Recovery Could Depend on Companies’ Savvy Use of Temporary Workers

By Nick Zieminski | November 5, 2009

Most employers around the world are leery of using temporary workers and other contingent labor, but they will have to get over their reluctance if they are to thrive during an economic recovery, according to employment services firm Manpower Inc .

Manpower’s survey of 41,000 employers found 62 percent do not view so-called contingent workers — temps, contractors, consultants, outsourced labor and other non-permanent workers — to be a key element of their workforce strategy.

Instead, employers who use contingent workers most often are filling seasonal demand or replacing staff on leave, the survey found. Other reasons, such as screening candidates for permanent positions or working with limited budgets, were cited by fewer respondents.

Globally, 54 percent of employers do not use contingent labor at all, Manpower found.

The next economic recovery will present a competitive advantage to employers who think strategically about their workforce, including their use of contingent labor, said Manpower Chief Executive Jeff Joerres.

“We’re starting to see a separation of those that have finely tuned their workforce strategy, and those that are doing the boat rises with the tide sort of thing,” Joerres said.

Strategic planning is common among Manpower’s large clients, especially in technology and telecommunications, where contingent labor can be as much as 20 percent of the total.

“The Dells, the HPs, the IBMs, have taken good, hard looks at this. If you put a Rubik’s Cube in their hands and the colors are all mixed up, they can turn it to the right side the fastest in terms of their workforces.”

COMPETITIVE EDGE

Demand for short-term or contract workers typically falls early in a downturn as employers try to avoid cutting salaried staff, so companies like Manpower that provide such workers act as a leading indicator of the labor market.

They are also a leading indicator later, on the way up, when those same employers avoid hiring full-time staff as they await clear evidence of returning demand.

In the United States, temps are less common among small- and mid-sized businesses. Overall, fewer Americans work as temps than before the recession: about 1.4 percent, versus 1.8 percent at the peak in early 2008. Such declines are typical, and the temp penetration rate could set a record during recovery, according to Manpower.

That recovery, however, may still be a ways off. Friday’s October jobs report is expected to show the U.S. unemployment rate rising to 9.9 percent, with another 175,000 jobs lost outside the farm sector .

Still, U.S. employers have an edge versus overseas rivals because they operate amid less restrictive labor laws, according to Manpower.

“The biggest thing that actually happens coming out of a recession is reconfiguration of the workforce,” Joerres said. “That is the biggest advantage that a U.S. company has, because of its ability to take people out or in, compared to the Europeans. That’s typically why we’re first out of cycles.”

Companies do not become clever users of contingent workers overnight, Joerres said. Now, awaiting an expected recovery in demand, is a good time to practice and develop strategy.

“A recovery does have a tidal wave effect, particularly with your workforce,” he said. “Mid-2010 is when we start to see much more robust demand. The tidal wave should be coming.”

(Editing by Maureen Bavdek)

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