly 40 per cent of those in transport, storage and communications. Only 14 per cent of businesses in the hospitality industry, meanwhile, said the same.

Julia Kermode, chief executive of the Freelancer & Contractor Services Association, said cost may be a contributing factor to the increased use of agency workers, as Britain’s exit from the EU approaches. 

“Given the economic pressure on businesses it is perhaps not surprising that we are seeing an increase in the numbers of agency workers,” she told People Management. “The flexible workforce is key as businesses can tap into the resources they require on an as needs basis.”

Kermode added that strategic approaches to using agency workers will continue to become vital to companies: “It is likely that we will see continued and growing demand for agency workers as businesses seek to fill the gaps.

“In the context of Brexit, it remains to be seen whether the UK will have continued access to necessary and important skills from within the EU."  

This is in line with previous research from the Recruitment & Employment Confederation and ComRes, which warned that the shortage of suitably qualified candidates for UK jobs contributed to employer confidence dropping to its lowest level since the EU referendum. 

The proportion of employers that said they did not know their short-term hiring plans for temporary staff rose to 27 per cent, up from 9 per cent at the same point last year, the report published on 31 January found.

In its response to Good Work: The Taylor Review of Modern Working Practices, the Department for Business, Energy and Industrial Strategy (BEIS) said it would launch four consultations to ‘reform’ the rights offered to flexible workers in the gig economy, including the rights of agency workers.

The BEIS said it had acted on “all but one of Taylor’s 53 recommendations” in its response. It also said it would consult with businesses on the impact of plans to enforce employment rights, change rules concerning agency workers, increase transparency in the labour market and consider employment status. 

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