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Are you in control of temporary recruitment expenditure?

Posted on 05/02/2016 by Jamie Eaton in Category Managed Services
​The UK recruitment industry had a record breaking 2015. Figures released from the Recruitment and Employment Confederation (REC) show a UK industry worth £31.5bn (£28.5m temporary recruitment and £3m permanent recruitment), which is 25.5% higher than pre-recession peak in 2007/08. The industry is also set for further unprecedented growth in 2016 and 2017 of 6.5% and 7.5% respectively.
 
This, in our opinion, can only be good for UK plc but as businesses seek to become more flexible, the strategic significance of using temporary workers and contractors to support operational efficiency cannot be underestimated. But with overall economic recovery still fragile, the costs of temporary recruitment must be managed closely.

The REC Trends report highlights a few key areas you must consider for 2016 and beyond:

1. Cost of each temporary assignment is rising by 5.4%

With a growing industry, this is expected but according to the Office for National Statistics, wage growth on regular pay was just 1.4% in 2015. If not wage growth, then agency margin and on-costs, such as Working Time regulations, Agency Worker Regulations and Pension Auto Enrolment must also be factors to consider.

2. Length of each temporary assignment is increasing

The percentage of placements over 6 months rose from 28% of the total to 48% in 2015 and is set to continue. We are seeing a real shift from ‘traditional’ temporary, short-term roles to longer term assignments. However, it is also important to ensure you have effective internal control measures to review and end assignments once they hit their original end date. If extended, make sure it is approved and justified plus consider revising contractual terms with agencies to reduce agency margins over longer periods of time. This is known as tenure discounting.

3. Candidate shortages reported in 8 of the top 10 categories of temporary recruitment expenditure

The major growth is in the use of temporary workers in professional and managerial roles in categories such as technical, engineering, IT, construction and accountancy/financial. Yet these are the same areas where the REC report candidate shortages. It is therefore essential to keep a constant, close eye on fulfilment and quality of hire to evaluate whether you have the appropriate supply chain of recruitment agencies.
 
Keeping a constant and close eye on the cost of an assignment, the length of an assignment and fulfilment and quality of hire in candidate short markets will give you a greater confidence that you are in control of temporary recruitment expenditure in the coming years.