Government urged to think carefully about new regulations

According to the organisation, recent improvements in unemployment figures could be halted if regulations adding to the cost of using temporary workers are brought in.

The comment follows the publication of unemployment figures from the Office for National Statistics (ONS) which revealed the number of people out of work was 450,000 lower than anticipated.

Katja Hall, CBI director for employment policy, said: "One major factor behind [the lower figure] is the flexibility of the UK labour market, which allows companies and their staff to take action quickly to protect jobs and create new ones to meet upturns in demand.

"That is why we are urging ministers to think very carefully about regulations to come into effect next year which will add to the cost of using temporary agency workers."

Employment agencies assist more than one million job-seekers in gaining employment she points out. "Ministers must not undermine this important means of job creation," she added.

Although the majority of agency assignments are currently for less than 12 weeks, 45% are for longer. Employers may limit these to less than 12 weeks so that they don't have to implement the regulations, or worse still they may drop the use of contact staff completely thus putting a heavier workload on their current permanent workforce.

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