Contractors are providing contracting clients with enhanced capacity and support during the current period of economic uncertainty; they are also helping improve productivity. New research shows that more than a third of contractor clients have increased their use of temporary and contract workers “due to the uncertain economic environment”.
This is according to the latest Labour Market Outlook published by the Chartered Institute of Personnel and Development (CIPD), which also highlights how much temporary working, including contracting and freelancing, has grown during the recession. Over four fifths of the survey’s participants use contractors and temporary workers (temps).
“The shift to more part-time and temporary employment looks set to continue to drive the jobs market further along the road to recovery,” said CIPD labour market Adviser Gerwyn Davies in response to the report’s findings.
Contractors not just hired due to uncertainty
Although 37% of contractor client organisations use contractors and temps due to the current economic uncertainty, the report highlighted other key reasons. These include:
- Fitting the client’s business cycles (30%); and
- the drive to lower short-term costs (25%).
Cost reduction has become a priority for some client organisations because of falling productivity during the first two quarters of 2012. Over a quarter of survey respondents had increased the number of contractors and temps in the 12 months to October 2012.
The shift to more part-time and temporary employment looks set to continue to drive the jobs market further along the road to recovery
Gerwyn Davies, CIPD
Productivity gains arising from temporary contracts
“More employers report that the shift to employing more…temporary workers has had a positive impact on productivity,” says the report. It also highlights that casual and zero-hour contract workers have had a greater impact on productivity than contractors and temps.
The report continues: “More than a quarter (36%) of employers who have increased the proportion of workers on temporary contracts say that productivity has improved compared with 16% who say it has had a negative impact.”
However, in contrast, 28% of client organisations are planning to reduce the proportion of their workforce that is made up of agency workers, due to fears about the costs of the Agency Workers Regulations (AWR).
Public sector has embraced the flexible workforce
Not only do a greater proportion of public sector clients hire more contractors and temps –86% of clients in the public sector versus 82% of private sector clients – but the use of contractors and temps is growing faster in the public sector.
Nearly a third (30%) of public sector clients already using contractors and temps are planning to increase the number, while 25% of private sector clients are planning increases in flexible worker headcount.
CIPD’s analysis of the public sector’s greater use of flexible workers is "that public sector employers are becoming more flexible in how they resource their organisations".
Skills shortages in IT and engineering
Skills shortages continued to plague some clients, with 41% reporting that they “currently have vacancies they are finding hard to fill”. This is only a single percentage point lower than a year ago, when 42% of clients said the same, showing that the skills situation, whilst no worse, is certainly no better.
The core contracting disciplines of engineering and IT top the skills shortages league table: 17% of clients contributing to the report cited engineering vacancies as hardest to fill, closely followed by 15% citing IT vacancies as hardest to fill.
Management vacancies were in third place, with 14% of clients finding this type of vacancy hardest to fill, and accounting and finance staff were fourth hardest to recruit, according to 11% of respondents.
Larger clients find it harder than small to medium sized enterprises (SME) to fill vacancies, with 48% reporting they have hard-to-fill vacancies compared with 28% of SMEs. Of those experiencing difficulties filling vacancies, 36% said this was due to skills shortages.
Offshoring to hit IT hardest
Less welcome news for contractors is CIPD’s analysis of offshoring trends. IT is the most likely function to be offshored, according to 38% of respondents, closely followed by 36% of clients planning to offshore finance and accounts.
Those sectors most likely to offshore functions within the next 12 months include consultancy services, finance, insurance and real estate.