At a time when business confidence has plummeted to a record low as a result of Brexit, around half of the companies engaging freelancers and contractors have highlighted the importance of temporary workers in times of uncertainty.
* Update: at the time this article was written, the off-payroll (IR35) reforms were due to be implemented on the 6th April 2020. On the 17th March 2020, the UK government announced that it would be deferring the reforms to the 6th April 2021 to help businesses and individuals during the COVID-19 crisis. You can read more about this here.
The latest research carried out by The Recruitment and Employment Confederation (REC) reinforced the widely held view that independent professionals are a valuable resource in challenging times. 47% of hirers described agency workers as important, up from 38% just a year earlier. On reflection, maybe it’s more of a surprise that this figure isn’t higher. However, that’s not to say that employers were reserved when voicing their general appreciation of the temporary workforce to REC.
74% regarded contractors’ ability to help them cope with peaks in demand as quite or very important, while 70% paid tribute to these workers’ availability when covering leave or absences. Additionally, more than half (58%) said they engage freelancers to help them deal with fast-changing organisational requirements. 51% stated that temporary workers provide important short-term access to key strategic skills.
That said, due to Brexit, the picture REC’s research paints isn’t an entirely positive one, as REC’s Chief Executive, Neil Carberry explained. “A year of falling business investment and weeks of Brexit inertia mean no-one should be surprised that employers’ confidence in hiring for their own business is now dropping. For months, businesses have told us that they were concerned about the general outlook for the economy – it is clear to us that this concern is now closer to home. Lower use of temporary labour is a sign of lower demand.” REC’s data revealed that failing confidence in the economy has resulted in nearly 18% of businesses to state that they expect to decrease their use of temporary workers in the next three months.
Differences between the public and private sectors
There were, however, stark contrasts between private and public sector businesses, with the former recording a positive outlook, albeit one that was largely overshadowed by the public sector’s intention to scale back on engaging freelancers and contractors. It’s a similar story with regards to firms’ hiring plans for the next 4 to 12 months, with the research showing a 21% drop compared to last year. Again, the private sector sits in positive territory, but the overall score is hampered by the public sector.
Such noticeable sector differences could be a long-lasting hangover from IR35 reform in the public sector, which has resulted in the organisations that engage contractors being made responsible for setting the tax status of independent professionals. It’s widely acknowledged that the public sector has had trouble coping with IR35 changes. With further reform due, the pressure is now on medium and large companies in the private sector to prepare.
A robust jobs market
Regulation challenges aside, agencies will no doubt take note that 35% of employers expressed concern over the sufficient availability of freelancers and contractors, which is the same level compared to last year. It’s clear that despite hiring intentions being notably lower, businesses still want to fast access to high-quality independent professionals. In what is understandably a cautious hiring climate, construction contractors and agencies placing these workers will at least be pleased to hear of the 43% increase in anticipated demand for these individuals.
Despite tough economic circumstances, REC’s Chief Executive, Neil Carberry, remains optimistic overall, praising the UK’s “robust” jobs market in which “even now, recruiters are finding people new jobs and helping companies compete.”
Mr Carberry did, however, urge politicians to resolve Brexit urgently, which he views as something well within the government’s control. He said: “We cannot delay forever. It is in politicians’ power to make the weaker data we see today a blip. Our labour market is strong. Giving firms certainty about a future deal that supports trade, jobs and investment would get the UK back on track.”
While REC’s insight does suggest firms view freelancers and contractors as important assets in uncertainty, there’s no doubt that a more stable economy, and one that benefits from a much-needed conclusion to Brexit, would see demand for independent workers rise once again.
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