The chief executive of Matrix Supply Chain Management has hit back at claims that the company is squeezing recruitment agencies.

A document entitled ‘Amendment to the Matrix Supplier Agreement’, seen by Recruiter, shows that Matrix asked one agency supplying temporary social services staff to the London Borough of Ealing to take a cut in its mark-up from 18% to 13% for temporary assignments over 14 weeks.

Andrew Thorne, chairman of ASWEB (Association of Social Work Employment Businesses), told Recruiter: “We are working to improve standards and taking on additional costs, but some ASWEB agencies are getting hammered by this cut in their margins.”

Julian Young, Matrix’s chief executive, responded: “The wonderful thing is the tremendous response we have had: 98% of our supply chain have agreed to the new rate. Some agencies have come in below this rate, and an awful lot have said ‘this is fine, this is good business for us’.”

He argued that 13% was a fair price for long-term assignments because recruiters “have had the costs out of their temps, and can
therefore afford to accept a lower margin”.

Young admitted that the company had taken similar action elsewhere, and would continue to do so in the future. “Tell me of any procurement business that isn’t pushing the market hard,” he added.

A spokesman for Ealing Borough Council said: “We have been successful in negotiating down the fee we pay to agencies, but staff are
still paid the same wage. There is absolutely no reason to suggest that this will change as a result of re-negotiating a contract that offers
better value for money.”

David Pyle, head of marketing at the Synergy Group, told Recruiter that all Synergy’s contracts with Matrix included a mandatory tenure discount that reduces the company’s mark-up by 2% after 12 months.

Amanda Marques, managing director of PPS, a managed services provider, told Recruiter that reducing the rates paid to agencies was “something MSPs should do as part of the service they provide for clients”, particularly where lots of candidates were available. However, she questioned whether it was the right strategy where talent was scarce. “Any rate cuts should only be made after meeting and discussing it with agencies,” she added.

Managed services pro - vider Comensura declined to comment on whether it cut its rates to recruiters.