Contractor agencies continue to struggle to make up for worsening skills shortages as the gap between client demand and contractor availability worsens. This is according to the Recruitment and Employment Confederation (REC) and KPMG Report on Jobs, which showed the rate of growth in terms of contractor agency billings to have dipped to its lowest in 25 months in July.
Despite the increase in vacancies, July saw over two fifths of recruiters report a fall in the number of people seeking work, the steepest decline in eight months. This combination of falling agency billings and sharp reductions in candidate availability, alongside increased rates and growing contract vacancies, is a classic sign of severe and worsening skills shortages.
“It is clear we are in the grip of an industry wide skills shortage, which shows no signs of abating,” warns Bernard Brown, Partner at KPMG, who expressed concerns over the long term implications the skills shortages may have on company growth plans and the wider UK economy as a whole.
The gulf between skilled candidate availability and demand is widening in the construction sector, where businesses are recruiting contractors heavily.
REC chief executive Kevin Green explains: “While demand for staff remains strong, the labour market is tightening. Alongside long-term problem areas such as technology and engineering, we’re now seeing vacancies such as bricklayers and drivers being flagged as hard to fill.
“The shortage of construction workers is a particular concern. If construction companies don’t have the people they need, both infrastructure projects and house building will be constrained, and this will have an impact on wider economic growth.”
Construction has rocketed to first place in the contractor demand league table, with engineering in third place and accounting/financial in fifth. The other core contracting disciplines of IT & computing and executive/professional are in eighth and ninth place respectively, although both are still showing strong demand growth.
However, the increasing struggle to meet demand is already beginning to show signs of slowing down projects. While vacancies increased through July, rates of expansion eased to their slowest in two years, as highlighted by Brown:
“The likelihood is we will see no immediate improvement to this situation. We are already seeing hints of a slowdown, with the loss of growth momentum in housebuilding and civil engineering in July.”