Demand for contractors set to increase in spite of hirers’ confidence in economy falling

Demand growing for work as a contractor

Short-term forecast demand for temporary and contract workers increased by three basis points to a net positive five percent over the May to July quarter. This growth in demand for contract work is according to new data from a recent survey of 609 UK employers compiled by a leading recruitment industry body.

Demand for temporary or contract work from independent contractor rather than full-time employee was much higher amongst small and medium enterprises (SMEs) than at larger organisations. Forecast demand for contingent workers in the previous quarter of February to April was positive two percent net.

The news that most employer look to hiring a contractor will be well received by many independent contractor or self-employed workers, amid a contraction in the United Kingdom’s gross domestic product (GDP) last quarter. Also, the continuing economic precariousness driven by the uncertainty over the form of the UK’s departure from the European Union will take.

Demand for permanent staff or full-time employee was also expected to increase, due to forecast demand increasing by three basis points over the short- and medium-terms quarter-over-quarter, from positive sixteen percent to positive nineteen percent in the short-term and from positive eighteen percent to positive twenty-one percent in the medium term.

However, the JobsOutlook survey by the Recruitment and Employment Confederation (REC) in association with ComRes also measures employer’ confidence levels in the UK economy as a whole. This dropped one basis point from the previous rolling quarter to net minus twenty-six percent. This is only five percentage points lower than the record level of minus thirty-one percent published in April, relating to the January to March quarter.

For some idea of how confidence levels have dropped over the past three years, confidence levels published in JobsOutlook in June 2016, shortly after the results of the referendum on leaving the European Union (EU), stood at positive twenty-six percent, some fifty-two basis points lower than in the most recent quarter.

Of potential concern to those who work as a contractor will be the data that suggests more hirers are transferring workers from temporary contract position to permanent employment role, with the proportion of employers of temporary workers transferring at least half of them into permanent employment posts each year increasing eight percentage points, from fifteen percent in May to July 2018 to twenty-three percent over the same time period this year.

Commenting on the results of the JobsOutlook survey, Tom Hadley, director of policy and campaigns at the REC, said: “Our flexible labour market continues to be one of the strongest elements of the UK economy. This most recent survey shows employers are still looking to take on both permanent and temporary workers as they seek to maintain stability amidst the Brexit uncertainty.

More employers also seem to be trying to transfer their best workers with independent contractor status into permanent full-time employment roles as candidate shortages continue to bite across many sectors. This means that those work as a contractor have higher chance of benefiting from permanent employee benefits as they start to get full-time work.

“These skills shortages are especially acute in sectors like health and social care. With over one hundred thousand vacancies in the NHS and staff already working at full capacity, the government’s recent announcement on ending freedom of movement has come at the worst possible time. EU workers are an integral part of our health and social care system and the UK workforce as a whole. It is essential that the government has in place a sensible transition towards an evidence-based immigration policy to help reassure employers and EU citizens.”

Other results included forty-six percent of employers of permanent staff expressing concern over availability of suitable candidates when hiring an employee, with health and social care skills being the rarest, and also seventy-seven percent of hirers indicating that they had little or no surplus capacity in their workforce. Forty-five percent of public sector employers surveyed had zero spare capacity.

The UK employment rate for the April to June quarter was 76.1 percent, the joint-highest on record since comparable records began in 1971.

The JobsOutlook report is produced by the REC in partnership with ComRes. ComRes interviewed 609 UK employers involved in hiring by telephone between 7 May and 25 July 2019.

29th August 2019.