In todays business world it is often hard to decipher the best approach to hiring, should it be a Permanent employee, or Temps/Contractors. It doesn’t matter what part of Australia your business is located,
there are benefits as well as disadvantages to having all of these kinds of workers within your business. But are we Australians becoming more and more reliant on Temps and Contractors than the traditional permanent employee?
A recent Hays study actually shows an overall increase in temporary and contract staffing by employers in the last twelve months. When asked, more than 35% of Australian employers said they have experienced an increase in the usage of temps, with more than 83% of those suggesting that temporary or contract employees now make up a quarter of their workforce.
This trend is also increasing in the US as well. In 1983 only around 0.5% of the workforce in the US was made up of contract and temporary workers, thirty years later that percentage has risen to almost 3% or roughly 2.5 million workers as of last year.
As you would imagine both in Australia and the US these numbers did fall, along with permanent hires during the Global Financial Crisis, however reports show that we are now at above pre-GFC numbers of temps and contractors within the workforce both at home and abroad.
Why are these trends in temporary and contract employment in both Australia and the US growing? Some point to the insecurity of the overall job market, and the flexibility a temporary workforce offers an employer. Perhaps this shift in hiring has been born out of the global financial crisis? During the downturn the job market was hit very hard and jobless rates rose significantly around the world, with some countries across Europe experiencing double-digit unemployment. Perhaps employers have become more risk averse and need flexibility in their workforce in case of a repeat of the GFC?
Others, especially the workers themselves, may say that its because of the flexibility that being a temporary employee affords. More time spent at home with family, a variety of employment options, a breadth of experience gained on the CV and ultimately not having to be stuck in the same role and company year after year. But perhaps many are now feeling that the security a permanent job offered them before, no longer seems apparent in the post GFC world we live in?
So what if you are an employer? Hiring a temp will give you the flexibility to complete a short-term project; you can pay them by the hour and remove them at little or no notice if they don’t perform without any severance costs to your business. A contractor may well be a pay-rolled employee of your business with a fixed end date, and as such will receive all statutory benefits including annual and personal leave, super, workers compensation and also may be entitled to any company fringe benefits. But will you gain their loyalty? Quite obviously a permanent employee who has been with your business for some time will have inevitably built your mutual trust and you would expect be a loyal and hardworking employee.
Is this the ultimate downside to this shift in hiring preferences; the loss of employee loyalty? Are we really prepared to continue to reduce our permanent head count and supplement this with temps or contractors and risk losing the loyalty we gain from our permanent team? How will that affect productivity, morale and the culture within the team? Are we risking it all for a little flexibility to help us with the unknown? Im not so sure its a sensible and sustainable strategy, do you??