Permanent staff rise, contracts fall

Permanent staffing is on the rise, as contract or temporary placement is falling, possibly suggesting an impact of the Agency Workers Regulations which give temporary staff similar rights to employees.

The findings come from a detailed report by agency body The Recruitment and Employment Confederation (REC) and accountants KPMG which draws on original survey data provided by recruitment consultancies.

Recruitment consultants reported a rise in permanent staff placements for the third month in succession during March, albeit at a slower pace than February's nine-month high. In contrast, agencies' temporary/contract billings decreased. Although moderate, it was the fastest drop in short-term appointments for over two-and-a-half years. Panel members frequently indicated that employers had chosen to convert temp workers into permanent employees due to the effect of the AWR.

Key findings in the report show:

• Permanent placements increase further but temp billings decline
  
• Differing trends in permanent and temporary appointments suggest a link to Agency Worker Regulations
  
• Permanent staff placements increase for third month in a row
  
• IT and computing sector leads upturn in permanent job vacancy growth to eight-month high
  
• Permanent staff salaries stagnate
  
• Candidate availability rises at weaker pace

Tom Hadley, Director of Policy and Professional Services for the Recruitment and Employment Confederation, said: "This month's data shows a slight decline in appointments of temporary workers. This may in part be linked to employer uncertainty over the Agency Worker Regulations, although it could mainly be due to the fact that increasing business confidence has resulted in more employers being prepared to take on permanent hires rather than temporary or contract staff. The benefits of flexible staffing arrangements are well established and other REC data provides some positive indications in terms of the outlook for temporary work in the UK."

Ronnie McCombe, partner at KPMG, said: "Some of the rise in permanent placements appears to stem from employers simply switching temporary workers to permanent status due to the higher entitlements that the Agency Worker Regulations have given them. And while it is heartening to see that overall vacancies are rising, salaries are stagnating meaning the economy is likely to carry on feeling the pinch from cost conscious consumers reluctant to part with their money.

"There are grounds for cautious optimism but recovery remains fragile and could all too easily be blown off course."