Empowering the Freelance Economy

IR35 + Automation = disaster for UK’s digital skills gap

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  • More than two-thirds (67%) of digital leaders globally are now unable to keep pace with change because of a dearth of the talent they need, according to Harvey Nash Group.
  • Cyber security is the most sought after tech skill with 43% indicating a shortage, up by almost a quarter in the last 12 months, followed by big data/analysts (40%), and technical architects (34%).
  • The shortage of developers (32%) saw the biggest increase compared with previous years. Harvey Nash Group says that this shortage correlates with its findings that companies are focusing on creating new products and services, and therefore need developers to do this work.

Contractors could bridge the UK’s tech skills gap

Outside of training and using niche consultancies to bridge the tech gap, more than a third of digital leaders have widened their geographical net to source new talent, as hybrid working becomes more commonplace, according to Harvey Nash Group.

Not surprising that companies are having to hire non-UK workers to fill the digital skills gap with the onset of new hiring challenges due to IR35 and Off-Payroll legislation. These new rules are already very damaging to the UK’s ability to remain competitive, according to a host of contractor specialists, such as Dave Chaplin of IR35 Shield, and representative bodies, such as IPSE and the CBI.

Chaplin, who has been watching the developments unfold in recent HMRC and House of Lord committees, told The Freelance Informer that IR35 could be “very damaging” for the UK’s ability to address the digital skills gap in a variety of sectors from finance to construction.

“We are already seeing many in-demand contractors turn their backs on medium or large UK firms and simply offer their services, remotely, for overseas clients. We have a major brain drain on our hands. The reforms are a terrible act of self-harm,” said Chaplin.

He added: “The legislative flaws are a disaster, producing behavioural side-effects that aren’t going to be doing anything to stoke the wheels of UK commerce.”

Since the changes in April 2021, pressure has been growing, with IPSE and a number of other organisations recently giving evidence to the House of Lords Finance Bill Sub-Committee on the reforms.

IPSE stated in a December newsletter:

“While the findings of the report are yet to be published, we at IPSE are continuing to fight against IR35 by appearing on major broadcasters such as the BBC and Sky News, and across national newspapers over the past year. Our research is also indicating that the pendulum is correcting away from the blanket ‘inside IR35’ assessments that we have seen this year.”

Automation culling jobs and weakening human tech skills

Automation in most industries has been applauded during the pandemic, but when automation replaces human skill acquisition, then the economy is weakened in its ability to employ people and generate taxes.

Some industries saw an equal growth in job creation and automation over the pandemic, such as computer
programming, professional services and the creative arts. Meanwhile, agriculture, waste collection, and manufacturing sub-sectors experienced a decline and are at a relatively high risk of automation, according to a RSA report.

Construction, which has a large percentage of contractors, is also seeing its skills gap widen due to automation, according to Lara Potter, Arcadis UK’s director of workforce for the future.

Potter believes that the built environment needs a new culture of upskilling to deal with the anticipated changes that automation could bring to the sector.

Speaking at the Construction News Summit, Potter referred to a study from the RSA (the Royal Society for Arts, Manufactures and Commerce), which said that as much as 50% of some construction activities could potentially be automated.

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