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52% of recruitment agencies concerned with IR35 reforms

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65% of agencies expecting to place more applicants this year

According to research by by digital payroll solution for contractors, Cool Company, talent shortages were one of the greatest recruitment agency challenges of 2022. More than a third (39%) of the recruitment agencies involved in the research, cited lack of applicant talent as causing problems in 2022. With a further 20% saying that they believe the same problem will cause issues this year.

Surveyed recruiters highlight other concerns such as the demand for higher salaries, which proved challenging for 39% of recruiters in 2022 and is a concern for 14% in 2023. While a further 39% said that attracting the right candidates was a difficulty last year, but is less of a concern this year. With more recruiters worrying about the ability to hire quickly (15%) and the cost-of-living crisis/inflation (14%) in 2023.

Following the difficulties surrounding IR35 reforms during the last two years, compliance also remains a point of unease. With 52% of recruitment agencies either somewhat or very concerned and 43% of agencies saying that IR35 compliance has caused them difficulties when recruiting for contract positions.

However, for most (85%) the outlook for 2023 is positive, with 65% of agencies expecting to place more applicants this year and 74% saying that it’s either likely or very likely that they will grow their team in 2023.

Kris Simpson, Country Manager UK at Cool Company, commented: “2022 raised a range of difficulties for recruiters. With economic instability, and the global talent shortage creating unfillable vacancies. But while this problem may have previously been remedied by outsourcing, difficulties with navigating IR35 legislation has obviously impacted that process.

As we settle into 2023, talent acquisition remains a concern for many businesses, recruiters are up against it, matching applicants who expect higher pay with businesses looking to reduce overheads. However, despite the challenges, it is encouraging to see such optimism in the sector.”


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