Contracting continued to grow in August driven by new client projects and organisations choosing to hire workers on a ‘temp to perm’ basis because of current economic uncertainty. This is according to the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs, which also shows IT and engineering and construction topping the demand table for temps and contract workers.
According to the report: “... survey respondents indicated that growth of short-term appointments was the result of higher vacancy levels and new client projects.” It goes on to say that, “there were reports that a number of companies had preferred to take on temporary staff with a view to converting to permanent employment at a later date.”
These types of ‘temp to perm’ assignments should set IR35 alarm bells ringing for contractors. Even if there is the chance of a permanent role, contractors entering into such contracts should still ensure that they adopt best practice for remaining outside IR35. Whether or not a permanent role materialises, if they are subsequently investigated by HMRC, the contracts could be found to be inside IR35.
REC Chief Executive Kevin Green is upbeat about the UK labour market’s prospects and confident that the Agency Workers Regulations that come into force on 1 October won’t derail job market recovery.
“The UK jobs market is being incredibly resilient,” says Green. “Even with increasing job losses in the public sector and a new influx of school-leavers, it is performing much better than many predicted. We are confident that this trend is set to continue and that the Agency Workers Regulations will not undermine the UK’s flexible labour market.”
Engineering and construction leads the demand league for the fourth month running, with IT and computing in second place. Not surprisingly, this highlights skills shortages and potential opportunities for contractors. Recruiters identified specific shortages of developers and analysts in the IT contracting sector, and engineers and designers in the engineering and construction sector.
KPMG Partner and Head of Business Services Bernard Brown is less optimistic about the direction that the UK market is heading. “Although the jobs market has held up relatively well, it remains in the summer doldrums and, worryingly, there seem to be early signs of trends similar to those of 2008.
“Whether this is a blip or a return to a familiar and unwelcome pattern will emerge over the next few months,” Brown says, noting that employers are continuing to take a cautious approach to hiring decisions in the current uncertain economic climate.
The caution over hiring revealed by this latest Report on Jobs highlights that the ongoing uncertainty, whilst not good for the economy as a whole, has a silver lining for contractors. It has resulted in clients postponing permanent hiring in favour of temps and contract workers.
Published: Wednesday, September 07, 2011
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