UK Contract Recruitment: Mid-Year Update 2024

In January, we asked the question “Will 2024 be a year of recovery or was 2023 the beginning of a new normal for the UK’s contract recruitment market?”. As we reach the mid-point of the year, Ben, our Contract Delivery Manager shares an update: 

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In the first half of 2024 – we have registered almost as many contract vacancies as we did in the whole of 2023. This significant increase can possibly be attributed to a shift in market sentiment from permanent to temporary hiring plans – probably driven in part, by the mass redundancies that have continued into 2024. Not necessarily a revival of budgets for major project-based work – but maybe more of an increase in demand, due to a reluctance or inability to hire permanent staff.

Fierce Competition 

We noted an increase in the quality of contract applicants in 2023 – this has continued so far in 2024 and we are now in a fiercely competitive contract market. Candidates that would have almost certainly secured contracts a few years ago, are now repeatedly being ‘pipped to the post’ by others that previously might have been termed “unicorns”. Focussing a search on the best possible match in terms of skills, location & rate, is a strategy that is helping Contractors to stand out.  

Contractor Availability 

The average time that a contract applicant has been available has also risen dramatically. Approximately 35% of the number of overall contract applicants have been out of contract for between 1 & 3 months – roughly 15% of all our contract applicants have been out for between 3 & 6 months and around 10% of our contract applicants have been looking for a new contract for over 6 months. 

Rates 

It’s hard for candidates to know where to pitch their services, in terms of rate right now. ADLIB recruits across: Tech, Marketing, Product & Programme Management, Data, Science and Design – the exact fluctuations that we have seen vary by industry; however, the general trend is down. Some of the more extreme examples include:

• Senior Software Developers going from £550 per day in 2022 to £350 per day in 2024,
• Copywriters reducing rates from £350 per day in 2022 to £225 per day in 2024
• UX Designers that used to work for £500 per day in 2022 taking on assignments at £300 per day in 2024.

Not Everybody Has Been Affected 

In parallels to the situation with increases in UK mortgage rates, predominantly affecting homeowners who have had a fixed deal expire – contractors that had been in a contract throughout 2023, hadn’t yet felt the full effects of the recent market. Typically, when such Contractors roll off a contract and/or begin their search for a new role in 2024, they spend a few weeks adjusting to the rates that are available and almost inevitably end up reducing their expectations. 

The Perm Wage Spiral & IR35 

In many of the markets that we recruit into – it seems fair to say that the post-COVID permanent wage spiral has either stalled or all but completely unravelled. There has been a notable normalisation of permanent salaries and as such – some “Inside IR35” contract roles have become more attractive than they might have been previously. I think most contractors reading this, that have been active in the market, will have agreed to apply to at least one “Inside” role this year. The 33% premium that contractors were adding for “Inside” roles has been eroded significantly, by an increased supply of candidates and a reduced demand from Clients. 

“Outside IR35” 

In our last snapshot we also asked whether the tweak to IR35 (known as “double taxation”) that came into effect on April 6th, would lead to an increased appetite for “Outside” Contractors. Whilst we have seen an increase in the amount of “Outside” roles – It’s a bit early to say for sure what the impact has been. What we have noticed, is that the “Outside” market is maturing – Contractors are taking their limited companies more seriously in terms of websites, the use of substitutes is increasing, more Contractors are working with multiple Clients and so on.  

So, is 2024 the year of Recovery or a New Normal? 

Well, at the halfway point it’s looking as though it could well be a mix of both. There is a recovery underway but, in most sectors, it is not fuelled by a rampant economic revival – more so by economic necessity. There are still markets that are outperforming others – Science, AI/Data & Marketing seeming to lead the way – but it still feels like there is time to be spent on the road to recovery, before we are talking about a white-hot contact market in the UK again.