Self-employed contractors make comeback after budget tax rise
There are 326,068 jobs for contract workers listed on Adzuna, the job search engine, a fifth more than at the beginning of April.
James Neave, head of data science at Adzuna, said employers had been 'increasingly favouring contract workers' since the government raised the amount of national insurance paid by employers on April 6.
For a worker earning the average UK salary of £33,000, employers are having to pay an extra £900 a year in NICs. The government thinks the increases will raise £25 billion a year.
Economists have said the national insurance increase is already having a larger effect on the jobs market than expected. Recent labour market statistics show the biggest impact on employment in leisure and hospitality, industries that employ millions of people.
The economy has shed a quarter of a million jobs in the past 12 months and unemployment has risen to a four-year high of 4.7 per cent.
Adzuna's data demonstrates the shift in the labour market. While companies are looking for more contractors, there has been a 9 per cent drop in permanent roles listed on its website since April. Back then, there were 573,167 permanent vacancies; now there are 519,767.
• Businesses to cut staff and raise prices after national insurance rise
Anecdotal evidence suggests some companies are pivoting to contractors because they typically receive no employee benefits such as healthcare and, importantly, employers do not have to pay NICs on their behalf.
Neave accepted that companies' growing preference for temporary workers could reflect a 'knee-jerk reaction to rising employment costs', although he added that there were likely to be other factors at play.
Companies focusing more on hiring contractors rather than permanent staff has been a feature of the jobs market for the past two and a half years. Neave said it was usually quicker to bring in a freelancer on a fixed-term contract while there has also been an element of 'try before you commit', he said.
The big recruiters have blamed the enduring geopolitical and economic volatility for bosses not wanting to commit to permanent increases in headcount. With Donald Trump's flip-flopping on tariffs, the outlook for many companies has only become more uncertain in recent weeks.
• Trump doubles India's tariffs to 50% in response to Russian oil row
'[Temporary hires offer] a little bit of flexibility where someone's not so confident, so they'll bring in a temp for six months and see how it goes,' James Hilton, chief financial officer at recruiter Hays, said recently.
On the other side of the equation, permanent employees are reluctant to move jobs for fear of being last in and first out if their new company starts to struggle. That is likely to be another reason why companies have started to look for more contractors.
Neave said that business owners needed to be mindful that contractors were 'typically [on] higher rates' and can lead to 'lower levels of control and knowledge retention in the business'.
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