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What could influence the contractor market in rail 2019?

It has been reported that there are approximately 4million temporary workers in the UK. 1.56million of which are what we class as professional contractors, meaning they choose to operate as a temporary worker long term. The rail industry has always been a prominent sector in the hiring of professional contractors. Many companies are focused on the delivery of project related contracts.

 

2019 could be significant for the rail industry, in particular the contractor landscape as a result of a number of possible influences.  

 

 

CP6

CP6 was actually announced in the 2017 budget. The government has allocated £47.9bn to Network Rail in order to further fund operational improvement and change. This comes into effect in April 2019 and will run to 2024. Network Rail announced this year their priority will be to improve reliability as opposed to major enhancement projects. Improved reliability means change and when that comes in to play it normally has a positive effect on contractor demand. If you are a contractor of course! 

 

IR35

In theory with the announcement in this years budget that the introduction of IR35 to the private sector has been delayed this should have little impact on the sector. However the change is still likely to go ahead causing companies to think about how they employ workers ahead of any new legislation. For the rail sector this could cause an interesting dynamic. Given it is made up of both public and private organisations it has been reported that IR35 has had a negative effect on public bodies, such as Transport for London, capacity to attract talent. If IR35 is a major cause of this, losing out to the private sector may no longer become an issue but will that necessarily attract workers back?

 

Brexit

It’s not going away and it feels like it is not getting resolved. Brexit may not effect funding for large parts of the industry but it will impact talent acquisition and import / export which are fundamental to delivery of projects and services. Talent acquisition is perhaps the biggest short term concern. However this could have a positive effect for a contractor. Less talent arriving from the EU and less people open to moving jobs due to uncertainty could increase the demand for a flexible workforce. Although we must consider if the outcome has a negative impact on the economy project spend and flexible workers are at high risk. 

 

Digital transformation

Whether it is the introduction of services or operational change digital transformation is high on the agenda for the industry. Network Rail has set out a 15 year plan which will drive digital transformation and therefore increase efficiency and reduce costs. The introduction of new technology could have a positive effect on introducing new talent to the sector. However digital replaces existing services which can lead to redundancies and certainly a drop in demand for contractors associated with services and operations to be replaced. 

 

Skill shortages

Large parts of what is discussed above points to increased demand if you have the right skillset. IR35 introduction could lead to a war for talent across the public and private sector where it is perceived the private sector is winning at present. CP6 creates new projects. Digital transformation requires new skills and there are plenty of potential positives for the contractor landscape in Brexit. However as an employer will there be enough to go round? The reality is the industry needs new skills to introduce new technology which across all sectors, such skills are not being developed as fast as the technology itself. New legislation could remove large parts of the contractor workforce in what is a heavily project related environment where flexible staff suit the employer. 

 

 

2019 certainly looks like it could be a significant and interesting year for the contractor landscape in the industry. As a specialist recruiter in the sector of both permanent and temporary staff we are on hand to talk you through in more detail the prospects for the coming year and help with your hiring or finding opportunity needs. Feel free to get in touch at manchester@talascendint.com