The government has not properly thought through what the consequences of the 2012 pension reforms will mean for temporary worker agencies and the UK’s flexible labour market, according to a report released today by the British Chambers of Commerce (BCC).

 

From 2012, all workers will be auto-enrolled into a qualifying pension scheme but they can opt-out after the initial enrollment.

 

The report argues that temporary workers, who are twice as likely to opt-out as permanent employees, should not have to go through the process of opting-out every time they start a new assignment. The administrative costs of doing this, which the current proposals suggest, are so severe that there is a real risk of pricing temporary workers out of the market altogether as agencies defer their extra costs onto their clients.

The BCC recommends that rather than going ahead with reforms which promote the continuous process of opting-out; agency workers should only have to opt-out once every three years. This would dramatically reduce the overall administrative burden on agencies and avoid the added costs being passed on.

25 per cent of all UK businesses use agency workers, with this figure rising to over 1 in 2 for the largest firms.

Commenting, David Frost, Director General at the British Chambers of Commerce, said:

“It’s logical to suggest that temporary workers should not have to opt-out after each assignment they take on. The administrative costs of doing this are so high that they risk pricing temporary workers out of the market.

“The government must stop thinking of these reforms in a bubble. Put in the context of the other changes that will be going on around 2012; pension reforms, the implementation of the temporary agency workers directive and the increase in National Insurance Contributions, this could have a devastating impact on our essential flexible labour market.”