Contractor demand continues to increase, alongside growing skills shortages. The recovery is becoming increasingly broad-based, with demand in other core contracting disciplines catching up with engineering, oil and gas and IT. There seems no let up to the worsening skills shortages, which suggests that employees currently considering taking the leap into contracting would be well placed to do so now. The distribution of contracts around the UK is highly variable, with London, the South East and Scotland taking the lion’s share of work.
In this month’s ContractorCalculator market report:
- Contractor demand increased across every contracting discipline and in every UK region, says October’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- The 19th Aberdeen and Grampian Chamber of Commerce Oil and Gas Survey shows many oil and gas professionals are leaving employment to start their own contracting businesses
- The IT contracting sector, as part of the UK’s IT industry, is outperforming the wider economy across a range of measures, according to new research by sector skills council e-skills UK, the British Computer Society (BCS) and Intellect
- October’s Bank of Scotland Report on Jobs shows Scotland’s booming contract market is not being fulfilled by indigenous contractors, suggesting strong opportunities for contractors from outside Scotland willing to travel
- Contractor clients are twice as likely to hire as they were 12 months ago, reports the Recruitment and Employment Confederation (REC) JobsOutlook for November 2013.
Contractor demand reaches a six-year high, as contractor availability falls
Contractor vacancy growth reached a six-year high during October 2013, with increased contractor demand across every contracting discipline and in every region. But the month saw the fastest fall in contractor availability since June 2007.
This is according to October’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs, which alongside the sharp and sustained fall in contractor availability showed increased rates of pay and a modest increase in agency billings. This may all be due to increasing skills shortages.
Whilst skills shortages are good in the short-term for contractors, REC CEO Kevin Green warns that they “could cause serious damage to future economic growth in the UK”.
However, Green is upbeat about the future prospects for contractors: “Recruiters are also telling us that the hiring process is starting to pick up speed as employer confidence returns, which should lead to greater fluidity returning to the jobs market.”
Oil and gas pros becoming contractors is causing an employee brain drain for clients
New-start contractor businesses are behind the falls in core employee numbers in the North Sea’s operators and oil and gas services companies. This is according to the 19th Aberdeen and Grampian Chamber of Commerce Oil and Gas Survey. It also shows that leaving employment to become self-employed contractors is given as the second most common reason for clients losing core employees, after retirement.
The survey also highlights that a third of oil and gas services companies are planning to increase their contractor headcounts over the next year in response to record levels of renewed North Sea investment and activity.
“We are reporting our highest ever reported level of companies recruiting in the contracting sector,” explains Aberdeen and Grampian Chamber of Commerce chief executive Robert Collier. “This brings challenges around how vacancies will be filled, but we fully expect the sector to meet these challenges.”
We are reporting our highest ever reported level of companies recruiting in the contracting sector
Robert Collier, Aberdeen and Grampian Chamber of Commerce
Operators and services companies identified ‘problem occupations’ where they were experiencing particular difficulties in hiring. These included drilling-related occupations, subsurface and reservoir personnel and petroleum and pipeline engineers. Also in short supply are specialists with solids control, software engineering and remotely operated vehicle piloting skills.
IT contractors are outperforming the wider UK economy
The IT contracting sector is outperforming the UK economy across a number of economic measures, according to new research, Information Economy: Economic Estimates 2013, by sector skills council e-skills UK, professional institute the British Computer Society (BCS) and trade association Intellect.
The growth in the number of contractors and employees in the information economy has also outpaced the wider UK. Between 2009 and 2012, the number of IT workers grew by 8%, four times the rate recorded for the workforce as a whole.
“The UK tech sector is critical to the national economy,” explains Intellect’s Julian David. “Across all industries we employ more than 1.4 million people, representing 5% of the total UK workforce.”
According to the research, information economy workers such as IT contractors also “tend to be more highly educated than average, with just under two thirds (65%) holding some form of higher award”. This compares with a UK-wide workforce average of 40%.
Contract boom across Scotland, as labour market index returns to pre-recession levels
Contractor demand increases alongside deteriorating contractor availability across Scotland suggests that there are opportunities for contractors from elsewhere in the UK who are willing to travel.
October 2013’s Bank of Scotland Report on Jobs also shows that the Labour Market Barometer, a key index measuring the health of Scotland’s labour market, reached its highest point in six years, “taking the index back to pre-recession levels”.
“Demand for staff rose at a marked pace across all sectors while the number of people appointed…rose sharply in the month,” notes Bank of Scotland chief economist Donald MacRae. “The recovery in the Scottish economy is showing through in growing employment and rising pay.”
Scotland’s recruiters have also specifically highlighted the shortage of engineers across all disciplines, and because a similar situation exists throughout the UK, this could present an opportunity for expat contractors from further afield.
Contractor clients twice as likely to hire as a year ago
Contractor clients are twice as likely to hire contractors over the next 4-12 months as they were a year ago, while two thirds plan no changes to their contractor numbers. This is according to the Recruitment and Employment Confederation (REC) JobsOutlook for November 2013.
However, these figures could change rapidly as the report highlights that “UK Plc continues to run with very low surplus workforce capacity”, showing that 87% of organisations definitely would or may have to hire more contractors to accommodate any increase in demand.
Although demand for contractors in the engineering and technology sector weakened slightly during the period, recruiters are anticipating skills shortages in this sector. In contrast, demand for finance contractors has strengthened, but no skills shortages are anticipated.