• New employment data from the Office for National Statistics (ONS) tell us what we already knew. Talent pools are growing thinner, while vacancies continue to rise. How can recruiters meet demands?

• Stagnant productivity is affecting industries across the UK. What is causing it? What are the solutions? A new online report looks to provide the answers.

Government to Cut Small Business Support

Double Blow for the Self-Employed Could Create Recruitment Shockwaves.

The UK government may reverse two policies designed to help smaller businesses and the self-employed, it was revealed this week. The consequences of the policy changes may impact upon recruitment agencies in several ways.

The first, a scrapping of proposed cuts to National Insurance Contributions (NIC) for the self-employed, was confirmed last Thursday. The decision drew significant criticism from the media and affected industries.

Chancellor Philip Hammond had originally pledged to scrap class 2 NICs for the self-employed. It was estimated that the policy would have left 3.4 million workers £130 better off each year.

In reversing the decision, the government is expected to claw back £360 million in projected lost tax revenue. There are currently no alternative plans to deliver on the proposed tax cut.

John O'Connell of the Taxpayer's Alliance said “High taxes on the self-employed discourages entrepreneurship and risk-taking." He added: "Millions of self-employed people in Britain who were promised lower taxes will be extremely disappointed".

The Daily Express described the decision as one that "infuriated the white van man". But the impact is likely to be felt on a much wider scale than that.

New Enterprise Allowance could also be affected

Meanwhile, it has been revealed that a second roll-back on policies that helped the self-employed is also on the cards.

The Association of Independent Professionals and the Self-Employed (IPSE) has learned that the government may be about to axe its prized New Enterprise Allowance (NEA) scheme. According to IPSE, sources at the treasury have warned business leaders that the chancellor intends to remove the scheme.

The New Enterprise Allowance is a funding scheme for entrepreneurs wishing to start their own business. The scheme offers loans of up to £25,000. Recipients must currently be receiving benefits, and are required to produce a suitable business proposition. The government has previously hailed the successes of the scheme. Official figures show that more than 100,000 unemployed workers have found work through NEA funding.

Andy Chamberlain, deputy director of policy for IPSE said: “Encouraging people into self-employment and to run their own businesses is an overwhelmingly positive thing for the economy. The Government should think very carefully before axing the Allowance".

Assessing the Impact on Agile Recruiters

Both policy changes could find recruiters re-evaluating their internal and external processes. Both hiring and outsourcing are likely to be shaped by the changes to potential earnings for the self-employed.

The past twelve months have seen a dramatic shift in the make-up of certain industry-specific jobs markets due to IR35 changes and worker status. Most significantly, there has been rapid up-take of permanent, in-house roles for those in the IT and healthcare sectors. The outcome has been a widening skills gap for roles which remain unfilled in these fields. A further squeeze on the self-employed and independent contractors may create similar outcomes in other industries, too.

But some recruitment consequences could be felt closer to home.

Should the NEA scheme be scrapped, many newer agencies are likely to feel the impact. Today, a significant number of agile agencies fill chairs with consultants that retain their self-employed statuses.

If star recruiters find the loss of tax breaks unworkable, some organisations could be doubly affected by these policy changes. Were NEA funds be withdrawn, smaller recruitment firms may find themselves in a bidding war for top talent with larger industry organisations. If candidates are forced to accept permanent placements rather than retain their independence, it is the agile agency that could lose out.

ONS Job Figures Latest

This week, the Office For National Statistics (ONS) published its latest employment report.

The figures are likely to confirm the real-world experiences of many recruiters: shallow candidate pools and unfilled vacancies are commonplace.

Official data shows a further squeeze on skills, as unemployment falls across the board and vacancies continue to rise. Meanwhile, youth unemployment continues to fall. The number of 16-24 year olds out of work or full-time education dropped to its lowest levels since records began.

Figure 2 in the report illustrates the stability in UK employment – with recruitment increasing at a steady pace since the 2008 downturn. Overall employment rose slightly to 75.5 per cent in the second quarter of this year.

However, as made clear by Figure 19, the steady employment data represents a slight under-performance, in light of the number of vacancies on the market. Employment opportunities have risen sharply since the third quarter of 2013. Total number of vacancies in the UK job market stood at 833,000 by the end of August 2018.

The full report can be viewed online here.

Higher employment, more jobs – but output stagnates

At the same time, JobSite has published its own independent investigation into slumping UK productivity.

The report finds productivity has remained stagnant since the beginning of the current recession, in 2008.

The JobSite investigation – which finds UK output trapped below pre-crash levels – describes the situation as a ‘productivity crisis'.

The report considers multiple factors – from seismic shifts in workplace culture and technologies, to the briefest moments of squandered time. So what is to blame for lost time in UK workplaces? Is it our more relaxed office environments, remote working, or an expectation for staff to work while sick?

In truth, low productivity may simply be a natural result of increasingly globalised markets. Organisations are learning to operate on narrower margins and are fielding teams that lighten the payroll burden. Lower returns and higher risk of burn-out would seem to be the obvious outcomes of this approach to enterprise.

Whatever the root causes of stagnant output, you can read the full report for free, here.