How the downturn is forcing recruiters into short-termism

Employers under pressure to control their wage bills are increasingly looking to temporary contractors and outsourced providers to provide essential skills on a more flexible basis
Web Images Feb 2023

The market for permanent jobs in the UK has cooled considerably since Q3 last year. In March, the number of appointments to such roles fell for the sixth consecutive month, according to a survey of recruitment consultancies published by KPMG and the Recruitment and Employment Confederation.

The research also showed that appointments to temporary jobs were at a six-month high. These two contrasting findings can be treated as an indicator of the state of the economy: historically, permanent hires tend to trend above temporary ones when trading conditions are favourable and vice versa during tough times.

Persistently high inflation, rising interest rates and weak demand are conspiring to make life hard for many businesses, which need to control their fixed overheads but still require skilled people. Although candidates are facing similar pressures amid the ongoing cost-of-living crisis, the best ones considering opportunities in the many sectors facing a skills shortage can afford to remain picky. 

Given these challenging conditions, recruiters need to think creatively and keep an open mind.

How fixed-term contracts offer flexibility

Kate Palmer, HR advice and consultancy director at Peninsula UK, believes that the growth in temporary hiring suggests that employers are “perhaps concerned” about the future of their businesses in a faltering economy. But she finds some positivity in the fact that recruitment activity remains stronger than it was during the great recession of 2008-09.

While not everyone is a fan of them, fixed-term contracts “can be an effective solution when an employer doesn’t know how much work it will have for employees to do beyond a certain date”, Palmer says.

Victoria Short, CEO of multinational recruiter Randstad in the UK and Ireland, notes that fixed-term contracts are “relatively under-utilised” in the UK compared with elsewhere in Europe. 

“They bring an element of ‘try before you buy’,” she says. “As an employer, you retain the option to offer the employee a longer-term arrangement if the circumstances allow it. Or you can choose not to.”

For Orenki Creative, a graphic design agency based in Maidenhead, Berkshire, temporary appointments have been key to growing the business at a sustainable rate. 

“The only other hiring option would have required us to seek a loan or outside investment, which wasn’t the right route for us,” explains the firm’s co-founder and creative director, Cat Burchmore.

The potential of specialist recruitment agencies

Tom Way is managing director of SThree – a FTSE 250 recruitment agency specialising in science and technology – in the UK, France, Belgium and Luxembourg. He says that “the pandemic has driven the concept of a blended workforce, as more companies realise that they can look beyond traditional resourcing models. Bringing in independent contractors enables a business to flex its workforce to suit its needs and streamline costs when times are tight.” 

The pandemic has driven the concept of a blended workforce

Way believes that, while a competitive salary will “help to attract the right contractor, ensuring that the contract is focused on an interesting project can be just as important in some cases, if not more so.”

He adds that a specialist agency can offer a resourcing model that differs from independent contracting, by acting as the legal employer that takes responsibility for those on temporary assignments. 

“It enables skilled professionals to reap the benefits of being permanent employees [because the arrangement is handled by the agency], while retaining the flexibility that contractors, enjoy,“ Way explains.

Advantages of outsourcing

In their drive to cut overheads, some companies may decide to farm a non-core function out to a third party. Kieron Goldsborough, CEO of Newcastle-based marketing and PR agency Different Narrative, makes the case for such an approach. 

“While an in-house team will have expertise in your business, a benefit of outsourcing is that it grants you wider industry awareness,” he argues. “Your outsourced expert will be savvy in getting the lowdown on your business – that’s part and parcel of any retainer or project-specific campaign.” 

Goldsborough says that his firm will assign at least three members of staff to every client to ensure continuity of service. While they may not all be needed on that account every day, this arrangement “not only enables internal pick-up when someone goes on leave; it also ensures that the team is not isolated on project work. Multiple creative heads looking at a project brief are better than one.” 

Outsourcing to a specialist provider can also give the client access to the latest tech without having to buy it or learn how to use it. Orenki Creative uses a third party to fulfil all its video-editing needs, for instance. 

Burchmore explains: “This is a specialism – and it’s often the sole focus of those skilled at it. Editing videos is not something we need to do very regularly, so we can hire well-equipped expertise as and when we need it, which works well for us.” 

Why it’s crucial to treat contractors fairly

It can be useful to pay temporary workers on an hourly rate, according to Palmer, “as this helps to maintain flexibility on both sides.” She says that offering a pro-rata salary tends to “be more effective only where the employer can guarantee a minimum number of hours each week and knows how long it will need the person for, as it would if it were using a fixed-term contract.”

Too many bad write-ups could wreck an organisation’s brand

For Emily Bain, co-founder and managing director of recruitment agency Bain and Gray, it’s important that temporary staff don‘t feel separated from their permanent colleagues. She points out that the Agency Workers Regulations 2010 ensure that a temporary worker’s hourly pay compares to a full-time salary in the same role. Temps should also be given access to entitlements such as holiday pay, paid overtime and performance-based bonuses.

“It’s vital that the candidate feels included in the business,” Bain stresses. “A temp should be invited to company events and be granted one-to-one meetings with their line manager. They should also have access to the same opportunities and benefits that are available to permanent employees.”

Short agrees, warning that hiring and employing contractors presents a reputational risk that must be respected. It’s in the employer’s best interests, she argues, to consider what the impact on its reputation would be if it failed to treat its temporary staff well. 

Indeed, Short suggests that “employers will usually have to pay the right candidates for temporary roles slightly more than they would their permanent equivalents. These workers know that they’re missing out on the benefits of job security.”

Pointing out that temps tend to talk to each other and compare notes on employers as they move around, she warns that “too many bad write-ups could wreck an organisation’s brand.”