By Claire West

Specialist recruiter Poolia has seen a switch in demand from temporary to permanent placements in January 2011 in stark contrast to the recruitment patterns 12 months ago. January 2011 permanent placements are up by almost 99% whilst short term opportunities are down by almost 10%, in comparison with January 2010.

One interpretation of this data is that businesses are shifting the emphasis of their recruitment away from a reliant on short-term workers in advance of the government’s cap on migrant visas, due to be introduced in April, in order to protect themselves from a shortage of a skilled temporary workforce.

Recent research by Poolia amongst a panel of recruiters in London suggests the government’s proposed cap on non-EU skilled migrant workers could be bad for business, increasing costs and leading to further skills shortages. The knock-on impact on UK employees could be the exact opposite of what the government hopes to achieve: squeezing hard-pressed businesses into a corner which could only be worse for job-seekers.

The government has announced that, from April 2011, it will introduce a permanent cap on visas issued to skilled migrants arriving to the UK from outside the European Union, restricting numbers to 21,700 per year, and introducing further conditions to limit entry to skilled migrants.

This new survey shows that many businesses are concerned that this policy will have a negative effect on recruitment, retention and costs. Almost half of those surveyed (45%) agreed the cap would affect their business. Only 16% think the cap is a good idea. Many - almost one in five respondents - are concerned the cap is the government’s way of being seen to be doing something without actually impacting prospects for Britons.

About a third of respondents (36%) said the cap is likely to bar entry to the UK for people whose skills and experience are already in short supply here, so it is unlikely to have an impact on UK employment levels. It will only mean more severe skills shortages and an increasing war for talent, resulting in a more volatile market and higher employment costs. This is particularly true for short term and temporary placements. About a quarter are worried about losing current staff if visas are not renewed, leading to higher recruitment and training costs, combined with loss of essential company knowledge.

Shaun Greenfield, Poolia’s Managing Director, said, “The message from clients seems clear: many don’t feel the proposed cap on skilled migrants will have a great deal of impact on UK jobs and it could cause employers severe problems. So the question is, why introduce it? The concern is that by squeezing the source of skilled workers, employers will face increased pressures, which could have an impact on cost, productivity and overall trading performance.”

He continued, “Non EU candidates account for 40% of the people we represent and place within London. Whilst the British and EU candidate base is of a good quality, the diverse skills and life experience that you gain from the Non EU candidate base stimulates the London talent pool. Although the government’s intentions appear to be good for British and EU candidates, one has to wonder whether or not the government will be able to replace the skills that London currently benefits from by employing Non EU candidates in a timely fashion.”