A new survey from the CBI and specialist IT recruiters Harvey Nash suggests that the private sector jobs market is recovering but that the Agency Workers Regulations are deterring employers from hiring temporary agency staff.

Jobbing PAYE umbrella contractors may not be as adversely affected as other temporary workers, however. Employers are looking to hire highly skilled professionals over the next six months and most contractors who work through umbrella companies or limited companies fall into this category.

Paradoxically, it may be the very workers the EU directive was designed to protect – relatively unskilled, low-paid temporary staff – who are suffering the most. Employers are exceptionally cautious about pay in their struggle to remain competitive and are reluctant to risk the increased costs that the AWR inevitably brings. According to the poll, six in ten employers have cut back on agency staff as a direct result of the AWR.

The CBI’s Chief Policy Adviser, Katja Hall, said:

“Employment law is now seen as a brake on competitiveness by two-thirds of firms, and 52% expect new rules from Brussels to prove damaging in the next five years. The Agency Workers Regulations are a case in point, with half of respondents indicating that they’ve been affected by their introduction, and with 57% reducing their use of agency temps as a result, hurting job creation in these tough times.”

Ms Hall went on to say that a degree of flexibility had survived but the evidence from the survey is clear: “unwanted and unnecessary” regulations such as the AWR are damaging opportunities for people seeking work. She urged the government to work assiduously in Brussels to “get rid of the directive entirely.”

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