The Problem with Short-Sighted Business
The UK’s contractors have faced some trials and tribulations of late – and they don’t seem to be out of the woods yet. As the country’s businesses begin to recover from the effects of COVID some new, unfavourable trends seem to be emerging.
The first hurdle for contractors
Let’s step back a couple of months… In March, the government’s reaction to the pandemic from a vocational context was to introduce the Coronavirus Job Retention Scheme. This furlough provision was a relatively straightforward way for employers to support their workers temporarily through the height of the virus. It wasn’t long before the major contracting forums were hinting towards the notion that many umbrella companies (even some of the “accredited” ones) were refusing to partake in the CJRS programme for their employees. A major blow to contractors across the nation.
Why this was the case is anyone’s guess. Was the umbrella standing to lose its weekly margin? Were their payroll systems or mindsets involved not robust enough to comprehend the notion of furlough payments? Was it too much of an administrative obstacle to entertain the CJRS system? We’re not overly certain – and our research has provided little in the way of conclusive reasoning.
This may be the initial instance of short-sighted business decisions impacting contractors during COVID-19. These umbrellas had a choice to make; treat their contractors as regular employees (which they are) and partake in the CJRS as a support mechanism to ensure they had secure income for their families – or don’t. As mentioned, we are not sure of the reason behind many umbrella companies choosing not to participate – but that decision may well have lasting effects on their reputation from their employees’ perspective.
In the long run, are those umbrella companies set to lose business due to this decision? Look at it from the contractor’s perspective; if you were in their shoes, would you give your hard-earned cash to a company that chose not to support you in a time of need?
What was a temporary inconvenience for contractors may stand to have long-term impacts on any umbrella that chose a short-sighted, convenient approach to employee care.
The New Norm
Except for a few isolated community flare-ups, we are gradually easing back to a state of “normality” (though no one is expecting an easy or straightforward path). The UK’s industry has contended with unknown landscapes and an ever-changing horizon for months, but as the dust settles difficult decisions must be made. These new considerations are sparking new trends within the contracting world.
No change is more evident or stark than the clear deficits in new contract values. We have heard from highly skilled IT Professionals, Banking Gurus, Project Managers and many others who are being offered contracts at 60-80% of their contract worth pre-COVID.
This could be due to cashflow restriction faced by the businesses themselves, fiscal circumstances may be understandably tight as they try to regain their position in the marketplace. But the consensus among many contractors is that end clients may be taking advantage of the difficult situation that temporary workers find themselves in, i.e. kicking contractors while they’re down.
Contract renewals are at record low levels due to the pandemic negatively impacting demand. From a recruiter’s perspective, it means there are plenty of talented individuals out of work – offering a £300 daily rate to attract individuals worth much more may seem like a savvy move in the present climate. But is this another case of short-sighted decision making?
Say, for instance, that your business can hire an uber qualified IT technician at bargain rates due to current circumstances. Be under no illusion that said IT technician will be applying for higher-rated roles as the industry bounces back; should a position arise that offers greater earning opportunities they will have no problem departing without hesitation. This may leave you with a vacancy to contend with and an ongoing workload to adopt that only a very high earner would understand.
On the flip side – when the economy has recovered and industry is once again booming, will your company name be remembered as one of those who attempted to shortchange hard-working contractors during their times of need?
Contractors talk, they know their worth, they know their rights and they have lasting memories. The pandemic offered a unique opportunity for businesses to show their true colours – here’s hoping short term financial or administrative decisions do leave a negative impact on providers and end clients for years to come.
Have you been affected by a short-sighted business decision? Are you being offered contract rates well below your value? We’d love to hear your stories.
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