Not-so Mini Budget

Kwasi Kwarteng’s statement towards the end of last month saw a wealth of revelations from the Truss administration. Perhaps the greatest shock for the recruitment sector was the repeal of the IR35 regulations. APSCo has been calling for a reversal on Off Payroll or at least a review of the legislation, which we felt was simply unsuitable for the modern world of work for some time. While we were surprised at the unexpected U-turn, it was certainly testament to the success of our public policy and lobbying teams who have worked tirelessly to communicate with the relevant Ministers and Government bodies to voice the concerns of the recruitment sector on this matter.

It was also highly promising to see the recognition that a localized, sector-based skills focus needs to be prioritized to drive growth. Changes to Income Tax and the reversal of plans to increase Dividend Tax will help grow the flexible workforce once again, following a decline in contractor activity post-IR35. And while plans for immigration reviews are in the pipeline, it’s encouraging to note that the government is currently recognizing the need to bolster the country’s skills and resources.

But that doesn’t mean that the talent troubles of the UK are over. In fact, the dearth of skills is still being widely reported. And according to our latest data, talent shortages could be set to increase further in the immediate future as salary increases fail to keep up with inflation.

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Staff Demand Soars While Salaries Drop

When looking at APSCo’s own Recruitment Trends Snapshot, it is certainly interesting to see the changes in pay over the last few years. Looking back on August 2020, when Covid restrictions were first beginning to ease, the number of vacancies and placements across permanent and contract roles had spiked. In fact, the number of permanent jobs added between August 2020 and August 2022 increased by 48%, while contract vacancies rose by 71%. However, despite the growth in demand for staff since Covid hit the country and the current cost-of-living crisis, average permanent salaries dropped by 8% during the same period.

The data, provided by the global leader in software for the staffing industry, Bullhorn, also shows a similar picture in pre-Covid comparisons, with remuneration dropping 7% between August 2019 and August 2022. This suggests that salaries across the professional recruitment sector haven’t risen despite the record-breaking inflation rates and increased demand for talent, forcing people to look for new roles that offer them a competitive salary or a pay rise that can protect them from the rising cost of living.

Amplified Skills Struggles

The notion that the cost-of-living crisis isn’t inflating salaries is also supported by the latest ONS labor market statistics, which revealed that total pay between May and July 2022 — when adjusted for inflation — fell by 2.6%.

Increasing salaries while our economic stability is being questioned is understandably unlikely to be a priority or even feasible for many businesses, but to see a decline in pre- and post-Covid salaries is worrying. Since 2019, we’ve witnessed a demand for talent on a significant scale and an initial surge in economic activity as restrictions were lifted, but salaries across the professional, highly skilled sectors haven’t risen in line with this. The result is now being felt across the country. With the impact of Brexit also still playing out, this decline in financial incentives for new hires will only have a detrimental impact on the country’s ability to attract the skills needed to bolster the UK’s economy.

In a post-Brexit and Covid-hit economy, the strength of the labor market will be paramount to the UK’s ability to become — and, crucially, remain — a global powerhouse. While the Chancellor’s Mini-Budget demonstrated steps to help bolster the country’s labor market, more will be needed.

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However, HS2’s breach of the legislation lies with how the organization works with third party organizations acting as consultancies. These distinctions made by HMRC have important implications for agencies offering project-based products and SOW-based IR35 solutions.

What We Know

From HS2’s internal review and additional HMRC guidance, we can see that HS2 did not carry out employment status determinations on a number of contractors because they were supplied by a third-party provider.

HS2 took the view that it was the third parties’ responsibility for determining the IR35 status for each individual contractor. In principle, this is correct. Consultancies that provide genuine contracted out services to a client would be responsible for determining the IR35 status.

However, we are seeing an increasing number of cases where the service the consultancy or agency is providing is a provision of labor as part of or disguised as a consultancy agreement or SOW. This would leave the end client open to investigation, as the agreement between the consultancy and the end client does not reflect a genuine managed service and therefore changes the responsibility for IR35 determinations by moving it to the end client — in this case, HS2.

What Does Outsource Service Provision Mean?

When engaging with contractors through a third party, there are different things the end client must consider. Arrangements should be carefully analyzed to ensure that a contract has not simply been re-labelled as a managed service when what’s being provided is a source of labor. Agencies and other service providers should ensure that the right contracts and practices are in place to make the distinction.

This is not an issue that can be dealt with by an IR35 status tool such as CEST; an IR35 specialist should review the arrangement to ensure the person responsible can be correctly identified. If labor is supplied, the IR35 rules may still apply depending on what is being provided and who is providing it.

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How Does This Affect Contractors?

If the service is genuinely outsourced and the outsourced service provider is classed as a small company, contractors will still be responsible for their own IR35 determination. This should be advised by the consultancy, but it is important to get this in writing. If the job role changes or the consultancy grows in size, the IR35 position may change. This issue is becoming more common in sectors with long supply chains and where sub-contracting takes place, particularly in the oil and gas sector where there are often six or seven people in the supply chain.

What Should End Clients Be Doing?

If you think the contractor supplied to you is genuinely part of an outsourced service, ensure you have the appropriate documentation to evidence this in case of investigation by HMRC. You should be considering this for all contracts which involve the use of contractors, and it is recommended that you liaise with all service providers on this issue for peace of mind.

What Should Agencies Be Doing?

If you provide outsourced services in addition to your core recruitment business, you should ensure you have taken IR35 advice from a specialist, or you could inadvertently bring risk to your clients. This may lead to short-term gain in helping your clients alleviate their own IR35 responsibilities, but this could cause long term reputational damage if HMRC investigates and finds this not to be the case. If you are unsure who should be responsible for assessing the contractors, get legal advice to review the circumstances before the contracts are agreed upon.

Don’t Be Caught Out

Using a contracted-out service as an IR35 get-out was once viewed as a silver bullet to the IR35 changes, but HS2’s mistake highlights that it is vitally important to ensure full due diligence is carried out to minimize the risk of a hefty fine. Always seek expert advice if you are uncertain to protect yourself and your supply chain.

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Permanent Job Numbers Take a Hit

Taking a detailed look into the white-collar jobs market, our latest Recruitment Trends Snapshot report reveals that the contractor recruitment market remains buoyant in light of the ongoing dearth of resources, with vacancies up 2% month on month and 7% between July 2021 and 2022. This increase in contractor demand has translated into positive sales revenue trends for contract placements, which grew 3% between June and July 2022 and 15% annually.

In contrast, permanent job numbers have dropped, down 1% from June to July 2022, also reporting a similar decline annually in July. This decline in permanent demand has impacted both placement numbers and sales revenue for recruiters, which both saw a 7% drop month on month in July.

While this dip in permanent recruitment appears to be marginal, in a market impacted by a cost-of-living crisis, recession fears and a shortage of skills, these figures present a potential indication of economic instability. In fact, when we look at the pre-pandemic comparison, we can see the extent of the drop in permanent recruitment, with vacancies falling 23% between July 2019 and July 2022. In comparison, contractor job numbers rose 13% during this same period, highlighting the extent of the reliance on contingent labor to fill resourcing gaps in the current economy.

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Salaries Show No Signs of Inflation Increases

The data, provided by the global leader in software for the staffing industry, Bullhorn, also reveals that perhaps rather concerningly, given the widely talked about cost-of-living crisis, average permanent salaries have fallen 7% year on year, despite July seeing a 10% annual increase in permanent placement numbers. This will no doubt exacerbate the shortage of applications for current roles, further increasing the reliance on the contract market. However, a further worry is that these underwhelming salaries could also lead to a drop in staff retention rates. There have already been reports of sector-wide strikes, with recent plans for an autumn strike by those in the education sector fueled by anger over the government’s below-inflation pay proposal.

An Unsustainable Talent Pipeline

While the reliance on the contractor market to fill resourcing gaps is evident, as Global Public Policy Director Tania Bowers explains, this isn’t a long-term solution: “This reliance on the non-employed segment of the workforce simply isn’t sustainable at a time when the UK’s attractiveness as a destination to work for international contractors is dwindling post-Brexit. And with the impact of Off Payroll still being felt in the temporary recruitment market, the longer-term availability of these resources and the ability to tap into skills in a cost-effective manner is at risk. We urgently need some stability from the government and a clearer direction on the regulation of the employment market to ensure that the UK can manage through the difficult times ahead.”

The data is painting a worrying picture for the UK’s permanent recruitment market at a time of continued instability. We are still seeing the impact of the pandemic play out, but to see such significant spikes in contractor recruitment when comparing pre-pandemic levels with today, while permanent jobs decline, suggests that the country’s skills agenda is balancing on a knife’s edge. Companies are faced with no other choice but to turn to contractors to keep business as usual operations running, but for many, that’s not a sustainable approach. With average permanent salaries also dropping despite the cost-of-living crisis, our economic stability is at stake. While we await the decision around a new prime minister for the country, my hope is that the successful individual prioritizes a solution to the UK’s skills crisis.

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As many talent acquisition leaders will know, keeping up with the ever-evolving pace of international, national and local employment regulation and compliance changes can be complicated and sometimes even intimidating. However, it’s critical that employers take the time to understand country-specific legal requirements and what they mean for their business. Here are some key regulations to be aware of.

International Differences: Europe

Across the globe, there are specific legal obligations that must all be adhered to. However, lesser known is that in-region screening solutions are also varied across countries. A good example of this is the General Data Protection Regulations (GDPR) within Europe, which leave it up to individual countries to determine who can process criminal conviction data. Some countries are significantly more stringent than others — Spain being one of these.

Under Spanish law, employers need a legal requirement — not legitimate interest — to process a criminal conviction. This nuance in criminal screening requirements across Europe recently came to the foreground when the first legal case and fine for undertaking illegal criminal checks was issued this year. As a result of this breach, a €2M fine was handed out to a major global retailer for processing the criminal convictions of its delivery drivers in Spain.

Comparatively, certain countries place all responsibility on the employer to determine whether this check should be conducted. For example, in Germany, employers must determine if personal integrity is indispensable to the specific role before they can then conduct a criminal record check.

Meanwhile, in the UK, there are many legal bases for employers to process employees’ criminal convictions. For example, employers may seek to help prevent or detect unlawful acts, help protect the public against dishonesty and help prevent fraud. The UK government has made it relatively simple to determine which criminal check you can give your staff, and a simple survey is even available to help firms know which check is appropriate.

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Mitigating International Hiring Risks

Here’s what hiring teams can do to help minimize risks and prevent your firm from incurring any unexpected fines:

Consult work councils and trade unions. When setting up a global screening program, consulting with local work councils and trade unions can also be valuable. Going back to the Spanish GDPR fine mentioned earlier, it was in fact a work council that brought the issue to the attention of authorities.

Map your recruiting data. It’s always a good idea to conduct regular companywide data audits. This process will show what kind of data your organization collects for what reason and where it’s being taken from and stored.

Stay up to date with developments. International hiring protocols are already complex, and it’s likely that this trend will continue, with authorities always outlining new regulations. It’s important to stay on top of changes in data protection rules across any country you’re operating in or expanding to.

Safe and Secure Data Transfers

It should be noted that data transfers will be an inevitable element of global hiring, and ensuring that these are safe and effective will be paramount. You must have robust information security and privacy policies in place to ensure that any risks arising from cross-border transfers are minimized.

While data transfers have become increasingly more complex in nature, particularly within the EU and the UK, utilizing a trusted global screening partner that has met all the required protocols and meets all best-practice standards required by your business will prove to be invaluable for hiring teams.

While there are a variety of cross-border challenges to consider here, the UK’s chronic skills shortages alongside dried-up talent pools mean that international hiring is simply a must for those businesses looking to get ahead.

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Every country has its own laws and rules regarding employment. In light of this, minimum wage and employment laws vary from nation to nation; hence, your company would benefit from recruiting individuals from abroad to provide high-quality services. For companies with a limited budget, hiring overseas personnel makes things easier. Whether you are an existing company or a start-up, there are many reasons you should hire offshore talents for your company.

Improved business growth. Without first establishing an offshore staff in another country, you cannot expand there. To properly integrate into the new nation and build awareness for your business, you need to start with your offshore crew. Additionally, they would make it easier for you to hire more employees and develop your company entirely inside of their jurisdiction. However, you need to be familiar with their rules before you fully integrate into the new nation. For example, if you wish to expand in Singapore, you must learn about company registration rules there.

Worldwide talent. When hiring employees from your country, you only have access to a limited pool of professionals. Although the ones applying to work for you are experts in their field, hiring offshore talent will give you a wider range of choices. Having a variety of talented professionals would create room for healthy competition and help you achieve maximum productivity. When hiring professionals, you will come across a wide range of applications. All you need to do is select the best candidate and get the best for your company.

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Lower employment cost. The most intriguing aspect about recruiting people from abroad is that you would pay less for a service that otherwise would have cost more. Why does this matter? Each nation uses a unique currency, and different currencies have distinct conversion rates. Therefore, you will automatically spend less on salaries if the value of your country’s currency is higher than the currency used in the nation you are hiring from. The minimum wage is another significant factor in cost reduction. In India, the minimum wage for three days is equal to the minimum wage in America per hour. You will also spend less on infrastructure and utilities because you are still establishing your business. Your employees could even start with their own equipment.

Time difference. Another benefit of hiring an international worker is that you and your offshore team will be in different time zones. This often means that your staff will perform tasks while you’re sleeping or taking a break, with your employees ready for a new assignment when you return to work. You have the option to hire workers who are available 24/7 if you hire offshore.

Access to resources. You can access resources not available in your own country by hiring offshore talent. Because technological development differs significantly between nations, you can do your work with special tools if your offshore crew is working in a location with more advanced technology. Other tangible resources operate similarly. Employing workers from abroad gives you access to resources and supplies that are difficult to get locally, therefore fostering business growth and productivity.

Hiring internationally has done a lot of good for the companies who take advantage of it. It is never too late for you to hire an offshore professional who would help you build a team to enable you easier access to an international scene.

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The combination of Covid-19 and the fallout from Brexit is certainly exacerbating the sector’s skills shortages. However, the profession has faced talent challenges for many years, and the nature of the sector means that urgent and temporary demands often outstrip supply. In fact, Skills for Care has previously reported that the adult social care sector in England needed to fill around 112,000 job vacancies on any given day. One of the greatest challenges faced by recruitment professionals in this highly regulated space is finding staff quickly and compliantly.

The clinical and healthcare sector frequently requires staff to be in contact with vulnerable and young people or children who require the safest possible care, so filling a position with a candidate who is not only compliant but will also adhere to strict safeguarding measures is essential. As those in the sector will attest to, there’s a wealth of different standards that need to be adhered to, and approaching this can be daunting, even for an experienced recruitment professional.

Gary Snart, sourcing director at HealthTrust Europe LLP, reinstates the importance of high-class compliance standards in healthcare, adding: “Raising the bar on standards in compliance for healthcare remains both critical and fundamental to the delivery of safe patient care across the UK. Embedding robust policies, processes, governance and auditing to ensure employment checks, safeguarding checks, mandatory training, counter fraud, [and] regulatory and contractual requirements of supply are consistently met gives healthcare providers the assurance and confidence they need to engage the supplier community openly.”

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With multiple frameworks to navigate, recruiters have a number of hoops they need to jump through to demonstrate they can not only quickly source the right talent but also ensure they meet the strict safeguarding and training requirements of the sector. At APSCo, we found that these often time-sensitive recruitment challenges called for a better solution for recruitment professionals in the clinical and healthcare sector that would support best practice standards. For this reason, Compliance+ was created, launching last month at an event in the House of Lords. The Compliance+ accreditation was constructed following extensive consultation with recruitment firms and external stakeholders, including NHS Workforce Alliance and Health Trust Europe (HTE). This has been produced to both safeguard vulnerable people and benchmark recruiters against the highest service deliverables, giving them the framework to meet all sector-specific requirements.

Shazia Imtiaz, general counsel at APSCo, was a key player in the creation of the Compliance + accreditation for the sector. She commented: “Our new accreditation sets the best quality standards, beyond the statutory safeguarding requirements, for recruitment businesses that operate in the clinical and healthcare sector. It establishes a compliance framework that safeguards vulnerable persons and provides clients with safer, best-suited, highest-quality candidates. APSCo’s new Compliance+ standard presents both candidates and clients with an easy-to-identify accreditation that verifies the recruitment partner they are working with is fully compliant, has been annually audited by an independent third party, meets all safeguarding requirements and will provide the best-in-class services.”

If the UK hopes to overcome the severe staffing struggles faced by the clinal and healthcare sector, then initiatives that aim to provide a robust solution for those operating in the sector need to be embraced by talent acquisition leaders and employers alike. Only then will the recruitment quality standards for these positions improve so that candidates can be placed in a timely, risk-free manner.

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For those fortunate enough to have enjoyed an era of reasonably cheap, widely-accessible travel over long distances, the prospect of enforced immobility feels deeply unsettling. What is modern life if we work so hard but aren’t able to visit family across the country or schedule a much-needed winter break in the tropics?

The disruption described in the Daily Mail has been particularly acute in Europe. Still, it’s ramping up in the US as we stare down the barrel of a summer of “revenge travel” following the pandemic. Like any market breakdown, it’s driven by multiple factors, but one phenomenon seems to be the chief culprit: During the pandemic, airlines and the government bodies that oversee their transportation infrastructure laid off staff due to anticipated drops in demand. Now that demand has roared back in the wake of vaccination and household bank accounts buoyed by stimulus money, airlines and airports haven’t been able to hire quickly enough to prevent staff shortages.

A tight labor market is part of the problem. A recent article in Reuters pointed out that aviation lost 2.3 million jobs globally during the pandemic, and many of those workers have been lured away from the industry by other, better-paying opportunities. One baggage handler mentioned in the piece that recruiting young people for airport roles was especially difficult, as they could just as easily work as cashiers for similar pay with less stress and responsibility.

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It’s also worth noting that it can take up to five months to fill sensitive travel-industry jobs (not including pilots and their specialized training). Plainly, one obstacle standing in the way of smooth travel operations is the difficulty of hiring qualified candidates and the inefficiency of prolonged background checks.

In truth, staffing shortages will likely be an unavoidable challenge in certain industries for the foreseeable future. There currently aren’t enough teachers, nurses, restaurant workers or rideshare drivers to keep those businesses functioning as they should, and the inflation currently wreaking havoc around the world is one of the outcomes.

Businesses need to think creatively about hiring in this difficult environment. Some smart strategies:

Find creative ways to source talent. Beyond traditional ways of sourcing talent, there are now numerous online communities and new talent marketplace platforms where desired hires can be found. Also, previous candidates represent a rich source of potential talent — the timing simply wasn’t right at the time.

Make it easy for applicants to get through the processes. Due to the labor shortage, candidates often have more than one job opportunity available to them. They are not only looking for competitive compensation and benefits; they are also moving forward with employers who offer a more convenient onboarding experience. Ensure a smooth and friendly candidate experience to reduce drop-offs and make them more excited for their first day of work.

Support flexible shifts and hours. These days, workers are interested in more flexibility to meet the balance between work, family and personal demands. Consider offering flexible shift and location policies wherever possible, and highlight these as benefits in job descriptions and during the application and interviewing processes. An employer that caters to workers’ interests is going to win more often than those who don’t.

The labor market will eventually reach a new equilibrium, which should mollify some of the current inflation problems and snarled travel. Streamlining hiring practices so those essential roles can be filled more quickly should be an important part of the solution.

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In fact, APSCo’s own Recruitment Trends Snapshot research reinforces the extent of the ongoing hiring challenges across the country, with yet another month of spikes across vacancies noted in our latest report. When comparing May 2022 to April 2022, we see that vacancies were up 16% for permanent and 19% for contract roles. The annual comparisons, however, revealed the biggest spikes, with contract vacancies increasing 34% between May 2021 and May 2022, while permanent roles grew by 25% year on year. The impressive annual increase in contract vacancies is perhaps explainable by the fact that more businesses have been turning to the flexible segment of the workforce as a means of tackling the ongoing dearth of talent.

Despite this, the data, provided by the global leader in software for the staffing industry, Bullhorn, does indicate a slight dip in hiring towards the end of the month for permanent vacancies, which were down by 3%, while contract roles only saw a 1% rise. This is perhaps unsurprising, as the lead-up to the extended bank holiday and half-term period predictably create a dip in recruitment activity.

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Placements and sales on the up. While placements also saw monthly and annual increases across all roles, the yearly uptick in permanent placements (44%) is arguably a cause for concern in a skills short labor market. With these numbers increasing at a time when the Office for National Statistics (ONS) previously revealed that jobs have surpassed the number of people currently unemployed for the first time since records began, the pressure on recruiters will only intensify.

Encouragingly for recruitment firms, though, this spike in placements and vacancy numbers is translating into an increase in sales revenue across both permanent and contract. The data does suggest that the skills shortage continues to drive demand for highly skilled contract professionals, with revenue from these placements up 28% between April and May 2022. While revenue from permanent placements saw a smaller monthly increase (16%), the year-on-year figures revealed a more significant growth, up 43%.

After analysis of Bullhorn’s daily tracking data, we see that permanent placements spiked 14% in the final half of May 2022, which translated into a 19% uptick in sales revenue in the final two weeks of the same month. Permanent salaries remained relatively stable throughout the month, increasing just 1% in the final few weeks when compared to the start of May.

Contract placements, in comparison, fell 6% towards the end of the month. Despite this, sales revenue for contract placements was up 10% in the final two weeks of May, which gives a good indication of the level of demand for highly skilled and highly paid contractors.

What needs to be done? The UK’s labor market is reaching breaking point, and this latest data suggests hiring demand is unlikely to slow anytime soon. In recent months, we’ve seen record-breaking vacancy numbers reported by the ONS and the first-ever instance where there are more jobs than people out of work. At a time when the market is so tight, it seems that businesses are really seeing the value that external recruiters can provide and will continue to do so in the coming months.

In a post-Brexit and Covid-hit economy, the strength of the labor market will be paramount to the UK’s ability to become — and crucially, remain — a global powerhouse. However, if this is to be achieved, change needs to happen, which is why it’s vital that the country’s policy makers implement an internationally viable approach to boosting the UK’s access to skills. This includes creating an attractive entry route into the country for highly skilled self-employed professionals and refocusing international trade deals on skills, the workforce and the mutual recognition of services and professional qualifications as well as tariffs and goods.

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This means you can’t afford to stand still on your flexible workforce strategy. In my last post, I explored the ways contingent workers are helping organizations meet the challenges of employee churn. This time, we’ll spotlight contingent worker engagement to demonstrate how you can win the most sought-after skills ahead of the competition and boost value from contingent engagements.

Build your contingent brand. Employee branding for contingent workers often gets overlooked. If you’re trying to increase your access to high-quality independent talent and take a step closer to total talent management, it’s vital that you don’t ignore this. This doesn’t mean simply putting your perm branding and employee value proposition in front of a contingent audience. How do contingent workers engage with your brand? What do they want from a flexible role? What do you offer that your competitors don’t? How can you attract more diverse workers?

“With the rise in the number of people who want to be a contingent worker, employers must consider this increasingly valuable talent pool as part of their strategic workforce plan,” said Kirsten Tolfree-Dart, contingent worker program manager for Kantar. “We are constantly evaluating our brand positioning through the lens of contingent workers to gauge if we are an attractive employment destination. Additionally, our contingent employees are a great resource to provide insight on what is working.”

Of course, this most all be done mindfully without muddying the waters of worker classification. But it’s no longer enough to cross your fingers and hope the best flexible workers look your way.

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Bring HR, talent acquisition and procurement to the table. In the recent KellyOCG Global Workforce Report, Re:work, 46% of Vanguards — the most successful organizations surveyed for profitability and customer satisfaction — said that contingent talent is perceived as equally important as permanent talent, while 51% said that their procurement team works with talent providers to improve workforce agility and employee experience. At CWS Europe this year, the number of HR and TA professionals on the attendee list was higher than ever. This cross-functional approach is vital to developing a strong and well-rounded model for contingent engagement. It takes a full spectrum of staffing, hiring and people skills to develop a successful contingent talent engagement strategy.

Educate hiring managers on contingent engagement. Some hiring managers are worried about overseeing contingent workers because of worker classification issues. But a completely hands-off approach can mean your business doesn’t get everything it needs from an engagement. It’s important to educate managers on local labor laws and internal guidelines to clearly explain the ways they can (and can’t) engage contingent workers to maximize access to skills and expertise while shaping positive outcomes for internal employees. This could include setting clear goals and project milestones to shape the work being done, monitoring progress effectively and providing a positive experience and access to appropriate benefits that might encourage a skilled contingent worker to put you at the top of their list for future assignments.

Contingent worker engagement can be a tricky balancing act, but the need for flexible talent is growing so fast that it’s a challenge you can’t ignore. How is your contingent strategy helping to support and accelerate your business objectives?

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Holidays Prompt Drop in Recruitment, but Contract Roles Remain Resilient

While the year to date has certainly seen recruitment activity increase, the holiday period in April did have an impact on hiring. According to APSCo’s latest Recruitment Trends Snapshot, there was a general decline in professional vacancies in April, with permanent vacancies down 19% month on month.

The data, provided by the global leader in software for the staffing industry, Bullhorn, did, however, show that in the absence of permanent resources, there has a greater reliance on the temporary workforce with the demand for contract professionals increasing by 2% in the final half of the month, while permanent vacancies fell by 3%. Year on year, contract demand also grew 13% in April. Although this is lower than the 24% annual growth in the contract recruitment market that was reported in March, it does highlight the scale of pressure being placed on this flexible segment of the workforce.

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Legislation Changes Needed to Support the Temporary Workforce

For recruiters, demand for highly skilled contractors is having a positive impact on revenue, with profits from contractor placements up 31% between March and April. With this flexible segment of the workforce set to play a crucial role in filling resourcing needs for some time yet, we expect to see this positive revenue growth continue.

However, as our own Global Public Policy Director, Tania Bowers, has reiterated, this reliance on the flexible workforce could be at risk due to the continued lack of clarity around the Employment Bill:

“The UK’s employment market is not fit for purpose in the current economic landscape, and APSCo has warned that the long-awaited Employment Bill needs to be pushed forward swiftly if the country is to recover from the impact of the pandemic and Brexit. It’s clear that the future of the labor market needs to be flexible, dynamic and fair, but current legislation is not designed to support this.

“The self-employed have a crucial role to play in the skills short environment that we are experiencing, and ensuring these individuals are adequately supported and able to operate in a flexible manner without being penalized is important. We’re already seeing Off Payroll case law impacting this segment of the market, and the UK is at risk of diminishing its own flexible workforce if action isn’t taken. Self-employed status needs to be defined in legislation that differentiates highly skilled self-employed independent professionals from dependent contractors, workers, other variants of self-employment and the lower skilled, less independent elements of the gig economy.”

Necessity of Data in Uncertain Labor Market

As Joe McGuire, sales and strategy director, analytics at Bullhorn, also highlighted in the recruitment trends snapshot, access to the latest trends and data will also be critical in strengthening the recruitment market:

“There are many things affecting the labor market today, not least rising inflation and the talent shortage, and we will see some fluctuation in macro-level industry data. In these unprecedented times, it is essential to have easy access to real-time data, data about your own business. Understanding how the behavior of your clients and candidates is changing and having the agility to react quickly is what will keep agencies most competitive.”

The professional recruitment sector is set to face tough times as the talent shortage continues to impact recruitment success in an economy that is still adapting to the impact of Covid, Brexit and IR35. APSCo will continue to be the voice of the professional recruitment market, lobbying for the legislation and support our members need to thrive in the new hiring landscape.

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