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Construction industry growth slows

Activity in the UK’s construction industry grew at its slowest rate for three months in May, as new orders dwindled and optimism weakened.

The Markit/CIPS Construction Purchasing Managers’ Index (PMI) fell to 54.4 from 55.8 in April, staying above the 50 level which separates growth from contraction and beating forecasts f or a fall to 54.2. However, the reading was still the lowest in three months.

Many firms blamed lower economic confidence for the drop in demand for new business. Around a third of respondents thought their output would increase in the next 12 months, while almost a fifth expected a reduction. The resulting balance signalled that the degree of positive sentiment about future business fell to its weakest since October 2011.

Tim Moore, senior economist at Markit, which compiles the survey explained; “While still in positive territory, the month-on-month fall in business confidence was the greatest since June 2010, which was when plans for the autumn government spending review were first announced.

“This reassessment of the year-ahead outlook represents worries within the construction sector that weakening economic conditions could leave firms running on empty again once existing projects have come to completion.”

Last week the PMI for Services revealed a slump in the manufacturing sector too. The report revealed the biggest drop in three years with the sector dropping well below the 50 level to 45.9.

Managers are confident about growth despite economic uncertainty

It seems fears surrounding the news of a double-dip recession were short-lived, as a multitude of surveys reveal strong business and growth confidence.

60% of bosses are confident that their business will grow its output next year and almost a fifth expect it to grown significantly – according to research by the Institute of Leadership and Management (ILM).

The survey of 1000 managers showed that 85% felt growth was a priority for their company and 8 out of 10 said they were confident about their ability to lead growth.

Supporting the survey, the UK business Confidence Monitor (BCM) found that confidence, surprising, improved in the three months to May, despite uninspiring employment and GDP figures.

The BCM index (from chartered accountants ICAEW and consultants Grant Thornton) was 12 at the beginning of the month, up from -9.3 in the last quarter and the highest level since the second quarter of 2011. The organisation believes that the increase implies economic growth of 0.6% in the second quarter of the year.

“Turnover and profits are all increasing but nowhere near the rate seen pre-recession and businesses are beginning to realise that this environment may be the norm for some time,” said Grant Thornton chief executive Scott Barnes.

The news is great for the temporary agency labour market, which has seen some recent fluctuations too. As companies continue to increase production and activity, temporary agency staff are employed as a prudent way to increase workforce levels whilst remaining flexible.

UK top of Spanish workers relocation list

With unemployment in the country rising rapidly, a recent survey has found that 69% of the Spanish workforce is willing to relocate to find jobs.

This week, joblessness in the country hit a record high of 5.64 million, putting the rate of unemployment at just below a quarter (24.4%)

Half (52%) of those surveyed would prefer to relocate within Spin, to larger cities where employment prospects are more positive – such as Madrid or Barcelona. However, 20% of those surveyed would move to other parts of Europe for work. Perhaps unsurprisingly, top of the list of preferred destinations was Germany and the UK.

Other results showed that 3% would choose to move to countries outside the EU and 4% would consider moving to Latin America or a similar destination with an emerging market.

The desperate state of the jobs market in the country is exposed by the fact that a fifth of people surveyed said moving abroad poses no problems, provided they have secured work.

Find out more about contingent workforces in the country in our blog post Spain and temporary agency workers.

Employers struggle to close the pay gap.

Despite a drop in inflation, employers are still finding it difficult to close the gap between basic slurry and the cost of living.

Last week it was announced that inflation dropped to 3% in April, the lowest for more than two years, however a survey by the CIPD found that 51% of companies are unable to predict whether salaries will even rise over the next 12 months, let alone increase in line with inflation.

The Labour Market Outlook showed pay award expectations over the last three months have fallen from 1.7% to 1.5% – just half the current level of inflation.

Perhaps surprisingly, it is private sector firms which are least certain about their ability to give pay increases over the next year. 21% of employers surveyed have already decided to postpone pay decisions until next year.

Among those companies that have been able to forecast a pay rise, the average award is below inflation at 2.6% and the main causes for the expected increase are affordability (62%), inflation (55%) and employee productivity and performance (52%).

Charles Cotton, rewards advisor at the CIPD, comments: “Our data shows that many employers are keen to raise pay in line with inflation but are struggling to close the gap as inflation remains stubbornly high. Line managers and HR professionals need to look at how they can continue to keep employees engaged and performing well in the absence of substantial pay rises, while at the same time limiting the impact of financial distress on employees by offering financial education, debt counselling and voluntary benefits packages.”

Olympic boost for temp positions

With the London 2012 Olympics now just two months away, there are expectations of a huge rise in the use of temporary agency workers. Whilst they are commonplace in businesses that naturally have peak periods, such as retail and tourism, the games will mean companies unused to contingent workforces will be reliant on them to meet demand.

Businesses planning to use temporary agency workers to cope with a rise in demand during the Olympics must make sure they fully understand the Agency Workers Regulations.

The duration of the games means many workers will only be employed for a few weeks, much less than the 12-week qualifying period. But, the regulations have an impact before the qualifying period expires. Whilst many larger employers who use temporary agency workers year-round will already have the processes in place to deal with the regulations, those anticipating a high demand purely during the Olympics may fall foul.

Under the regulations there are ‘Day One Rights’, which, unsurprisingly, a temporary agency worker is entitled to from their very first day. These include access to shared facilities and amenities or services, such as crèches, canteens and transport services, and information on job vacancies.

For further information on the rules, please see our Agency Workers Regulations website.

Unite cracks down on employers using agency workers

Unite has voiced concerns over the “widespread use of agency labour” in the mechanical and electrical sectors.

This week the union launched its national campaign, “Play by the rules” aimed at policing key agreements on every site in the UK. In a press release the union said it is concerned that “employers are increasingly cherry picking the parts of the agreements that suit them while ignoring the rules that don’t, resulting in workers not receiving the correct rates of pay and other terms and conditions as well as the widespread use of agency labour.”

Unites agreement states that employers should make every effort to offer directly employed work, however there are increasing levels of temporary agency workers in the sector.

This is not unique to these sectors, and whilst some employers may use so-called ‘casual’ workers to flout laws and avoid higher pay-rates, the majority use temporary agency workers due to their flexibility and skills. Whilst Unite doesn’t want to remove all temps from the industry, caution should be taken, especially whilst the economy is still so volatile.

Is diversity the next green?

Green supply chains and eco-friendly procurement have been hot topics for years now and many firms are selecting their suppliers and partners based on their ‘green’ credentials. But could the next big thing be diversity?

Yes, many would argue diversity has been and continues to be a key issue for HR professionals, but if ‘true diversity’ becomes a key selling point in your business, much like your green credentials, how would you fare?

You may have a female on the board of directors and an African-American in your R&D team, but does that represent the diversity of the country? Or your local area? True workforce diversity should ideally reflect the local economy, according to Karla Porter that means considering age, nationality, disability, dual/multi citizenship, education, international work experience, language skills, life experience, marital status, multicultural/multiethnic background, parenting experience, personality, physical disability, religion, socio-economic background, veteran/military experience, work experience in different industries, work function, work style…the list could go on!

Often retaining minorities is more difficult than recruiting them. This is especially true for companies in less diverse regions where minority employees may feel disconnected. HR professionals may find the need to adapt workplace culture in order to accommodate.

Whilst all of this sounds expensive, a diverse workforce has many bottom-line benefits. For example, companies with more women on their boards outperform their rivals with a 42% higher return in sales, 66% higher return on invested capital and 53% higher return on equity.

A recent article in HR Magazine highlighted “The standard 12 point plan-style argument for diversity:

1. Widens the perspectives brought to bear on decision-making
2. Increases creativity and problem solving
3. Reduces people risk behaviours
4. Avoids too great a similarity of attitude
5. Offers access to a deeper pool of candidates
6. Helps companies understand and connect better with their customers
7. Engages employees and keeps them loyal
8. Opens up new areas of business opportunity and enhances adaptiveness to change
9. Secures investor/shareholder/government and regulatory confidence
10. Reinforces organisational cohesion
11. Helps drive HR as a strategic priority
12. Is a core driver of innovation, productivity and sustainability.

Now the key is how to move from here to there…

Supplier relationships in tough times

Difficult times shine an intensive spotlight on supplier relationships, exposing both their strengths and weaknesses. It’s a time when businesses find out just how much they need each other.

The collapse of well-known businesses over the last three years has undoubtedly had an effect on suppliers and their relationships. Smaller firms concerns of losing large orders due to weak retail figures have been warranted again by the news that retail sales dropped sharply last month.

Two recent examples in the retail sector show the very different sides of supplier relations:

• HMV

After troubling sales results, HMV used the positive relationship with supplier to trade a small equity share with them for vital “breathing space”. HMV Chief Executive Simon Fox said the move helped them “Off the sick list.”

• GAME

Game, meanwhile, asked suppliers to accept not as good payment terms to help ease its financial woes, some of its larger suppliers refused the terms, inhibiting the chain from getting key new-releases and eventually leading to the company entering administration.

New rules by supermarket giant Tesco to fine its suppliers for late deliveries caused ructions earlier this year. One Tesco supplier told The Grocer that “the sort of sums involved are enough to take a small company down. This sort of approach totally alienates the supply base and it’s going on across the board.”

Conversely, the Government has admitted that the laws designed to ensure suppliers were paid on time aren’t working.

Supply chains need to work both ways to ensure that in times of hardship all parties are able to survive.

Underemployment and its impact on workforce politics

Underemployed (adjective) 1.employed at a job that does not fully use one’s skills or abilities.
2. employed only part-time when one is available for full-time work.
3. not utilized fully.

The unemployment rate dropped in the last three months, but figures show that the rise in part-time and temporaryworkers has been significant. There are now 1.4million people ‘underemployed’ in the UK; that is that they are working, but not in a role which is insufficient in some way to the workers, for example pay, hours or skill-level.

Whilst some work is obviously better than no work, the strain underemployment puts on workers and their families is pronounced. The phenomenon is gripping across the market too – whereas many would expect women to be part-time workers, the latest figures show that 645,000 men are now working part-time. Many people are finding the need to work multiple jobs to make ends meet, not only is this a risk to their health, but it’s also a concern to employers as productivity levels are likely to drop.

The impact on workforce moral and politics is, unfortunately, a hugely detrimental one. Although employees are choosing to work on a part-time or temporary basis over relying on Job Seekers Allowance, there is still likely to be a level of resent, especially toward those who are employed on a full-time basis or in desirable positions. HR Managers have an increasingly difficult job to maintain moral in an underemployed workforce, at the same time recognising underemployed talent that could benefit the business if better utilised.

According to the TUC, involuntary part-time work has risen quicker than unemployment since the start of the recession. During this period, the number of men in this position has risen by more than 115%. And nearly a third of young people in work are having to do part-time hours, even though they want a full-time job.