The Impact Of A Downturn Economy On The Staffing Industry February 2009

Discussion Paper: The Impact of a Downturn Economy on the Staffing IndustryFebruary 2009Is North America in a recession? Although we are hearing of many company lay off’s and downsizing, Not everyone agrees on the state of the current many organizations and business leaders have adopted a wait and economic situation. Some would debate we are see attitude. If they are downsizing they are taking this opportunity not in a full blown recession but if we are, it is to prune away the non-performing employees in their organizations definitely not like previous ones, especially when allowing them to be more efficient, putting off expansions and freezing or canceling projects. More than ever we will continue to we are looking at the staffing industry.struggle to source top talent. “History does not repeat. But it When we look at the latest figures released from the Statistics Canada December 2008 Labour Force Survey we actually see does rhyme.” a gain in December in part-time employment and in 2008, all - Mark Twainof the employment increases were in part-time work. Part time work is where we capture Contingent Labour figures. “Full time” Bottom line: Every downturn is different. employment is defined as 30 or more work hours per week. Anything less is classified as “Part time” employment.There are several problems with trying to forecast a recession and many factors that impact this. The biggest being the lag in receiving Another challenge faced in the staffing industry is the continued data and the time captured in this data as well how quickly this data worker shortage. Baby boomers are retiring, and there aren’t expires. So where does this leave the staffing industry? The answer enough younger workers to replace them. Millions of baby boomers to this question really is quite simple; it is too early to tell the full -- people born between 1946 and 1964 -- expect to retire in the magnitude of the current economic problem. next few years and not enough GenXers will replace them. And it’s not just finding workers, it will be also finding qualified workers that If North America is in a recession, it has affected the Staffing presents a continuing challenge. Industry unlike any in the past. Staffing industry growth is highly sensitive to the health of the economy. Previous recessions would This demographic shift that we are witnessing in Canada has made have temporary and permanent employment drop just before the need for immigration critical to our future growth. Workforce the start of a recession and we would see a rise quickly after the migration continues to be a pivotal focus that each and every recession. Traditionally, the staffing industry has been a leading business leader will need to address. In a recent Monster.ca indicator of any kind of financial change in past downturns. The published article it was noted that, “Immigrants have represented 2001 recession was caused due to the fall of the technology stock almost 70% of the total growth of the labour force over the bubble and the decrease of business spending and investments. past decade. If current immigration continues, it is possible that Today, we are seeing a different picture, one that has been driven by immigration could account for virtually all labour force growth by a cash flow problem.2011.” Although temporary and contract employment has been flat over A misconception of note surrounds the perception that as a result the past year; when we look at the long term, the North American of the economic downturn, there is an abundance of new talent staffing industry has been growing faster than the economy mainly available in the work force. While there have indeed been lay offs because of it’s flexibility. Today’s workers want a flexible work life in certain sectors such as automotive and manufacturing, many of and businesses require it. Temporary help provides businesses with those individuals have specific skill sets that do not easily transfer a more flexible workforce with long-term controllable costs. As without a significant investment in training. What this translates to we all can agree today’s workforce is changing. Jobs, flexibility, for employers, is that while there may be more workers available in bridge to permanent employment, choice alternative employment this downturn economy, they may not posses the required skills, arrangements, and training – are all benefits staffing firms offer to education and competencies to fit all industries and particular today’s workers. Flexibility and access to talent is what the Staffing employer needs.firms bring to clients.