Contractor skill shortages continue to worsen, driving up contractor rates across the core contracting disciplines. Although positive for contractors, who are in increasing demand to fill the void, skills shortages are less positive for UK plc and threaten to derail the recovery. On a more positive note, IPSE’s latest ‘Kingston Report’ shows that contractor numbers reached 1.88m in 2014, an increase of 35.1% since 2008. This growing number of flexible knowledge workers should help to meet the skills challenges faced by the UK economy, as well as giving contractors a stronger voice with policymakers.
In this month’s ContractorCalculator Market Report:
- Contractor skills shortages lead to improved pay across the core contracting disciplines, although the overall economic impact could be negative, says the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- The Bank of Scotland Report on Jobs warns that Scotland’s contract market has softened further, suggesting that contractors in some disciplines should consider seeking work in the wider UK market
- Over two thirds of contractors are paid more than their permanent counterparts and clients are increasingly reliant on contingent workers for access to strategic skills, highlights March 2015’s JobsOutlook
- IPSE’s latest ‘Kingston Report’ shows that contractor numbers have grown by 35.1% since 2008 to reach 1.88m, and this growth is showing no signs of slowing
- According to the latest Morgan McKinley London Employment Monitor, new roles increased by 19% month-on-month, driven by increased optimism and business volumes.
Contractor skills shortages worsen, driving up rates
Contractor skills shortages worsened during March 2015, shows the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs. The result is an increase in rates of pay across the core contracting disciplines, but commentators predict that skills shortages could undermine the UK’s economic recovery.
“Recruiters are struggling with industry-wide skills shortages, as demand for talent continues to outstrip the number of candidates seeking work,” notes Bernard Brown, partner and head of business services at KPMG. “This pervasive skills shortage could put the brakes on economic growth if it continues unabated.”
ContractorCalculator CEO Dave Chaplin anticipates that now is a good time for permanent employees to consider becoming a contractor: “For permanent employees with transferable skills in areas such IT, engineering, construction, marketing and finance, the acute skills shortages in these core contracting disciplines mean that there is a steady stream of contracts available to provide stability during those first few months of a contracting career.”
Scotland’s contract market softens, as contractor demand shrinks in some sectors
Scotland’s contracting sector suffered another month of “broad stagnation”, with the “lacklustre performance seen in Scotland” in stark contrast to “a further strong increase in temporary billings across the UK as a whole”.
This is according to March 2015’s Bank of Scotland Report on Jobs, which also shows that Scotland’s interim sector actually shrank, alongside the core contracting disciplines of engineering, accounts and financial showing sharp declines in contractor demand growth.
“Contractor demand growth in Scotland is at a two-year low, with six falls in the last eight months,” highlights ContractorCalculator CEO Dave Chaplin. “The broader UK contract market has outperformed Scotland for the thirteenth consecutive month. This suggests that contractors struggling to find work might have to look beyond their local client base.”
Despite this seeming decline in prospects for contractors in Scotland, Bank of Scotland chief economist Donald MacRae remains upbeat about the country’s labour market: “Conditions in the Scottish labour market continued to improve in March this year.The number of people appointed to jobs increased while the number of vacancies grew over the month.”
Contractor clients paying contractors more than permies
Contracting continues to grow in importance to the UK’s major contracting clients, says the latest JobsOutlook from the Recruitment and Employment Confederation (REC), as 71% of contractor clients pay their contingent workers more than permanent counterparts.
Skills shortages still threaten to derail the UK’s economic recovery and REC CEO Kevin Green is concerned that skills shortages pose a problem: “The biggest challenge, and a real constraint on continued growth in our economy, is the lack of candidates with the right skills to fill the vacancies employers have to offer.”
“Employment is at a record high, and yet businesses say they will need more staff if demand for their products or services increases. It’s good news for jobseekers and people looking to move roles, but it’s a headache for bosses as candidates become harder and harder to find.”
The JobsOutlook warns that engineering and technical skills are in especially short supply, highlighting that: “22% of employers expect to see shortages in permanent technical and engineering staff and 32% expect shortages in agency staff.”
Contractor numbers grew to 1.88m in 2014
Contractor numbers in the UK have reached 1.88m, representing an increase of 35.1% since 2008 shows research by Kingston University. Commissioned by the Association of Independent Professionals and the Self Employed (IPSE), the research also states the increase is structural and not caused by the recession.
ContractorCalculator CEO Dave Chaplin explains: “The ‘doom-mongers’ led us to believe that workers were being forced into freelancing because they could not find employment. This latest research reinforces that individuals are proactively choosing to become independent professionals, and not one driven by economic factors.”
“The figures are hugely impressive; an 8.7% rise in the total number of independent professionals on the year and a huge 35.1% increase since 2008 has resulted in 1.88m now working in the UK,” says IPSE’s head of research education and training, Suneeta Johal.
Limited companies without employees, which are one measure of increase in personal service companies (PSCs), grew by 20.3% between 2008 and 2015. Almost half of the UK’s contractors and freelancers are based in London and the South East of England.
IT and financial contractors benefit from London’s financial sector growth
Contractors working in IT, finance and accounting are benefiting from a surge in growth in London’s financial sector. The Morgan McKinley London Employment monitor for March 2015 highlights that new work opportunities have increased by 20% in the last month, along with “strong optimism” in the sector.
Financial services jobs grew by 19%, indicating a benevolent landscape for job hunters during the second quarter of 2015. This is great news for financial IT contractors, as demand for their skills directly correlates with the health of the UK’s financial sector.
“With the double digit increase in job openings month-on-month, we expect this to be the start of a positive trend that will continue through to April and May,” says Hakan Enver, operations director of Morgan McKinley Financial Services. “We continue to see strong demand for those with change management and corporate governance skills.”