Almost three out of five (57%) employers say they have reduced their use of temporary agency workers as a result of the Agency Workers Regulations (AWR), according to a new survey.
Following the introduction of AWR in October, fears were raised by many in the recruitment industry. The results of the spring 2012 CBI/Harvey Nash employment survey appear to bear these fears out.
The survey of 319 employers across the UK, carried out between February and April, also found that 12% of employers reduced their overall headcount as a result of AWR, while 8% stopped using agency workers all together.
If confirmed on the ground, the results suggest that over time AWR would have a dramatic impact , not only on the recruitment industry, but also on how employers recruit, as well as on the flexibility of the UK labour market
However, recruiters say that while they recognise many of the effects, based on their experiences to date the repercussions of AWR haven’t been anything like as great as the survey would indicate.
Pete Taylor, operations manager at industrial, driver and technical recruiter Encore Personnel, says he has noticed some reduction in the use of agency workers by clients.
However, he tells Recruiter
that while it is difficult to put a figure on it, the reduction is “nowhere near” the 57% reported in the survey.
Taylor says the impact would have been much worse if the staff Encore supplied didn’t have pay parity with the permanent staff with whom they work.
Referring to the 8% of employers in the survey who say they have stopped using agency workers completely, Taylor says: “I don’t know of any the 300 companies in my business area that have stopped using temps because of AWR.”
The CBI/Harvey Nash survey revealed that AWR has had wide-ranging effects on employers’ resourcing strategies:
- 36% of employers increased their use of fixed-term contracts
- 27% changed their model of temporary labour use – for example, the Swedish Derogation
- 17% greater use of overtime for existing staff
- 15% increased use of self-employed individuals
- 11% increased permanent hiring
- 12% lowered overall headcount
- 8% stopped using agency workers
- 3% increased use of agency workers
Jeanette Barrowcliffe, finance director at Meridian Business Support, says the trends revealed in the survey chime with the firm’s experience. “We are definitely seeing a drop-off in terms of temps and an increase in perm, as well a rise in fixed-term contracts.”
However, she says the impact of AWR hasn’t been as dramatic as the CBI/Harvey Nash survey suggests. “We haven’t seen a 57% drop off in our temps business or a 36% increase in fixed term,” she says.
The impact of AWR is also dependent on the sector, she explains. While she estimates a 20% drop in the use of temps in the commercial sector, in industrial, Barrowcliffe says Meridian has seen a smaller reduction.
Barrowcliffe says clients have responded to AWR in the industrial sector by requesting shorter assignments and are quicker to switch temps to permanent status, while in commercial there has been an increase in perm vacancies.
Tom Hadley, Recruitment & Employment (REC) director of policy & professional services, tells Recruiter
that the figure of 57% of employers who have reduced their usage of agency workers “seems very high”.
It doesn’t tie in with the REC/KPMG’s recent ‘Report on Jobs’ that showed “a small blip” in the use of agency workers and even this could not definitely be attributable to AWR, he says.
Hadley adds that even where there is evidence that AWR has led to a reduction in agency worker use in industrial and manufacturing, that evidence has been anecdotal. And even in these sectors, he suggests the 57% figure is out of step.
The 57% figure also requires deeper analysis, he says. As he explains it could simply be “a lot of employers using one or two temps less”.
“It seems a bit of a blip to us,” he adds.
Hadley is encouraged by the experiences of other countries, such as France, that have introduced similar equal treatment legislation. “In every country there has been a blip, but this has been rectified over time as people get used to the regulations,” he says.
The CBI/Harvey Nash survey is the latest piece of research into the impact of the AWR and in many ways its results are out of step.
AWR came into force in October, with the aim of giving temporary agency workers pay equality and many of the same benefits as permanent employees after a 12-week qualifying period.
In February, temporary labour supplier de Poel reported that the number of temporary staff in the UK rose by 13% in January
, compared to the same period last year.
The REC Report on Jobs covering April found that agency billings from the employment of temporary/contract staff fell in April
, the fastest reduction since July 2009. That said, it did recognise that one of the effects of AWR was for employers to switch temporary workers to permanent status, continuing the rise in permanent placements that began at the beginning of the year.
The results of CBI/Harvey Nash survey do, however, coincide with research by Eversheds in April, which found that almost one in five (17%) of employers had opted for the Swedish Derogation
as way of mitigating the worst effects.
The CBI/Harvey Nash results found that 27% changed their model of temporary labour use – one of which is the Swedish Derogation.