Hotels and restaurants are set to increase temporary recruitment but will hold off on permanent hires until confidence returns to the hospitality sector, according to Chris Williamson, an economist at Markit.

This week, hospitality recruiter Berkeley Scott reported a surge in demand for temporary staff.

The CIPS/Markit index for the services sector, of which hospitality is part, grew at its fastest rate in two years.

Williamson told Recruiterthat the reason for the increased demand for temporary labour was down to caution among hotels and restaurants over taking on extra costs in case there is a ‘W’ shaped than a ‘V’ shaped recovery.

Williamson says: “Employment is a lagging indicator. Look at what businesses are doing and what their outlook is for the next 12 months. You will see a further improvement in the employment trend as we move towards the end of the year.

“With the CIPS index, we break the service sector into six sectors, one of which is hotels, restaurants and catering, and the employment reading for this sector was the highest of all six sectors. That sector saw the weakest job culling.”

Marcus Peaker, partner for reward at PricewaterhouseCoopers, adds: “If there is an increase in activity in the sector, increasing temporary staff is a way of hedging your bets to allow you to meet that increase in capacity without permanently increasing your cost base. If the work dries up, it is lot easier to reduce your cost base than it is with a permanent hire.

“It is an indication of cautious activity. As confidence increases, it will reflect in more permanent roles. At the moment, firms are taking people on for specific projects and specific needs.”