Manufacturers likely to turn to temporary labour

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The UK manufacturing sector is likely to turn to temporary recruitment due to poor visibility on how the sector is likely to fare, according to Chris Williamson, director and chief economist at Markit.

The latest data from Chartered Institute of Purchasing and Supply (CIPS)/Markit shows UK industrial production was down 1.5% in the last quarter (March to June) compared to the previous three month period, with manufacturing down 0.2%.

Industrial production rose 0.9% in May, offsetting a 1.7% decline seen in April. Manufacturing saw a strong 1.8% rise in June, though this also needs to be looked at in the context of the 1.5% fall seen in April.

Williamson told Recruiter: “The rate of growth in manufacturing has cooled very significantly since earlier in the year. We were seeing good payroll growth then. Over the next few months what we are likely to see is firms becoming increasingly reluctant to take on extra staff. Those that they do take on, they will be tempted to take on as temporary or contract workers.

“Firms are operating under flexible conditions because there is uncertainty about the next 12 months. I think that despite AWR [Agency Workers Regulations] legislation, companies will continue to have workers on short-term contracts and see how the next few months go.

“There is so little clarity at the moment in terms of both domestic demand that they will be tempted to hold off hiring permanent employees, and if it means using staff for less than three months, then so be it.”

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