What if all of the UK’s workforce were temporary agency workers?

It’s a hypothetical situation, which is unlikely ever to happen, but just what would change if the whole of the UK’s workforce were employed as temporary agency workers?

A temporary workforce is one of the most flexible ways of working; this has been proven across many industries during recent economic instabilities. Particularly suited to industries where peaks and troughs can be difficult to forecast – such as construction and logistics – it has been a valuable tool for companies to ride out the recession. As the number one procurer of temporary agency labour we have seen a consistent rise in the use of flexible workforces over the past few years.

The nature of contracts mean should the worst happen companies do not have to worry so much about redundancy packages (dependant on contract terms). Workforces can be quickly tailored to meet fluctuations in demand, which reduces the chances of redundancies and their associated costs. Research by the CIPD has revealed that 2.7million people have been made redundant since the start of the recession at a whopping cost of £28.6billion.

The implementation of the Agency Workers Regulations last year means that there is now less of a stigma attached to agency work. Previously the opinion of temporary agency workers was that they were over worked and underpaid (whether that assumption was actually correct is a different matter). Now, workers are entitled to ‘Day one rights’ as well as equivalent pay and benefits after a qualifying period, changing the outward perception.

The skills and knowledge each worker would gain from being employed in a series of temporary positions would be second to none, by experiencing different environments and ways of doing things temporary workers would bring significant understanding to their next position.

There are of course a few negatives; agency workers can prove expensive for hiring companies unless the supplying agencies are not correctly managed. Although redundancies costs could be reduced it also goes that workers can provide little notice of leaving a position – despite contractual obligations the lure of a different contract could mean they leave you high and dry.

What do you think? Could it ever happen?

CIPD forecasts more employment misery in 2012

Private sector redundancies are predicted to contribute to the worst job prospects since 2009. The news comes as another survey predicts that a double-dip recession is not inevitable.

According to the Chartered Institute of Personnel and Development (CIPD) “The first quarter of 2012 will be the most difficult quarter for the jobs market since the recession, as the number of private sector firms surveyed planning to make redundancies increases.”

However, a separate report by the employers’ organisation, the CBI, suggests the UK economy will grow in 2012. It found companies were starting to invest in new equipment and in finding new export markets, despite the CIPD’s research finding many companies were to make redundancies.

The conflicting news will do nothing to help employers who have yet to decide whether staff cuts are necessary. The CIPD’s Public Policy Advisor, Gerwyn Davies, suggests that such news is the cause of many redundancy pushes:

“Whereas employers were in ‘wait and see’ mode three months ago, more private sector firms, particularly among private sector services firms, have decided to push the redundancy button in response to worsening economic news. This will exert yet more pressure on a jobs market that is buckling under the strains of contractions in economic growth and public sector employment.”

Sharp rise is redundancies to come from public sector cuts

Reports in the press today suggest redundancies are set to soar this year.

A survey by The Chartered Institute of Personnel and Development found that employers intentions to cut staff numbers are at there highest since 2004. Many of the redundancies are expected to be in the public sector as the government cuts take hold.

According to BBC News:

Four out of 10 organisations planned redundancies in the first quarter of this year, the survey discovered.

These included one-third of NHS employers, half of central government and three-quarters in local government.

The organisations affected typically proposed to cut around one in 10 employees, increasing to one in eight in the public sector.

Despite the fact the private sector is anticipated to increase it’s positions this year it is likely the rate of unemployment will continue to rise.

Already this year there has been a substantial increase in the employment of temps – figures from the REC suggest temporary staff placements grew at the fastest rate in seven months in January. And, with speculation that employers will recruit temporary agency workers over permanent staff to allow themselves flexibility should the economic climate fluctuate, those made unemployed in the public sector can utilise the temporary positions to gain a foot on the private ladder. The notoriously difficult shift between sectors can be eased through the use of temporary positions, which not only mitigate unemployment but also allow workers to gain experience and insight into the private sector affording them an easier route in.

For employers recruiting temporary agency labour with public sector experience hold many benefits that your business may not be aware of. For example, those with previous public sector experience are often used to working within tight budget constraints and finding the most cost effective ways of doing things. Public sector workers are regularly sent on training and personal development courses to ensure their skills are up-to-date.

Why do businesses use temporary agency workers?

Throughout the recession there have been massive increases in the amount of people made redundant – even people who have worked at companies for decades have found themselves in the dole queue. Yet many have found themselves replaced by temporary agency workers – who perhaps have never worried in the industry before.

So why do businesses take on temporary agency workers over permanent employees?

Certainly for the production and manufacturing industries there are three top reasons – to meet peaks in demand or to cover busy periods, to vet staff before permanent recruitment and to help keep running costs down.

The priorities for the service industries focus less on keeping running costs down and more on the overall flexibility of using agency staff.

Equally important for both industries is the need to cover short term absences and staff leave.

What is surprising is that the agencies surveyed said obtaining access to skills they cannot otherwise recruit was lowest on the list.

Many of the reasons businesses use temporary agency labour make it clear that using them through the recession was a necessary business choice to ensure stability and longevity.

NHS reforms – have they considered streamlining their temporary spend?

The NHS has been left in shock after the scale of government budget cuts took them by surprise. The Commons health committee has criticised the scrapping of primary care trusts and the passing control of budgets to GPs, saying the National Health Service has been unable to plan properly.

The service needs to make a £20bn saving by 2014 – one which the committee believes has been hindered by the coalitions policy shift. The Mirror reported yesterday that up to 77,000 jobs are to be cut as part of the cost saving process – equivalent to closing six major hospitals. All of this, coupled with an aging population is bound to put strain on an already overworked system.

It is difficult to see how the NHS could function after axing over 5% of its work force, and the answer will be temporary agency workers.

Temps are a great way to plug skills shortages and cover for particularly busy periods – such as winter. Their flexibility is appealing as they can be employed only when and where necessary. However, the NHS already relies heavily on temporary agency workers and could well rein in spend by using a vendor neutral recruitment procurer.

A company like ourselves, can save an average of 6-12% of temp spend, simply through managing temporary agency labour effectively on businesses’ behalf and in the absence of a government regulator. Our solutions are supported by a unique web-based timesheet and invoice processing system, e-tips^®, which eliminates transactional costs and removes the administrative burden of processing multiple timesheets and invoices, delivering one single consolidated invoice a week. The typical invoice error rate of 15% is reduced to zero.

“As a healthcare company delivering care in multiple sites across the country, it’s vital that we have tight control and a good understanding of our usage of temporary labour.  de Poel are playing a vital role in our achievement of this objective – helping us to realise significant cost savings and supporting us in ensuring that our temporary labour providers meet the high standards of care delivery that we demand on behalf of our residents.”

Richard Pugsley, Group Financial Director, Shaw Healthcare

Take for example a hospital that spends an average of £10 million per year on temporary labour; de Poel could save them between £600,000 and £1.2 million, plus, by auditing agencies, the risk of any fines for legislation infringement is eliminated.

Councils could cut their redundancy needs

Over the last three months barely a week has gone by without news that a council is ‘being forced to make redundancies’. The coalition’s budget cuts have significantly affected the public sector, in particular councils, who have seen dramatic funding cuts.

Today, Manchester City Council announced it will be making 2000 job cuts in the next 12 months, after a 21% reduction in its government funding. The authority said it has been ‘badly hit’ by the cuts and needs to reduce costs by almost 9%.

Sir Richard Leese, leader of the authority, said: “The accelerated cuts mean we can no longer achieve the staffing reductions we have been forced into through natural turnover which is why we are proposing a time-limited offer of voluntary severance and voluntary early retirement.

One way councils could quickly and effectively cut costs, and reduce the level of redundancies, is to streamline their temporary agency labour costs. Using a vendor neutral recruitment procurer councils can continue adapting their staffing levels when necessary, but also reduce their temp spend.

Councils in England spend anything from £14,000 to in excess of £50 million on temporary labour every year. A company like ourselves can save an average of 6-12% on temp spend, simply through managing temporary agency labour effectively on businesses’ behalf and in the absence of a government regulator. Our solutions are supported by a unique web-based timesheet and invoice processing system, e-tips®, which eliminates transactional costs and removes the administrative burden of processing multiple timesheets and invoices, delivering one single consolidated invoice a week. The typical invoice error rate of 15% is reduced to zero.

Take for example a council that spends an average of £10 million per year on temporary labour; de Poel could save them between £600,000 and £1.2 million, plus, by auditing agencies, the risk of any fines for legislation infringement is eliminated.

Councils that have yet to make announcements about redundancies, or who do not need to enforce them immediately can use temporary labour to mitigate the impact. The Bucks Herald recently reported that Buckinghamshire County Council spent in excess of £7million on temporary staff last year, despite planning to cut 500 positions.

Ann Cobban, head of human resources for Bucks County Council, explained: “During the past year we have deliberately recruited agency workers in preference to recruiting permanent employees, in anticipation of headcount reductions in the future. This enables us to remove agency workers first as we reduce the overall headcount, and secondly we can actively redeploy employees who are under notice of redundancy into posts covered by agency workers. The exception to this is where there continue to be skills shortages and, therefore, difficulty in recruitment – an example being Social Workers.”