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Nick Golding

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Using temporary workers in a recession

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As the culling of staff continues and the availability of permanent roles remains sparse, the number of individuals going it alone, whether in a freelance capacity or as a temporary employee, is climbing. Nick Golding investigates.

 
 
The latest Report on Jobs survey (June 2009) by KPMG and the Recruitment and Employment Confederation (REC), reports that recruitment agencies have not seen a rise in the number of permanent job placements since March 2008, indicating that more and more companies are seeing value in recruiting temporary staff.
 
Helen James, founder of Freelance UK, with a website for employers to find freelance workers that suit their business, believes that the uncertain market enhances the attraction of freelance workers. She explains: "I’d argue that the flexibility of freelancers makes sound business sense in volatile times. Business needs and the demand for labour can change rapidly. The flexibility of freelance work allows organisations to respond to changes in the market or to short lead times."
 
And this is certainly a selling point for the HR department at Computacenter, where temporary contracts help the company to remain as flexible as possible, and also gain new perspectives on the way business is conducted.
 
Barry Hoffman, UK human resources director at the firm, explains: "Temporary staff not only bring flexibility to the company, but can sometimes also offer a fresh approach to the business."
 

Removing the cost risk

 
The unpredictable economy is also spreading reluctance among organisations, discouraging them to venture into new areas of business, but temporary and freelance staff can help to remove potential cost risks, like pensions or sick pay, often associated with permanent positions.
 
Anne Fairweather, head of public policy at the REC, says: "Freelance staff help organisations to move into different areas and diversify, it can be the best way to grow in new areas without taking on the employment risk or long-term commitment that comes with permanent staff."
 
Sadly though, freelance and temporary staff are not entirely trouble-free, and while the benefits of recruiting these flexible individuals are clear, they do pose a couple of issues for the HR team within an organisation as well. Teamwork and effective working relationships are essential within any organisation, and this is only achieved over a period of time, where employees work together on a range of projects. Freelancers do not tend to be in the workplace long enough to spark these relationships, and this can be a serious drawback for many companies, adds Fairweather.
 
"I think part of work is getting on with the people you work with and building relationships. Obviously with freelancers you don’t have the employment relationship and this is where the risk comes for the employer," she says.
 

Company buy in

 
Managing freelancers and temporary employees who are drafted in for short periods can also be tricky, as these employees may not have time to ‘buy in’ to the overall company strategy and long-term interests like permanent staff, adds Hoffman. "It can be difficult to manage staff who potentially have little interest in the vision and long-term future of the company," he says.
 
Government changes too are playing a crucial role in organisations’ decisions to recruit on a temporary basis, specifically the impact of the recent Budget 2009 announcement to remove the VAT staff hire concession. Since April, all organisations that cannot reclaim VAT have effectively been forced to pay up to 15% more for the salary element of their temporary workers, when hiring through recruitment firms.
 
"If freelancers start costing their clients an additional 15%, it’s likely those who can’t reclaim VAT will be offering fewer jobs at reduced rates. Budgets, particularly at the moment, are finite," explains James.
 
Meanwhile, the new rules within the Agency Workers Directive will ensure that temporary workers, after 12 weeks of service, receive the same treatment as permanent staff when it comes to issues such as pay, holiday and overtime. When this new ruling will be up and running remains undetermined, though it may encourage employers to just fork out the extra cash and take on permanent staff, rather than opt for temps.
 
Freelance workers clearly have their place in business, and while they may not be as easy to manage as full-time staff, their flexibility and low risk makes them an attractive option – especially in the current climate.
 
 
Hiring freelancers and temps

Pros

  • While the economy remains uncertain, drafting in workers as and when needed allows employers to manage costs far more effectively.
  • Companies can take more risks with freelancers and temporary staff, and if new ventures do not work out as planned there are no redundancy payments necessary.

Cons

  • Working relationships are difficult to build if temporary staff are in and out of the workforce, and good working partnerships are essential for successful businesses.
  • New government rules have increased the cost of recruiting temporary staff by as much as 15% for some businesses where VAT cannot be reclaimed.

2 Responses

  1. Ideas To Make Money

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  2. Using Freelancers in a Recession
    “Using freelancers to complement the permanent workforce allows flexibility, so that businesses can manage fluctuating demand and take advantage of rapid, low-cost hiring or obligation-free downsizing, as appropriate and particularly through a recession. SME’s are in an ideal position to take advantage of the many skills and services offered by freelancers, allowing their businesses to be agile and versatile in an increasingly competitive world. As the burdens of employment legislation, which weigh disproportionately on the smaller business become heavier, freelancing offers a pragmatic and flexible resourcing model able to cover specific projects, help cope with peaks in demand and provide valuable advice and expertise.

    Companies should build “freelancing” into their hr strategy so that they understand how to deploy freelance talent to get the best out of them – managed correctly, freelancers have the experience, knowledge and expertise to add value from the outset, hit the ground running, focus on the task in hand and all that without being distracted by internal politics. Freelancers are helping UK plc through this recession.”
    John Brazier, Managing Director, PCG, http://www.pcg.org.uk

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