The Financial Times (FT) picked up on an interesting AWR angle at the weekend (11th March) that we haven’t previously seen commented on elsewhere.
According to their report, the introduction of the new regulations has led to a ‘wave of consolidation’ in the temporary staffing industry as businesses involved with the supply of temporary labour get to grips with the legislation.
As recruiters and staffing businesses have worked to adapt to the changes, the additional administration, and in some circumstances the additional costs created by AWR, have led some of the smaller staffing businesses to struggle. This can’t have been helped by some of the tales we regularly hear about the squeeze on margins that can occur when some clients are reluctant to increase costs and staffing businesses simply can’t absorb them either. This seems to be a particular issue for staffing businesses involved with the supply of ‘blue-collar’ temporary workers where pay parity must be achieved as part of a Match Permanent Pay (Regulation 5) model. Another issue is that smaller businesses simply can’t afford the additional manpower required.
Interestingly, the article cites Regulation 10 (Swedish Derogation) contracts as one way of reducing the cost burden associated with AWR.
William Shirley, an analyst at Liberum Capital states in the article that AWR has prompted a growing number of the UK’s 17,000 staffing businesses to seek buyers or consider closing, although he does acknowledge that some of this activity would have happened anyway due to the weak UK economy.
So do you have firsthand experience of this? Are you the owner/manager of an SME staffing business looking to sell up or shut up shop? We’d love to hear from you so leave a comment below.