In my preparation for chairing the ATC Contingent Workforce: The New Perm* conference next week (Tuesday 11 September and Wednesday 12 September 2012) in Sydney, I have been reviewing the most recent media reports and research on the non-permanent workforce and it’s been a fascinating exercise.
As if on cue, ERE.net ran a story on 29 August by John Zappe , headlined Experts Predict: Half Your Workforce Will Be Temps which was a brief commentary on the state of the USA contingent workforce containing the following;
Following the release of the June employment numbers by the U.S. Bureau of Labor Statistics, FordyceLetter.com reported, “There are now 2.534 million contract and temp workers in the U.S., a number just a few months shy of exceeding the all time high of 2.657 million reached in August 2006.”
Now, U.S. News says “Temp Workers Make Huge Comeback.” The article points out that the staffing industry has regained almost all the jobs lost in the recession, while other employers have added just over half the ones they shed. It’s not simply a sign of cautious employers bringing in extra help while waiting to see what the economy will do, but evidence of a trend.
Says the article, “In 1983, temporary workers made up just over half a percent of all employment. Now, that figure stands at nearly 2.3 percent — a remarkable change, despite the small numbers.”
“It’s a structural transformation,” maintains Arne Kalleberg, a professor of sociology at University of North Carolina who studies the labor force.
Meanwhile, Dana Shaw, former senior vice president for Staffing Industry Analysts, says, “Currently, the average mix of contingents in the Fortune 100 is 20-30 percent of the workforce, but it will evolve to 50 percent.” That evolution, she says, will be complete in barely eight years.
In November 2011, there were approximately 11.4 million employed persons aged 15 years and over. Of these, 7.1 million (62%) were employees with paid leave entitlements, that is, they were entitled to paid sick and/or paid holiday leave. Of the remaining employed persons (38%):
- 2.2 million (19.3%) were employees without paid leave entitlements;1.0 million (8.8%) were independent contractors; and1.0 million (8.8%) were other business operators.Unless you, or a member of your family, are in one of these ‘without paid leave’ categories you probably don’t give too much thought to the people who are employed in one of these categories, yet workers without paid leave entitlements are everywhere in our workforce.A few examples being:· Jockeys (probably the only people who perform their normal work duties with an ambulance following them)· Cleaners (Coles got a harsh reminder last week of the risks inherent in contracting out the cleaning of their stores when one of their Tasmanian subcontractors ran an ad for staff containing the line “Store requires no indians or asians please. MUST SPEAK ENGLISH,”· Trainer/speakers (nobody pays my annual leave, sick leave or bereavement leave)· Tradies (the Construction sector, at 32%, is by far, the largest employer of independent contractors in Australia, ahead of the Professional, scientific and technical services industry at 13%)· Macca’s staff (the industry with the highest proportion of males and females without paid leave entitlements was Accommodation and food services at 59% and 68% respectively)The ABS research then provides an analysis of people who had sourced their current job through a recruitment agency or labour hire firm (for the purposes of brevity I will use the term ‘recruitment agency’ where the ABS uses ‘labour hire firm/employment agency’.Specifically the ABS reported that in November 2011:· 605,400 persons (5% of all employed persons) found their job through a recruitment agency· For males who found their job through a recruitment agency, the Manufacturing (19%) and Professional, scientific and technical services (9%) were the industry Divisions with the greatest proportion. For females , the most common industry Divisions were the Health care and social assistance (15%) and Financial and insurance services (11%)· The most common occupation groups for males who found their job through a recruitment agency were Machinery operators and drivers and Professionals (both 22%). For females , the most common occupations group were Clerical and administrative workers (39%) and Professionals (23%)· 141,700 persons (23% of those who found their job through a recruitment agency) were paid by a recruitment agency .· Of these 141,700 workers, the Administrative and support services (20%) and Manufacturing (13%) were the industry Divisions with the greatest proportion. Clerical and administrative workers (21%) and Machinery operators and drivers (19%) were the most common occupation groups.· Of those who were paid by a recruitment agency, there were 115,500 persons (82%) who usually had continuous/ongoing work from a recruitment agency .In March 2012, research firm IBIS World reported that aggregate temporary services/labour hire revenue in Australia was around $16 billion per annum and paid an average 327,000 workers per week. This weekly figure is around 130 per cent larger than the previously quoted ABS figure so the reality is probably somewhere in the middle.Speaking to recruitment agency and owners recently, it certainly seems that perm work flows have tightened and price pressures continue to mount. In contrast, The RIB Report (using data from 117 Australian and New Zealand SME recruitment agencies) in comparing the past three Q4’S (April-June) tells us that temp pricing is both stablising (ratio-wise) and rising (in real dollar terms) on the back of increasing demand.QuarterAverage Temp GP as % of salesTop 10% Temp GP as % of salesAverage Net $ gross profit per hourTop 10% Net $ gross profit per hourApril – June 201014.0%25%$6.30$10.00April – June 201114.4%24.5%$6.97$10.25April – June 201214.0%24%$7.40$11.10It doesn’t take too much analysis to see that a profitable future for a large majority of recruitment agencies in this country is dependent on how effectively they can understand and capitalise on the increased use of a contingent workforce.How are you responding to this workforce trend?* The ATC Contingent Workforce: The New Perm conference organisers have very generously offered a 20% discount for RossClennett.com subscribers. To be eligible for these discounts you must type ROSSCWF12 in the promotional code box on the registration page. View the full pricing schedule on the ATC website.