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Did the recession trigger a new contractor culture in the UK?

Did the recession trigger a new contractor culture in the UK?


The latest report published by the Recruitment & Employment Confederation (REC) has highlighted the growing importance of contractors in the UK labour market.

According to the figures, the total revenue recorded by the nation’s recruitment industry reached £28.7 billion by the end of the 2013/14 financial year – surpassing pre-recession peaks. An astonishing £26 billion (91%) of this was attributed to “temporary/contract business”, with permanent recruitment activity accounting for the remaining £2.7 billion.

The research also confirmed that the number of companies hiring people on a temporary/contract basis rose by 2.4% last year, which marked a fourth consecutive annual upturn.

Why has this happened?

There’s a theory that the financial crisis sparked something of a contractor revolution in the UK.

Millions of permanent workers were made redundant during the recession, and it is thought that a sizeable proportion of these people opted to become sole traders. Some companies changed their recruitment strategies at the height of the crisis, choosing to hire more temporary workers on short-term contracts, rather than bringing in full-time staff. As such, it made sense for out-of-work professionals to go it alone.

A study published by the Office for National Statistics (ONS) earlier this year also supported suggestions that the economic downturn prompted an increase in sole traders to a point. It showed that as of June 2014, 4.6 million people were self-employed in the UK – the equivalent of 15% of all workers. By contrast, at the very start of the financial crisis in 2008, there were 3.9 million people working for themselves, which made up around 13% of the overall workforce.

If we were to take these figures at face value, it’s easy to see why some have come to the conclusion that the recession was a direct catalyst for the sharp upturn in contractors and freelancers operating in the UK in the past six years. While this is true to an extent, the ONS pointed out that the improved figures have mainly been driven by a fall in the number of people leaving self-employment, rather than a massive surge in the number of full-time workers choosing to become sole traders.

Interestingly, the report also found that as many as 43% of self-employed workers in June 2014 were aged 50 or above, while 32% were female – up from 29% in 2009.

The influence of the construction industry

Perhaps unsurprisingly, the recent ONS report revealed that one-fifth of all self-employed people in 2014 worked in the construction industry.

With the economy continuing to expand, and house builders growing in confidence, the future appears to be bright for contractors in this important industry sector. Indeed, the latest Construction Purchasing Managers’ Index published by Markit and the Chartered Institute of Purchasing and Supply highlighted another impressive increase in building output across the UK in September 2014.

The index posted a score of 64.2 for the month – up from 64.0 in August. Any rating over 50 denotes growth in the industry, so it’s clear that business is booming at the moment.

Quantic UK works with a multitude of construction professionals, ensuring that all of their tax affairs are taken care of, allowing them to focus on doing what they do best. With further construction industry growth predicted – particularly in the house building sector – contractors will inevitably be even busier in the coming years, so it’s vital that they have their own personal accountant to turn to.

If you need any more information about the Construction Industry Scheme or CIS registration, you’ve come to the right place.

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