Austerity breeds public sector contractor demand

Wednesday 26 June 2013

Public sector employers are turning more and more towards contractors to help them meet their differing commitments, research has shown.

According to the latest Talent Planning Survey from the Chartered Institute of Personnel and Development and Hays Resourcing, the number of vacancies for contractors and other temporary workers across the whole of the public sector is roughly double the number of vacancies to be found in comparable private sector companies.

In addition the ratio of demand for interim and contract workers to permanent staff is far higher in publicly-funded bodies, indicating that public sector recruiters are shifting their preference towards flexible or interim staff.

The report authors claim that the shift towards a temporary workforce is a product of the government’s current austerity measures. As part of a multi-year plan cut the UK’s budget deficit, the coalition government is enforcing sweeping cuts in nearly every government department, although school and NHS spending is ring-fenced.

But with diminished resources and growing workloads public sector organisations are struggling to meet all of their commitments, the report’s authors say. In turn, the authors argue, these departments are turning increasingly to contractors and other flexible workers to help them cope with their ever-growing workloads without increasing their permanent headcount.

With chancellor George Osborne announcing another £11.5 billion in spending cuts in today’s (June 26th) spending round, it is likely that this trend will continue, giving contractors and self-employed professionals the freedom to choose from an even greater range of opportunities that will open up to them.

However, the report was less certain on the subject of the Agency Workers Regulations. Since the laws came into force in October 2011, a quarter of all of the organisations across both the public and private sector surveyed said they had reduced the number of contractors they worked with. Among larger companies employing between 1,000 and 4,999 people this figure rose to one in three - possibly because these firms are in a better position to commit to permanent hires than their smaller counterparts.

As employers become more familiar with the legislation, however, they do seem to be coming back to flexible talent - two out of every ten companies took on more temporary staff last year than they had in 2011. Unsurprisingly, this rise was largely down to the public sector, who were nearly twice as likely to hire contractors than their private sector peers.

More than half of the organisations surveyed identified managerial and professional vacancies as the most difficult to fill. Positions requiring specialised technical skills came in close behind with 46 per cent of employers admitting that they faced problems finding staff - a figure which rose to 57 per cent in the manufacturing and production sector.

“Our annual resourcing survey shows that employers still struggle to find talent that is well qualified,” said Ksenia Zheltoukhova, research associate at the CIPD.

“Low rates of labour turnover suggest that some workers at the top end of the labour market are staying put in their jobs in these economically uncertain times, meaning employers have to work harder than ever to find the right talent to fill vacancies.”

By Victoria McDonnell

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