A new study undertaken by a leading contractor website has highlighted the detrimental effect of COVID-19 on contractors’ mental health. The survey, which compiled answers from over one thousand contractors, showed concerning stress levels in the contracting sector, which have been further exacerbated by the impending April 2021 off-payroll reforms.
Alongside the usual stresses of the pandemic, the survey shows that COVID-19 and the resulting lockdown has had a particularly crippling impact on the contracting sector. This is mostly down to the Government’s treatment of contractors during the pandemic, which has seen them largely excluded from support schemes.
Many contractors have had to rely on personal savings, with 33% noting that they haven’t worked at all following lockdown, and 50% suffering financial hardship as a result. An overwhelming majority of contractors also reported that they were concerned about sourcing future work. In addition to 49% experiencing periods without any work, 41% of respondents reported that work had slowed down during lockdown, or that they had experienced disruption with projects, creating cash flow problems.
For many, exclusion from the various support schemes has reaffirmed the notion that Government doesn’t value the contracting sector. Although the government has confirmed that limited company contactors affected by COVID-19 are eligible for a business loan, most respondents felt this was unhelpful as a loan creates further debt during already uncertain times.
When asked, 68% indicated that they trust Government less as a result of its handling of COVID-19. Of these, the majority observed that IR35 had already resulted in stress and a lack of opportunities prior to lockdown. The reforms have now been confirmed, with few assurances that serious flaws in the legislation will be dealt with.
Consequently, 24% of respondents say they are considering going into permanent employment, citing off-payroll changes and financial uncertainty as the driving factors. However, with unemployment expected to almost double to 7.5% by the end of the year as government-funded support schemes come to an end, permeant jobs could be thin on the ground.
It’s unfortunate that confidence amongst the flexible workforce appears to be at an all-time low, just when the economy will be relying heavily on contingent workers to underpin its recovery. Demand for contractors is predicted to rise as businesses look to remodel, while there are also opportunities for contactors to recycle their skills in emerging areas of demand.
This content has been supplied by IR35 Guru
If you’ve been affected by the Off-Payroll reforms, or if you’re unsure about your employment status, Umbrella Exchange can help you make sense of your options. For an overview of IR35 and the off-payroll changes ahead, read our free guide here. We have a range of hassle-free services that can help you re-open your limited company, or find the right umbrella company for you. To talk to a member of our team, call: 0203 393 3881