Often overlooked, freelancers actually play a pivotal role in the UK’s economy. Not only do they pick up the slack during periods of heavy workloads, but they also provide outside expertise and experience to crucial business initiatives.
 
The value of freelancers is being recognised today because the 23 November has been designated as National Freelancers Day. The Professional Contractors Group (PCG), which represents the UK’s freelancers, consultants and contractors, established this day to help gain wider recognition for the contribution that freelancers, consultants and contractors make to the business environment.
 
Already freelancers have become hugely important as the country tries to fight its way out of recession. Carole Thorn, Human Resources Business Partner at Thales, the UK’s second largest defence electronics supplier, says: “During the current economic downturn, freelancers can sustain businesses in their operations when there is a problem with staffing until the economic situation improves.” Currently, an estimated 1.4 million are working as freelancers in the UK. They span a variety of industries ranging from journalism, IT, engineering and finance to social work and human resources.
 
Anne Mulliner, Head of Resources at Carillion, a leading engineering and construction company, is also supportive of freelancers. She says: “From my experience interims have always been very professional and have worked out what they needed to do in order to support the business. It has always been a very positive experience.”

Business success in the upturn will be defined by companies’ human resources functions, with top performing companies making long-term plans now, delegates at the Chartered Institute of Personnel & Development (CIPD) conference were told.

Peter Cheese, former managing director of management consulting firm Accenture, said HR departments become far more critical during a recovery: “Companies need to move from thinking in terms of a short-term crisis to long-term planning for workforce strategies, and those who do are going to be the ones that outperform the competition when we go into the next part of the cycle.

Research from Accenture found human capital infrastructure, career development and succession planning were the pivotal difference between companies performing in the top quartile of business results and those in the bottom. Here, these processes were highly mature, as opposed to only moderately mature within the bottom quartile of the companies measured.

The key to HR strategic planning is increasing the investment in education, said Cheese. He recommends implementing a strategy straight away to avoid the dangers of ‘ghost redundancies’ by employees who will have more opportunities available to them when the economy recovers. “At the moment there’s an ‘attitude of gratitude’ from employees, that doesn’t mean they are going to stay with an organisation in the long run,” said Cheese.

Marketing a companies’ employer brand at the different segments of its workforce is also critical, and Cheese recommended an individualistic approach to flexible working, reward programmes and career models.

Cheese told delegates that the recession provides an excellent opportunity for change in these areas.

The number of jobs posted or refreshed on the Totaljobs Barometer has risen for a second consecutive month. The barometer also showed that each job received nine applications, down from 10 in June to September.

Job postings rose in 26 of the barometer’s 33 industry sectors. Healthcare and nursing jobs were up 20% to 21,000, while applications dropped in 16 sectors.

Regionally, Scotland and the North-East recorded the biggest rise in jobs, while East Anglia, the South West and Northern Ireland witnessed a drop in job postings.

It’s not just the UK where the signs are increasingly positive. For example, in Germany, after losing almost 280,000 workers because of the recession, the temp market is recovering, although the number of temps has yet to reach its pre-recession levels.

As we come towards the end of a turbulent year for the UK jobs market, newly published research has provided a ray of hope for jobseekers across the country. Whilst employers are still being careful about levels of pay, recruitment freezes that have affected UK organisations are beginning to thaw and some of the dramatic changes made to working patterns during the recession are now being eased.

According to a study conducted by executive recruiter Harvey Nash and the CBI, half of British employers are planning to freeze pay altogether, whilst just four per cent are planning to offer above inflation pay rises. 

However, the number of firms operating recruitment freezes has dropped from just under a third (61%) in the spring to 37%. The research also discovered that fewer employers are currently utilising cost cutting measures that were adopted earlier in the year, such as extended shut-downs, cuts in overtime, and bringing forward holidays. 

Albert Ellis, Chief Executive Officer, Harvey Nash, comments: “This downturn has required tough decisions and strong leadership from managers at every level of every organisation. On a positive note, there have been many examples of employers and employees working together to minimise the impact of the recession on jobs, skills and pay. 

“Worryingly, however, there have been some isolated cases recently where executive pay is out of sync with the economic reality and the public mood. In light of the thaw in the recruitment freeze we urge continued restraint on executive remuneration ensuring that a return to sustainable economic growth is not put at risk.” 

John Cridland, Deputy Director-General, CBI, adds: “As unemployment has risen, businesses and staff across the country have had to adapt to new economic realities. Pay cuts to preserve jobs are part of that reality. Given the alarming state of the public finances we must see similar pay restraint in the public sector. 

“The new spirit of co-operation between employers and workers will be a real fillip for UK competitiveness as we return to growth, delivering more flexible working and a welcome improvement in the work-life balance.”

Companies are optimistic that 2010 will signal an end to pay freezes, according to newly published research. Data from Mercer’s Salary Indicator (MSI) of Q3 2009 reveals that 76% of UK blue chip organisations will not be consider implementing pay freezes in 2010. This highlights a clear change from the first two quarters of 2009, whereby companies used pay freezes as an immediate reaction to the downturn.

The data reveals that most organisations considered or instituted some type of pay freeze in 2009, with 22% introducing a blanket freeze and 32% applying a freeze to specific employee groups.

Research from the consultancy also discovered that organisations were optimistic about next year – only seven per cent of firms had already instituted a blanket freeze for this period, whilst only 5 per cent were considering it and 12% were considering a freeze for specific employee groups.

Organisations also revealed that there would be less emphasis on the cash element when rewarding staff in 2010, and more of an onus on career development and elements of work/life balance. 61% of respondents said they would put more emphasis on high potential employees in 2010, and 56% of companies will put more emphasis on employee engagement.

Hannah Perera, Principal in human capital business, Mercer, comments: “Cash, tarnished by the role of bonuses in the economic slump, is no longer king in the eyes of employers. It’s being usurped by an emphasis on employee engagement and a focus on motivating specific high value employees. Whether this ‘new normal’ approach continues when the economy gathers pace again remains to be seen”.

Nov 12th 2009
From The Economist print edition

Accountants grapple with the fallout over “marking to market”

ACCOUNTING has become political. Fair-value rules, which require assets to be marked to market prices, are blamed by some for exaggerating banks’ losses. Although it will take years to establish whether banks’ accounts have painted too bleak a picture, the rows are already in full swing. Confidence in “efficient” market prices has been hammered, as has the principle that accounts are designed mainly for investors. The public has a big interest in banks’ books now, too. “There are competing paradigms about what financial statements are for,” says John Hepp of Grant Thornton, an accountancy firm.

The International Accounting Standards Board (IASB), which sets rules for most countries apart from America, has made tactical concessions to avoid the nightmare scenario of banks and politicians writing the rules themselves. On November 12th it issued new rules for financial assets that will be optional from this year and mandatory from 2013.

Loans, or securities similar to loans, will be held at the price banks paid for them, provided the bit of the firm that owns them is not engaged in trading. Everything else will be held at fair value. Most observers, including the IASB, reckon this will cut the proportion of assets held at fair value, which is about 50% for big European firms. Critically, for those who believe most firms try to warm up, if not fully cook, their books, the notes to the accounts will disclose all assets at fair value.

The IASB also proposes a rejig of how bad debts are recognised. Instead of booking losses as things go sour, they will be spread over the life of a loan, although the draft rules do not go as far as Spain’s system of “generic provisions” which leads to more reserves being built up in good times than in bad, smoothing profits even more. The IASB also wants to end the practice of banks marking the price of their own debt to market, though details are not agreed.

The IASB has made big concessions. Yet it is the European Commission which decides if the European Union adopts the standard-setter’s new rules. The G20 has called for independent, global standards, that “reaffirm…the framework of fair value”, but a few countries, notably France, are hostile. In a letter to Sir David Tweedie, the IASB’s chairman, the commission said the rules “may not yet have struck the right balance”. The IASB will probably plough on and hope the commission backs down.

The IASB’s position has been weakened by differences with the Financial Accounting Standards Board (FASB), which sets rules in America and which wants to merge eventually with the IASB (although a recent survey found only 24% of American finance executives supported this goal). The FASB has yet to produce proposals on financial assets and is more wedded to a fair-value regime. It also faces a proposal in Congress that could allow America’s new systemic-risk regulator to suspend the rules. Strength comes from unity—without it, accounting risks becoming just another tool for governments to attempt to manage the economic cycle.