Contractor demand continued to outgrow availability across all core contracting disciplines during July 2015, largely due to increasing skills shortages. Consequently, many contractor clients plan to increase contractor headcount over the short-term, with rates generally on the up. Meanwhile, Aberdeen’s oil and gas industry continues to struggle while other sectors remain buoyant, particularly London’s financial sector. Iran has emerged as a potential work alternative to the North Sea for oil and gas contractors with the right kind of transferable skills.
In this month’s ContractorCalculator Market Report:
- Contractor demand continues to outgrow availability in Scotland, worsening the already acute skills shortages, according to the latest Bank of Scotland Report on Jobs
- Cross-sector skills gaps persist despite a softening of the labour market, highlights the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- One third of contractor clients plan to increase contractor headcount over the next 12 months, says the Recruitment and Employment Confederation (REC) JobsOutlook
- The Confederation of British Industry (CBI)/Pearson Education and Skills Survey proposes educational reforms to tackle the skills shortages that are causing increased contractor demand
- Financial and IT contractor prospects benefit from London’s buoyant financial market, according to the Morgan McKinley London Employment Monitor.
Contractor availability in Scotland suffers sharp decline, worsening skills shortages
Contractors are struggling to make up for acute skills shortages in Scotland, as demand for contractors continues to outgrow availability, after candidate numbers fell sharply in June 2015.
This is according to the Bank of Scotland Report on Jobs for June 2015, which found that contracting vacancies increased in six of the eight sectors monitored in the survey, with engineering and construction leading the way.
Despite the candidate shortage, overall contractor agency billings rose in June, marking the fastest increase since October 2014, with Edinburgh’s financial district enjoying the sharpest increase. Meanwhile, Aberdeen’s faltering oil and gas sector meant it was the only region which recorded declines in contractor agency billings, although it saw an increase in candidate availability.
ContractorCalculator CEO Dave Chaplin was positive about the current situation: “The trends we are witnessing in terms of contractor vacancies and candidate supply means those contracting in Scotland won’t find themselves short of work any time soon.”
Contractor demand increases in core sectors, as skill shortages persist
Contractors are benefitting from exceptional demand as skills gaps across all core contracting disciplines persist, despite an overall softening of the UK’s labour market. This is according to the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs for June 2015 that highlights engineering as a sector with a particularly acute shortage.
“Vacancies continue to rise, candidate availability has fallen steeply and we’re seeing this affect the amount of placements being made each month. The concern is that business growth in being constrained,” explains REC Director of Policy Tom Hadley.
It is feared that the slump in recruitment will make it extremely difficult for businesses to keep pace with demand, but ContractorCalculator CEO Dave Chaplin believes that contractors are the best solution: “When billings fall at the same time as vacancies increase, you know that there are simply not enough suitably skilled candidates to go around. Contractors are well placed to meet these skills shortages.”
The demand league table shows an increase in contractor vacancies across all core contracting disciplines throughout June, with the Midlands reporting the strongest expansion. Engineering came in second place in the demand league table, while all of the remaining contracting disciplines also recorded growth.
Contractor vacancies increase in core disciplines due to worsening skills shortage
Contractors are benefitting from increased contract opportunities due to worsening skills shortages across several core sectors, including IT, construction and engineering.
Approximately a third of contractor clients are planning on increasing contingent worker headcount over the next year, according to the Recruitment and Employment Confederation (REC) JobsOutlook for June 2015.
“For workers the outlook is good. Starting salaries continue to rise as employers compete for talent, and permanent and temporary opportunities are available to those with the required skills and capability,” highlights REC chief executive Kevin Green.
Despite the short-term benefits for contractors, the skills shortages look to be detrimental to the growth plans of contracting clients and UK plc, who are operating at a capacity and increasingly struggling to meet demand.
However, ContractorCalculator CEO Dave Chaplin believes hiring contractors can prove to be mutually beneficial, particularly for smaller companies: “81% of the UK’s large organisations hire contractors, but so do 75% of the smallest businesses. [This] shows that smaller clients are using contractors to meet their specialist skills needs and support growth plans.”
Contractor demand set to continue, as skills shortages linked to education
Contractors can expect sustained demand for their services over the long term as businesses struggle to source candidates with sufficient skills, according to the Confederation of British Industry (CBI)/Pearson Education and Skills Survey 2015. The survey claims that skills shortages in many of the core contracting disciplines will take years of investment and educational reforms to resolve.
“The danger is very real: as this survey shows, over half of all businesses fear that there will not be enough people available with the skills needed to fill their high-skilled jobs – particularly in the key sectors which underpin growth, such as manufacturing and construction,” warns Katja Hall, deputy director-general of CBI.
With the report suggesting improvements in higher education are required to tackle this issue, it will be some time before the benefits of any proposed changes are felt.
“This leaves a skill deficiency for the foreseeable future, which hard-working contractors will be eager to take advantage of,” highlights ContractorCalculator CEO Dave Chaplin.
Of the more than 300 companies surveyed, 55% admitted a lack of confidence in their ability to source suitable recruits at this moment. Meanwhile, two thirds of businesses claimed they are expecting to need more highly skilled staff over the next few years.
Contractor prospects increasingly positive in London’s financial sector
IT and financial contractor prospects in London’s financial district are looking encouraging as vacancies in these sectors prove increasingly buoyant, according to the Morgan McKinley London Employment Monitor for June 2015.
Job vacancies in June increased by 56% month-on-month, wiping out the dip in demand in the previous month’s figures, which had been attributed to employment uncertainty caused by the General Election. Meanwhile, figures show a 26% increase in professionals seeking new opportunities, reflecting a renewed confidence in the economy.
“All the data we are seeing shows that there is a robust market for financial services jobs in the city. It’s an assertive market,” highlights Morgan McKinley Financial Services operations director Hakan Enver.
The report also highlights significant rate increases, which have been augmented by low inflation, as well as growing cross-sector skills shortages. “There is an enormous skills crisis looming. We’re not producing enough young people with the skills employers are looking for,” warns Recruitment and Employment Confederation (REC) chief executive Kevin Green.
Finance and IT are highlighted some of the sectors with particularly acute skills shortages, meaning contractors with the required skillset can literally “name their price”