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Brexit extension gives hirers more confidence in contractors


The latest JobsOutlook, released by the Recruitment and Employment Confederation (REC) this week, shows that whilst employer confidence in the economy, and in making hiring and financial investment decisions, remains at near-record lows, the recent six-month Brexit extension has led to a slight rise in economic confidence – however many firms remain “in limbo” due to the ongoing uncertainty.

The report, compiled with data from interviews with an employer count of over 600 between February and April, shows that employer confidence remained close to the record low levels reported last month, with their confidence in the British economy, and in making hiring and investment decisions in their own businesses, both rising by just 2 percentage points each to net -29% and net -3% respectively.

Confidence in the UK’s economic prospects remains 55 percentage points lower than when the survey began, shortly after the referendum on leaving the European Union.

Agencies and hirers continue to look increasingly likely to favour contractors due to the economic uncertainty, reasons being that with the balance of forecast demand in the medium-term increasing by 3 percentage points for agency workers to net +4%, and anticipated demand for staff in permanent employment falling 1 percentage point to +18%. Short-term forecast demand for staff in permanent employment, recruitment agencies and contract roles remained stable.

This Brexit uncertainty has therefore given greater value to those who choose to work as a contractor. The reasons for the uptick in contractor work aren’t the most stable, but they will no doubt cause a leap in the number of temporary workers and may increase the work volume and day rate of current temporary workers.

The JobsOutlook report also showed that more than half of employers of temporary workers (not in permanent employment) cited their importance in providing short-term access to key strategic skills, a rate increase of 3 percentage points from a year earlier.

These skills will give contract workers more to offer in their future employment, providing them with a greater chance to start work with new companies and recruitment agencies.

Those who have considered working as an independent contractor in the past, should consider starting now as they will have more luck being hired, enjoy greater financial security, and have a better peace of mind than they would have in previous years.

Figures released this month by the Office of National Statistics showed that unemployment had again fallen, to 3.8%, the lowest rate since 1974.

Chief executive of the Recruitment & Employment Confederation, Neil Carberry, said:

“The Brexit extension has pushed the threat of a ‘no deal’ Brexit into the Autumn, and the ending of our survey’s strong downward trend in confidence reflects this. But it is a temporary reprieve, with businesses stuck in a familiar holding pattern.

“The jobs market is robust, but more businesses remain negative about the future than positive. This will only change when they have a greater sense of being able to invest with confidence in the UK – and that comes with securing a sustainable and smooth outcome to the Brexit process.

“Employers are particularly concerned about being able to find the right people to grow their business when the moment comes. The survey shows that many businesses already have little surplus workforce capacity, with engineering and health and social care employers most concerned. Recruiters are working hard to help clients, and delivering great results. But a key part of the post-Brexit settlement must be an immigration system that is open to the skills and labour we need to drive British prosperity. Scrapping the £30,000 salary limit on visas for non-UK citizens would be a big first step to securing this, protecting key sectors including the NHS.”

Other statistics from this month’s JobsOutlook include:

  • Four in five employers (80 per cent) reported having little or no surplus capacity in their workforce, such that they would need to take on extra staff to start contracting work if demand increased. This rose to 85 per cent amongst large organisations (250+ employees).
  • Just under half of employers (45 per cent) expressed concern over the sufficient availability of candidates for permanent employment, with Engineering & Technical, Health & Social Care and Construction the three skill areas they typically reported most concern about.
  • Worryingly, the two skill areas in which employers reported the highest short-term net demand for permanent employment were Engineering & Technical (net +25%) and Health & Social Care (net +36%).

JobsOutlook is compiled by the REC in partnership with ComRes.

7th June 2019.