Exclusive research into the jobs market has revealed that freelancer and contractor placements increased in February despite the imminent introduction of IR35 reform.
The data, compiled by staffing association REC in collaboration with KPMG, showed while growth in temporary placements had eased to a seven-month low, businesses continue to rely on temporary workers to navigate the COVID-19 pandemic.
Alongside this, with permanent placements said to have fallen only “modestly” throughout the most recent lockdown, REC Chair, Neil Carberry was cautiously optimistic:
“Given the national lockdown that has been in place for the past two months, the labour market has coped remarkably well. Permanent placements have only fallen modestly, while vacancies and candidate availability have stabilised.
“Meanwhile, businesses have continued to use temporary work to help them through this tough period. We are well-positioned for a recovery as restrictions are lifted – but both businesses and workers will need help to do so.”
The slight rise in temporary billings in February comes at a time when contractors are preparing for the arrival of IR35 reform on 6 April, which Chancellor Rishi Sunak chose not to address in last week’s Budget.
With the introduction of controversial changes now certain, there is real concern that businesses may ban contractors, forcing many of them into PAYE working – a move that would impact the availability of contractor opportunities going forward.
IPSE’s Director of Policy, Andy Chamberlain, said: “The changes to IR35 would be damaging at any time, but on top of the financial impact of the pandemic, we are concerned they will do serious harm to the contracting sector.”
Continuing, Chamberlain explained the importance of contractors making the government aware of the potential damage of IR35 reform:
“It’s essential they know that all is not well with the contracting sector – and that what is needed, as we are campaigning for, is long-term structural reform.”
The UK Report on Jobs also highlighted that fees commanded by freelancers and contractors remained “broadly stable” last month, following a “slight drop” in January. Additionally, open roles for short-term workers were said to have risen “strongly” across both the public sector and private sectors, the latter of which is bracing itself for IR35 reform.
Unsurprisingly, the demand for locums and healthcare contractors sat highest, while blue collar workers placed second, as the construction industry stays open throughout lockdown.
Looking ahead to the road to recovery, according to KPMG’s Vice Chair, James Stewart, “there’s a long way to go to rebuild confidence in the UK jobs market”, but “reason for optimism for the UK’s future workforce.”