Reasons why labour hire is popular with many businesses

There’re several reasons why temping as a service has grown to become an entire industry – the labour hire industry. Labour hire offers the following:

  1. Workforce flexibility. Many businesses face periodic fluctuations in demand, meaning their labour requirements keep shifting throughout the year. Labour hire gives these businesses the ability to adjust their workforce to match the current labour requirements of the operation. This ensures that companies have adequate workers when they need them and that they don’t become overstaffed when labour needs fall back to normal levels after periods of peak activity.
  2. Specialised recruitment. Labour hire firms are in essence recruitment agencies that provide additional services. As such, they are specialised recruiting entities with strategies and systems in place to enable effective and efficient recruitment of employees. This makes them better at recruiting than the majority of businesses whose core functions lie elsewhere.
  3. On-the job trials. As was the case when labour hire was in its infancy, this labour arrangement gives employers the opportunity to test potential employees on the job before committing to hiring them full-time. This way they reduce the risk of hiring a person who is not suitable for the role or hiring permanently for a role that will only last for a short time.
  4. Emergency cover. Labour hire provides temps who can fill in for absent workers on short notice ensuring that businesses that use the labour solution do not suffer downtimes as a result of labour gaps.
  5. Access to diverse skill sets for projects. For skills that are only needed for a short and indefinite amount of time, labour hire enables companies to access them without having to employ permanently for a skill set that is only needed for a short period of time.

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History of labour hire

In the beginning

While the term “labour hire” is relatively new in Australia, the concept of labour hire has been around for quite a while now. The use of companies and agencies specialising in the provision and supply of workers to client organisations and companies can be dated as far back as the 1950s.

“Temping agencies” have for a long time been providing workers to help companies cope with temporary employee absences and fluctuations in demand. At their emergence, these “primitive” labour hire agencies only provided temps for administrative, clerical and other white collar positions – roles that generally needed nothing more than standard administrative and secretarial skills to perform.

The 70s to 90s

Over the years, these firms slowly but steadily grew as the labour arrangement became increasingly popular with many businesses and organisations. It was not until the 1970s and 1980s, however, that labour hire really begun to pick up steam. At this time there weren’t many fully fledged labour hire companies. Instead, labour hire as a service was provided by regular recruitment agencies as an alternative to permanent employee placements.

Recruitment firms also used labour hire in these early days as a way for clients to try-out prospective employees before they decided whether the employee would make a good fit and hire them permanently. If the employee impressed during their trial period (or on-hired period), the client company would pay the recruitment-labour hire agency a one-off fee and keep the worker as a direct employee.

By the 1990s, many of the recruiting firms doubling in the temping business had widened the range of staff they provided to cover roles that were well beyond the office temps they originally provided. It’s at this time that fully fledged recruiting agencies (similar to what we have now) begun to take over the sector – and thus the beginning of the ‘pure’ labour hire industry.

Teething issues

The period between 1990 and the beginning of the new millennium saw the industry experience exponential growth. In 2002, the Australian Bureau of Statistics estimated that about 290,100 employees were on-hired staff with the worth of the industry being placed somewhere close to $10.2 billion.

Of course, like any other nascent industry, labour hire has faced some teething issues; most of which have been ironed out over the years or are currently being worked on by the industry players in collaboration with the various stakeholders. The ultimate goal being to have a labour arrangement that provides flexible labour for businesses to enable them to maintain competitiveness in today’s cutthroat business environment while providing fair employment to workers.

Labour hire came about as a solution to the need for a flexible workforce that could adapt more fluidly to the ever changing business world. As the business world grows ever more dynamic, you can expect labour hire to continue playing an important role in the provision of workforce solutions in Australia and around the world.