As we enter the last quarter of 2023, the landscape of the UK labour market is experiencing significant shifts and challenges. Temporary labour, a solution for businesses to fill skill and capacity gaps, is also facing various factors that are impacting its demand, availability, and cost. In this article, we will explore the trends and outlook for temporary labour in the UK across different sectors, including business, finance and IT.
Over the past three years, the UK temporary labour market has witnessed steady growth, with the number of temporary workers increasing by approximately 17% from 1.4 million to 1.7 million. Sectors such as healthcare, education, and logistics have shown significant demand. However, the temporary labour market is not immune to global shifts, including regulatory changes and movements in political and economic power, industry trends, and government policies. https://www.efficioconsulting.com/en-gb/resources/reports/category-insights-outlook-temporary-labour/
The Past Influences the Future
Pandemic Impact on the Temporary Labour Market
The COVID-19 pandemic profoundly impacted the UK labour market, including the temporary workforce. As businesses faced economic uncertainty and shifting demands, many turned to temporary workers to meet short-term staffing needs. However, as the pandemic unfolded, the landscape shifted again, with remote work becoming the norm for many industries. But, as we have progressed, some have opted to bring back employees to the working environment or look at hybrid working solutions. These shifts have presented new challenges and opportunities for temporary workers and business owners.
The Rise in Remote Work and the Gig Economy
One notable trend in the temporary labour market was the rise of the gig economy. The pandemic accelerated the adoption of remote work practices and individuals looking to start a side hustle. This shift opened up opportunities for workers and businesses seeking flexible work. But for those pursuing their own goals, it also took those people away from the flexible working pool of talent for companies to dip into.
The Future Outlook
Short-Term Outlook
The short-term situation is quite fluid, with some slowdowns affected by economic changes and other circumstances. For instance, as the UK union-government relationships normalise and strikes reduce, the use of temporary labour to cover worker gaps is expected to decrease. However, it is important to note that specific sectors may be shielded from economic changes, such as niche and qualified temporary labour in back office roles, IT, and temporary senior positions. Roles like CFO, CPO, and Financial controllers are expected to continue to be in demand.
Long Term Outlook
The temporary labour market is poised for further growth and evolution. As businesses continue to navigate economic uncertainties and changing market dynamics, the demand for flexible staffing solutions will likely remain high. The rise of remote work and the gig economy will continue to shape the landscape, providing opportunities for individuals seeking flexible work arrangements. The increase in remote working has opened up new opportunities for temporary workers, and businesses will continue to rely on them to meet short-term staffing needs and the business drive for innovation.
Continued Worker Shortage Squeeze
Worker shortages, particularly in the technology market and due to Brexit and the Ukraine crisis, will create upward pressure on wages and the availability of staff. Conversely, higher wages may spark a downward pressure on the demand for labour, and this will be an interesting balancing act moving forward.
According to the ONS, From April to June 2023, the annual growth for regular pay (excluding bonuses) was 7.8%. This is the highest annual growth rate since comparable records began in 2001. Yearly growth in employees' average total pay (including bonuses) was 8.2% from April to June 2023. It is worth noting that from April to June 2023, annual growth in real terms (adjusted for inflation using the Consumer Prices Index, including owner occupiers' housing costs CPIH) rose on the year in real terms by 0.5% for total pay and 0.1% for regular pay. This only goes to show the balances we need to look at and the current economic climate we find ourselves in.
This squeeze in the labour market may be partly mitigated by slower growth in temporary labour and increased technological layoffs. However, you can not guarantee this, and things can change quickly; look at what the appearance of AI has done to our markets. This shows businesses must prepare for flexibility and keep their fingers on the pulse of flexible workforce trends, giving options for future events. You don't want to find you have not got the talent pool to dip into if you suddenly have to expand your business. Building relationships with quality recruitment agencies can help in these circumstances. Having quarterly appraisals with them with long-term forecasting, even if you are estimating your circumstances, can help both parties get the best talent at the right time.
Counteroffers and Salary Negotiations
A CIPD press release in August 2023 stated that as part of efforts to keep key staff, 40% of UK employers have made a counteroffer in the past 12 months. To tempt workers to stay, 38% of employers who made offers matched the salary of the new job offer and 40% offered even higher sums. Counteroffers are most prevalent in London (58% of London-based employers in the last 12 months), making it the 'counteroffer capital' of the UK. These counteroffers reflect the competitive nature of employment and can have a knock-on effect within the temporary labour market. It is important to retain skilled workers, whether they are permanent or temporary. Later in this article, we go into strategies for retention and transitioning temporary talent into permanent staff members, which can be a key strategy for business.
An Insight Into The Temporary Workers' Mindset
Understanding the reasons individuals choose temporary work is important so you can set a strategy accordingly. The motivation behind their choices can help you with long-term planning. The ONS data reveals that among the 1.64 million temporary employees, approximately 370,421 were temporary because they could not find the right permanent job. This is significant if you are looking at a Temporary to Permanent strategy for employment. We will look into this later in the article. Furthermore, 440,581 individuals did not want a permanent job, while 171,455 had contracts with a training period. Additionally, 657,685 temporary employees cited other reasons for their engagement in temporary work.
These statistics highlight the diverse range of motivations behind temporary employment, including factors such as job availability, personal preferences, and skill development. Temporary work can provide individuals with the flexibility they desire, an opportunity to gain experience, or a means to bridge the gap between permanent positions.
Trying to Make Sense of it all
Well, it is a real mixed bag within the flexible work landscape, with some sectors falling in demand and others increasing. We can take into consideration all this information, but it is still hard to set a business course as we live in unpredictable times, and things have a habit of changing quickly. Even the big brains of financial predictions get it wrong regularly. Just this month (September 23 as of writing), everyone predicted a rise in inflation, only to see a slight fall. Fuelled by globalisation and technology, economies can peak and trough with unprecedented speed, and this trend will only advance with AI thrown into the mix. So, staying flexible is a fantastic way to face these challenges head-on!
Shifting and moving like grains of sand to where the economic wind is blowing could be key for businesses and flexible workers. Keeping your connection with the temporary workforce is an excellent strategy for our current situation. Let's glean more insight and look at the landscape of temporary working across industries.
Flexible Working - A Mixed Outlook Across Industry
While the Healthcare Sector faces significant problems when filling temporary vacancies, the Hospitality sector has been particularly affected by increases in the National Minimum Wage. The Public Sector has experienced a decline in net employment intentions. Then there is the education sector, which has a high prevalence of hard-to-fill vacancies, with 60% of employers reporting difficulties. But lets focus on the private sector for a moment.
Sector-Specific Insights: Office Work
Within the office work sector, with some ebbing and flowing, generally, the demand for temporary workers has remained steady, with a focus on roles such as administrative assistants, data entry clerks, and customer service representatives. Businesses in this sector often require additional support during peak periods or to cover staff absences, making temporary workers a valuable resource.
Sector-Specific Insights: Finance
The finance sector relies heavily on temporary workers to handle seasonal fluctuations, such as the tax season, or to provide support during mergers and acquisitions. Temporary workers in the finance sector often possess specific financial qualifications and experience, making them valuable assets for businesses seeking expertise on a short-term basis; there seems to be a steady demand for temporary workers within this sector.
Sector-Specific Insights: IT
The IT sector has witnessed a surge in demand for temporary workers, driven by advancements in technology and the need for specialised skills. Businesses require temporary IT professionals to support software development, system upgrades, and cybersecurity initiatives. There have been some notable Tech layoffs of late, but the fast-paced nature of the industry makes temporary workers an ideal solution for organisations seeking to adapt quickly to emerging technologies.
The Benefits and Challenges of Hiring Temporary Workers
The Challenges
There are challenges associated with hiring temporary workers. Ensuring effective onboarding, training and maintaining clear communication channels are very important at the start. Building a positive and inclusive work environment with clear management lines, constant feedback, and training evolution for temporary workers is essential to maximise their productivity and job satisfaction. There are very strict legal and contractual issues to navigate with directly employing temporary workers, but good quality Employment Businesses are your friend here! They take all this worry away from you with the added benefit of screening the right person for the position.
The Benefits
For all the challenges, there are some fantastic benefits. Hiring temporary workers provides flexibility in managing staffing needs, allows for specialised expertise, and can be cost-effective. Temporary workers can also bring fresh perspectives and ideas to an organisation, contributing to innovation and creativity. They can help your business adapt and be part of your success, smoothing out the challenges within a fast-paced business environment.
Assistance
Recruitment agencies play a vital role in connecting employers with temporary workers. These agencies can access a pool of qualified candidates and match them with your businesses and company culture. Recruitment agencies also provide valuable support in screening candidates, managing contracts, and ensuring legal compliance with employment regulations. Bringing all these together can make your journey of filling your temporary role an enjoyable experience, increasing your chance of finding the right person the first time.
One of the most significant advantages of The Flexible Workforce
The Benefits of Transitioning Temporary Workers to Full-Time Employees
We could write an entire article on this, as it is truly a powerful tool for companies to consider. But we will keep it relatively brief for you.
We have established within the dynamic landscape that business flexibility is paramount. The UK is starting to recognise the benefits of initially hiring temporary workers who can then transition into full-time roles. Why is this such a powerful strategy, and what makes it a prime approach to discovering top talent for your company? Let's delve into the many advantages.
Cost-Efficiency
Temporary staff can be more cost-effective in the short to medium term. If the temporary employee then transitions to a permanent role, their proven capability and performance will justify the extra costs of doing this.
Flexibility
Employing temporary workers provides flexibility in staffing, allowing companies to adapt quickly to workload fluctuations. This flexibility can be invaluable when businesses face uncertain conditions or seasonal variations.
Quick Solutions for Immediate Needs
Often, there are urgent project requirements or unexpected employee absences. Temporary staff can fill these gaps promptly, ensuring that work continues seamlessly. If these temporary roles are expanded or made permanent, you already have a tried-and-tested individual in place.
Attract Diverse Talent
Often, top talents prefer to start on a temporary basis due to their circumstances, seeking to prove themselves or to understand the company better. By offering such positions, companies can tap into a diverse pool of candidates they might otherwise miss.
Trial Before Commitment
Employing individuals on a temporary basis initially allows companies to evaluate a worker's skills, work ethic, and compatibility with the company culture before committing to a long-term contract. Think of it as an extended interview where both parties can ascertain if it's a right fit.
Reduced Turnover
Once a temporary worker transitions to a full-time role, they often have a clearer understanding of the company's workings, expectations, and culture. This clarity can lead to increased job satisfaction, which in turn can lead to lower turnover rates.
Enhanced Employee Morale
Knowing there's a potential permanent position at the end of a temporary contract can motivate workers. This can lead to increased productivity, a strong drive to exceed expectations, and a desire to integrate with the team and company culture.
Streamlined Recruitment Process
Using a recruitment agency to hire temporary staff who can transition into full-time roles can simplify and streamline the hiring process. Agencies already have pre-vetted, skilled candidates ready to step in, saving companies significant time and resources.
Conclusion
In conclusion, the strategy of hiring temporary workers with the potential for full-time transition is more than just a staffing solution. It's a forward-thinking approach that recognises the evolving needs of businesses and the changing dynamics of the job market. For companies looking to find unparalleled talent and build resilient teams, this approach is not just beneficial—it's essential.
The UK temporary labour market is undergoing significant changes, influenced by global shifts, economic and regulatory factors, social changes, and worker shortages. While the short-term outlook suggests potential challenges, businesses can navigate these trends by planning for disruption, budgeting for increased costs, evaluating cost savings, and exploring the temporary workforce talent pool. By adopting these strategies, organisations can effectively manage their labour needs and remain competitive in attracting and retaining talent in any challenging business environment.