Crystal Umbrella

The Association of Recruitment Consultancies (ARC) is challenging the legality of the draft Agency Workers Directive Regulations which were laid before Parliament at the start of this year. Despite a two part consultation process, ARC have stated that the draft Regulations contain important aspects which were omitted from the consultations and should not be introduced as part of a secondary legislation such as AWD.

The point in question refers to recruitment businesses who have no contact with agency workers. These recruitment businesses do not fall within the scope of the AWD but the regulations provide that they can still be held liable for the acquired rights of the agency worker. ARC have questioned the legality of this position and has subsequently raised this issue with government, requesting that the relevant regulations be removed from the draft. ARC believe that the government is essentially redefining the employment relationship definition within law. However, the Department for Business, Innovation and Skills has yet to comment on this issue.

Adrian Marlowe, ARC Chairman, commented: “It is crucial to understand that this argument does not affect the rights of agency workers to equal treatment or enforceability against the actual temporary work agency or the hirer. It is unfortunate that so little time has been given to consider these regulations when we have pressed for more time, and that they have been laid before Parliament ahead of an approaching election when MPs minds are probably more on their constituents than anything else. However we are where we are and everyone can be assured that the ARC will take whatever action is required to clarify this issue as it could have serious consequences for agencies. The Government’s sledgehammer to crack a nut approach also highlights an element of mistrust of the recruitment industry that regrettably still exists in Government. This makes it all the more important that ARC pursues its objective of improving relationships and understanding between Government and the recruitment industry.”

There seems to be a direct link between the recent demand for IT staff and the recovery of the banking industry. This is the belief of the Association of Recruitment Consultants (ARC) who believe that many companies are looking to upgrade their IT systems as the UK leaves recession. This means that skilled IT contractors are back in demand.

This increase in job opportunities was actually evident in the most recent Report on Jobs from the Recruitment and Employment Confederation, which showed that employment for both contract and permanent staff increased in February.

Chairman of ARC, Adrian Marlowe, said: “As far as IT is concerned, our members have also experienced an increase in IT employment requirements. At the moment, there is definitely an increase in work of that nature.”

He continued: “I think that having laid low for 18 months or so, those organisations that have larger IT requirements are taking the view that they need to upgrade their systems, hence the IT requirement in that regard.”

However, the REC have warned that there will need to be “radical reform” to ensure that the ongoing cuts in public spending do not have a negative effect on recruitment opportunities. Their Report on Jobs did show the sharpest increase in the number of vacancies between January and February through the past 30 months, however the report noted a slowdown in billing for contractors during that period.

Chief executive of REC, Kevin Green, believes that contractor opportunities in the public sector could be set to decrease: “Looking ahead, there are indications that recruitment in the public sector could drop off fast. A new approach to public sector resourcing is now critical and will have a direct impact on the wider employment outlook. We question whether the public sector has the right capability in place to lead the necessary transformation and put in place staffing structures that will keep costs down while improving public services.”

Home Office figures have revealed that 30,000 foreign IT workers entered the UK on intra-company transfers last year from seven companies who have their headquarters in India. The main three users of the ICT scheme were Tata, Infosys and Wipro. The figures, obtained through a Freedom of Information request, show that most of the positions filled by these ICTs were for entry and mid-level IT positions, which could easily have been filled by UK based staff. Actually none of the positions filled with Indian workers required a skills base currently in shortage within the UK.

Ann Swain, chief executive of APSCo, commented: “These figures show just how easy it is for foreign companies to bypass the UK labour market. The majority of companies relocating non-EU IT workers to the UK aren’t British companies looking to plug skills shortages, but foreign companies with their headquarters abroad moving staff to UK subsidiaries.

She continued: “Foreign companies are supposed to pay workers brought in on intra-company transfers UK market rates, but you have to wonder whether there is some economic benefit to transferring Indian workers from a low wage economy to the UK? If there is no cost-saving, then why do they do it?…These figures show that they [ICTs] are being used to fill entry to mid-level roles in which the [IT] skills used are largely standardised.”

She concluded: “There is no requirement for companies to tap the UK labour market before transferring workers from overseas. This is a major loophole which the government has failed to close, despite intra-company transfers accounting for about 80% of all work permits issued in the IT sector.”

The founder of Ecademy, a social business network, believes that more companies are shunning permanent staff in favour of freelancers and contractors. Penny Power is an expert in business matters and she has said that this increase in freelance hiring is inevitable while the effects of the recession continue.

She said: “Businesses have hired consultants, suppliers and external advisers for a long time, but there is now a distinct shift toward a ‘networked model’ of resourcing your company rather than an ‘institutional’ one of having employees that work full time, when perhaps their niche skill is only needed for a smaller amount of the week. In a global market, that competes on costs, sourcing suppliers is the only way to keep your business competitive.”

Power’s comments are echoed by those detailed in the recent CBI report that explored a move towards more flexible workforces across all sectors. Power stated that she believes that focus will now be on freelancers’ core skills rather than their previous contracts.

She concluded: “A job is something that gives you security and ties you to the company, but only for as long as your are useful. ‘Work’ on the other hand gives you the freedom to look for the right type of work to suit you and allows you to find many people who may want you to ‘work’ for them as a supplier. Having six clients that you work for in a freelance or consultant capacity is far more secure than having one employer in the current climate,” says Power.

Shadow minister Jonathan Djanogly has spoken out to confirm that even if the implementation of the Agency Workers Directive is pushed through by the present government prior to the general election, a full review would be carried out by the Conservatives if they were to come into power.

Mr Djanogly was speaking at a House of Commons reception hosted by the Association of Professional Staffing Companies (APSCo) when he stated that the existing AWD consultation period has been too short and he believes that it should have been extended past December.

Ann Swain, chief executive of APSCo said that Djanogly had estimated the cost of the AWD being implemented in its current form at round £4billion per year. Swain also stated that if the controversial Directive becomes law without any further amendments the economy will surely suffer as more jobs are lost at a time when the economy is still trying to recover.

She continued: “We support Jonathan Djanogly’s view that the consultation period needs to be extended and that the draft regulations should be revised if they are too damaging to UK plc. With the implementation of the regulations delayed until 2011 there is now a real prospect that whoever the next government is could make significant amendments to the regulations before they even come into force.”

Damian Broughton, managing partner at accountancy firm Danbro said: “The good news is that there is a delay in the implementation of the AWD to 1 October 2011, and that it will not apply to all those who are genuinely self employed. There is also possible good news in the knowledge that if the Conservatives win the next election they will have a ‘total review from top to bottom’ of this and other regulation that affects this industry.”

The Association of Recruitment Consultancies, however, stated: “Although the change of heart is welcome, there is no room for complacency. There is still much that is wrong with the proposed legislation in its current form, and more work is required.”

It is fair to say that the effects of the recession have been felt by employers across the UK. However, figures show that both Scotland and Northern Ireland have actually experienced an increase in IT recruitment over the past five years. However, the majority of recruiters in Scotland admit to the recession affecting their team morale due to increased workloads and training cutbacks.

Jacqui Hepburn from the Alliance of Sector Skills Councils in Scotland has said that while the IT sector was indeed affected by the recession there are now signs that it is “clearly stabilising”. Much of the strength of the IT sector in Scotland has been attributed to the lessons learned from the demise of the dotcom years and the acceptance by businesses that they must be flexible in their business models.

Jacquie Hepburn commented: “The IT professional workforce will be central to the UK’s recovery from recession. All industries need, and will continue to require, highly skilled technical professionals. There is an arguably even greater need for business-focused technologists who can understand business needs, know how to apply IT to solve business problems, and can manage technology projects to deliver direct business value.”

The ‘Skills, Business and the Economy’ report which was published a number of weeks ago included advice from the Alliance that the Scottish IT sector could be boosted by encouraging more young people to train for careers in IT.

Ms Hepburn concluded: “The UK must continue to invest in the technology skills pool: from the IT professionals who create the systems, to the business managers who need to be able to exploit them for business benefit, to the individuals who need to be able to use them in their day to day jobs.”

Specialist accountancy firm SJD Accountancy has joined forces with specialist IT recruiter Technojobs to create a rate checker for contractors. This new service will cover the most up to date IT contracting including Java, SQL and C++. The rate checker will be a useful tool for those considering a working as a contractor as well as experienced contractors.

Information available on the web page will include average national and daily rates of pay across all skill sets within the sector.

Managing Director of SJD Accountancy, Simon Dolan, stated: “SJD focuses on giving as much advice and guidance to contractors as possible. We’re specialists and have been helping IT contractors make the transition from permanent work to contracting – we hope our new contract rate checker can make the transition that little bit easier.”

SJD Accountancy is a sector leading company providing accountancy services to freelancers and contractors. They are accredited by the Professional Contractors Group as a Quality Accountant. Meanwhile, Technojobs is an award winning IT recruiter, advertising over 12,000 contracts every month.

Sales and Marketing Manager of TechnoJobs, Anthony Sherick, commented on the new partnership service: “The page has huge value for those entering the contractor market as well as experienced IT contractors’. This project seeks a natural fit between the two companies. We have a number of other projects on the go and have plans for future partnerships that will further benefit both contractors and recruiters alike”.

The shadow work and pensions minister, Mark Harper, has questioned how much the government’s Business Link service has spent on support for start-up businesses and contractors. Harper was asking how much of the £207 million Business Link budget was ringfenced for one-person ventures or new companies. He put this to Lord Mandelson’s business department, requesting figures for the past twelve months. However Pat McFadden, Lord Mandelson’s deputy, has refused to provide the requested information. He stated that the department would incur a prohibitive cost for gathering this data.

In response to Mr Harper’s question, Mr McFadden stated: “The department provides regional development agencies with funding in a single pot for the delivery of services. The RDAs contract with regional suppliers to deliver Business Link. The question requires gathering data from the nine regions and the multiple suppliers they contract with to deliver start up services locally and could be obtained only at disproportionate cost.”

Business Link are now providing courses where people can gain knowledge about how to run their own business. However, these courses are only accessible by people who have been claiming jobseeker’s allowance for a period of six months or more. The government have also recently conceded that some people on shorter term unemployment may also be eligible to attend some of the self-employment training courses. These concessions relate to specific groups including people with a history of homelessness and other disadvantaged members of the community.

Japanese electronic firm Fujitsu has announced 1200 job cuts within its British IT services unit. Fujitsu have attributed these redundancies to reduced client spending and have deemed them “reluctant” but “necessary”.

Analysts had predicted the redundancies as Fujitsu had been hit rather hard by the economic downturn. In a bid to avoid paying off permanent staff, Fujitsu had previously reduced its contractor pay rates by 15% as a ‘take it or leave it’ ultimatum. They had also frozen permanent staff salaries and curtailed pensions. They had then reduced the number of contractors that they used.

Fujitsu released the following statement regarding the new redundancies, “This measure [a reduction of 1200 jobs] is being proposed because of lower than anticipated revenues.
Fujitsu has proposed this measure reluctantly. However action is necessary to ensure that the company remains competitive in the current difficult global economic climate and is in a solid position for future growth when the economy starts to recover”

However, the Unite union has slammed the announcement of redundancies at Fujitsu, calling them “wholly unwarranted” in light of the company’s recent profits.

Unite national officer for IT and communications, Peter Skyte, commented: “These proposed redundancies amounting to 10% of its UK workforce are wholly unwarranted given that the company made £200m profit last year. It even paid two directors £1.59m in compensation for loss of office. Unite is pressing for detailed information about the reasons for this proposal and the areas affected. We will be doing everything possible to protect the jobs of the workforce.”

Leading technological companies in the UK have formed a coalition to will the creation of quarter of a million IT jobs over the next decade. This coalition has been developed by software firm Micro Focus who have asked other influential firms to sign their Technology Manifesto. They have said that due to a decline in manufacturing and the resulting “shock” to financial services, the IT sector needed a boost in order to stimulate the economy. More than thirty influential sector figures have backed this manifesto.

Micro Focus chief executive, Stephen Kelly said that the economy is presently “saddled with debt, decline, depleted industry and deteriorating employment”, however he believes that the IP-rich industries can “make Britain great again”.

The Technology Manifesto includes five directives for the IT sector. The directives include radical tax incentive overhauls for individuals and companies investing in the growth of technology business in this country. The manifesto states that ‘fiscal incentives’ should accompany these tax reforms for IT companies in the UK. They state that this will boost the output of world leading R&D from the UK. The Manifesto also suggests using the skill of IT entrepreneurs working in the overseas market by calling on their ‘good will’ to train IT start-up businesses in Britain which have a potential for high-growth.

The signatories on the manifesto state, “The over-riding goal of the manifesto is to increase UK technology jobs by 250,000.” The signatories include Kingfisher IT, Carphone Warehouse, Oracle, BT Global Services, Virgin Media, INSEAD and Tata Consultancy UK.

These companies said that the job creation process should “significantly raise the contribution by home-grown technology businesses to GDP over the next ten years, thus providing a real roadmap for recovery by creating sustainable jobs, businesses and wealth.”