The ongoing skills shortage has now been creating hiring challenges for recruiters in the UK for several years. With fewer candidates across the jobs market but a growing number of vacancies, the landscape has been favourable to limited company contractors, freelancers and other temporary workers as businesses have turned to these workers for short-term access to in-demand skills.
In fact, recent research from the Open University showed that UK organisations are currently spending more than £2 billion a year on hiring temporary workers. This is because 53 per cent are unable to find a permanent candidate with the skills that they require.
£2 billion worth of opportunities for contractors
The Open University conducted a survey involving 400 firms, which found that nine in ten have experienced difficulties in hiring the calibre of workers they have wanted at some point over the last 12 months. With Brexit looming, many organisations are concerned that these struggles will be exacerbated further in the coming months, leading to even more reliance on contractors and freelancers.
At the moment, three-quarters of businesses are spending an average of one month and 24 days longer on recruitment than they expected to, which is leading hiring processes to cost at least £1.7 billion a year for companies across the UK. What's more, offering higher pay rates for roles in order to attract a greater number of applicants is costing firms an estimated £527 million a year.
In total, 56 per cent of companies revealed they had increased the pay rates on offer to their candidates over the past year. On average, these pay offers rose by £5,575 at larger organisations and by £4,150 at small and medium-sized firms.
Naturally, this situation is good for limited company contractors, freelancers and other self-employed individuals, as it means they have their pick of the jobs if the end clients are willing to take on contractors to fulfil a short term need, and they may find themselves being more highly remunerated thanks to the skills shortage.
However, this situation is unlikely to be sustainable for businesses over the long term, so what will this mean for contractors then?
Steve Hill, External Engagement Director at the Open University, warned: "The UK challenge of finding talent with the right skills means that businesses need to look at recruitment, development and retention differently."
How contractors should position themselves
Of course, there will still be opportunities available for contractors once the skills shortage lessens, but it is unlikely that there will be quite as many as at present. Therefore,contractors need to make sure they are adding as much value as possible to the clients that they work with throughout the skills shortage. This will help to improve the client's attitude towards temporary workers, as well as potentially creating more opportunities for them in the future, either with the same client or after they have been recommended via word of mouth.
With the temporary hiring landscape likely to become even more competitive in the future, it is also important for contractors to be upskilling themselves constantly in order to ensure they are in the most competitive position to benefit from opportunities when the situation changes.
If contractors need to take time out from their usual daily responsibilities to focus on acquiring new skills, they may wish to take advantage of the support and advice on offer from My PSC, PayStream's limited company service. My PSC can provide a safe pair of hands to help with the administrative side of running a limited company, allowing contractors to gain new skills elsewhere safe in the knowledge that they are operating in the most compliant and tax-efficient way.