Businesses reduce full-time hiring as contractor demand grows, survey finds

Nearly four in 10 UK businesses have reduced full-time recruitment over the past year, while a quarter are increasing their use of freelancers and contractors, according to research from Employment Hero.

The YouGov survey of more than 1,000 UK business leaders found that 39% of organisations have scaled back full-time hiring as employment costs continue to rise.

According to the research, the cost of employing full-time staff has increased by almost 10% over the past year.

At the same time, 25% of businesses said they are hiring more freelancers and contractors and expect to continue doing so.

Employment Hero said the findings point to the emergence of what it describes as an “untethered workforce”, where employers continue to require skills and labour but are becoming more cautious about taking on the long-term financial and administrative commitments associated with permanent employment.

The research found that flexibility was the main reason businesses were turning to contractors, cited by 49% of respondents.

Avoiding long-term commitments was highlighted by 43% of businesses, while 40% pointed to the need for specialist skills. Cost savings ranked lower, with 34% identifying it as a key factor.

Kevin Fitzgerald, UK managing director at Employment Hero, said:  “Permanent employment has long been seen as the traditional route into the workforce, but that assumption is being tested as the landscape changes for the businesses doing the hiring.