Chancellor Philip Hammond delivered his début budget speech this Wednesday lunchtime. Amidst a broadly optimistic tone and a prognosis of good health for the nation’s economy, there was a controversial change to National Insurance contributions for the self-employed. We consider how the amendment could shape attitudes within the recruitment market of 2017 – and explain why enterprises should learn to adapt.
Responding to changing
It has been called “the Gig economy”: the proliferation of workers in the United Kingdom for whom the greater part of their income is earned through self-employment – either as self-starting entrepreneurs, or as independent contractors within a larger organisation.
This week, that growing section of the national workforce found itself the target of chancellor Phillip Hammond’s first budget speech, as he announced an increase in national insurance contributions (NICs) for the self-employed.
The 2% rise in NICs for class 4 – those earning more than £8,060 in profits per annum – equates to around 60p extra per week, on average. The chancellor described the move as a way to level the playing field between those in full time work and those who earn their income as part of the gig economy: “Employed and self-employed alike use our public services in the same way but they are not paying for them in the same way. Such dramatically different treatment of two people earning essentially the same undermines the fairness of our tax system”.
Yet the move may seem counter-intuitive to those with an eye on the long term. Last year, journalists and recruitment commentators were contemplating a future where the gig economy could provoke a swing in popular opinion towards lower taxes and changes to welfare: principles that are the traditional domain of Conservative policy-makers. Furthermore, some critics have already suggested this week’s rate hikes will make self-employment a less attractive proposition, and that the government is stifling innovation by causing potential self-starters to think twice before choosing to go it alone.
Recruitment: time to adapt for the Gig Economy
But is it realistic to suggest that a 60p per week increase would drive entrepreneurs away from self-starting, and into the waiting arms of employer contracts? It would seem unlikely. Rather than wielding taxation as a stick to drive self-starters into a steady wage, the Chancellor has simply acknowledged these workers as increasingly significant contributor to the national wealth.
Since 2010, the gig economy has grown 72% in London alone, and many recruitment experts believe that this so-called “Uberfication of labour” will continue. If self-employment is here to stay, governments will need to find a way to extract revenue from this group. This week’s budget is a clear indication of precisely that.
So we should not expect to see long lines of former self-starters queuing up outside recruitment offices for salaried positions just yet. Instead, we in the recruitment community should recognise the chancellor’s move for what it tells us about the government’s own expectations for the future. The gig economy is only going to get bigger.
Semantic search recruitment software: Proven solutions to a less certain world
So far, the disruptive impact of the gig economy has been seen primarily from the workers’ perspective. But what of employers and recruiters? The growing influence of gig workers may, in due course, create an employment culture of very different values to those of the present: one where the average candidate will have come to expect a hyper-flexible working arrangement.
When every candidate has a unique set of individual expectations, the search for suitable recruits becomes ever more scientific: where big data, recruitment software, and precise, semantic search operations will play a vital role. Tomorrow’s recruiters will have to assess not only the competence of candidates, but also that their outlook represents a cultural fit that is compatible with employers’ needs.
It means that recruiters will have to become more technically-minded; more adept at processing high-volume pools of data and executing fast, qualitative assessments of every candidate: each of whom represents one in an almost infinite number of permeations of values, ethos, and expectations.
The spring budget confirms what many of us in recruitment have known for a long time: that the gig economy is here to stay, and that recruiters – just like the exchequer – must find new ways to address the changes to our working culture.