Contractor demand softened during February 2013, with agency billings increasing at the weakest rate since August 2012. But despite the slowdown, February’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs shows vacancies increasing at the sharpest rate for three months. This suggests an emerging shortage of appropriately qualified contractors.
“This month saw increased demand for both temporary and permanent workers across all the sectors we measure,” noted REC director of policy Tom Hadley, “which is a really positive indicator for a continued recovery.”
All core contracting disciplines remain in positive territory, and contractor demand has expanded for seven unbroken months. Accountancy and finance contractors moved into second place in the demand league table, pointing to a financial sector in recovery. Fewer than six months ago, demand for financial contractors was sharply contracting.
Engineering and construction contractors have been in second place, behind nursing and medical care, for four out of the last five months; they dropped to third place during February, overtaken by accountancy and finance.
However, future demand for engineers and construction contractors is likely to rebound strongly, with skills shortages on the horizon. Hadley says: “There’s also noticeable demand for skilled staff to support infrastructure developments, such as water and rail.
“With the Chancellor’s Budget only weeks away and more investment in infrastructure expected, a growing concern will be whether or not the UK has the skilled staff needed to get these projects off the ground.”
IT contractor demand also increased strongly during February, with the category rising from fifth place in January to fourth behind engineering and construction. Recruiters have singled out IT developers as one of the contractor skills categories suffering from acute shortages.
Despite the mismatch between contractor billings and vacancies, indicating looming skills shortages, pay rates have yet to catch up. Modest increases made up for the slight fall in January, but have largely remained flat. The only exception was in the North of England, where contractors enjoyed a strong rate increase.
Now might be a good time for reluctant contractors mulling a change of scene to consider a permanent role. IT and engineering contractors in particular are likely to be welcomed with open arms by employers, as both categories posted very high demand during February.
And new employees are benefitting from a 17-month high in starting salaries, as employers compete to recruit the best talent from a dwindling pool of candidates.