Permanent positions fall while temporary work continues to rise, poll finds

Experts say temp positions offer several benefits to employees, but the financial uncertainty that often accompanies short-term contracts can discourage people from applying
March 13, 2023
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Permanent staff appointments in the UK fell for the fifth consecutive month in February, but temporary billing has increased, a poll of employers has found.

The latest Report on Jobs survey, by the Recruitment & Employment Confederation (REC) and KPMG registered a permanent placement index of 46.3 in February, while the temporary placement index was 51.1.

As per REC and KPMG’s calculations, an index reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease. Since October 2022, permanent placements have scored lower than 50 on the index, and temporary placements higher than 50, indicating a sustained decline in permanent roles and mild growth for temporary billings.

The report also found that the rising cost of living and difficulties attracting and securing suitably skilled staff drove further increases in starting pay for both permanent and temporary positions in February. The permanent salary rate of pay index read 61.3 and the temporary rate of pay 57.6.

Kate Palmer, HR advice and consultancy director at Peninsula, said hiring temporary employees can be an “effective solution” in situations where employers do not know how much work they will have for employees to do beyond a certain date. “It has been particularly useful recently as the cost of living crisis, economic uncertainty and labour shortages have negatively impacted business across the UK,” she said.

When done properly, temporary roles can provide several benefits to employees; however, the “financial uncertainty that can come from short-term contracts or temporary roles can discourage many from applying”, she added.

The report also discovered that overall staff supply fell at a moderate rate, the lowest in nearly two years, supported by softer falls in both permanent and temporary candidate numbers.

Recruitment consultancies reported that the current downturn in candidate availability continued to ease midway through the first quarter – panel members commented that workers were reluctant to seek out new roles in the current economic climate, while ongoing skills shortages also weighed on staff availability.

Jane Middleton, co-founder of Trapeze HR, said she had seen an increase in the number of clients whose financing and funding rounds had delayed or stalled, which has led to a “further spike” in temporary workers – which she predicts will halt growth.

“I think the implications for the recruitment market with clients doing this will be that larger-scale change initiatives and people projects are stalled until Q3, and growth in some of the high-growth businesses will be held back until later in the year,” said Middleton.

However, Jon Boys, senior labour market economist at the CIPD, said it was “hard to confirm” whether temporary contracts were increasing with official data, because of the “time lag” in publication. “The proportion of people working part time because they could not find a permanent job has been trending down for years and is now below pre-pandemic levels,” he said.

“Under the current economic conditions, where demand for staff is high but availability is low, we tend to see more permanent placements. It’s possible that the REC data is picking up on a recent change, but I think we should wait for more data to see if this becomes a trend.”

Original Article: People Management

Want solutions for both permanent and temporary roles, contact our recruitment specialist Gareth Allison or give us a call on 02920 620702.

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