REC makes IR35 demands, as uncertainty ‘plays havoc’ with hiring

A national measure of IT contractor demand fell last month to its weakest reading of the entire year – and its lowest score, overall, since August 2009.

Unveiling this 10-year low, agency body the Recruitment & Employment Confederation said that “uncertainty”, from a combination of Brexit and a general election, was “taking its toll.”

To prove how the events were “playing havoc” with hiring in November, the confederation pointed to a nine-month consecutive fall in placements, and a decade-low in vacancy growth.

'Good to hear'

But these side-effects of the uncertainty are in the full-time market, whereas it is actually the temporary, freelance and contract market which the REC devoted its commentary to.

In fact, in a departure from its political-neutrality, the group’s CEO said he thought it was 'good to hear' from the Tories that they will review IR35 reform if they remain in power.  

Acknowledging what he called “similar commitments” from the Lib Dems and Labour, Neil Carberry said: “Everyone should pay the right amount of tax.

“And that must mean thinking again and stopping 2020 implementation [of IR35 reform in the private sector].

“Contractors and the self-employed are a vital part of the UK’s flexible labour market, and current implementation plans risk rewarding those who avoid tax whilst punishing hundreds of thousands of compliant contractors and agencies.”

'August 2009'

Carberry’s comments will be seen as referring to engagers who, despite having only draft legislation to base their decisions on, have deemed their PSCs non-compliant or inside IR35.

Whether those actions which IR35 advisers and others have criticised are now actively depressing demand for IT contractors cannot be ascertained from the REC index.

But demand for temporary IT skills shrunk in November 2019 for the second month in a row (October’s tiny growth has been revised downwards into the red), representing a back-to-back contraction not seen since August 2009.

'Not moving, not growing'

Coincidentally, the index back then stood at where the REC scores it currently in its Report on Jobs  -- 48.5, so still some way off the 50.0 threshold, above which monthly growth occurs.

James Stewart, vice chair of report co-authors KPMG, believes that the difference now is inertia, whereby candidates are 'not moving' and hirers 'not growing' due to the Brexit-election combo.

It’s a paralysis that he implied isn’t sustainable – for either party.

“As big business set out their strategies for the coming year, they will need to start making key decisions on hiring and investment, while those seeking new roles will be hoping to get their CVs out in the New Year”.

'I've lost count...'

In an online post, Mr Carberry echoed: “I've lost count of the number of businesses that have said to me that 2020 might be quite a good year if only we can get investment flowing by finding a smooth way out of the Brexit treacle.

“There is lots to be confident about in the UK economy, but we need to start ensuring policy - be it Brexit, IR35 or skills, supports the future of work, rather than stymieing it.”

According to November’s Report on Jobs, eight IT skill were scarce on a permanent basis, including Automation, Testing, Data Science, Development, Software and Analysis.

Technology skills that the REC’s contractor agencies said were in short supply on a temporary basis included C#, Cloud Engineering, Java, Programming, CNC, Database Development, Data and Software Engineering.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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