How Labour’s win at general election 2024 will affect contractor recruitment

First and foremost myself and APSCo would like to congratulate the new Labour Government on its landslide election win, writes Tania Bowers, a director at the Association of Professional Staffing Companies.

The professional staffing sector and a forward-thinking flexible labour market is critical to its plans for growth, and APSCo will continue to be the voice to all parties articulating the difference between expert independent working and the broader agency market.

The productivity conundrum

The UK is arguably home to the most dynamic professional staffing sector in the world and with a government desperate for growth to finance its spending pledges, unpicking the ‘productivity conundrum’ must be near the top of Sir Kier Starmer’s to-do list.

Our organisation has long argued that flexible, skilled contracting is highly productive and a necessary lubricant within a strong, fair and efficient labour market. Matching these niche experts to clients with specific, technical needs will drive much-needed improvements in productivity across the country.

At odds?

However, this may seem to be at odds with Labour’s manifesto pledge to introduce more employment regulation through its Employment Rights Bill.  

The good news for contractors, recruiters, umbrella companies and end-users is that APSCo and business leaders have been engaging with senior shadow ministers for the past three years and the value of the flexible staffing sector is understood at the top. However, that doesn’t mean there aren’t challenges ahead.

For independent contractors, any hope that the Off-Payroll Working rules will be scrapped by a new Labour government has been extinguished by virtue of IR35 not even being mentioned.  

However, there is some light; Labour has pledged to consult on employment status, including defining genuine self-employment. This must be seized as an opportunity to differentiate self-employed professionals from ‘dependent contractors’ and lower skilled roles within the gig economy.

New rights for agency workers?

For agency workers, the Employment Rights Bill is likely to provide some additional rights such as day one statutory sick pay. However, umbrella companies and other recruitment employers will face some significant challenges around any ban on zero-hours contracts and day one employment rights.  

Defining an “exploitative” zero-hours contract in legislation will be key, and day one rights may result in a change to engagement models, though it is too early to tell without the publication of the finer legislative details.

The SEB in all but name… 

Labour’s plans to establish a Fair Work Agency appears to be along the lines of the Single Enforcement Body proposed in 2017 following the Taylor review, though the current detail suggests this will be much broader to include sick pay, holiday pay and parental rights enforcement. As with any government regulation, though, it will only be as hard-hitting as the enforcement. 

What will be of most use to end-users, recruiters and workers if this body is granted stricter permissions to enforce regulation, will be quicker, cheaper routes of redress for disputes. Endless claims stuck in overworked employment tribunals are harmful to employers and the individuals involved in the process.

How UK recruitment views Labour’s win 

End-users, alongside the recruitment profession, will welcome greater economic certainty of a new Labour government with a clear majority, but no doubt feel trepidation about increased flexible supply chain costs, following a fairly hefty boost to National Living Wages earlier this year. 

It is the staffing sector’s role to ensure that reasonable increased costs of the supply chain are passed up to end-users where appropriate and that technological improvements are embedded in the hiring process to raise efficiency, delivering the best service outcome for contractors and candidates.  

The UK, alongside other developed economies, continues to face an ongoing professional skills crisis with APSCo’s recent research showing reduced applications per vacancy across all key sectors, including legal, engineering, financial services, pharmaceuticals, IT and education. 

Where new prime minister Keir Starmer has his work cut out 

With Starmer announcing plans to increase jobs in many of these remits and invest in greater implementation of Artificial Intelligence (AI) in core public services, these falling application numbers showcase the significant talent shortage Labour now needs to contend with. 

The new government has committed to reform the Apprenticeship Levy to deliver a Growth and Skills Levy and is keen to expand access to upskilling and reskilling training programmes.  

All eyes now on Labour’s first 100 days 

We will continue to push for the scope of the levy to be widened to include agency workers and skilled contractors, to allow access to funds for the ongoing professional training required in specialist sectors such as clinical healthcare and clean energy. 

The new government has ambitious plans for skills policy, including the establishment of Skills England, but the proof will be in the actions taken in the new government’s first 100 days and then delivered over the next year.