Six in ten (56%) small and medium sized businesses in London have seen an increase in permanent staff requesting to move to contract roles in the years following the pandemic – far higher than the UK average of 35%.
Research from business finance lender Sonovate also shows that firms in the capital are increasingly reliant on contract or freelance workers – three quarters (75%) of employers report an increase in the proportion of temporary workers, compared to 67% of firms across the UK which have seen a similar trend.
Meanwhile almost a third (29%) of London businesses say they’re more cautious about recruiting permanent staff, compared to 22% across the UK.
The research suggests that businesses in London are more focused on the benefits of contract or freelance workers – three quarters (73%) say contractors and freelancers contribute to a positive company culture, higher than the UK average 66% .
Similarly, over two thirds (67%) of London firms believe offering flexibility to workers helps the business attract and retain talent – higher than the 55% UK average.
Research from the Policy Institute and King’s College London in 2022 revealed that three-quarters of London’s workers didn’t think they’d return to the office full-time. For many, the cost of commuting was a major factor.
Richard Prime, co-CEO of Sonovate, comments: “London’s business community has a proud history of innovation and firms across the capital are demonstrating this once again as they overhaul their traditional working structures to attract and retain talent as well as boost competitiveness. Businesses in other regions should consider following London’s lead otherwise they risk getting left behind.
“Rising living costs are forcing people to reassess how they work and how they can maximise their income – for an increasing number, this means moving to freelance or contract work so they can have more control over their finances. For Londoners facing the highest costs in the UK – from commuting and housing prices to nursery fees and the soaring cost of leisure activities – having this control is essential during the cost of living crisis.
“Businesses who can help facilitate their employees’ shift to contract work are likely to reap the rewards in retaining key talent but also boosting commercial performance. However, it is not without its challenges. Initially, in order to implement these changes within an organisation, businesses will often need reliable access to funding to help to manage cashflow and allow them to be more agile when responding to upcoming projects or workload.”
Business lender Sonovate provides embedded finance and payment solutions for the contingent workforce – including contract and freelance workers – serving recruitment businesses, consultancies and labour marketplaces globally to smooth cashflow and ensure workers get paid on time.
Sonovate recently announced that it surpassed £3.5bn in total funding and £1 billion in annual funding for the first time as rising costs force businesses to seek finance to manage cashflow and drive growth. During 2022, Sonovate provided businesses with £1.1 billion in finance, a 58% increase on the £700 million lent in the previous year and £312 million in Q4 2022 alone.
To date, more than 33,000 freelancers, contractors and gig workers in 44 countries have received payments from over 3,300 businesses supported by Sonovate.
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