Tightness in flex market past peak

Rate increase for self-employed and seconded workers lags behind inflation

The scarcity in the labor market - both for permanent and flexible staff - has been high for years, but in the flex market it seems to have passed its peak. The number of responses from professionals to assignments is rising and the number of assignments without bids is falling. Hourly rates are also rising, but lagging behind inflation with an average increase of 3.7 percent. This is according to the latest Talent Monitor from labor market data specialist Intelligence Group and HR-tech service provider HeadFirst Group.

Increase in flex supply finally squeezes scarcity
The total number of highly skilled self-employed workers has increased by 325,000 since 2018 (+30 percent). In that time, over a hundred thousand seconded workers have also joined the workforce, which together represents a sharp increase in the supply of "flex. From 2020 to 2022, this did not result in less scarcity because demand was enormous. Since this year, that has changed.

Labor market activity, the figure that tells how actively people offer themselves in the labor market, has been rising since the summer of 2022 and even faster since the beginning of 2023. This is reflected in the number of offers per job: it has returned to pre-corona crisis levels. The number of assignments without offers has fallen sharply to below 10 percent.

Geert-Jan Waasdorp, CEO Intelligence Group, explains, "The tightness in the flex market is easing but remains as great as ever. Although the first professional groups are now noticing this turn, the current market is still a huge opportunity for employees to make the step to self-employment - with decent income security. For many organizations, flexible employment remains a solution to the tightness in the permanent labor market."

Rate increase lags behind inflation
Rates for highly skilled self-employed and seconded workers continue to rise, up 3.7 percent from the first half of 2022. This falls far short of the rise in inflation. This is another indication that the labor market is becoming less tight.

Rates for junior professionals rose relatively sharply in percentage terms, by 8.3 percent. Motivated, on the one hand, by starting salaries that are rising broadly and, on the other, by the fact that these rates - because they are lower - can rise percentage-wise faster. Marion van Happen, CEO at HeadFirst Group, finds this a striking development: "The trend is precisely that there is proportionately more demand for professionals with experience. Due in part to AI innovations and the flattening of the economy - not to mention the challenges with Generation Z workers - clients prefer mediors and seniors."

More insights into developments in the permanent and flexible labor market? Download the latest Talent Monitor here.