Temporary labour is an expensive requirement and large area of spend in most public sector organisations. This could be due to structural changes or recruitment struggles in some of the key roles. It’s then really easy to look at these large spend levels and see the potential and opportunity to make large savings.
However, it may not be that simple. Here’s a few things to think about before you make changes to your temporary labour contracts:
In all honesty, the recruitment rates already agreed in most local authorities (including directly sourced contracts and most frameworks) are already extremely tight. The agency fees and the managed service provider (MSP) fees, are the lowest they’ve been in local authorities, and we’re then seeing an increase in temporary labour that isn’t bought through your contract (off-contract spend).
If an agency is getting paid a higher search fee, and a candidate is getting paid a higher daily rate from another customer, they’re likely to place the individual into the other customer. The key is to make sure you have strong levels of communication between your hiring managers and the MSP. This will allow you to discuss the ability to change the pre-agreed fee and/or workers wage to make sure you recruit the most appropriate candidates for those hard to fill roles. This type of communication will support you in decreasing off-contract spend, where hiring managers are using other providers outside of the contract to fill roles – it’s likely they’re getting charged much higher rates than through your contract.
You should try to think about the approach for temporary labour within our organisation, why do you need the worker? Do you really need the worker? How long do you need the worker for? Has the worker been with your organisation longer than planned? These are key questions you should be asking yourselves to look at reducing the spend on temporary labour. This is where significant savings can be made.
Work better with your managed service provider
It's really important to work well with your managed service provider to look at ways to reduce the requirement for temporary labour, as they understand the market in depth. But you might think, why would they do this if they’re going to lose that spend - there’s no incentive for them?
We’ve seen some local authorities work excellently with their MSP to look at alternative ways of working to make sure that the MSP can still make a profit while helping you deliver the savings you need to achieve. Some organisations have worked well with the MSP on alternative HR projects.
In summary, there’s an opportunity to deliver savings within temporary labour across all public sector organisations, but it’s about managing the potential savings in the correct way to make sure you don’t see the spend increase in other areas of your organisation.