PAYE umbrella contractors on the lookout for new work placements have been dealt a mixture of good and not-so-good news by the latest CBI/Harvey Nash Employment Trends Survey.

CBI Director-General John Cridland warns that wage growth is very likely to remain flat over the next six months but on a brighter note, nearly one-third (29 per cent) of the UK’s private sector firms will be on a recruitment drive.  Umbrella companies, in other words, should see their contractors in regular work, although pay rates will hardly have them dancing on the streets.

Public sector workers fare especially badly according to the report: pay freezes in general have risen from 14 per cent to 23 per cent since October 2010 but in the public sector, they stand at 80 per cent.  Public sector workers facing the chop in the wake of the government’s spending austerities might derive a few crumbs of comfort from the news that recruitment prospects appear to be strengthening in the private sector, especially for highly skilled professional staff.  Skilled contractors are also likely to benefit.

Mr Cridland continued: ” The pay and recruitment freezes that were commonplace in the private sector during the depths of the recession have now migrated to the public sector.  However, we remain confident that private sector growth can more than compensate for job losses in the public sector. ”

Pay rates have been hit by the continuing fragility of the economy, with 31 per cent of the firms polled saying they will be planning increases below the RPI.  Only four per cent of respondents said they would be planning above-inflation-rewards.  20 per cent plan to target higher awards on some staff only, while 17 per cent will make awards in line with the RPI.

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