Contractors appear to be looking at a buoyant contract market as they enter the second quarter of the year in April 2013. Four major UK labour market surveys have pointed to a strengthening and growing contract market, and it would be firing on all cylinders if not pockmarked by periodic fluctuations. April is the start of the public sector’s new financial year; it will be interesting to see whether the sector succeeds in hiring enough new contractors to maintain service levels, given the off-payroll rules facing public sector contractors.
In this month’s ContractorCalculator market report:
- Despite a fall in agency billings, contractor vacancies increased at their sharpest rate for three months, according to February’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- Engineering and IT contracting is set for a rebound, according to employment data from the Association of Professional Staffing Companies (APSCo), and marketing and media tops the demand league table
- Research by IT recruiter ReThink indicates that IT contracting may be turning a corner, with budgets increasing and new teams being created – and not just in ‘hot’ areas such as mobile and apps
- Public sector contracting opportunities are likely to increase to compensate for austerity-driven ‘over-firing’, reports the latest Manpower Employment Outlook Survey UK
- Construction bucks the trend of other labour force surveys and shows strong growth during February, according to the Reed Job Index, which shows all contracting disciplines are hiring.
Contractor demand stays in growth territory, despite a softening market
Contractor vacancies increased at their sharpest rate for three months during February, and have grown for seven consecutive months, despite a fall in agency billings over the same period.
This data from the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs suggests that there are not enough contractors with the right skills in the right place to meet demand.
“[February] 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 were firmly in growth territory, and accountancy and finance contractors moved into second place in the demand league table, followed by engineering and construction contractors in third place. IT was in fourth place, behind engineering.
However, despite emerging skills shortages evidenced by the mismatch between agency billings and contractor vacancies, pay rates have yet to increase significantly.
Engineering and IT contracting set for possible rebound in “new era of corporate agility”
Engineering and IT contracting have grown by 0.1% and 0.5% respectively since the start of 2013, which the Association of Professional Staffing Companies (APSCo) believes could signify rebounds in both sectors.
In its latest set of employment data, APSCo has also found that the marketing and media sector is suffering from a “massive talent shortage”. The shortage is being filled in part by contractors, with marketing placements increasing by 4% and media placements by 8% over the last quarter.
The professionals sector, which APSCo classifies as bankers, accountants and IT professionals, “continues to be mixed with permanent jobs continuing to be replaced with contractors”. Contracting assignments have increased by 4% in the last three months, whereas permanent hiring has fallen by 5.8%.
What's becoming clear from these monthly trends is that we are entering into a new era of corporate agility, where temporary workers will no longer be seen as 'atypical' but as the new way of working
Ann Swain, APSCo
“What’s becoming clear from these monthly trends is that we are entering into a new era of corporate agility, where temporary workers will no longer be seen as ‘atypical’ but as the new way of working,” notes APSCo chief executive Ann Swain.
IT contracting renaissance fuelled by fresh budgets and renewed confidence
IT contracting may be undergoing a renaissance that is being fuelled by fresh corporate budgets and renewed confidence on the part of senior decision makers. Research by IT recruiter ReThink Recruitment shows resurgence in IT investment, and not just in ‘hot’ areas such as mobile and apps.
“Confidence about what 2013 holds in store has spread throughout IT departments,” explains ReThink Recruitment director Michael Bennett. “Factors that tended to make IT directors cautious last year ... have subsided. Businesses are now hoping to bring years of IT job cuts or headcount freezes to a close and are ready to invest in their IT departments again.”
Organisations are increasingly looking to IT for efficiency, productivity and profitability gains, and IT directors who have postponed technology investment in the face of ongoing uncertainly are now starting projects, and hiring contractors.
“The importance attached to IT departments has grown enormously since the financial crisis [began],” continues Bennett, “but paradoxically this has not been matched by growing IT investment. IT spending now looks like it has turned a corner.”
Public sector contract opportunities likely to rebound due to ‘over-firing’
Public sector contract opportunities look set to increase as many public sector organisations struggle to maintain service provision following a period of austerity-driven ‘over-firing’.
The result is that the Manpower Employment Outlook Survey UK for the second quarter of 2013 shows public sector hiring intentions to be higher than in the private sector. “We’ve noticed that a number of public sector organisations have begun recruiting again with renewed vigour,” explains ManpowerGroup UK managing director, Mark Cahill.
“In [the public sector’s] efforts to implement budget cuts there has been a degree of over-firing,” continues Cahill. “In other words, in their zeal to cut budgets, too many people may have been laid off. Now councils and other bodies have realised that if they want to maintain vital public services they are going to need to start recruiting again.”
Councils and other bodies have realised that if they want to maintain vital public services they are going to need to start recruiting again
Mark Cahill, ManpowerGroup UK
However, whether public sector clients will find enough willing contractors to take on the new roles is questionable, following the introduction of the off-payroll rules in September 2013, which prompted PCG to last month launch a new campaign to have the rules changed.
Construction was one of the top five sectors for hiring during February 2013
Construction and property was one of the top five sectors for hiring during February 2013. This is according to February’s Reed Job Index, which also shows all core contracting disciplines performing strongly.
Construction’s place in the top five is a surprise, as in most other surveys the sector is performing poorly. It may be a statistical anomaly, or it could signify that the sector is turning a corner.
Looking at the broader picture, the Reed Job Index reached a record high during February, pointing to a highly buoyant contract and permanent jobs market.
Reed.co.uk managing director Martin Warnes observes: “The latest Reed Job Index figures provide further confirmation of robust and continued growth in the employment market. The vast majority of sectors and regions are consistently offering more opportunities and we enter the busy spring recruitment period with some optimism.”