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The Contractor market

  • Publish Date: Posted about 5 years ago
  • Author:by MERJE

As a supplier of specialist contract and interim recruitment solutions to our growing Client base, we thought we would share our insight on this fast moving market.

Here are some of the current factors which have been influencing the volume of activity across the interim & contracting space over the last 12 months:

Temporary workers filling a skills gap

Digitalisation projects are taking place throughout the UK as organisations upgrade their aging systems and processes. These projects require very specific skills, whether data or operations focused, and often have finite timescales and resources allocated to them. As such, bringing in technically-skilled people on a permanent basis is likely to not be a suitable, or even possible, solution.

Firms now look to the Contractor market to temporarily populate their teams with technically proficient workers. The outcome is that the organisations are confident they are recruiting the right people for their projects and there is a fluid workforce that move from role to role and organisation to organisation on a per-project basis. It also means that the day rates of Contractors with specific niche skills are rising as they are able to demand more for their technical abilities.

A changing regulatory landscape

Similar to the digitisation skills gap, many organisations are in need of Compliance, Risk Management and Financial Crime professionals to ensure that any significant process changes caused by transformation projects and new product launches abide by relevant laws, policies and regulations. This has resulted in increasing Contractor demand in these areas as regulatory experts are needed for these short-term projects.

Paul Sherlock, Director at MERJE with 12 years' experience in Compliance and Risk Management contract recruitment, explains: "The last few years have seen a number of significant changes across the regulatory landscape, such as the introduction of SM&CR, GDPR, MiFID II and PSD2. These changes in guidelines have an impact on many regulated organisations as they work to ensure that they are operating in a compliant manner. 

"Given the nature of the work involved with these projects, most organisations look for external contract support as this enables them to bring in the necessary expertise on a short-term basis until such projects are rolled out and implemented. This has created a buoyant market for contractors who can use their skills and experience to move between projects and, importantly, enabling them to add tangible long-lasting value to a business even though they are not a long-term member of staff. This has resulted in an upturn in regulatory professionals turning to contract work given the rewarding and varied nature of the projects they undertake."

Flexible working

Throughout the recruitment landscape, it is notable that flexible working has become a deciding factor for many when choosing to take a job. The flexibility could be down to location, hours worked, dispensation due to physical or mental health issues, or many other bespoke benefits. As such, many have started to see changing from working on a permanent to a temporary basis as moving towards a better work-life balance.

This isn’t to say that all contract positions have flexible working elements, however the freedom to not be tied to a permanent contract, working in a variety of locations (including home-based) and the potential to have time away from work between contracts has become appealing to many permanent workers.

The attraction of flexible working has, in some cases, created a more competitive Candidate market and an over-saturation of talent in certain sectors and functions. So, while Clients have a wider pool of talent to choose from, there is not enough availability of roles for the Contractors.

What will the future hold?

IR35 & VAT changes

There are a number of potential trends which may negatively impact the market in the next 12 months. One significant factor is the upcoming IR35 tax changes within the Private sector, of which all Contractors need to be aware and fully compliant.

Andrew Varty, Managing Consultant at MERJE with over 20 years’ experience recruiting Contractors and Interim professionals across the UK and internationally, believes that “with the imminent IR35 changes, the future has become uncertain for some Contractors. The volume of available talent in certain skillsets will undoubtedly remain unchanged, however the financial benefits of contracting may diminish for many. At MERJE, we ensure Contractors are fully compliant and are on hand to offer help and support to Clients and Candidates in minimising any impact caused by the scheduled changes in 2020.”

Similarly, the switch to digital VAT record-keeping may impact the way many private sector Contractors pay and manage their tax. Some Contractors may perceive these changes as an additional complexity and influence their intentions to continue operating on a contract basis.


With the UK planning to leave the EU in a matter of months, Brexit is having an impact due to the uncertainty of how businesses will be affected and influencing hiring plans and the general stability of the market. This has led to a perceived slowdown of permanent recruitment in some areas, replaced with an increase in contract and interim support, as firms are not keen to make long-term commitments to new staff without knowing the financial outcome from Brexit.

One concern is that international firms, especially ones based in Europe, may be nervous making structure changes due to the possibility of a decrease in Contractors able to work in the UK triggering a skills shortage.

The next few months will be crucial in seeing how organisations are able to plan ahead and adapt to the changes caused by Brexit, and how the contractor market will react to these changes.

The contractor market is evolving, with many factors impacting both volume of Contractors and opportunities. Beyond the next 12 months we will no doubt see new trends which may influence how buoyant the market is, yet at the moment, and despite some uncertainty, many are thriving in the current conditions.

To discuss how MERJE can support your ongoing Contractor recruitment needs in 2019, please contact or 0203 637 1600 (London and the South) or 0161 883 2740 (North West and rest of UK).