Contractors are becoming an increasingly greater proportion of the UK’s workforce, and this highly skilled and flexible resource is doing wonders for the UK’s economic recovery. But will that resource suddenly become less flexible and more expensive once the Agency Workers Regulations (AWR) come into force on 1 October 2011?
Yet another labour market survey, this time the Confederation of British Industry (CBI)/Harvey Nash Employment Trends Survey (ETS), has confirmed that the use of contractors and temps is increasing – in fact, the percentage is higher than it was pre-recession. And this survey, alongside labour market statistics from the Office for National Statistics (ONS), also confirms that the number of self-employed workers has steadily increased since the recession began.
CBI and Harvey Nash also confirm that the increasing use of contractors and temps is due to “firms looking to meet staffing needs flexibly in an uncertain economic environment.” This is all great news for contractors, as it means there are more contracts to go after. It is also great news for UK PLC, because at the same time there are a greater number of flexible and highly skilled knowledge workers able to enhance the UK’s competitiveness in a global marketplace.
Why on earth would we then want to machine-gun ourselves in both feet by suddenly and significantly increasing the cost of contractors, and substantially reducing the flexibility of one of the few competitive advantages we retain over our global competitors? For that’s what AWR looks set to do.
AWR presents a very real threat to the UK’s economic recovery. From midnight on 1 October, flexible workers will suddenly become much more expensive to hire and much more expensive to administer. And, whilst AWR will undoubtedly protect some vulnerable workers, it also presents the unions with new employment legislation to unnecessarily drag more employers through expensive, unnecessary employment tribunals.
Ironically, in light of the monster the UK has helped spawn, the original objective of the Agency Workers Directive, which is the European Union directive that led to the AWR, was to “make a success of the transition towards [a knowledge] economy.” It goes on to say:
“...the cooperation of the social partners must be enlisted in a bid to promote more flexible forms of work organisation and reform the regulatory, contractual and legal environment so as to better reconcile flexibility and job security and create more and better jobs.”
So how did this directive, which was meant to promote a brave new flexible knowledge economy, become the one of the greatest threats to the UK’s recovery since the credit crunch and banking crisis?
If agency workers become more expensive to hire than simply hiring a worker directly, then the UK’s £18bn temp agency and staffing sector will be in serious trouble. And an inflexible and expensive workforce will be one more reason for inward investors to invest elsewhere, and for UK-based transnational corporations to consider relocating to more benign jurisdictions.
Unfortunately, the AWR is happening whether we like it or not. All we can hope for is that, when it comes into force, the unions, employment lawyers and tribunal judges don’t conspire to use it as a stick to beat corporate Britain with.
Because the last thing UK PLC and the contracting sector need right now is for the fragile recovery to be derailed.