Contractors are entering 2011 with numerous business and economic forecasts using words like ‘muted’, ‘modest’ and ‘sluggish’ in their headlines. However, out of these economic challenges will come fresh opportunities for contractors. Their specialist skills and flexible work patterns should make them an even more attractive alternative to employees for client organisations facing uncertain times. As 2011 begins, the full impact of government cuts will begin to be felt and this downsizing will provide further public sector opportunities for contractors.
In this month’s ContractorCalculator Market Report:
- IT contractor demand has increased by 24% since November 2009, according to the Monster Employment Index
- Contractors look set to experience modest market growth as the economy slowly recovers, but the risk of a double dip has receded, forecasts the Confederation of British Industry (CBI)
- Contractor clients are facing ‘immensely more competitive’ international markets, explains the Centre for Economic and Business Research (CEBR) think tank
- Contractors may benefit from economic uncertainty in 2011, as many organisations will choose to recruit temporary workers in place of employees, predicts the Chartered Institute of Personnel and Development (CIPD)
- Contractors can expect opportunities from the challenges facing businesses and the economy in 2011, says PCG Managing Director John Brazier.
IT contractors top annual online worker demand league
Online demand for IT workers has grown by 24% year on year to November 2010. This is the highest growth across all twenty-one industry sectors monitored by the Monster Employment Index (MEI), the latest index reveals.
The overall November MEI fell by 6% compared to the previous month, with online demand for contractors across the core contracting disciplines of IT, telecoms, engineering and construction falling, although interim management and consulting increased by 3%.
According to Monster UK & Ireland Managing Director Julian Acquari, seeing slowing demand in November is against the normal trend of worker demand and could suggest uncertainty on the part of client organisations and employers.
However, as Acquari explains: “…long-term recruitment growth remains positive “and “the pace of job creation over the past two quarters was faster than any time since the 1980s.”
Contractor demand fuelled by modest economic growth in 2011 – CBI
Contractor demand will be fuelled by modest economic growth driven mainly by exports and business investment, predicts the Confederation of British Industry (CBI) in its December Economic Forecast.
Business investment is forecast to grow by 7% in 2011, which will sustain demand for contractors as firms gain confidence in the recovery. They are expected to reinstate IT and business infrastructure projects that were shelved during the recession. Exports are also likely to grow, increasing demand for contractors in the manufacturing sector.
According to CBI Chief Economic Adviser Ian McCafferty, sluggish consumer demand, falling wages, public sector spending cuts and inflation will all lead to modest growth in 2011. He also points out that the likelihood of a double-dip recession is receding.
“We do not expect that rapid pace of growth to continue over the next two years of recovery,” says McCafferty. “Quarterly growth at the start of 2011 is likely to be very sluggish, although we do expect the recovery itself to stay on track.”
Contractor clients face “immensely more competitive” markets, says think tank
Contractor clients, particularly those with trans-national markets and operations, are facing “immensely more competitive” international markets compared to just five years ago, claims the Centre for Economic and Business Research (CEBR) in its latest ‘Forecasting Eye’ bulletin, sub-titled ‘Britain Is Not Yet Open for Business’.
The bulletin’s authors, Douglas Williams and Scott Corfe, explain that UK businesses are competing with economies having much lower cost structures and rates of taxation. They call on the government to “rapidly address the barriers to growth from regulation and taxation that leave the UK currently in an uncompetitive position.”
Contractors working for client organisations with substantial exports could be facing a tougher market in 2011, as the CEBR challenges official estimates of the health of the UK’s manufacturing export market. The think tank forecasts that export growth will “slow to 2.5% next year compared with an [Office of Budget Responsibility] forecast of 6.9% growth.”
A “fingers crossed” year ahead for contract opportunities
Contractors should directly benefit as a result of downbeat forecasts by the Chartered Institute of Personnel and Development (CIPD), which paints a gloomy picture of a 2011 labour market characterised by part-time and temporary jobs.
The CIPD Annual Barometer Forecast predicts that 2011 will be a worse year for jobs than 2010 and that 200,000 jobs could be shed, bringing total unemployment to 2.7m, or 9%. Average earnings will decrease in real terms because of high inflation, according to the forecast.
However, the uncertainty and temporary nature of those private sector jobs that CIPD expects to be created could work in favour of contractors and present a greater number of contract opportunities.
The chances are that the bulk of any new private sector jobs will continue to reflect the experience of 2010, with part-time and temporary jobs in the majority
Dr John Philpott, CIPD
CIPD Chief Economic Adviser Dr John Philpott explains: “2011 will be a ‘fingers crossed’ year for the economy and jobs. The chances are that the bulk of any new private sector jobs will continue to reflect the experience of 2010, with part-time and temporary jobs in the majority.”
PCG looks forward to new challenges and new opportunities for contractors in 2011
Contractors are facing a testing time over the next 12 months, but out of the challenges will arise opportunities. This is according to PCG Managing Director John Brazier, who says: “The spectre of redundancies, public sector cutbacks and financial uncertainty will cause many to welcome in the New Year with a degree of trepidation.
“I believe that if there is one sector of our community ready for the challenges ahead it is the UK’s growing freelance community,” continues Brazier. “By their very nature this is a skilled, resourceful and flexible group able to adapt quickly to the needs of clients.”
Brazier concludes by citing research completed by PCG and research partner ComRes, which highlighted the growing importance of contractors to end-user clients’ organisations: “60% of business leaders confess that it would be difficult for their business to operate without freelancers and well over half of business leaders polled said freelancers were essential to growing the UK economy.”