Firms’ £1.2bn temporary staff bill ‘expensive and unsustainable’

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Organisations have spent £1.2 billion on temporary staff to plug skills gaps over the past year, prompting the Open University to warn that such short term solutions will prove ‘expensive and unsustainable’.

Research conducted by the Open University for its Business Barometer 2020 report found business expenditure on filling skills gaps has grown by 39% over the past 12 months, despite more than half of senior HR leaders claiming reducing costs is key to their firm’s survival.

Many are turning to short-term hires which could end up being more costly, the research found. Of the organisations that made redundancies or furloughed workers, one in five said they plan to hire temporary staff when needed.

The university estimated that £6.6 billion had been spent on inflated salaries, temporary workers, recruitment fees and training, up from £4.4 billion last year, with the average time to fill a vacancy taking around two months.

“It’s unsurprising that after such a challenging year, business leaders are looking for quick fixes to talent shortages. And while hiring in short-term solutions to skills vacancies may solve the immediate issue, we know that further change is coming, and this cycle of hiring and firing will prove expensive and unsustainable,” said Viren Patel, corporate director at the Open University.

Patel urged employers to upskill their existing workforce in order to meet their skills requirements, with many firms reporting that management and leadership skills and digital capabilities are the most difficult to find. More than half continue to experience skills shortages.

Thirty-nine per cent of the 1,000 HR leaders surveyed require more leaders to navigate the disruption caused by the Covid-19 pandemic in the next 12 months. Nearly two-thirds (61%) value adaptability and agility as qualities in new candidates.

“The massive increase in available workers in the labour market is not increasing the supply of the skills that businesses most need to help them respond to and recover from the crisis, instead, the skills that are in short supply have become more valuable as organisations chase a pool of talent that was already very low before the crisis began,” said Patel.

“Organisations that instead adopt a ‘grow your own’ approach to the roles they need, and re-skill colleagues into relevant roles, will find themselves able to adapt to further challenges and uncertainties more quickly than those buying them in, whilst cutting costs.”

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