Short-sighted employers are set to waste £500m by failing to extend the
contracts of temporary workers.
Research by IT services and training company Parity reveals that in a bid to
cut costs, firms are agreeing shorter contracts for temporary staff – but are
actually setting themselves up to lose out in the long-term.
Based on more than 2,000 temporary contracts over the past year, the study
finds the UK’s million-plus temporary workforce is now being offered
three-month contracts on average, compared with five-month terms in 2001.
This is the result of businesses trying to reduce their initial investment
in contract workers.
Parity predicts this short-sighted policy could leave UK firms spending an
unnecessary £500m this year, as it costs up to £1,000 to source and recruit a
new temporary worker, and an outlay of £50 to extend a contract.
Rick Bacon, managing director at Parity, said the extra expenditure alone
for extending three-month short-term contracts will cost companies more than
£100m each year.
On top of this, employers will also have to engage in rate renegotiations
more frequently, which will result in further spend.