The eyes of the world will be on the UK this year and PAYE umbrella company contractors have a role to play in promoting the contribution small businesses make to the country’s economy.

2012 sees the Queen’s Diamond Jubilee, the Olympics and the Paralympic Games. All of these events are likely to draw visitors to the UK from every corner of the globe and provide a welcome boost to the UK economy.

The Forum of Private Business has now launched the Get Britain Trading campaign, which aims to encourage the Government to help small businesses trade on a local and global basis.

The FPB’s Get Britain Trading manifesto focuses on four keys areas, simple and proportionate tax, improving cash flow, creating opportunities for growth and creating jobs and improving skills.

David Cameron frequently says that small businesses will drive the private sector recovery, but they need the right trading conditions if they are to expand and create much needed jobs. One of the best ways to achieve this, according to the FPB, it to reduce the amount of bureaucracy small firms have to deal with. More than 50% of SMEs believe their business would develop if they had less red tape to contend with.

Simplifying employment law would encourage small businesses to take on additional staff and help absorb public sector redundancies. But the UK also needs to plug the ever widening skills gap and the Get Britain Trading campaign is calling for a review of the education system so that young people are work ready when they leave school or university.

Contractors can pledge their support for the campaign by signing up on the Get Britain Trading website.

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The UK is suffering from a decline in human capital according to data from the Office for National Statistics, and this could benefit contractors working through an umbrella company.

UK economy statistics use the term human capital to represent the value of skills and knowledge in the workforce. In the first few years of the twenty-first century, this value grew at the rate of about £425 billion each year. During the recession, this dropped to an annual growth rate of £120 billion but by 2010, human capital plunged by £130 billion. This indicates that fewer members of the UK workforce have the skillsets that companies require.

Jonathan Portes, a director at the National Institute for Economic and Social Research, said that if the government allows the unemployment rate to stay high for an unnecessarily long period of time, human capital will be damaged and this will have an adverse affect on long-term employment and growth.

Umbrella companies could see this as positive news. A lot of their clients have the knowledge and skills that many top-level firms are demanding. Contractors with skills in engineering and manufacturing could find themselves in high demand this year as companies look to the flexible workforce to plug the skill gaps that exist in their businesses.

IT contractors could also find themselves in demand as both employers and recruiters have already expressed concerns about the lack of suitably qualified candidates for system development and project management roles.

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Umbrella company contractors might be interested to learn what the REC thinks lies ahead of us as we enter into the New Year.

Last week, the CIPD predicted that 2012 would be a difficult year for many as the jobs market continues to deteriorate.

The chief executive of the REC, Kevin Green agrees that the jobs market will stay fragile for the first few months of the year but warns that we should not be overly pessimistic, as this will dent employer confidence.

He went on to explain that small businesses will drive job creation and they may not have been included in the CIPD’s assessment as many do not have HR departments. REC research has shown that although employers remain cautious over hiring permanent staff, many are considering increasing their headcount this year. Many recruiters are also reporting a skills mismatch and the lack of suitably qualified candidates is creating shortages that must be addressed this year.

The outlook for contractors and temporary workers looks good as businesses continue to take advantage of the flexible workforce. The latest REC Jobs Outlook discovered that at least 80% of employers intend to maintain or increase the size of their temporary workforce this year.

Green went on to say that he expects unemployment to peak at about 2.75 million and demand for staff will continue, particularly at the top end of the labour market. Furthermore, the private sector should be able to absorb public sector redundancies by the end of the year.

The current crisis in the Eurozone is denting confidence and a speedy resolution is needed to encourage business investment and bank lending. This would kick-start job creation and ensure the jobs market had a better year, he concluded.

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There are concerns that small businesses will adopt a ‘hire and fire’ culture if proposed reforms to employment laws go ahead.

More than 75% of employment lawyers think that small businesses will hire and fire, according to research by Contact Law, the find-a-solicitor service. 67% of the employment lawyers questioned for the survey said the new proposals were not workable and only 8% were in favour of the whole raft of changes.

The government proposes to overhaul the employment tribunal system in the hope of saving employers £40 million every year. It has also called for evidence on whether businesses are restricted by the minimum consultation period, currently 90 days, for collective redundancies.

73% of those surveyed said the reforms will not encourage SMEs to hire more staff, and 63% believe the changes would have no affect on the way small firms treat their employees.

About 33% of respondents think small businesses will lose out on talent if the reforms go ahead because jobseekers will be concerned over job security.

Therese Wallin, a legal expert at Contact Law, said the business secretary’s proposed reforms are causing a lot of debate in legal circles. The industry is backing some of his proposals, but others are not so popular.

Vince Cable has said the changes would not lead to a hire and fire culture, but the majority of lawyers disagree. Rather than helping the small business community, these reforms could adversely affect it and it’s hard to see how they can be implemented without facing a lot of resistance, she added.

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Last week’s unemployment figures made depressing reading for everybody, including umbrella company contractors.

Data from the Office for National Statistics showed that 2.62 million people were unemployed in the third quarter of this year. Youth unemployment is a matter of grave concern, with the figures showing that 1.016 million young people are now without a job.

Kevin Green, the chief executive of the REC, was clearly distressed with the youth unemployment figures and said the government needs to take urgent action to rectify the situation.

He reiterated his calls for a National Insurance holiday for small businesses that hire young people. Furthermore he urged businesses and recruitment experts to raise awareness and create better avenues into work.

Government policy must revolve around jobs and growth, he continued, and George Osborne’s Autumn Statement later this month must kick-start the process. The government must start taking real action – just talking about it is no longer good enough.

Will rising unemployment be enough of a deterrent to stop workers looking for pastures new? According to a study by Train4TradeSkills, more than 25% of workers are dissatisfied with their current position and the majority of them intend to make a career change within the next five years.

Top of the dissatisfaction table comes people working in the retail sector. With only 14% saying they are very satisfied in their job. People in the leisure and hospitality sector are the most satisfied, but at only 27% the percentage is still not high.

Interestingly, 46% of the employees questioned for the survey said they wanted to be their own boss. With unemployment continuing to rise, self-employment may be the only option available to the UK’s dissatisfied workforce.

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What measures would umbrella company contractors like to see laid out in the Chancellor’s Autumn Statement?

The business community has compiled its “wishlist” ahead of George Osborne’s speech on November 29^th. Not surprisingly, credit easing features on this list, along with less bureaucracy, super-fast broadband and tax changes for R&D.

The Chancellor’s Autumn Statement outlines measures designed to stimulate our fragile economy and will come at the same time as the Office of Budget Responsibility releases its new economic forecasts.

Small businesses in particular will be hoping to see a bold, affordable and readily available initiative to enable them to access much needed credit. As the FSB points out, the smallest businesses get the worst deal when it comes to lending; they pay the highest rate of interest and are most at risk of refusal.

John Walker, the chairman of the FSB, explained that micro-businesses must be able to benefit from credit easing. However, because the high street banks already dominate the SME market, many firms are put off applying for finance simply because they expect to be refused.

The EEF agrees that measures must be taken to help companies obtain credit.  It points out that in order for the economy to grow, firms must be able to access the finance and skills necessary to help individual businesses expand.

The Forum of Private Business would like to see the Chancellor reduce the burden of employment law. The Forum claims its legal helpline has been bogged down with calls since new employment regulations came into force at the beginning of October.

A lot of businesses believe the best thing the Chancellor could do is reward companies that create job opportunities with a lower rate of tax. Entrepreneurs are the lifeblood of the UK economy, said Andy Raynor of RSM Tenon, and yet they are paying the highest level of taxes in 30 years.

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As we get nearer to the festive season, some workers, including umbrella company contractors, could be tempted to do their Christmas shopping online during working hours.

ELAS, the business support specialist, claims that companies will lose £5 billion as emails offering discounts will tempt workers away from their daily tasks and into the online marketplace.

When employees first arrive at work they automatically check their email. Some then spend up to an hour reading discount emails and shopping around for the best deal before redeeming their discount vouchers.

Peter Mooney, ELAS’ head of employment law, explained that more and more people are doing their Christmas shopping online. In the past, the majority of employees have been sensible and browsed the Internet during their lunch break or at the end of the working day.

However, we’ve recently seen an explosion in sites such as Groupon, offering huge discounts, and these entice people to start shopping early in the day.

ELAS says it expects that in the run up to Christmas, people will spend an average of half an hour a day online shopping from their desk. Based on an average £12.60 hourly wage, that would equate to £5.3 billion over the next 40 working days.

Even those who shun online shopping for the high street are likely to have spent working time browsing for ideas or looking for the best prices, Mooney added.

Although bosses do not want to play Scrooge and further dampen the morale of their employees, time is money and online shopping is going to hit productivity at a time when many businesses are still struggling to recover from the recession.

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Prospects aren’t looking too bad for contractors at the moment, but unfortunately the UK’s young people are still struggling to find employment.

Albert Ellis, from recruiter Harvey Nash, has echoed the calls of the CBI for the government to provide tax breaks for companies that hire young people.

The UK has nearly 1 million unemployed youngsters and the CBI wants the government to waive the first £1,500 of an employers National Insurance bill in return for hiring a jobless 16-24 year old.

Ellis says this would effectively mean that for every ten young adults a company takes on, it gets one free. He went on to say that his own company would take on additional graduates if the tax break were implemented.

Furthermore, Ellis believes that employers would take on more young people if the National Minimum Wage were frozen.

The REC has also been a long-term proponent of a National Insurance holiday for small businesses.

Kevin Green, the chief executive of the REC, was recently engaged in discussions with the business and enterprise minister, Mark Prisk. Green explained that the REC has been asked to draw up proposals to encourage companies to hire young people.

The Confederation will continue to push for government action, as well as showcasing the positive role recruiters play through the REC’s Youth Employment Charter. Nearly 100 REC members have already signed up to the Charter, which aims to work with schools and colleges to raise awareness of the opportunities available to the future workforce.

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According to jobadswatch.co.uk, the third quarter of 2011 saw an increase in the number of opportunities for IT umbrella company contractors.

The website’s data shows a 4.7% increase in the number of adverts for freelancers on the main IT and multi-sector UK recruitment sites in Q3. The number of adverts for full-time IT staff also increased, but only by 1%. However, these figures show that IT recruitment has been expanding for the last nine consecutive quarters.

Jobsadwatch expects this upturn will continue, as employers frequently turn to contractors in the first instance when hiring conditions improve.

However, there are regional disparities and IT contractors in the North West actually saw a 13% decrease in the number of job adverts in the third quarter, whilst Inner London registered the most new contracts.

Adverts for contractors with AGILE skills were up by 38%, followed by .Net with a 23% increase. AGILE is very much the new kid in town, but is rapidly gaining in popularity. There has been a 75% increase in demand for permanent staff with this particular IT skill over the past year.

None of the IT skills registered a fall in demand, but candidates hoping to secure a public sector IT contract saw a 40% drop in adverts.

Financial services firms are now looking for more IT contractors than they were this time last year, as are software houses.

The Monster Employment Index also registered a 19% increase in IT recruitment over the past 12 months. Despite this, the IT sector dropped to fifth place in the monster overall rankings. Engineering topped the chart, transport and logistics came in second and maintenance and construction occupied the third and fourth places.

Monster’s Employment Index also showed that in September, six out of the nine regions in the UK saw an annual increase in online job vacancies. Best of all was the South West where opportunities increased by 22%.

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Limited company contractors could be set to benefit after the government announced it was to inject £950 million into the Regional Growth Fund.

Earlier this week, Nick Clegg, the deputy prime minister, announced the cash injection as part of the coalition’s pledge to stimulate the jobs market. The funding should help to directly create about 37,000 jobs and protect or create around 164,000 jobs in the UK’s supply chain. 119 firms will be able to expand, thanks to the funding, and another 10 enterprises are bidding for funds at the moment.

Clegg said he was delighted to announce this boost for businesses, which will kick start growth and create lasting employment opportunities in areas that need them. As well as enabling businesses to expand, this support will unlock private sector investment.

As more firms expand, highly skilled freelancers could find themselves in demand as projects that have been on the back burner are eventually given the green light to proceed.

Pharmaceutical research contractors based in the Nottingham area, could be one such group to benefit from the funding. Molecular Profiles has received £1.6 million to help it create 62 new high-quality jobs.

However, Ed Miliband, the Labour party leader, does not appear to share Clegg’s enthusiasm. He said this funding was “too little, too late”, saying the £1.4 billion Regional Growth Fund’s three year budget was only 33% of the money made available to the Regional Development Agencies the coalition have scrapped.

He went on to explain that the new funding comes at a time when ministers are withdrawing the capital allowances for companies investing in plant and machinery.

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The Agency Workers Regulations should not prevent organisations using umbrella company contractors to build a flexible workforce, according to the REC.

The REC insists that UK companies still have a variety of options including the Swedish Derogation Model that has already been adopted by Tesco. The Confederation stressed that this is a legitimate supply model and should not be viewed as a “get out clause”.

Kevin Green, the chief executive of the REC, said that AWR has encouraged employment agencies to design innovative recruitment methods. Some have hired their temps on a permanent basis, which is obviously good news for the temporary workers who will benefit from added job security.

With the Swedish Derogation Model, the recruitment agency becomes the temps’ employer and must pay its workers when they are in-between assignments. It’s not a way round AWR, rather it’s a great way of making sure the UK still has a flexible workforce, said Green.

The main issue surrounding the Swedish Derogation Model is one of commercial viability because it exposes agencies to increased risk and obligations. In order to make it work, there needs to be strong collaboration between recruiters and their clients.

He went on to explain that in the majority of cases, new supply models are not necessary. In the majority of sectors, temporary workers’ pay is on a par with, if not higher than, their permanent counterparts. Furthermore, around 50% of all temporary assignments are for less than 12 weeks and are therefore not bound by AWR.

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Apparently, umbrella company contractors yearn for stability nearly as much as their permanent counterparts do, according to a survey commissioned by recruitment company Elan.

Stability is a top priority for permanent employees with 83% of them saying it was one of the three most important factors. 67% of IT contractors also listed stability among their top three priorities.

Strangely enough, more permanent staff than contractors said flexible working hours was a priority but an equal number agreed that technical training was important.

Meanwhile, another study, this time by the HR consultancy Reabur, has discovered that a lot of Brits in full-time employment are not happy in their current role.

31% of those questioned said they were unhappy, 12% were impartial and 7% went as far as to admit to hating their present job. However, employers can take a little solace from the fact that 22% of respondents said they loved their job.

More than 25% of those who are unhappy at work said their job was not challenging enough, whilst 12% said their role was too difficult. Just over a third of the respondents said their job was boring.

9% of employees think they’ve hit the jackpot and secured their dream job, while 34% of the ones who haven’t say they’re too lazy to go out and look for it.

Georgina Read, the joint MD of Reabur.com said it was concerning that such a lot of employees are unhappy with their job. Happy workers are always going to perform better than unhappy ones, she explained.

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