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Jobs data shows dip in contract placements as businesses prepare for IR35

The latest monthly Recruitment Trends Snapshot report from the Association of Professional Staffing Companies (APSCo) in conjunction with growth analytics platform cube19, has seen the impact of the roll out of IR35 changes to the private sector. The Snapshot has revealed contract placements dropping a sizeable 10.1 per cent month-on-month, as employers shy away from contingent workers.

With certain banks such as HSBC scrapping contingent workers altogether – the drop is perhaps not unexpected. Permanent placements have fared well as a result, with a 0.9 per cent increase month-on-month and 10.2 per cent rise from last year’s numbers.

The data also indicated a levelling out of recruitment demand in February after a huge seasonal uptick at the beginning of the year. Across permanent and contract jobs, openings fell 8.6 per cent and 7.4 per cent respectively between January and February 2020. However, permanent roles are up 9.3 per cent year-on-year, and contract opportunities have increased 7.7 per cent.

This may, in spite of coronavirus-related economic uncertainty, indicate greater stability for 2020. Between January and February 2019, perm vacancies dropped a notable 17.1 per cent, significantly more than the latest figures.

Along with growth in permanent placements, the data shows a huge uptick in recruitment sales revenue from permanent placements year-on-year, which increased 24.5 per cent – another possible indication of the impact of IR35, with businesses reducing their reliance on contractors.

“We always expect to see a dip in placements and vacancies across the board between January and February as activity levels out following seasonal hiring peaks,” said Ann Swain, CEO of APSCo. “What’s incredibly encouraging is the year-on-year increases we’re seeing, which certainly indicate that economic positivity remains for now.

“The private sector roll out of IR35 has clearly already had an impact on contract placements, however, we hope that the government’s decision to take a softer approach to off-payroll rules will encourage more businesses to continue to tap into the valuable contingent workforce,” she added.

Jo McGuire, global sales director at cube19 said: “Year over year growth is very positive on the perm side and what’s especially encouraging is the growth in permanent fees. Salaries remain neutral whilst revenue increases. This signifies that end clients recognise the value that staffing providers bring in securing top talent. IR35 is showing an impact in contract revenue but the YoY increase in contract jobs combined with the government’s softer approach to off-payroll rules will hopefully see this bounce back soon.”