July 25, 2016 – New Zealand ranked as the highest-ranked country for contingent workforce operations in 2016, followed by Singapore and the Philippines, according to the fourth contingent workforce index (CWI) released by ManpowerGroup. The U.S. fell to sixth place from second on the list, and Canada dropped to seventh from third.
The index measures and tracks the relative ease of sourcing, hiring and retaining a contingent workforce in 75 countries. Each nation in the index is assessed on 50 market conditions and statistics that influence contingent workforce conditions. Countries’ standings reflect a cumulative index ranking based on workforce availability, cost efficiency, regulation and productivity. In the 2016 index, weighting of the volume of skilled workers within a market has increased significantly from 2015.
The U.S. drop was based largely on higher costs compared to other countries. However, it ranks seventh globally in both regulation and productivity and third in availability. Higher weighting of the large American workforce and positive geopolitical factors are balanced by the higher cost of these workers with regard to overtime, profit, taxes and higher engineering and technology wages, among other cost-related metrics, the report found.
Availability of Talent
This year’s report findings mark New Zealand’s second consecutive year at the top of the list. The top five markets for 2016 do not feature any countries from the Americas as the workforce volumes for countries in the other regions elevated them to the top based on more favorable ‘availability’ scores.
“Over the past year, we saw a shift in priorities that resulted in a change in the 2016 weighting attributed to workforce size,” said Kate Donovan, senior vice president of ManpowerGroup Solutions. “Employers are feeling the talent shortage. Availability of contingent workers, as well as skilled labor, is gaining prominence. As a result, we saw countries like China and India re-emerge into the top 10 markets for availability of talent.”
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“Compared to last year, the 2016 CWI allows for a greater influence of skilled contingent workforce availability when it comes to determining locations for growing business,” said Raleen Gagnon, director of market intelligence for ManpowerGroup Solutions. “Weighting of specific metrics is adjusted annually to highlight the most influential factors when considering new markets for contingent labor opportunities. The increased focus on availability has resulted in concessions on lower wage markets, as employers are considering non-wage based labor costs such as benefits and taxes due to their increasing impact on the total cost of labor.”
- APAC: The greatest shift in the APAC region is the movement of Singapore, the Philippines and India back into the top five in 2016. New Zealand ranks highest of all countries for regulation of contingent workforce engagement practices, including geopolitical factors, holding its top ranked position in both the region and globally for the second year in a row. Hong Kong also appears in the top five.
- AMERICAS: The U.S. and Canada hold the top two positions in the Americas region for the third consecutive year. The U.S. has a very slight lead over Canada due to a fall in Canada’s availability ranking based on the higher weighting in 2016. Columbia, Mexico and Puerto Rico also join the top five for the region.
- EMEA: Israel maintains its top ranking in the EMEA region in 2016, moving up from fourth in 2014. Despite the change in availability rankings, Israel remains in the lead overall ahead of Ireland, the U.K. and South Africa. Both South Africa and Turkey advance to the top five nations for 2016, with high marks in productivity.
Here are the 2016 Top Markets for Contingent Workforce Engagement and Their Index Levels:
Numerous other reports have shown a rise in companies using the services of temporary or contract related employees, and many recruiters based in London said they expect a keen rise in the use of contingent workers due to the country’s recent Brexit vote. Market uncertainty, they theorize, is already leading hiring managers away from making commitments to full time employees and all the associated costs that come with them.
A Growing Trend Toward Flexibility & Adaptability
According to a recent report released by CareerBuilder and Economic Modeling Specialists International, hiring temporary and contract employees can help businesses sidestep talent gaps and remain nimble. The study shows more companies will be tapping into this labor segment, with temporary employment expected to add 173,478 jobs from 2016 to 2018 – an increase of 5.9 percent.
“Today, nearly three million people are employed in temporary jobs, and that number will continue to grow at a healthy pace over the next few years as companies strive to keep agile in the midst of changing market needs,” said Kyle Braun, president of CareerBuilder’s staffing and recruiting group. “Opportunities are opening up in a variety of occupations and pay levels, and this is a trend we’re seeing in a wide range of industries and company sizes.”
Another separate report by CareerBuilder found that 47 percent of employers reported that they plan to hire temporary or contract workers in 2016, up slightly from 46 percent last year. Of these employers, more than half (58 percent) plan to transition some temporary or contract workers into full-time, permanent roles.
“Temporary employment benefits both sides of the labor market. Hiring temporary and contract workers helps companies stay flexible and adapt quickly to changing market demands,” said Mr. Braun. “For workers, it opens doors for those who want to utilize various skills, build relationships with different organizations and explore career options.”
These figures coincide with similar findings by The Execu | Search Group. Its ‘2016 Hiring Outlook: Strategies for Adapting to a Candidate-Driven Market’ report found that 26 percent of hiring managers surveyed plan to increase hiring of temporary employees in 2016.
In addition, a recent Adecco study, ‘Definitive Guide to Building a Better Workforce,’ found that 67 percent of companies use contingent labor to enhance their workforce and close talent gaps. The study surveyed 536 C-suite executives across the U.S. regarding the types of talent they need, skills that are most difficult to find, how they are using contingent labor and progressive recruiting methods to enhance their workforces, employee retention techniques and more.
The report found that best-in-class companies are 44 percent more likely to increase the size of their temporary workforce in the next 12 to 24 months. The report also found that 80 percent of employers agree that the U.S. skills gap is a real challenge, and it provides insights into how different companies conceptualize and address this gap in talent. Part of the reason for the increased use of temporary workers: companies are having difficulty finding quality talent.
“With the U.S. unemployment rate at an eight-year low, competition is fierce for skilled talent. That means it’s more important than ever that companies resolve to invest in the recruitment and development of top talent and explore creative, progressive staffing solutions,” said Joyce Russell, Adecco Staffing USA president.
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media