Self-employed contractors surge as employers react to rising NIC costs

In the wake of the UK government’s decision to raise employers’ national insurance contributions (NICs) in April, there is data to suggest the labour market is undergoing a notable shift in that companies are increasingly turning to self-employed contractors to manage rising employment costs.

Contract roles on the rise

According to data from job search engine Adzuna, contract job listings have surged by 20% since the NIC hike, with over 326,000 roles currently advertised. In contrast, permanent job listings have dropped by 9%, reflecting a strategic pivot by employers.

James Neave, Adzuna’s Head of Data Science, attributes this trend to the increased financial burden on employers—an extra £900 annually per employee earning the UK average salary of £33,000. The government anticipates the NIC increase will generate £25 billion annually, but economists suggest it’s already reshaping hiring behaviour more dramatically than expected.

Why employers are opting for contractors

Several factors are driving this shift:

• Cost avoidance: Contractors typically don’t receive benefits like healthcare, and employers aren’t liable for NICs on their behalf.
• Flexibility: Temporary hires offer agility in uncertain economic conditions, allowing businesses to “try before they commit.”
• Speed: Freelancers can be onboarded quickly, helping companies respond to short-term needs without long-term obligations.

Recruiters note that geopolitical and economic volatility—exacerbated by global trade tensions—has made permanent hiring less attractive. Employers are hesitant to expand headcount amid unpredictable conditions.

Risks and considerations

While contractors offer flexibility, Neave cautions that they often command higher rates and may lead to reduced control and knowledge retention within organisations. Additionally, permanent employees are increasingly reluctant to switch jobs, fearing instability and potential layoffs.

Strategic implications

For business leaders and HR professionals, this trend underscores the importance of balancing cost management with workforce stability. As the contractor market grows, organisations must consider how to maintain institutional knowledge, culture, and long-term capability while navigating financial pressures.