Michelle Reilly, CEO of 6CATS International and Founder of 6CATSPRO looks at the global impact on contractors and recruiters
Since coronavirus first hit headlines at the tail-end of 2019 the world has had to quickly adapt to the growing spread of the virus. But no matter what procedures were put in place, the impact on economies worldwide has been detrimental. Global markets have been hit hard, and for those recruiters working with contractors, the impact has been significant.
Countries have responded and been impacted differently by the pandemic and at varying paces. For contractors where the chance to move across borders for work has arguably provided the most lucrative opportunities, worldwide lockdowns have had a significant impact. But things are changing rapidly.
Reflecting on tough times
It’s perhaps an understatement to say that things have slowed down in the contracting marketplace. With movement restricted, expat opportunities have ground to a halt, with lockdowns being implemented across the globe with very little notice – overnight in some cases.
Aside from the understandable drop in contract opportunities, there have been a number of interesting trends that we’ve noted as the world adapts. In particular, there’s been a promising increase in the extension of contracts – far more than we would normally see. Where these are happening, they are being agreed for longer periods than we would usually expect, as employers focus on retaining talent. For contractors, this has presented the challenge of remaining compliant with local employment and tax legislation if their stay is extended.
Sector wise, the impact has varied significantly. Some areas such as oil and gas saw contract opportunities fall off a cliff as those fields unable to implement remote working policies saw work stop. In comparison, some specialisms are surviving well, with opportunities still prevalent across the likes of logistics and pharmaceuticals.
While expat work may have dried up, we have seen a notable uptick in remote working for contractors as more businesses give contingent staff the option to deliver or even temporarily start contract services from their home countries rather than in a host destination.
Obviously, any move to help keep contractors and the self-employed in work is welcome, but in this case it also creates a number of challenges. Contractors working in this way will have to choose what model they can invoice their services under and may opt to use their home country PSC. Where this differs to original agreements, recruitment firms will be under greater commercial, administrative and time pressures to ensure assignments meet these temporary solutions.
Another difficulty for agencies is the need to adapt contracts to reflect the current Covid-19 enforced locations of service, the change of contractual parties, and factor in that this is a fluid situation pending further clarification.
Generally speaking, place of service will define where taxes are due to be paid. The Criminal Finances Act 2017 (CFA) will apply wherever the worker delivers their services, regardless of the global crisis. Potential fines for any breaches are unlimited for the owners of the business – and there has been no change to this in light of the pandemic.
Looking to the future
While there’s no doubt that the world of work as we know it has changed drastically, not all change is bad. We’ve seen a definite shift in behaviour that is promising for recruiters. Contractor recruitment enquiries are down, but conversion rates are up, meaning there are fewer clients ‘testing the water’ and predominantly employers are approaching recruiters with solid contract talent needs. Essentially, we’re seeing a trend of serious clients seeking serious recruiters.
Although there might not be the expat opportunities currently, we certainly expect to see that change soon as travel and mobility rules are eased. There are some skills that simply aren’t available in country, so employers are having to look further afield to source the expertise they need. In fact, we’re already seeing some positive trends, with activity picking up across Asia, from Pakistan eastwards. In China, some contractors are returning to their physical place of work and across Eastern Europe there have been signs of things getting moving again. Poland and the Ukraine, for example, have seen an uptick in activity that is much higher than normal for these destinations.
While we are by no means at the tail-end of the global pandemic, there are clear glimmers of hope for the recruitment of contractors in particular. We expect to see more countries slowly ease lockdown and freedom of movement restrictions which will certainly bolster contract opportunities worldwide.