UK contracting has never had it so good. At least in volume terms, if you disregard ongoing issues such as IR35. The UK’s flexible knowledge workforce has consistently grown since at least 2008, and self-employment has grown to reach record highs.
But Australia experienced a similar level of growth in its contracting workforce over nearly two decades. That is until last year, when the latest data from Independent Contractors Australia (ICA) showed a fall of 130,000 contractors, from just over 1.1m in November 2010 to 980,000 in November 2012.
So, what happened in Australia to cause 130,000 contractors to leave the sector? And could it happen in the UK?
ICA lays the blame squarely at the feet of the incumbent socialist government, a shaky coalition led by the Australian Labour Party (ALP) and Prime Minister Julia Gillard. The ICA’s view is that the government is seeking to create “a society in which ‘big’ dominates: big government, big unions and big business” at the expense of individual entrepreneurship. It also claims that the agenda is being driven by the unions seeking to regain lost ground over the self-employed workforce.
Now, as a membership organisation seeking to defend the livelihoods and promote the views of its members, you’d expect the ICA to come out with its fists swinging in defence of what some observers might interpret as a failed model of employment. After all, 130,000 contractors threw in the towel and were not replaced.
However, there may be some lessons for the UK for two reasons. Firstly, because we in the UK were not so long ago in thrall to a socialist government that deliberately set out, through many of its policies including tax and IR35, to promote mass employment at the expense of self-employment and entrepreneurship. The previous UK Labour government, and at its behest the organs of state, went out of its way to treat contractors as close-to-criminal deviants.
And secondly, the ICA has the support of empirical work by academic Professor Judith Sloan. Although not entirely un-partisan, Sloan has through her research highlighted some working population demographics that are difficult to explain; certainly unless they have “… a lot to do with the Gillard government's deliberate strategy, at the behest of its trade union mates, to make life increasingly difficult for independent contractors”.
Sloan’s analysis of the measures allegedly taken by the Gillard government is quite shocking, and it has gone arguably well beyond what the UK’s Labour government tried to do. Although he introduced IR35, former Prime Minister Gordon Brown never tried to deny the UK’s contractors and sole traders basic business and company registrations, as has happened in Australia.
Should we be worried about a future government with more socialist leanings than the current coalition? Possibly, but less so, particularly if we learn from Australia’s experience to ensure any such measures are firmly halted before they can get off the ground in the UK.
And, with both the private and public sectors increasingly recognising the benefits of contractors, any future fight to defend contractors is likely to have some powerful support.