The UK employment landscape is witnessing a significant shift towards temporary workers.
- Approximately 32% of UK employers are planning to hire more contractors this year.
- The upcoming IR35 offset rule is influencing over a quarter of employers in their hiring decisions.
- Specialist recruitment reports indicate a steady demand for temporary professionals.
- New tax regulations could alleviate potential double taxation, encouraging contractor hiring.
The UK employment market is undergoing notable changes, with around 32% of employers intending to increase their use of contract workers this year. This shift is largely influenced by the anticipated IR35 offset rule changes, which over a quarter of employers see as an encouragement in their hiring strategies.
Specialist recruitment firms have reported a consistent demand for temporary professionals, particularly towards the end of 2023. Such trends are expected to continue as businesses adapt to tighter budgets and streamlined headcounts, making skills-based temporary hiring an attractive option for many.
Lucy Bisset, Director of UK recruitment, highlighted, ‘In the wake of tighter budgets and headcounts being streamlined, we’re seeing employers increasingly turning to skills-based temporary hiring.’ This approach allows businesses to address urgent project needs with skilled workers capable of delivering on time and within budget.
Over 43% of employers cite project-based assistance as a primary reason for hiring temporary staff, valuing their expertise in completing projects efficiently. Additionally, 26% of employers appreciate the specialised skills and adaptability that contractors bring, particularly in bridging skills gaps and upskilling where necessary.
Affordability is another driving factor, with nearly 60% of contractors not increasing their rates in the past year, except in high-demand areas like machine learning and data science. The trend is reflected in the growing job advertisements for contractors with DevOps and Project Management skills in IT, and Business Analysis in Finance and Accounting, seeing significant increases over the previous year.
Despite the benefits, the upcoming offset rule has left 40% of employers uncertain about its impact on their businesses. Set to commence on 6th April, this rule allows HMRC to offset taxes already paid by contractors against the PAYE tax liability claimed from clients, potentially eliminating the risk of double taxation for employers.
Lucy Bisset warns, ‘Gaps in knowledge or confusion surrounding the new IR35 rule presents a huge challenge to employers trying to plug pressing skills gaps. It is important now more than ever, for employers to educate themselves on the upcoming changes in order to not miss out.’
In 2024, compliance and regulation issues pose a significant challenge for a quarter of employers, while over 41% find it difficult to source skilled contractors. Solutions include clear job descriptions, streamlined hiring processes, competitive day rates, and skills assessments to ensure suitability.
Lucy concluded, ‘The current market conditions in the UK are forcing employers to adopt a more strategic approach to hiring – temporary talent could be pivotal in this.’ Despite economic uncertainties, employers are advised to focus on addressing existing skills gaps and engaging specialised assistance on a project-to-project basis to optimise their offerings.
As employers navigate economic and regulatory changes, temporary hiring offers a strategic response to evolving market demands.
