DENVER--(BUSINESS WIRE)--A new report from IQNavigator shows that UK temporary labour rates for clerical, IT and professional roles increased significantly and more than US rates in 2011, reflecting increases in the UK Value Added Tax (VAT) and National Insurance (NI), as well as UK inflation rates. The data comes from IQNavigator, the leading services procurement solution provider for the Global 2000, and is based on actual hourly rates paid to staffing agencies by large private-sector enterprises that proactively manage their temporary labour spending.
Factors Affecting UK Temporary Labour Rates
In 2011, the most prominent factors contributing to the increase in UK temporary labour rates are the VAT rate increase, national insurance contribution increase and inflation rate.
- Inflation – In the period covered by the UK Office IQNdex (since January 2010), the UK has experienced an average annualised rate of inflation of 3.8 percent, which has exerted steady upward pressure on temporary worker rates.
- VAT Increase – On January 4, 2011, the UK VAT increased from 17.5 percent to 20 percent, and VAT is included in the hourly rates that enterprises pay.
- National Insurance Contribution – Effective April 6, 2011, the UK National Insurance (NI) contribution by employers was increased by 1 percent of wages. As with VAT, the NI is also included in the hourly rates that enterprises pay.
Together, these factors explain a significant part of the increases in the UK Office IQNdex during the first half of 2011. Starting July 2011, the IQNdex has been fairly steady (see Graph 1).
UK and US Compared
Comparing the UK Office IQNdex to the US IQNdex for the same job categories and timeframe shows that changes in rates have been similar in shape but have seen much higher increases in the UK than in the US (see Graph 2). Much of the difference can be explained by the factors described above. The average rate of inflation in the US over the past two years has been lower than in the UK (2.4 percent versus 3.8 percent); once this difference is accounted for, it appears that core temporary labour rates have been increasing 2 percent faster annually in the UK.
“As a new and regular tool for senior HR, Procurement and General Management executives, I’m sure the IQNdex is going to prove very interesting and useful. The first report shows that despite the UK economy softening, cost pressures from VAT and NI rises, and general inflationary pressure, are leading to quite significant increases this year in the rates paid for interim staff,” said Peter Smith, editor & co-managing director, Spend Matters UK/Europe. “Hiring firms need to be looking at what they can do to moderate such increases, which in turn requires good information, tools and processes to manage this spend category effectively.”
“Based on transactional data rather than surveys, IQNdex reflects actual market-clearing price changes for temporary labour,” said John F. Martin, CEO of Emerging Markets for IQNavigator. “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.”
IQNdex Description
IQNavigator’s SaaS application is used by leading global companies to manage their temporary workforce and services spending in nearly 50 countries. This flow of millions of assignments gives IQNavigator direct and timely insight into actual market rates. Following the IQNdex US launch in April 2011, IQNavigator has extended the index to the UK office temporary workforce, which includes the job sectors Clerical/Admin, IT/Technical and Professional/Managerial.
IQNdex tracks the total hourly rate paid by temporary labour buyers, including the wage rate, statutory costs paid by the agency and the agency markup. The buyers reflected in the index are IQNavigator clients in the UK and are typically well-managed programs that closely monitor and proactively control their spending on temporary labour.
Looking forward, the next few months will show if the Agency Worker Regulations, which became effective on October 1, 2011, will have an impact on temporary labour rates. IQNavigator will publish an overview of the UK Office IQNdex each quarter at www.IQNtelligence.com. In addition, IQNavigator clients have access to a more complete set of the benchmark and rate information upon request.
About IQNavigator
IQNavigator provides software and services that help the world’s best companies manage their extended workforce and procured services in a smarter way — putting the emphasis on “IQ” by giving companies comprehensive visibility into and control over the way they procure services and utilize their extensive non-employee workforce. For more than a decade, IQNavigator has been an innovator and leader in providing the software solutions and managed services that address issues inherent with services procurement and extended workforce management, turning those challenges into opportunities for companies to become more nimble, reduce risk and save millions of dollars. For more information about IQNavigator and how its industry-leading offerings such as IQNtelligence are helping many of the world’s most respected companies, visit www.IQNavigator.com.
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