Perfect storm leaves contract hiring ‘falling off a cliff’

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    Contractors who have found themselves looking for new roles due to Off-Payroll or coronavirus related terminations are finding that recruitment has virtually ground to a halt, with permanent job offers being rescinded and scant contract jobs available, a recruitment industry body has warned.

    The Association of Professional Staffing Companies (APSCo) is calling on chancellor of the exchequer Rishi Sunak to speed up support to business after the results of a snapshot survey of their membership which recruits within professional sectors such as education, engineering, IT, finance and life sciences painted a picture of a “complete stall” on hiring.

    They welcomed the chancellor’s “unprecedented” package of support for business but warned that “fast access will be vital”.  The association’s data showed that:

    • Almost ninety per cent of recruitment firms said that up to fifty per cent of their contractors had already been terminated
    • Three quarters (seventy-six per cent) expect up to fifty per cent to be terminated by 29th March
    • Two thirds (sixty-seven per cent) of recruitment firms said that permanent hiring within their sector was on hold
    • Eighty-three per cent of recruitment firms were considering redundancy for their own staff
    • Three quarters (seventy-six per cent) said that help with salaries was the most important measure that the government could implement

    “Permanent starters in April and May are now being told that their role is no longer available and so candidates have resigned from other jobs and are now out of work.  Consequently, no invoices are being raised and so cash flow is a nightmare,” said one respondent. 

    Commenting on the survey results and on the chancellor’s measures, Ann Swain, chief executive of APSCo said:  “Recruitment is a service industry and so the biggest business cost is the salary bill – the Government pledge to fund eighty per cent of furloughed staff salaries up to a maximum of £2,500 is obviously very welcome but the key will be how quickly that can be accessed.

    “The clarity and simplicity of the rescue package whether that be loans, tax payment deferral or salary grants will be critical.  It is also likely that HMRC and other financial services organisations will have a critical need for staff to process applications and APSCo members have ideal candidates ready and waiting. 

    “The VAT deferment will help cashflow, one of the key issues for recruitment firms, and the fact that the Business Interruption Fund will be interest free for twelve months and available from today will also be good news for our members. However, we are also concerned about the thousands of self-employed and freelance contractors who have had their assignments terminated and who will not be protected and who, it seems, will have to rely on the benefits system.”

    25th March 2020.