Contractors are still benefiting from increased demand and sharply rising rates as the economic recovery continues. Even the UK’s small and medium sized companies are looking to contractors for immediate fixes to their talent and skills challenges. Parts of the contracting market are struggling, such as in Scotland, where the local market cannot deliver enough suitably skilled candidates to fill assignments. Concern remains that the skills shortages in the UK’s flexible workforce could have a negative impact on economic growth.
In this month’s ContractorCalculator Market Report:
- Contractor pay rose at rates not seen in seven years, in response to increased demand and worsening skills shortages, says the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs for May 2014
- The Recruitment and Employment Confederation (REC) JobsOutlook highlights that it is small and medium sized clients that are looking to hire contractors over the next quarter
- Scotland’s contracting market continues to grow demand faster than contractors can be supplied, providing opportunities for contractors in the wider UK, shows the Bank of Scotland Report on Jobs
- The 20th Aberdeen and Grampian Chamber of Commerce (AGCC) Oil & Gas Survey reports that skills shortages plague clients operating in the North Sea, but investment intentions and confidence remain buoyant
- The interim management contracting market was buoyant during 2013, shows the Boyden Interim Management’s Annual UK Interim Management Survey 2013/2014, but the number of female interims is declining.
Contractor rates increase sharply, alongside a surge in vacancies and billings
Contracting rates increased during May 2014 at a pace not seen since December 2007, as vacancies and agency billings grew sharply. This is according to the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs for May 2014, which also highlights that skills shortages are worsening.
“The UK’s jobs boom continues with vacancies increasing as employers look for new workers to meet increasing demand and to replace staff that have been snapped up by competitors,” highlights REC CEO Kevin Green. “However the big issue remains that employers are finding it hard to find the talent and skills they need.”
Each of the core contracting disciplines experienced accelerated demand for contractors during the month. Engineering was in second place in the demand league table, construction remained in fourth, whereas IT & computing dropped two places to seventh. Executive and professional rose to sixth, suggesting an upturn in the interim market. However, accounting and finance remained in eighth place, reflecting a subdued financial sector.
Contractors should look to small and medium sized clients for contracts
Contractors may find their next contract with a small to medium sized enterprise (SME), as these are the companies most looking to hire contractors over the next quarter, says the latest Recruitment and Employment Confederation (REC) JobsOutlook.
“Contractors can offer a range of solutions to client organisations, whether they are global financial sector firms or start-ups,” says ContractorCalculator CEO Dave Chaplin. “It is encouraging to see that the UK’s smaller businesses have recognised the benefits contractors can offer.”
The report shows that the skills in most demand are in core contractor sectors such as the technical/engineering and professional/managerial fields. These match the skills shortages in the permanent recruitment space, and the survey highlights that this means there is “an acute need for these skills”.
“Business confidence continues to grow and it is excellent news to see employers planning to hire more people,” adds REC head of policy Kate Shoesmith.
Scotland offers contract opportunities as the local candidate supply dwindles
Contractor demand growth in Scotland increased again during May 2014, but the dwindling supply of candidates is leaving many clients and agencies unable to fill roles. This is providing an increasing number of opportunities for contractors throughout the UK who are prepared to relocate.
The Bank of Scotland Report on Jobs highlights that rates are increasing, driven by “the combination of increased demand for staff and falling levels of available candidates”.
“This month’s Barometer provides further evidence that the recovery in the Scottish economy will continue throughout 2014,” says Donald MacRae, chief economist at the Bank of Scotland.
Contractors can offer a range of solutions to client organisations, whether they are global financial sector firms or start-ups
Dave Chaplin, ContractorCalculator
The core contracting disciplines performed well, as the report highlights: “IT and computing and accounts and financial also recorded sharp increases in demand for temporary staff in May.” Engineering and construction moved into fourth place, showing strong growth in contractor demand when compared to the previous month.
In contrast, the demand for interim managers in Scotland is slowing, as the executive and professional category fell to eighth in the demand league table.
Oil and gas contractors benefit from sustained demand and rates
Oil and gas contractors continue to enjoy sustained demand and increased rates, as skills shortages plague Aberdeen-based clients. The 20th Aberdeen and Grampian Chamber of Commerce (AGCC) Oil & Gas Survey also reports that the investment intentions and confidence of operators, service providers and supply chain companies remains high.
“30% of all firms were more confident about their UKCS [UK Continental Shelf] activity than they were a year ago,” explains AGCC chief executive Robert Collier. “It is positive to see that firms are continuing to invest in the UKCS and are looking to increase spend over the next two years.”
The report says skills shortages and competition for staff are significant in “constraining” activity in the North Sea. Contractors will continue to fulfil many of the talent and skills shortfalls over the short term.
Longer term, clients are clearly looking to nurture their existing employees, as staff training is now the second highest investment category for clients, after developing new markets.
Interim management contractors enjoy bumper year for assignments in 2013
Interim management contractors enjoyed a “buoyant” market during 2013, with 85% of interims having worked on at least one assignment during the year, although pay rates remained fairly static.
Boyden Interim Management’s Annual UK Interim Management Survey 2013/2014 also highlights that the market is becoming more competitive, with a perception that there are more executives choosing to become interims.
Personal networks remain the principal source of new interim contractors, followed by business networking and interim agencies. At least half of those interims surveyed have won a contract during the year via social media marketing.
Less positive is the declining number of female interims, which peaked at 14% in 2012 and has fallen to 11.6%. The majority of career interims are male, with 91% over 44 years of age, and 51% over 55.