☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
23 December 2011 | Adam Leach
Increases in inflation, VAT and National Insurance have resulted
in the rates paid by UK companies for temporary labour rising by an extra 10.9
per cent since January 2010.
The UK Office IQNdex,
published this month by IQNavigator, reported
that the “robust” rise in temporary worker costs for UK companies was mainly
down to tax and inflation, rather than as a result of increased competition in
John Martin, chief executive officer of emerging markets for
IQNavigator, said: "We were surprised by the increases that enterprises
saw in the first half of this year. However, they are largely explained by the
additional statutory costs of employment earlier this year."
The index, which is based on figures from HM Revenue & Customs
and the UK Office for National Statistics, reported that since January 2010
rates have increased overall by 13.6 per cent. Calculating the factors around
the increase, the report cited annual inflation of 3.8 per cent a year over 23
months, which was responsible for more than half of the increase, and a 2.5 per
cent increase in VAT since January 2011, which directly increased the rate
firms paid for temporary workers.
The report also cited the one per cent increase in wage
contributions to National Insurance, effective since April, as having
contributed because statutory costs are generally passed on to the client by
companies have to pay higher than inflation rates for temporary workers, they
are also under increasing pressure to treat temporary workers the same as
permanent staff. Since
October 1, temporary workers employed for 12 weeks or longer are given the same
rights, such as pay and terms of employment, as those on permanent contracts.
However, if the employee takes a break of over six weeks, provided it is not
certified sick leave for no more than 28 weeks, statutory/contractual
maternity, adoption or paternity leave, or time off for public duties
(including jury service), then the term is reset.