The attraction of being a temporary agency worker
Who are temporary agency workers?
Temporary agency workers have long been relied upon by businesses far and wide to respond quickly and efficiently to business change, whether this be market growth, a seasonal shift, business growth or an economic swing. Temporary agency workers are cost-effective and available at short notice to fill the job vacancies created by skilled shortages, a lack of permanent staff or redundancies, and they get on with the work without complaints. For this reason, temporary agency workers have become increasingly appealing to HR and procurement departments in a variety of businesses and industry sectors, on an everyday basis and as we enter an upturn. The question is: who are temporary agency workers?
The profile of a temporary agency worker
The REC conducted a recent survey "Temporary Agency Workers in the UK" which aimed to understand the roles and expectations of temporary agency workers. The temporary agency workers included in the survey were drawn from a wide variety of skill sets ranging from temporary agency workers in secretarial work (29% of temporary agency workers), customer service (6% of temporary agency workers), driving (11% of temporary agency workers), construction (3% of temporary agency workers) and more. The survey of these temporary agency workers confirmed that there are more female temporary agency workers (58% of temporary agency workers) than male temporary agency workers. However, the age profile of temporary agency workers is broadly similar to that of the wider population. Temporary agency workers are more likely to be married (49%:41%). 86.5% of temporary agency workers come from a white British background while almost one in twenty temporary agency workers are born overseas (it should be noted that language issues may cause under-representation of this group of temporary agency workers in the survey). Interestingly, 7% of temporary agency workers report some kind of long term disability or illness that limits the temporary agency work they can do. Nearly one in four (24% of temporary agency workers) are currently studying on a full time (15% of these temporary agency workers) or part time (9% of these temporary agency workers) basis. The majority of temporary agency workers are well qualified: 25% of temporary agency workers have 'A' levels, 28% of temporary agency workers have degrees and 11% of temporary agency workers have a post graduate qualification (or equivalents). Most temporary agency workers (81%) define themselves as a 'temp' or temporary agency worker as opposed to a contractor (13% of temporary agency workers) or freelancer (3% of temporary agency workers) - although this varies by the sector that the temporary agency worker is working in. A total of 4% of temporary agency workers classified themselves as managerial or professional. Most temporary agency workers (82%) pay tax on a PAYE basis. A significant minority (10% of temporary agency workers) were unclear about how they paid their tax.
Recent research obtained in depth insight into the profile of temporary agency workers, the expectations of temporary agency workers, the satisfaction of temporary agency workers and the importance of temporary agency workers' economic role. Key findings suggested:
Temporary agency workers can be found in every sector of the economy including: professional temporary agency workers (such as IT and financial temporary agency workers); white-collar temporary agency workers (such as receptionists, secretaries and call-centre temporary agency workers), and manual temporary agency workers (such as general labourers, machine operatives and packers). Sectors such as retail, hotel and catering and agriculture have seasonal peaks of activity and are especially reliant on temporary agency workers. However the KPMG report on jobs data clearly mirrored the pattern of the economic downturn within the industry sectors as the use temporary agency workers declined rapidly. Nursing/Medical/Care was the only broad area of temporary agency worker employment to record higher levels of demand for temporary agency workers in January. The remaining seven sectors all registered declines in vacancies for temporary agency workers, led by Engineering/Construction.
The role of the recruitment agency in hiring temporary agency workers
The 2008 edition of the CIPDs annual survey revealed that 78% of UK employers use recruitment agencies to attract candidates (temporary agency workers) to their vacancies - a figure that was 5% higher than in the 2007 edition of the survey. In the 2008 CIPD survey, recruitment agencies were ranked as the most popular means of attracting the right applicants for a new job (suggesting that recruitment of temporary agency workers is favored as well as fast developing), followed by corporate websites (which were used by 75% of employers) and local newspaper advertisements (used by 74% of employers). Public- and private-sector organisations differ in their use of recruitment agencies and hiring of temporary agency workers. The 2008 CIPD report showed that only 57% of public-sector organisations used recruitment agencies and temporary agency workers, compared with 82% of private-sector organisations. Among manufacturers, the percentage of companies using recruitment agencies and temporary agency workers was much higher, at 90%. Public-sector bodies placed more emphasis on local newspaper advertisements (with 82% of public-sector employers having used local newspapers to advertise their vacancies), as well as on their own websites (82% used their own websites to advertise vacancies).
The CIPD survey also asked employers what steps they took to overcome recruitment difficulties. The solution that was favoured by 75% of employers was to appoint people who have the potential to grow into the job, while 48% of employers said they would take into account a broader range of qualities and experience when reviewing applicants. 43% of the employers profiled said that they would redefine a job specification if they found it difficult to fill the position. All of these points add weight to the argument that employment of temporary agency workers is becoming increasingly popular, as temporary agency workers fit the bill most times.
Employers choose recruitment firms that they believe can provide them with the most appropriate temporary agency workers in the correct timeframe. Employers often use a recruitment firm and hire temporary agency workers when they have attempted all other methods open to them. Clients take a number of factors into account when selecting a recruitment firm to use to hire temporary agency workers, including the specialist area of the recruitment firm and their temporary agency workers, its track record in being able to place temporary agency workers successfully, the level of service available and fee rates for the temporary agency workers.
By the very nature of its operation, the temporary recruitment industry (allowing the widespread recruitment of temporary agency workers) is one which historically functions with paper based timesheet and invoices. With an industry turnover in excess of £23.4 billion across 16,000 recruitment agencies the burden of administration associated with employing temporary agency workers has been laborious to all. Companies who operate with a large contingent workforce which includes temporary agency workers need to keep control of their pay rates and costs. In addition to this they must also administer the enormous amount of timesheets and invoices submitted by their recruitment agencies. With a typical average invoice error of 15% this process can be extremely expensive. The indirect costs to companies employing temporary agency workers, of handling the associated timesheets and invoices are enormous and, combined with an average agency invoice accuracy of 89% or less, this amounts to an estimated £2.1 billion a year.
As companies tentatively observe economic movements, the necessity for temporary agency workers, and efficiencies and streamlined costs when recruiting temporary agency workers will intensify. Large organisations typically have very little or no visibility of their temporary agency worker usage and spend, which presents difficulties when forecasting or leveraging spend on temporary agency workers. Many companies are unaware of the amount they spend on temporary agency workers or the different pay and charge rates for temporary agency workers that are in existence within their organisation.
Operating with an appropriate software system, developed specifically for the employment of temporary agency workers, and able to provide real-time management information, is vital when attempting to take control of spend on temporary agency workers. As is taking control of the agencies who supply your temporary agency workers. But first, it is essential to know exactly what recruitment agencies who supply your temporary agency workers are responsible for.
As the name suggests, recruitment agencies are responsible for ensuring your temporary agency worker recruitment needs are met with the most appropriate temporary agency workers for the job. But this is where many organisations come unstuck. The fact that the recruitment industry is unregulated means that the responsibilities of the client when it comes to employing a temporary agency worker, and those of the agency when it comes to employing a temporary agency worker, are very hazy indeed. Clients employing temporary agency workers find themselves asking: what does the process of sourcing and placing a temporary agency workeractually involve? And what counts as agency going that extra mile?
Quite the opposite occurs when agencies are working to formal terms of business. Here their responsibilities are clear and the client is able to keep a check on whether they are 'doing their bit' in the recruitment of temporary agency workers. Their tasks include:
It is imperative that organisations are confident agencies are complying with legislation, failure to comply with legislation such as the immigration points system for example, will result in fines being directed to the end user, not the recruitment agency.
The reliance of temporary agency workers by industry sector
Temporary agency workers. Who uses temporary agency workers and how temporary agency workers are useful to businesses.
Temporary agency workers have long been a valuable part of HR strategy, and in every industry sector, allowing businesses to respond quickly and efficiently to market growth, seasonal shifts and contractual new wins. The temporary agency worker, unlike a permanent worker, is available quickly and upon request, whilst temporary agency workers are also cost effective and experienced working the typical shift patterns of temporary agency workers. Allowing businesses to grow and undergo periods of rapid change without hassle, temporary agency workers make for a flexible and responsive labour market.
That said, there are some industries where temporary agency workers are more popular than others. The care sector specifically is a huge hirer of temporary agency workers, due to a lack of skilled and/or willing permanent workers. Temporary agency workers fill the void created by non-temporary agency workers, and are key to upholding the business constantly, not just during times of change.
Temporary agency workers across sectors - industries that use temporary agency workers and why
Accountancy/Financial sector and temporary agency workers
In terms of volume this sector has increased in size by nearly 50% since 2004, making up 3% of the total temporary agency worker placements. Similarly demand for temporary agency workers, especially more senior temporary agency workers such as financial managers and directors (temporary agency workers are not just lower level workers as many people believe) increased in 2006, 2007 and 2008. This resulted in considerable upward pressure on salaries for the temporary agency workers themselves and the consultants who find and hire the temporary agency workers, as well as recruitment fees for those employing the temporary agency workers.
However the effects of the recession are becoming increasingly evident within this sector, and temporary agency workers are set to be even more attractive as financial service providers make cutbacks on permanent staff. The lastest CBI and PricewaterhouseCoopers (PwC) survey estimated that high street banks had made redundant about 10,000 staff between October and December. It is the fifth successive quarter of job cuts. Up to 15,000 jobs in financial services are likely to be lost over the next three months, increasing the need for temporary agency workers to fill the vacancies. The Centre for Business and Economics Research estimates that 34,000 jobs will be lost in the sector this year, mainly at high street banks. Thus it is likely that more and more high-street banks will set about employing temporary agency workers and seek to formally manage their supply of temporary agency workers in the coming months.
Computing/IT and temporary agency workers
This has historically been a high growth sector, with severe staff shortages, making it a perfect for temporary agency workers to achieve employment. Temporary agency workers with specialist IT skills are required across a wide variety of businesses including the financial services industry and the public sector - both of which are familiar with the temporary agency workerrecruitment process. Online recruitment is used widely to recruit temporary agency workers within this sector. Computing/IT staff account for 7% of all current temporary agency workers. However, demand for temporary agency workers in this sector declined in 2008. Figures from the REC (the industry body for temporary agency workers) show a significant drop in the number of temporary agency worker placements in the year ending March 2008, and some organisations have estimated the fall to be as steep as 30% for the whole of 2008, compared with 2007.
Construction and temporary agency workers
Construction is one of the UK's biggest industry sectors, offering a wide range of services, making temporary agency workers with a variety of skill sets and backgrounds an attractive option. Within the sector there is huge pressure amongst rival companies to secure major (contractual) projects and continually innovate and evolve, and temporary agency workers have become key in their achievement of these goals. Pressure on the sector to maintain high standards of health and safety has caused concerns for those using temporary agency workers where supply of temporary agency workers is unmanaged, as rogue recruiters of temporary agency workers present a number of risks.
Construction companies utilise a sizeable amount of subcontractors and temporary agency workers, normally 14% to complete projects with strict deadlines - as temporary agency workers can be available at short notice. A wide range of skill sets among temporary agency workers are often required quickly, with temporary agency workers including construction and site managers, foremen, labourers, surveyors, electricians, engineers, builders and estimators.
However, between March and November 2008, the number of temporary agency workers in the building and construction industry dropped in each month. This decline is a reflection not only of the downturn in the property market, but also of the cutbacks on house building rather than a reflection of the use and value of temporary agency workers themselves. Construction is set to be a weak sector as regards temporary agency workers for the first quarter of 2009. Building work traditionally slows down in the winter months, reducing the need for temporary agency workers, so a pick-up in the sector is highly unlikely until at least April 2010 when temporary agency workers are expected to be relied on heavily for new contracts starting over the summer months.
Logistics and temporary agency workers
The demand for temporary agency workers with driving qualifications weakened in 2008 to 6% of temporary agency worker placements as the costs of petrol and diesel increased. Many organisations responded by cutting back on the volume of transport they funded, and this, in turn, had a negative impact on the requirement for temporary agency workers who were drivers. Recruitment firms that specialise in the supply of temporary agency workers for driving jobs have either lost some of their clients or have been forced to cut rates sharply.
Education and temporary agency workers
Demand for temporary agency workers in education bucked the trend by increasing strongly during 2008, to 11% of all temporary agency worker placements. The education sector is in crisis and thus reliant upon temporary agency workers for a number of reasons, such as low morale, high stress levels and a lack of teachers in many subjects, especially mathematics and science. There also continue to be shortages of candidates for the profession, making temporary agency workers an extremely appealing option to schools, universities and colleges. In September 2008, figures released by the Department for Children, Schools and Families (DCSF) showed that the number of vacancies in the teaching profession had risen by 25% compared with September 2007, making further increases in temporary agency workers likely.
This situation has been exacerbated by the fact that more teachers were said to be taking sick leave, and therefore the demand for temporary agency workers who were teachers rose strongly. Another factor benefiting the educational recruitment sector and the temporary agency workers interested in education is that many schools began creating non-teaching posts in order to take some of the administrative burden away from teachers, which meant that the variety of jobs on offer to temporary agency workers began to expand.
Retail and temporary agency workers
Retail has long been a friend of temporary agency workers. Retail is one of the biggest sectors of industry, (retail sales account for a fifth of the UK economy) employing over 3.0 million people (a large proportion of which are temporary agency workers), as at the end of March 2008 which equates to 11% of the total UK workforce. As one of the most prolific users of temporary agency workers, the retail industry has also been one of the first industries to take full advantage of vendor-neutral managed service providers who manage and control the supply of temporary agency workers.
Travel & Tourism and temporary agency workers
Travel and tourism is a dynamic and diverse industry sector, employing over 120,000 people (a large proportion of whom are temporary agency workers) and operating in areas such as airports, hotels, call centres, travel agents and holiday parks. Temporary agency workers and migrant workers are crucial in allowing the sector to respond to seasonal shifts, which are more apparent in this sector than in any other. Temporary agency workers are usually happy to work in the hotel and tourism industry, as it provides temporary agency workers with a large number of job vacancies in a variety of roles over periods with flexible hours.
Professional/Managerial services and temporary agency workers
The professional and managerial sector grew until around March 2008, with demand up by more than 50%, according to Key Note estimates, increasing their reliance upon temporary agency workers in the context of business uncertainty. However, demand has fallen since summer 2008, and now only 3% of all temporary agency worker placements are within this sector as employers have become reluctant to take on even temporary agency workers in professional and managerial roles. This is because most temporary agency workers working in managerial positions are required for the completion of special, one-off projects, or in the aftermath of a merger or acquisition (i.e. to help the firms move offices and put new procedures in place). Many of these projects (and thus the recrutiment of the temporary agency workers to do them) have been postponed by organisations during 2008 due to a fall in corporate finance activity. That scenario may change in 2009 as whole sectors of the UK economy undergo restructuring.
Care, nursing and charity and temporary agency workers
In the UK today there are currently more than 180,000 charities providing valuable services to the elderly, the sick and vulnerable people with learning and physical disabilities, mental health problems, drug and alcohol addictions to name but a few. Skills shortages, a lack of permanent workers and an ageing population have all put pressure on the sector's workforce. Thus, in order to meet the needs of affected individuals and their families and to effectively staff care and nursing homes, charities utilise a substantial amount of temporary agency workers, so that temporary agency worker placements in the care industry account for 11% of all temporary agency worker placements, including support workers, qualified nurses, care co-ordinators and administrative and finance staff. As a result, care organizations (like retail organizations) have become quick to recognize the importance of managing the supply of temporary agency workers, through use of VNMSP. This is because temporary agency workers must not pose a risk to the continuity or quality of care at any stage, and only the best quality of workers are acceptable.
Growth in this sector has increased throughout 2008 - increasing the need for temporary agency workers further. Both the financial input of the NHS and the increase in demand for temporary agency workers who are professionals in areas outside the NHS, such as care homes, have contributed to this. Candidates for temporary agency worker's roles come from as far afield as Australia, New Zealand, Canada and Asia.
This sector grew in 2007 and 2008 and, by the end of 2008, it was probably the most resilient sector of the entire recruitment market due to its high proportion of temporary agency workers. Shortages of medical staff remain, especially nursing staff - a situation that has been partly caused by high staff turnover levels (turnover of permanent and temporary agency workers). An increasing number of nurses who have been trained in the UK are leaving the country to work abroad - according to the Nursing & Midwifery Council (NMC), more than 11,000 nurses left the UK in 2007, which was approximately 1,000 more than in 2006 and the need for temporary agency workers to fill their shoes has never been greater.
Employment and recruiting legislation within this sector is constantly tightening, putting pressure on the recruitment of temporary agency workers, the clients who use temporary agency workers, the agencies who hire temporary agency workers as well as the temporary agency workers themselves. As from October 2009, when you recruit someone new to work with children or vulnerable adults you will need to check their ISA status. This determines whether or not you can employ them (or take them on as volunteers), and may affect what activities they can undertake. Ensuring recruitment agencies are following correct legislative procedures has become increasingly important, as temporary agency workers are not excluded. The cost implication is likely to fall on the temporary agency workers themselves and there is a fear that temporary agency workers may be put off working in the sector.
Facilities Management and temporary agency workers
Facilities management is one of the UK's most diverse industries, offering a wide range of services across almost every market sector, making a range of temporary agency worker positions available. Services commonly provided by facilities management companies include catering, security, property management, cleaning, engineering, horticulture, hygiene and waste management - all of which temporary agency workers fit the profile for. Most companies offer these facilities as single, bundled or fully integrated services, making temporary agency workers key to a full, professional service. In order to meet the requirements of their customers, in an ever-changing climate, facilities management companies now utilise a significant amount of temporary agency workers, including drivers, cleaners, security guards, warehouse operatives, professional traders and administrative staff
Industrial/blue Collar and temporary agency workers
Demand for industrial and blue-collar permanent and temporary agency workers fell rapidly in 2007 and most of 2008, with the number of vacancies in the sector falling by around 40% but still totalling 19% of temporary agency worker placements. This was partly due to the slowdown in the economy, as well as the decline in industrial activity and the outsourcing of many lesser-skilled jobs abroad. However, in the first half of 2008 there were signs that some jobs in the manufacturing sector were being brought back to the UK as the costs of sourcing abroad began to increase. Temporary agency worker placements are expected to increase substantially in 2010. Temporary agency workers are crucial to the retail supply chain. The role of temporary agency workers and the value of temporary agency workers in manufacturing may mean that this sector is particularly hard-hit by the incoming Agency Workers Directive which will bring in new conditions for temporary agency workers.
Technical/engineering and temporary agency workers
Engineering is one of the UK's and the world's biggest and most innovative industries, offering a wide range of services across a variety of sectors e.g. petrochemical, nuclear, pharmaceutical, thermal power and IT. In order to meet the specific requirements of their clients in this highly complex field engineering, companies utilise a large amount of highly skilled temporary agency workers, making up 6% of all total temporary agency worker placements, who operate mostly on day rates including; software engineers, technical engineers, project managers, structural engineers, mechanical engineers, chemical engineers, designers, site managers, administrative staff and research and development technicians.
It is extremely difficult to recruit individuals with the relevant engineering skills and specialist knowledge on a permanent basis so companies within this sector are forced to rely on temporary agency workers on a regular basis. As most work is project-based, engineering companies are judged solely on their ability to complete specific projects on time and to budget. Temporary agency workers therefore play a significant role in helping them achieve their overall business objectives. It is therefore essential that companies forecast accordingly for the necessary temporary agency workers.
This sector is showing some signs of weakening from the peak it experienced in 2007, when there were a record number of temporary agency worker appointments in engineering and technical roles. In 2008, the volume of these temporary agency worker appointments began to fall due to two major problems. The first is that pay levels for temporary agency workers in the industry are not as high as the pay levels for temporary agency workers in other professional sectors, and the second is that not enough young people are entering the sector either as permanent or temporary agency workers, despite the fact they may be qualified and have the relevant degrees. A further point is that too few women are taking jobs in this sector, either as permanent or temporary agency workers - even among female engineering graduates, relatively few go on to take jobs in the engineering industry.
Hotel/catering and temporary agency workers
Demand for temporary agency workers in the hotel and catering sector continued to grow in 2007 and the first half of 2008, totalling 7% of temporary agency worker placements. According to Key Note estimates, temporary agency worker placement numbers in the sector were up by around 20% in the first half of 2008, compared with temporary agency worker placement numbers for the same period in 2007. The market began to slow in August 2008, but, on the whole, demand for temporary agency workers has remained high. Part of the reason for this is that some employers are switching their recruitment from permanent to temporary agency workers while they wait to see what happens to the economy. However, shortages of permanent and temporary agency workers continue to be seen in many parts of the sector, especially in the hotel and accommodation industry. Demand is weakening for public houses ('pubs') as an increasing number close or try to cope with fewer staff as the pub trade suffers the twin effects of the ban on smoking in enclosed public places and cutbacks in consumer spending.
The use of temporary agency workers in the UK
Market conditions related to temporary agency workers
A temporary agency worker is one who is employed on a temporary basis, so temporary agency workers could in theory, work for several weeks or several months. The temporary agency worker might be self-employed, or as is the case with many temporary agency workers these days they might work for a recruitment company. Sometimes, a temporary agency worker may be employed by the client organisation. In the majority of cases, the temporary agency worker is employed by the recruitment company, and the client (the organisation employing the temporary agency worker through the recruitment company) will be charged on an hourly or daily basis for the services of that temporary agency worker. The client then receives an invoice from the temporary agency worker’s agency on a weekly or monthly basis for the work that the temporary agency worker has completed. There are temporary agency workers in all economic sectors. These temporary agency workers include: receptionists, secretaries and call-centre staff; manual workers, e.g. packers, building workers, catering staff and machine operatives; and professionals, such as IT technicians and finance personnel. Businesses that experience seasonal peaks of activity (such as hotels, catering firms and agricultural companies) are very dependent on temporary agency workers.
Thus, it is not surprising that temporary agency workers have become a popular solution for businesses across the whole spectrum of sectors coping with economic uncertainty and unrest. A temporary agency worker is a critical part of a company’s strategy, allowing them to take control of their finances whilst continuing to make positive steps towards a prosperous 2009. Providing an alternative to permanent workers in the context of job losses and strained budgets, temporary agency workers are currently relied upon by almost every industry, with care, retail, logistics, manufacturing, construction and tourism set to be the biggest users of temporary agency workers during 2010. Available at short notice, for short and long term placements, temporary agency workers can be brought in quickly and intermittently, allowing companies to cope with the contractual nature of new business opportunities. Temporary agency workers, unlike permanent employees, do not need to be given a permanent salary or any long-term commitment, making them perfect for companies trying to keep tight control over their budgets. Indeed, the latest REC Annual Industry Turnover and Key Volumes survey highlighted the importance of temporary agency workers and particularly the flexibility of temporary agency workers in supporting the UK labour market and economy. Currently, the practice of temporary agency working generates more turnover than the entire UK electronics industry and is now an integral part of many business’s operating model.
But as with other industries, recruitment and the process of hiring temporary agency workers, like much of UK Industry, is under pressure. Economic uncertainty, strong competition and continuing skills shortages have all contributed to a reduced number of temporary agency workers generally due to a rapid increase in the number of companies seeking new, skilled and efficient temporary agency workers. Other problems arise concerning payment for the temporary agency worker. The time during which a client will make payment for the temporary agency worker will vary, and the recruitment company employing the temporary agency worker can wait up to two months before they are paid. For this reason, temporary agency workers can create cash flow problems for the recruitment company who supply the temporary agency worker, particularly during a recession, and as a result, a large number of recruitment companies have begun to use an invoice discounting company to help them with client payments.
According to the REC, the suppliers of temporary agency workers generally work under the supervision, direction and control of the ‘client’ or user of the temporary agency worker. However, in some cases the recruitment company who hire the temporary agency worker may also play a part in supervising what the temporary agency worker is doing. In a recession, recruiters of temporary agency workers have been known to cut corners, so it is important that the temporary agency worker’s client monitors the HR service provided to the temporary agency worker.
Overview of 2009
Industry health and turnover relating to employment of temporary agency workers
From March 2008 to April 2009, the value of the UK staffing industry, which includes the recruitment of temporary agency workers, fell by 17% from its 2007/2008 high to a value of £22.5bn, the lowest figure since 2000. But this does not reflect the use and value of temporary agency workers in an upturn. In the context of the severe recession that began during this period, it is to be expected that the value of the recruitment industry as a whole which includes temporary agency workers would decline. What is significant is that the change is greatest in the permanent sector (which obviously does not include temporary agency workers) where total value has fallen by 39%. In the temporary sector, which does account for temporary agency workers, the reduction was 13%, a much lower rate. Indeed, it is this particularly low rate for the temporary agency worker industry specifically that reflects the flexibility that temporary agency workers can bring to the UK’s workforce management.
Issues and expectations relating to employment of temporary agency workers
The economy and its impact on employer decisions were at the top of the list of concerns expressed by agencies employing temporary agency workers. Though they valued the influx of companies relying on temporary agency workers, the reduced demand for permanent candidates was worrying. In addition, the increased competition to supply temporary agency workers has lead to pressure on margins for both permanent and temporary agency workers across the board.
Agencies specialising in the provision of temporary agency worker placements also comment on the impact of an influx of employment legislation linked to temporary agency workers, with particular reference to how this affects legal compliance for those both hiring and using the temporary agency workers. The recruitment of temporary agency workers and the increasing in reliance upon temporary agency workers has led to particular controversy over the Agency Workers Directive in October 2011 and the impact this will have on temporary agency working. Most agencies in both the permanent and temporary agency worker sectors expect demand for temporary agency workers to increase further in 2010 with some (18% in the permanent sector and 12% in temporary agency worker sector) pessimistically suggesting the increased demand for temporary agency workers won’t occur until 2011.
More encouraging is the 20% of respondents in the permanent sector and 34% in the temporary agency worker sector who report suggest that further increases in the use of temporary agency workers will occur this year.
Staffing and margins relating to employment of temporary agency workers
The workforce in the recruitment and staffing industry – those finding, hiring and supplying the permanent and temporary agency workers - dropped by 10% in the last year compared to the previous period, with a further reduction in headcount for 2009/2010 to be expected as reductions made in February and March 2009 were implemented. But significantly, the brunt of the cutbacks were of consultants who work exclusively on permanent placements while the number of those dedicated to temporary agency workers has actually increased. The number of administrative staff and managers employed by agencies is 10% lower – but this could be due to a need for more consultants specializing in temporary agency workers, and agencies allocating resource more efficiently.
In permanent recruitment (i.e. excluding temporary agency workers and the consultants who hire the temporary agency workers), the majority of all agencies are operating with margins of 10-19% although analysis revealed significant variation by sector, region and size of business. In the temporary agency worker sector, the margin range is wider than on the permanent side but again the majority of agencies report margins in the 10 – 19% range. In the temporary agency worker sector, there was also significant variation by sector, region and size of business although generally the incidence of margins above 19% was fewer. A large proportion of agencies operating in both the permanent and temporary agency worker sectors reported that margins had decreased over the past year.
Benchmarks relating to employment of temporary agency workers
Turnover per branch in the permanent sector (i.e. excluding the temporary agency worker sector and the turnover for temporary agency workers) dropped dramatically compared to the previous year, with volumes reacting much the same. Sales per consultant (who work only with permanent workers and not temporary agency workers) also fell, but volumes were maintained. Turnover and volumes per employee and per consultant continued on the downward trend that had started a year earlier.
In the temporary agency worker sector, sales and volumes per branch, temporary agency worker and per consultant working with the temporary agency worker were down, also though less dramatically, in line with the more robust performance of this sector.
Advantages and disadvantages of using temporary agency workers
Advantages of using a temporary agency worker
Disadvantages of using temporary agency workers
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