Irate ATSCo slams Government regulations

The Association of Technology Staffing Companies (ATSCo) has reacted with anger at newly revised Government proposals to regulate...

The Association of Technology Staffing Companies (ATSCo) has reacted with anger at newly revised Government proposals to regulate the operation of the private recruitment industry.

The trade body, which acts as a voice for agencies in the IT and comms sectors, said the proposals were "potentially disastrous" and would stifle labour market flexibility while threatening the Government's desire to make the UK an "e-commerce hub".

ATSCo was referring in particular to draft regulations released in their entirety for the first time by the DTI earlier this month, that aim to ban quarantine periods on "temp to temp" and "temp to third party" transfers over four weeks, and on "temp to perm" transfers over eight weeks.

But the industry has argued that a "freely negotiated" quarantine period of around 13 weeks is essential if agencies are to cover the "heavy upfront costs" involved in attracting and retaining specialist candidates. While most of the arguments have revolved around the issue of "temp to perm fees", industry players such as legal consultancy Lawspeed, have warned that it is the "temp to third party proposals" that are potentially the most damaging to smaller and medium sized agencies.

According to the firm, this rule will place the top 20 IT recruitment agencies - who currently account for 64 per cent of the IT market - in a position to force out smaller agencies with lower margins and preferred supplier arrangements.

ATSCo chief executive, Ann Swain, agrees: "If implemented, these regulations will herald an unprecedented period of poaching and predatory tactics in the IT industry. Smaller IT recruitment companies will be endangered, contractors will be bought and sold, and consolidation will drive out competition. Fewer agencies and increased charges will further restrict labour market flexibility at a time of a major IT skills shortage."

The proposals are now subject to a six-week consultation period and are due to take effect in summer 2001. Lawspeed is presenting a seminar on March 8 for those affected by the regulations. Further information and booking details are available by e-mailing info@lawspeed.com, or calling 01273 693 622.

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