Employment Rights Bill ‘hits IT contractor jobs recovery’

The Employment Rights Bill (ERB) is partly to blame for a recovery in IT contractor demand being choked off in June.

Publishing Report on Jobs, the REC spoke of “the threat of rising [employment] costs,” as it showed IT contractor demand fell from 48.0 in May to 46.3.

Ahead of the ERB, the agency body’s report (which is based on its members’ billings) says “companies continue to wait and see with their hiring.”

‘Employment Rights Bill striking the right balance is critical’

The report also reiterates comments that Recruitment & Employment Confederation (REC) deputy CEO Kate Shoesmith made last week to ContractorUK.

The report states that the ERB “striking the right balance” between “updating workplace protections” and “business growth” is critical.

But Report on Jobs indicates that it’s a balance that needs to be struck very finely due to “volatility” for employers, which is already forcing them to “assess a complex picture”, warns REC’s Neil Carberry.

‘Companies not hiring at the rate they might want to’

He spoke in the report of employers ‘hiring when they need to,' rather than hiring “at the rate they might want to.”

Nonetheless, despite candidate availability rising in June 2025 to its highest level since covid, Carberry says private sector temporary vacancies are “resilient.”

But the full figures for IT/Computing placements on a contract basis -- figures obtained by ContractorUK -- don’t mirror that resilience in temporary vacancies as a whole.

On top of dropping by almost two index points in a single month, a score of 46.3 from 48.0 positions IT contractor demand further into negative territory, as only scores of 50.0+ indicate growth.

‘Autumn Budget 2025 already causing hiring hesitation’

Carberry says “hesitation” from organisations about hiring “stems from the scar tissue left by the spring tax hikes, and fear of further business tax rises.”

Therefore, quite apart from ERB and today's Finance Bill 2026, March’s Spring Statement 2025 and next quarter’s Autumn Budget 2025 are cutting into recruitment plans.

The REC’s deputy CEO says she fears that “businesses cannot” shake off their “wait-and-see attitude…alone.”

‘Employer NICs rise of April 2025 stopped employers investing in workforce’

“It needs [the] Treasury to really get to grips with economic performance and ease the pressure on business,” Shoesmith said in a social media post.

“[Spring Statement’s] National Insurance rises [effective since April 6th 2025] have stripped most employers of their ability to invest in their workforce.”

Keir Starmer said during Prime Minister’s Questions on July 9th that UK business confidence was “at a nine-year high.”

‘Lies, damned lies, and statistics’

“Frankly, I have no idea which data set he’s referencing, but if ever there were a textbook example of the old saying -- ‘Lies, damned lies, and statistics’ -- this appears to be it,” says City Capital Ltd director Peter Warwick.

“Does anyone seriously believe that UK businesses, grappling with inflationary pressures, rising wage demands, and endless regulatory uncertainty, are more confident today than at any point in the past decade?”

‘UK business confidence at three-year low’

The prime minister appears to have been referring on July 9th to the Lloyds Business Barometer Survey.

But since then, the ICAEW has found that business confidence is actually at a “three-year low.”

In line with the accountancy body’s downbeat assessment, large staffing firms like Hays (contract fees down 5%) and Robert Half (contract fees down 13%) have announced disappointing results.

‘Company results are suffering, amid massive confusion and concern for agencies’

While SThree’s market update shows more promise, recruitment veteran Greg Savage says June 2025 saw “massive confusion and concern” for recruitment agencies.

“You are not alone if your results are down, the fun has dwindled, and you are worried about the future,” Savage told his agency ‘followers’ last week.

“Company results are suffering, and previously high-performing recruiters are struggling in many cases.”

‘Tech talent requests are on the increase’

But Richard Colgan, founder of Oakleaf Group, says June-July 2025 saw clients, “once again,” requesting expertise in “sourcing HR and tech talent.”

“Volumes are definitely on the rise. It’s clear that, for many, the direction of travel is back into growth mode.

“Another highly significant lead indicator is that the broader Financial Services sector is more active now than it has been for a couple of years…

“[And] our executive search business is also seeing some stronger pockets of activity.”

‘Cybersecurity job candidates unwilling to accept just any job’

In cyber security recruitment in June 2025, there were “more candidates actively looking” for roles, according to Georgina Day of Leap 29.

But due to a few reasons, including candidates not being willing to accept “just any job”, hirers are “still struggling to fill critical roles”.

Day also says that “layoffs” impact “availability,” as those affected “take time off, reskill, or pursue side projects before re-entering the market, which slows down the hiring pipeline.”

‘Technology skills in short supply in June 2025’

The REC’s report confirms that Cyber Security was in “short supply” on both a permanent and contract basis in June 2025.

Seven other technology skills were scarce across the board, notably CNC, Development, Senior IT Engineers, Software, Software Architects, Software Engineers, and Technology/IT.

Full-time tech recruiters also struggled to source Data Architects, Full Stack Developers, IT Project Managers, Programmers, Software Developers, Software Sales, Technical Roles and Technical Sales staff.

The tech contractor market was uniquely scarce in June 2025 of IT Operations Management, Security Cleared IT, Software Designers, and Technical Managers.

‘Employment Rights Bill roadmap gives embattled businesses breathing space’

The REC’s Mr Carberry said: “Clarity and transparency from government is vital to build trust with business and drive recovery.

“The new roadmap for the Employment Rights Bill allows for full and frank consultation on how the new rules will be shaped and gives breathing space to embattled businesses. Updating workplace protections is important, but striking the right balance with the business growth ambitions is the crucial part.”

Also of the confederation, Ms Shoesmith said: “[The Labour] government came to power with a big agenda. Its major mission was to create the right conditions for growth. It’s really needed.”