UK engineering contractors increase 68% in five years

Posted on Thursday, October 19, 2017 by The MSS teamNo comments



The engineering sector has seen an interesting phenomenon over the past five years – a huge rise in the number of contractors.

Figures obtained by Nixon Williams, an accountancy provider for freelancers and contractors, show an increase from 32,911 in 2011 to 55,393 in 2016 – that’s a rise of 68.3 per cent.

During the same period, the number of employees in the engineering sector increased by less than one per cent, from 203,000 to 205,000.

So, why has this happened? And what are the implications?

It’s true there has been a move towards more self-employment across the whole economy in recent years, but that’s at a much lower level than we’re seeing in engineering: from 2011 to 2016, those registered as self-employed have risen from around 3.97 million to 4.67 million. A 17.5 per cent increase is a significant jump for sure, but it’s a fraction of the rise in the engineering sector.

Nixon Williams, which obtained the figures from the Office of National Statistics (ONS), suggests: “Contracting is increasingly becoming a career and lifestyle choice. Where there may previously have been uncertainty and doubt, there is no longer the same risk of being out of work.

“Businesses may be turning to contractors as a solution as contractors provide a more flexible and cost-effective solution to the permanent workforce.”

Although those who are self-employed can expect to miss out on employee benefits such as paid holiday, sick leave, and a company pension, the firm suggests that the higher take-home pay could be a significant incentive for engineers to switch to self-employment, and that the extra money could make up for any gaps between projects, enabling contractors to pick and choose their work.

The ONS defines someone as self-employed if they run their business for themselves and take responsibility for its success or failure. They may be a sole trader, in a partnership (with one or more other people), or an owner of a limited liability company.

Although engineering is still dominated by men, this self-employment option – in its various forms - seems to be disproportionately attractive to women: those latest figures show 3.2 per cent of engineering contractors are women (1,784) compared to 2.4 per cent in 2011 (800).

Nixon Williams suggests that contracting is particularly suited to women who may have childcare responsibilities. Unlike employees, contractors can decide not to work during school holidays, and may also have more flexibility over their working hours and even their location.

The Engineer quotes Nixon Williams’ CEO Derek Kelly as saying: “There are more women in engineering in both permanent and temporary roles, but the increasing proportion of contractors who are women is particularly significant as contractors tend to earn more than their permanent counterparts, which suggests that the pay gap between men and women in the engineering sector is likely to be narrowing.”

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