Demand for temporary recruitment rising
Demand for temporary and interim recruitment to remain strong during a zero-growth economy
Temporary and interim contractors to remain strong
With all of the media coverage in the weeks preceding the Chancellors recent speech, the expectation was that there would be more stimulus to boost the growth prospects for UK businesses within the Autumn Statement, but sadly it was lacking in any meaningful measures. This was reflected in the Office for Budget Responsibility (OBR) down grading its growth forecasts for GDP from 1.8% to 0.7% growth in 2024 after it predicted interest rates and inflation would stay higher for longer.
With a close to zero growth economy to look forward to in 2024 we are predicting the demand for temporary and interim contractors to remain strong to deliver projects and maintain essential headcount to keep the lights on whilst many permanent head count freezes remain in place.
Levels of permanent recruitment have fallen in every consecutive month since July 2022 as global economic volatility alongside rising costs and interest rates have eroded business confidence.
The advantages of temp support during periods of uncertainty
It is obvious to see why temporary recruitment is such an attractive option to employers. Having temporary support allows businesses to flex with demand without any long term commitment. In fact temporary support can also improve profitability. Having the agility to deliver during busy periods and cut back in quieter times keeps costs lean and maximises profit.
Delivering specialist projects
Within the IT sector, interim consultants and contractors have been used to deliver key projects for decades. Growth in the use of interim consultants has occurred across each of our other specialist sectors (HR, Marketing and Accounting). Specialists have been able to deliver specific projects to set costs in Learning and Development, People Strategy, Software and Data projects, Digital Marketing, Financial Strategy and Executive support. Over 2023 we have seen 20% growth in the supply of specialists to deliver projects.
There is still some reticence amongst employers to the use of self employed consultants due to the legislative changes around IR35 an PAYE. With the most recent changes to this legislation now 3 years old, those companies that have embraced good practice around identifying the IR35 status prior to consultant onboarding have been able to benefit from the use of flexible experts and deliver projects more swiftly. We take a look at the IR35 risks to employers here
Could flexible employment be here to stay?
Whilst the job market is seeing reduced numbers of vacancies being advertised and a small increase in candidate availability, it has been possible to satisfy demand for regular skills with temporary positions. When demand returns to the permanent job market and the economy is back on a growth footing, filling temporary positions will become more challenging.
The use of specialist skills in a temporary capacity is without question here to stay, across a growing number of roles. With businesses turning to process automation, and adopting AI technology in an attempt to reduce costs and increase productivity, the delivery of this transformation will require particular skills and expertise. Furthermore, the capacity to accurately plan labour costs for project work is especially beneficial for budgetary control whilst profits are being squeezed.
Are there any downsides to temporary hiring?
Limited commitment cuts both ways and temporary employees are likely to be less engaged in the business than their permanent counter parts. One could argue that temporary recruits are less in tune with the purpose of the organisation and less likely to be as productive or see the long term value in aspiring to reach goals.
Temporary recruits represent a constant flight risk as better contract offers and longer contracts are presented. To minimise the likelihood of a temporary worker leaving towards the end of their contract, we recommend having conversations about continued work happen at least a month before the end of the temporary contract period. Find out how to recruit and retain professionals in a skills shortage.
Specialist skills along with any intellectual capital garnered during the contract leave with the consultant. Managing this transfer of knowledge to permanent team members can take time and may not be in the best interest of the consultant which can lead to conflicts of interest. Defining project timelines, project hand overs and skills transfer should all form part of the project brief from the outset of any contract.
The current job market favours the use of temporary resource and is proving a popular option during a prolonged period of high costs and uncertainty. How long this will continue depends on the period of time before the permanent job market returns to growth.
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