Guarded employers prefer short worker contracts

People walk in line to register for the 2009 CUNY Big Apple Job Fair at the Jacob K. Javits Convention Center in New York March 20, 2009.

(Reuters) - U.S. employers, unwilling to commit to full-time hiring until they see a clear pickup in demand for their goods and services, are relying on short-term contracts to try out workers before offering them a job, staffing industry executives say.

The trend illustrates the high level of caution among employers, which is preventing a faster pace of jobs growth.

"Our clients, even if they're doing well, are not hiring unless they absolutely have to have resources," said Tig Gilliam, who heads North American operations for Adecco SA, the world's largest staffing company. "And when they are bringing resources on, they're still doing it on a contingent and contract basis first."

More workers are finding full-time jobs after fulfilling a short-term contract than by applying directly for a permanent position, Gilliam said. Six- or nine-month contracts are typical.

"No one's hiring unless they absolutely have to," Gilliam said.

Although more jobs were added last month than economists expected, the pace of U.S. jobs growth is not keeping up with population growth and is not enough to lower unemployment.

The economy added 103,000 jobs outside the farm sector in September and the jobless rate remained above 9 percent, the government reported on Friday.

U.S. temporary help services added 19,400 jobs last month, slightly below August's pace but ahead of July's, Friday's data showed. An uncertain economic outlook is helpful to temporary staffing providers as employers who need flexibility rely more on contingent labor. (Graphic on U.S. payrolls data: link.reuters.com/qaq34s)

SEPTEMBER RAMP-UP

Staffing companies reported a typical pre-holiday ramp-up in demand for manufacturing workers in September, as well as in areas including retail and customer service. At Adecco, that seasonal ramp-up was in line with typical years but not any faster.

Year-over-year growth in temporary services remains positive but is running below its pace earlier in the year, according to both Adecco and the world No. 2, Randstad.

If the United States were heading for a second recession, temporary payrolls would likely fall, so their continued growth suggests a double dip is not in the cards right now, executives say.

"We're still coming out of this recession," said Joanie Ruge, senior vice president and chief employment analyst at Randstad Holding US, who said Randstad currently has thousands of openings in engineering, technology, healthcare and other professional fields.

She, too, described a cautious mood in the marketplace.

"They're contingent, project-based jobs that could be for a month, could be for three months," Ruge said. "Employers are still cautious to hire these people permanently."