UK Temporary Labour Charge Rates Decline

A new benchmark report from IQNavigator shows that UK temporary labour charge rates for private sector clerical, IT and professional staff are on the decline, reversing the upward trend seen in 2011. The results for the first half of 2012 reflect the weak UK economy and appear to contradict the anticipated upward pressure on rates from the Agency Worker Regulations introduced in the fourth quarter of 2011. The data, which comes from IQNavigator, the leading services procurement solution provider for the Global 2000, is based on the actual hourly rates paid by large private-sector enterprises.

"The IQNavigator UK Office Index is already providing an interesting and useful review of the temporary labour market for provider firms as well as line managers, procurement executives and human resource executives," said Peter Smith, editor and co-managing director of SpendMatters UK/Europe. "It is also providing strong evidence of wider economic conditions in the UK, where the first half of 2012 saw rates for temporary workers flat or slightly declining; not surprising given the state of the UK economy. What is perhaps more surprising is that the Agency Workers Regulations appear to be having limited effect on either rates or use of temporary labour. It looks likely that even when governments introduce more regulations, buyers are still recognising the benefits of flexible resources."

Reversing 2011 Trend, Rates Declining in 2012
Introduced last year, IQNavigator's UK Office IQNdex showed an upward surge in hourly rates of more than 10% for the 12 month period ending in November 2011, driven in part by VAT increases and changes to National Insurance. Now, six months later the upward pressure on hourly rates that defined 2011 is gone and the IQNdex shows a flat or slightly declining trend for 2012. The reversal in temporary labour hourly rates in 2012 is attributable to a number of factors:
• Weakening business expansion has reduced demand for temporary labour
• Seasonally lower agency labour utilisation early in the year
• Less spending on highly paid technical and strategy consultants

AWR Shows Little Material Impact on Rates
Five months after AWR became effective, it appears employers have not made significant changes to either rates or agency worker utilisation for white-collar workers, as the UK Office IQNdex has slightly declined so far in 2012. Detailed reviews of client charge rates have shown little or no adjustments are needed when comparing white-collar charge rates to equivalent employee salaries.