Contractor demand strengthened across all core contracting disciplines during June 2015, partly due to increasing skills shortages clients are experiencing across many sectors. Consequently, clients are investing greater resources to acquire contingent workers such as contractors to access their strategic skills. Meanwhile, Scotland’s oil and gas market is struggling to keep pace with its financial and video gaming sectors, which are performing strongly. Despite the oil and gas sector’s global downturn, there are still plenty of opportunities for contractors targeting the North Sea, as oil and gas clients slash permanent headcounts.
In this month’s ContractorCalculator Market Report:
- Contractor availability drops to its lowest in seven months, driving up skills shortages in the core contracting disciplines, according to findings from the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- Oil and gas contractors working on North Sea contracts shouldn’t worry about the current slump, says the Aberdeen & Grampian Chamber of Commerce (AGCC) 22nd Oil and Gas Survey
- Scotland’s contract market is diverging into two speeds, with the financial and video gaming industries significantly outperforming the oil and gas sector, highlights the latest Bank of Scotland Report on Jobs
- Contractors were crucial to the post-2008 economic recovery and are now a vital part of the UK economy, according to the latest report by the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA)
- The Recruitment and Employment Confederation’s (REC) latest JobsOutlook reports that clients are investing various resources, including higher pay, to attract contractors who possess key strategic skills.
Contract-rich market stems from contractor availability reaching seven-month low
Contractor availability was reported to have dropped to a seven-month low in May 2015, resulting in a contract rich environment across all of the core disciplines as recruiters and clients just can’t fill roles.
The findings from May’s Recruitment and Employment Confederation (REC) and KPMG Report on Jobs showed an increase in contractor agency billings and rates throughout May, with the Midlands and London proving to be the best equipped areas in the UK for sourcing contracts.
“Contractor demand growth is in the UK hubs of engineering and financial excellence – London and the Midlands – so contractors with the right skills have it all to gain from focusing on winning work in these locations,” said ContractorCalculator CEO Dave Chaplin.
However, REC chief executive Kevin Green warned of an impending jobs crisis, claiming that using contractors to fill worsening skills gaps can be no more than a temporary solution: “Recruiters are doing a great job at getting more and more people into work, but four in ten of those recruiters say that the availability of candidates is getting worse each month.”
The demand league tables show contracting in the core areas to have performed well. Accounting and financial rose from ninth last year up to fourth, whilst IT and computing came in at sixth. The increase in opportunities for contractors is being attributed to rising workloads at client companies, with staff unable to cope with growing business.
AGCC allays fears of oil and gas contractors in the North Sea
Oil and gas contractors working in the UK’s North Sea should hold their nerve despite the oil and gas sector’s global downturn, as considerable opportunities are still available. The Aberdeen & Grampian Chamber of Commerce’s (AGCC) 22nd Oil and Gas Survey highlights that the oil and gas still needs pumping despite permanent headcounts being slashed as a result of reduced confidence and activity levels in the sector.
James Bream, research and policy director at AGCC, stated: “Once again we have a set of results that give us clear signals that new opportunities exist. There is lots to build on and just perhaps it is possible that we are seeing the start of the next phase in our role at the frontier of the oil and gas sector.”
The halving of oil prices has caused two thirds of North Sea operators to cancel projects, with 76% of companies less confident about business than they were this time last year. This, as ContractorCalculator CEO Dave Chaplin notes, has caused firms to branch out: “In response to falling oil prices, 41% of service firms are choosing to accelerate their plans to expand into new markets.”
Despite the slump in North Sea activity, the survey reports that: “One in five contractors in the UKCS is working at or above optimum levels.” This is compounded by the decision by operators and firms to cut staff training following the oil price falls.
Scotland’s contract market running at two speeds, with finance and gaming excelling
Scotland’s contract market is operating at two speeds, with Edinburgh’s financial sector and Dundee’s video gaming centre significantly outperforming the oil and gas industry in Aberdeen. This comes from the latest Bank of Scotland Report on Jobs for May 2015, which also reports a severe decrease in availability of contractor candidates during May.
“Scotland’s contracting sector is performing strongly except for oil and gas. Demand, vacancies, agency billing and rates of pay are all strongly positive,” highlights ContractorCalculator CEO Dave Chaplin, who describes the current trend as “a clear call to action for contractors in UK regions that are performing less well to consider a move to Scotland.”
The report noted a strong rate of increase in permanent starting salaries while hourly pay rates for temporary staff increased for the second month in a row. Every Scottish region apart from Aberdeen enjoyed an increase in contractor agency billings.
Chief Economist at Bank of Scotland, Donald McRae stated: “These results show the Scottish economy recovering some of the growth momentum lost in January this year.”
Contractors essential to UK’s successful economy, says RSA
Contractors are essential to a successful UK economy, according to a report by the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), The Second Age of Small. Microbusinesses – defined as firms with 0-9 employees – were found to be a significant driver of UK productivity and now represent 96% of all private sector firms in the UK.
“This report confirms much of what we know about the self-employed. They work incredibly hard… but often don’t get the recognition they deserve,” said Chris Bryce, chief executive of the Association of Independent Professionals and the Self Employed (IPSE).
The RSA’s findings show that, whilst contractor numbers have increased, the amount of businesses of others sizes has either stagnated or shrunk, endorsing contracting as a career choice. These indications were reinforced by ContractorCalculator CEO Dave Chaplin, who stated: “Contractors have swelled in numbers since the recession and are now a mainstay of our economy.”
The report’s findings also support views that contractors, already a highly skilled group, are becoming increasingly better qualified. Since 2001, the proportion of contractors with a degree has risen to 28% from 20%, with 47% of contractors now undertaking professional or technical positions, compared to 43% of employees.
Clients increasingly targeting contractors with key strategic skills
Clients are investing increasing resources into securing the talent they require to address skills shortages, which as a result is confirming what many in the contracting sector already knew: contractors with key strategic skills earn more than their permanent counterparts.
The Recruitment and Employment Confederation (REC) JobsOutlook for June 2015 highlights that 65% of contractor clients admit to paying their contingent workers more than their employees.
REC chief executive Kevin Green explains: “Candidate availability is extremely low and, as a result, more employers are offering lucrative short-term assignments, especially in fields such as engineering.”
Whilst lower-skilled jobs have traditionally accounted for the bulk of temporary work, factors such as increased pay and flexibility have seen the profile of contractors shift over to more skilled workers.
The attitude towards contractors has also changed. No longer viewed as ‘temps’ drafted in to assist during peak times, eight out of ten employers now hire contractors for ‘short-term access to key strategic skills’.
According to ContractorCalculator CEO Dave Chaplin, this recognition by clients is long overdue: “Contingent workers in the core contracting disciplines have always delivered hard to source skills at premium rate. The JobsOutlook is simply confirming what those of us who have worked in the industry for decades have always known.”