Crystal Umbrella

Contractors working for umbrella companies in London will be interested in the latest survey from the recruitment specialist Poolia. The study found that three out of every four temporary workers polled, a proportion of whom would have worked for PAYE umbrella companies, saw their job opportunities either increase or remain constant during the last twelve months.

Well over half of the respondents (60 per cent) confirmed that they intended to enrol for study on courses leading to professional qualifications in 2011, a finding which suggests that the UK’s flexible workforce includes a large proportion of skilled people who are highly motivated toward ongoing professional development. 40 per cent reported that their pay rates had remained stable during the year, whilst a third revealed that their pay had actually increased during 2010.

Commenting on the study, Poolia’s Operations Director, Gavin Warner said that his firm’s customers are reporting that they’re likely to sustain temporary worker levels through to 2011. Opportunities have been highest in the financial services, banking and retail sectors, he noted, adding that “anyone with skills and experience who is able to build flexibility into their work structure will be well placed to find great short-term opportunities in the coming year.”

The study coincides with remarks made to small business owners by the Recruitment and Employment Confederation’s Director of Policy, Tom Hadley. Mr Hadley urged small firms to make greater use of the UK’s contractor and temporary workers, whom he maintained can deliver “vital flexibility” to companies seeking to grow in a challenging economic environment.

PAYE umbrella contractors have received a shot in the arm from a new study which shows that a majority of small to medium-sized enterprises (SMEs) in the UK consider freelancers vital to their stability.

The research, which was conducted by the specialist freelancer recruitment firm Office Cavalry, reveals that more than half of the 1,000 SMEs polled (52 per cent) believe that workers on contractor payroll will make a “significant contribution” to their workforce over the coming five years. A huge majority – 93 per cent – consider freelancers a “real alternative” to hiring permanent staff, which is encouraging news to contractors working for umbrella companies.

Commenting on the survey, Office Cavalry spokesman Andy Turner said that the figures show how much smaller firms are changing their operating methods. Amongst SMEs, there are growing initiatives to do business with the public sector, better access to finance and a turn towards flexible working arrangements for staff, he added. Together, these trends are “effective, scalable and flexible,” Mr Turner said.

Most commentators agree that future growth in the UK will be substantially driven by SMEs. Whilst organisations such as the Chartered Institute for Personnel and Development (CIPD) believe that initiatives such as the government’s proposed Employer’s Charter will have little impact on the UK’s labour market, there are growing signs that business confidence and consumer demand are returning. The REC’s latest Jobs Outlook, which was published last week, revealed that many UK companies are planning to expand their workforces during 2011, including hiring more temporary staff.

New figures included in the latest Monster Employment Index suggest that contractors working for umbrella companies could be amongst those who do well if the upward trend in job opportunities recorded continues. The Index shows that the number of jobs posted online in December were three percentage points higher than those posted during the previous month, and a healthy 11 per cent higher than figures recorded for the same time last year.

A degree of caution in extrapolating from these figures is necessary, of course, as the full impact of the government’s austere deficit reduction measures have yet to be felt within the wider economy. In particular, the rise in VAT earlier this month and job losses due to public sector spending cuts may make the next quarter a challenging one for PAYE umbrella contractors.

Even so, the figures are encouraging. Commenting on the increase, a spokesperson for Monster UK and Ireland, Isabelle Ratinaud, said that they show a “clear improvement” compared to the state of affairs in 2009, when the UK jobs market was considerably more depressed. She noted that whilst the upward trajectory has continued, the rate of increase had been slowing down over the last few months. She believes that many employers and recruiters will be playing it safe over the next quarter at least.

These views resemble those of KPMG Partner Bernard Brown and REC Chief Executive Kevin Green, who both anticipate that recruitment may slow over the next few months despite a recent surge in opportunities. Ms Ratinaud added that she, too, expects employers to hold off on embarking on a “new wave of recruitment” until they have a clearer sense of how 2011 starts to unfold.

Contractors working for umbrella companies may be interested in the distinctly cool reception given to the recent jobs summit (10th January) by the Chartered Institute for Personnel and Development (CIPD). Prime Minister David Cameron met with business leaders from across the UK earlier this week to discuss the issue of job creation. But according to the CIPD, the policies on offer from Mr. Cameron’s government will have only a “marginal impact” on employment during 2011.

To be fair, the CIPD’s Chief Economic Adviser, John Philpot, welcomed the summit but urged the public policy debate about job creation to focus on an “economic assessment of the determinants of growth and employment.” He went on to say that the UK’s flexible workforce, which of course includes many PAYE Umbrella contractors, has a high level of job creation potential. This reputation was enhanced by the encouraging rate of job creation in the private sector seen last year, he added. However, he maintained that business pledges and policy initiatives are unlikely to have a significant positive impact on employment during 2011.

His comments coincide with the release of the latest “Report on Jobs” from the Recruitment and Employment Confederation (REC) and KPMG. Although the survey revealed that both permanent post temporary vacancies continued to rise during December, the two organisations agreed that the next few months are likely to be “very tough” vis-à-vis employment opportunities, not least because of the impact of the recent VAT rise and public sector cutbacks.

Contractors in the IT skills market may endorse the views of a leading security expert, which suggests that IT freelancers on the contractor payroll may need to assist the companies they’re placed with to become more aware of fundamental security issues.

According to Robert Cheyne, an expert with SafeLight Security Advisors, not enough end users are being adequately engaged by companies to take an interest in protecting their firm’s data. In an interview with SearchSecurity.com, Mr Cheyne said that it’s fairly typical for employees to assume that data security is already being taken care of by someone at a higher level, whereas the truth is that employees are a “major part of the security process.”

The issue, which clearly has relevance for the UK workforce, came to light in Boston, Massachusetts, when an employee of a healthcare company emailed sensitive bank details to a mortgage broker. The worker concerned mistakenly believed that the connection was secure when in fact it wasn’t.

One way forward advocated by another security commentator, Winn Scwartau, is for the industry to come up with solutions that have implicit security models integrated into them. This approach would remove the onus from individuals and move data security to an automatic, behind-the-scenes level.

This news comes in the wake of the first two monetary penalties issued by the UK’s Information Commissioner’s Office following major breaches of the Data Protection Act.

The founder of Ecademy, a social business network, believes that more companies are shunning permanent staff in favour of freelancers and contractors. Penny Power is an expert in business matters and she has said that this increase in freelance hiring is inevitable while the effects of the recession continue.

She said: “Businesses have hired consultants, suppliers and external advisers for a long time, but there is now a distinct shift toward a ‘networked model’ of resourcing your company rather than an ‘institutional’ one of having employees that work full time, when perhaps their niche skill is only needed for a smaller amount of the week. In a global market, that competes on costs, sourcing suppliers is the only way to keep your business competitive.”

Power’s comments are echoed by those detailed in the recent CBI report that explored a move towards more flexible workforces across all sectors. Power stated that she believes that focus will now be on freelancers’ core skills rather than their previous contracts.

She concluded: “A job is something that gives you security and ties you to the company, but only for as long as your are useful. ‘Work’ on the other hand gives you the freedom to look for the right type of work to suit you and allows you to find many people who may want you to ‘work’ for them as a supplier. Having six clients that you work for in a freelance or consultant capacity is far more secure than having one employer in the current climate,” says Power.

Like many firms have been forced to cut back on contractors due to the grim economic climate of present, BT is now due to reduce the pay of the freelance workers in its IT services unit by up to 30%, it emerged after the company announced an across-the-board pay freeze for its 100,000 staff, including directors.

The pay cut follows apparent disappointment in the performance of BT Global Services, which was supposed to power BT’s growth, but instead failed to live up to what recession has made apparent to be over-optimistic profits projections. During the past few months, 6,000 contractors within the group has already been made redundant, and those remaining are now faced with pay cuts to compensate for the 81% slump in third quarter profits blamed on the performance of the unit.

A BT spokesman confirmed the situation on the Friday: “BT Global Services has asked some of its contractors to accept lower rates of pay.”

“This is part of the ongoing cost-control programmes at BT. We believe this review will ensure contractors are paid according to the currently appropriate market rates. Many of our competitors and other large organisations have carried out similar exercises; this is not unique to BT.”

Other measures already taken by BT to reduce company overhead costs include changes to the company pension scheme – the biggest in the UK – which involved raising the retirement age to improve the fund’s financial position.

BP has decided to eliminate its IT freelance staff in an effort to reduce cost given the current economic decline.  If any IT freelance worker wants to continue working with the oil and gas company, they will have to sign a new contract which will mean a significant reduction to their current salary. 

It is expected that freelance workers will have to take a 10% reduction in their salary.  If freelance workers are willing to accept the smaller salary they need to do so quickly.  BP will look to fill the positions with other workers beginning as early as March 1^st.

The freelance workers that faced terminations of contracts were told that “As a valued contractor BP expects that you will make every effort to support this change and ensure minimal impact to the delivery of service to our business.”

Ironically, BP received profits worth around $25.6 billion during 2008.  This impressive figure sets a new record for the company.  The explanation for why the company is forcing its freelance staff to accept reduced pay was stated as “given the impact of the deflationary economic environment.”

Many experts in the freelance field have expressed surprise at the tactics that BP has taken to cut costs.  One of the biggest surprises is that the freelancers who are facing losing their jobs are being forced to make a decision about a reduction in their salary in a very short amount of time. 

Thanks to www.contractoruk.com for the initial report.