Recruitment agency billings for contractors fell during February 2014, alongside sharply decreasing contractor availability and increasing rates of pay.
These indicators would normally signal worsening skills shortages, because agencies simply can’t find enough suitably skilled contractors to fill assignments. But the latest Recruitment and Employment Confederation (REC)/KPMH Report on Jobs also shows that demand growth slowed in every core contracting discipline, except for construction.
Coupled with record levels of permanent recruitment, does this mean that clients are sufficiently confident in the economy and its recovery that they are choosing to permanently employ workers rather than hire contractors?
REC CEO Kevin Green believes it is skills shortages causing the blip, explaining: “The number of candidates available to fill vacancies continues to fall and this is becoming a business-critical issue in highly skilled roles.
“Recruiters are struggling to source the managerial and technical skills that employers require and this will only get worse as the economy strengthens.”
The argument for skills shortages causing reduced agency billings is strengthened by the vacancy figures. Although slower than the previous month and growing at a lower pace than permanent hiring, contractor vacancy “rates of expansion…remained substantial”.
And recruiters have specifically highlighted that finance, engineering, general IT, business development and interim management contractors are all in short supply and difficult to source.
Turning to the demand league table, the core contracting disciplines of engineering, IT, construction, accounts and financial, and executive/professional occupy the bottom five spots in that order.
Although still well into growth territory, each discipline except construction saw demand slow during February. Most marked is the engineering sector’s fall from first place in January to fifth in February.
Regionally, the manufacturing heartland of the Midlands saw the highest growth in contractor demand, with the South and London posting the slowest.
Contracting rates have surged to a seven-month high, and according to the report recruiters “indicated that demand and supply imbalances in certain sectors had driven pay rates higher”.
Green blames immigration policies in part for the UK’s skills shortages, adding: “The government must address the restrictions on visas for highly skilled workers. This would allow businesses to access the people they need to grow.”