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UK contracting ended 2014 with quarterly high

According to figures from REC, although permanent placements rose at the slowest pace since July 2013, billings and placements for temporary workers saw a huge increase in the quarter leading to December. This is the fastest growth rate in over 15 years, with respondents to the REC survey attributing the growth to greater demand from existing clients and the securing of new contracts.

The recruitment industry broke the pre-recession peak

The recruitment industry hit £28.7bn turnover for 2014, a rise of 8.2% compared to 2013. The market for temporary staff has grown 8.7% above its pre-recession peak, with permanent staffing still lagging behind at nearly 40% under the levels seen prior to the recession. The strongest areas for growth were reported to be in nursing/medical/care and blue-collar workers.

Whilst this growth is tentative, there are two major points to consider when looking at the reasons for growth within this time period. Although these huge levels of hiring would not be possible in the first place without the continued robust growth shown by the UK economy, the Christmas boom can take some of the credit for these high levels of temporary recruitment.

Whilst year on year we see a growth in temporary placements at the Christmas period (Royal Mail alone recruited 21,000 workers for this period [source]) – these placements are wholly based on continued growth and demand from consumers. Businesses are beginning to grow and expand again and are in need of a flexible and skilled workforce.

As welcome as this growth is, the market is at risk of political indecision within the UK. The Left promises greater government intervention in the labour market and the right to question Britain’s positioning within the EU.

The role of the rise of temporary workers demand

So whilst it would be safe to say that the annual Christmas boom in the hiring of temporary workers had a huge impact on the industry, to say it was the sole reason would be short-sighted. The steady growth of the UK economy, as well as the consistent skills shortages across the UK mean that demand for temporary roles is soaring at an all-time high.

Provided the demand continues to far outstrip the supply of skilled workers in these industries, temporary workers will continue to command high salaries. REC’s Head of Policy  Kate Shoesmith accurately summarised this, saying:

“The real concern now is the mismatch between demand and supply, with recruiters reporting that they can’t source suitable candidates for vacancies in a whole range of sectors.’’

On the surface, the rise in billings can be put down to a simple case of supply and demand. Yet the more factors that are considered, the easier it is to attribute the rise of the temporary worker to continued improvement and growth within the UK economy and the rise of demand for services moving towards pre-recession levels.

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