Contracting is pulling ahead of the rest of the UK labour market as demand for niche skills in engineering, IT and interim management continues to rise. However, contractors in the upstream oil and gas sector who wish to remain in the UK have a less certain future, with drilling activity slumping due to the ‘windfall tax’ on energy companies. Despite demand, contractors may find competition for assignments increasingly fierce as workers leave the mainstream labour market to seek better pay and conditions as contractors.
In this month’s ContractorCalculator Market Report:
- Online demand for IT and engineering contractors continues to increase, according to the Monster Employment Index
- The Interim Management Survey 2011 shows that interim management contractors are spending more time on assignment compared to last year
- Employment offers poor prospects for the UK workforce, according to a report by the Chartered Institute of Personnel and Development (CIPD)
- Against a backdrop of a fragile labour market, skills shortages are looming in sectors such as IT, reports APSCo’s Monthly Trends report
- Oil and gas sector contractors continue to suffer from the Chancellor’s ‘windfall tax’ on energy companies, with Deloitte revealing that North Sea drilling activity has fallen by 52% over the last 12 months to a nine-year low.
IT and engineering contractors see another month of increased online demand
Online demand for engineering and IT contractors increased sharply in June, according to the Monster Employment Index. The headline index increased by 3.7% from May to June, which signified a reversal of the fall in online recruitment seen in May, and represented an 8% year-on-year increase.
Monster UK & Ireland’s spokesperson Michael Gentle was cautiously upbeat about the June MEI results: “The UK certainly has reason to feel comforted by an expanding job market. However, a lot of new employment opportunities have come in the form of part-time work; this suggests the job market may not be as steady as the figures initially suggest.”
But online demand for engineers is up 32% year-on-year, closely followed by IT, showing strong year-on-year demand increasing at the rate of 27%. Clearly, some sectors are performing well above the UK’s average.
Interim management contractors report sharp increase in assignments
The number of interim management contractors on assignment has increased from 51% in June 2010 to 60% in June 2011. The Interim Management Survey 2011, published by the Institute of Interim Management, also reveals that the gap between assignments has fallen from an average of 4.1 months in June 2010 to 2.6 months in June 2011.
The overwhelming majority of interim management contractors, 77%, are working full time. Service providers, such as agencies, provided 49% of assignments in this year’s survey. That total has hovered around the 50% mark for the last 18 months.
These figures suggest that interim management contractors source around 50% of assignments direct with the client, which contrasts sharply with the IT contracting sphere, where around 90% of contracts are sourced via agencies.
The survey notes show that, when interim management contractors secure assignments via an agency, knowing the consultant can offer a seven-fold advantage over simply uploading a CV to a database or applying for an assignment cold via LinkedIn.
Contracting has the potential to improve living standards as employment options stagnate
Contracting offers workers real opportunities to improve their standards of living. On the other hand, employees seem consigned to an era of stagnation that will feature wage increases below the rate of inflation and poor career prospects, particularly for workers with few skills.
The Jobs Without Growth Conundrum report by the Chartered Institute of Personnel and Development (CIPD) offers a downbeat assessment of the UK labour market. It paints a picture of employees caught in the trap of wanting to stay employed seemingly at any cost. And employers have retained workers even at the risk of lower productivity.
Unless workers choose options, such as developing new skills and contracting, to lift them out of this conundrum, the CIPD predicts that poor labour market conditions, including high unemployment, will persist until at least 2015. From that year, the economy is forecast to start offering employees better options.
Skills shortages loom in the IT contracting sector
In contrast to the CIPD’s labour market forecasts, the IT contracting sector may be struggling to meet the 28% year-on-year increase in vacancies, as businesses expand operations to take advantage of the recovery in some sectors of the economy.
This set of demand data has been published by the Association of Professional Staffing Companies’ (APSCo) in its new Monthly Trends report, compiled by Innovantage and Staffing Industry Analysts.
We are seeing a significant increase in demand for IT professionals, with skills shortages in some areas now becoming widespread
Ann Swain, APSCo
APSCo Chief Executive Ann Swain warns of IT skills shortages to come. “We are seeing a significant increase in demand for IT professionals, with skills shortages in some areas now becoming widespread. Candidates with niche, in-demand skills are receiving multiple job offers and double-digit pay increases for switching roles are now commonplace.”
According to Swain, the increased demand for IT contractors is due in part to IT directors “pushing the button on projects that will deliver significant productivity gains”. Another boost has come from sectors like retail, where firms are seeking to diversify into e-commerce, and media, where businesses are moving content onto alternative platforms.
Oil and gas contractors suffer from a nine-year low in North Sea drilling
Contractors working in the UK’s North Sea upstream sector have experienced a 52% drop in drilling activity, partly as a result of the Chancellor’s ‘windfall tax’ on energy companies in the 2011 Budget.
The figures from Deloitte’s latest North West Europe Review also reveal that the UK is now in the same “unstable” category as oil and gas markets in some developing economies. “It’s quite likely that the UK fiscal regime is now being viewed as unstable and, therefore, a less attractive place to invest,” says Deloitte’s Petroleum Group Managing Director Graham Sadler.
He also believes that the worst is yet to come: “We would not expect to see the full impact of these tax changes for at least another six to 18 months.” In contrast, other nations active in the North Sea, such as Norway and the Netherlands, are reporting 10% growth and sustained drilling activity respectively.