Jobs recovery threatened by new agency workers rules

A TENTATIVE recovery in the private sector jobs market is continuing, although firms are scaling back on temporary staff following the introduction of new agency workers rules, new data shows.

As a result of the scaling back, the CBI and recruitment firm Harvey Nash said serious risks to the employment outlook remained.

Staying the Course, the CBI/Harvey Nash Employment Trends Survey, covers 462 UK companies, and was conducted between August and September this year.

It concludes that while jobs are being created across the private sector, led by SMEs, pay restraint remains the norm, with nearly half of all firms planning a below-inflation pay award or targeted pay rises.

However, there is a marked difference between permanent and temporary recruitment with prospects for temps deteriorating significantly ahead of the October introduction of the Agency Workers Directive.

The CBI is now calling for a full review of the impact of the directive to strip out any “Whitehall-inspired gold-plating”. It said this would minimise the damage and retain as many job opportunities as possible.

Neil Bentley, CBI Deputy Director-General, said: “It is encouraging that firms right across the UK are growing their workforces, especially smaller companies. But employers are making hiring plans on shifting sands and there is a risk the tentative private sector jobs recovery could be blown off course by fast-moving economic events at home and abroad.

“We need to be doing all we can to get the UK working, so it is worrying that changes to rules around hiring agency workers are leading to fewer openings for temps.”

He said there needed to be an early review to minimise the damage the directive was causing and to ensure job opportunities were retained.

It has also set out new proposals for boosting employment, including a Young Britain Credit to encourage more firms to hire unemployed young people.

The survey also found that almost half (47%) of employers are predicting their workforces will be larger in a year and a fifth (19%) predict they will be smaller, giving a balance of +28%. This rises to +35% in firms with fewer than 250 employees

Only 7% of firms are operating a recruitment freeze, compared with 61% during the depths of the recession in 2009.

Ahead of the introduction of the Agency Workers Directive, just 16% of employers are planning an increase in the use of temps, and 20% a reduction.

Prospects for graduates are slowly starting to improve, with a balance of +11% of firms planning to take on more university leavers in the next six months.

On pay, the survey shows that restraint remains essential, helping preserve jobs and keeping companies competitive.

Albert Ellis, chief executive of Harvey Nash, said: “The UK jobs market is holding up, with robust demand for highly-skilled staff in professional services, science and IT, but there is a question mark about whether private sector recruitment can keep pace with public sector job losses.

“With the risk that economic conditions may well become more challenging, companies are understandably taking a cautious approach to pay for next year, particularly SMEs.
 
“When comparing the UK’s labour market to mainland Europe, it remains relatively favourable, but the implementation of the Agency Workers Directive is further degrading Britain’s standing as a business-friendly environment in which to invest.”