Employers’ turn to agency staff amid an uncertain economic outlook

A recent report by the Recruitment and Employment Confederation (REC) indicates a sharp rise in agency staff usage by employers in the UK. This dramatic rise has been widely attributed to pessimism about the economic outlook.

The stats behind the REC’s “JobsOutlook” report shows the balance of sentiment for hiring agency workers in the short-term was 10% higher than in the previous month at net +3%. Sentiment in the medium term was at net +1%, up 9% from the previous month.

This is despite employers’ confidence in economic prospects for the UK dropping again, by 3% from last month to net -31. According to the JobsOutlook survey, this is the lowest level since they began measuring sentiment about the economy among British businesses, and is 57% lower than in June 2016.

In contrast to this, employers’ confidence in hiring and investing in their businesses remained significantly higher, at net -4. This was a fall of 3% from the previous month, the second successive month that this measure has been in negative territory.

Neil Carberry, the Chief Executive Officer of the Recruitment and Employment Confederation made comment on the report:

“These figures emphasise again how Britain’s fantastic jobs market supports prosperity, given an uncertain economic outlook and lower business investment. Firms are only marginally less confident in hiring for themselves in today’s survey – and far more positive than they are about the wider economy. Given recent political events, these figures are remarkably robust.

“The more positive figures on hiring for temporary workers suggest that many businesses are turning to agency work to help them navigate the unpredictability they currently face. This might be driven by waiting to see whether permanent hiring is justified, or by using additional labour to meet demand rather than making big capital investments. In the long run, however, employment will be best supported by the stability a clear Brexit outcome will bring. It’s time to get on with delivering this.

“The delay to Brexit has given firms breathing space, and anecdotes from recruiters suggest that the jobs market has improved in the past few weeks. Building on this trend needs a deal – but it also needs action to address key staff shortages in some sectors. Employers are leading the way in addressing this, with the survey showing increasing activity on both training and inclusion. But government can help this process by reforming the apprenticeship levy into something that benefits all workers, through a flexible training levy approach.”

Another important statistic from the report outlined employer concerns over the qualifications and abilities of temporary workers. The report concluded that 34% of employers intending to hire temporary workers expressed concern over the sufficient number of agency workers with the necessary skills they require.

Underpinning this concern was feedback from 80% of employers surveyed had either no surplus workforce capacity, or such as small about that they may need to hire more staff if demand increased.

JobsOutlook is produced by the REC in partnership with ComRes. ComRes interviewed 600 UK employers involved in hiring by telephone between 2 January and 22 March 2019. Data were weighted to be representative of UK adults in employment by region, broad industry sector and public/private split.