Employers’ reliance on agency workers increases as confidence slides further

New data from the Recruitment and Employment Confederation (REC) shows that UK employers’ intentions to hire temporary agency workers have risen dramatically amidst pessimism about the economic outlook.

According to April’s JobsOutlook report, the balance of sentiment for hiring agency workers in the short-term was 10 percentage points higher than the previous month at net: +3. Sentiment in the medium term was at net: +1, up 9 percentage points from the previous month.

This is despite employers’ confidence in economic prospects for the UK dropping once again, by 3 percentage points from last month to net: -31. This is the lowest level since the JobsOutlook survey began measuring sentiment about the economy amongst Britain’s businesses, and is 57 percentage points lower than in June 2016.

In contrast, employers’ confidence in making hiring and investment decisions in their own businesses remained significantly higher, at net: -4. This was a fall of 3 percentage points from the previous month, the second successive month that this measure has been in negative territory.

Neil Carberry, chief executive of the Recruitment & Employment Confederation, said:

“These figures emphasise again how Britain’s fantastic jobs market supports prosperity, given an uncertain economic outlook and lower business investment. Firms are only marginally less confident in hiring for themselves in today’s survey – and far more positive than they are about the wider economy. Given recent political events, these figures are remarkably robust.

“The more positive figures on hiring for 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. 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.

“The delay to Brexit has given firms breathing space, and anecdotes from recruiters suggest that the jobs market has improved in the past few weeks. Building on this trend needs a deal – but it also needs action to address key staff shortages in some sectors. Employers are leading the way in addressing this, with the survey showing increasing activity on both training and inclusion. But government can help this process by reforming the apprenticeship levy into something that benefits all workers, through a flexible training levy approach.”

Other statistics from this month’s JobsOutlook include:

  • Following this quarter’s improvement in anticipated demand for temporary workers, 34 per cent of employers intending to hire temporary workers expressed concern over the sufficient number of agency workers with the necessary skills they require.
  • Employers are ready to hire in some areas – especially where there are skills shortages. More employers planned to increase, rather than decrease their permanent headcount in the short-term, at net: +16. Over the medium-term, forecasts for permanent hiring remained positive at net: +19.
  • Almost half (46 per cent) of UK employers expressed concern about the availability of permanent-hire candidates, with a lack of Engineering & Technical and Health & Social Care workers continuing to cause most concern.
  • Four in five employers surveyed in March 2019 specifically (80 per cent) had either no surplus workforce capacity, or such a small amount that they may need to hire more staff if demand increased.
  • Four in five employers surveyed in March (83 per cent) plan to offer training and upskilling opportunities to their staff in 2019 to increase the productivity of their business.
  • Seven in ten employers surveyed in March (71 per cent) plan to actively promote inclusion and diversity, while 58 per cent plan to offer more flexible working practices in an effort to increase productivity.

JobsOutlook is produced by the REC in partnership with ComRes. ComRes interviewed 600 UK employers involved in hiring by telephone between 2 January and 22 March 2019. Data were weighted to be representative of UK adults in employment by region, broad industry sector and public/private split. 

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