Times are getting increasingly tough across all contracting sectors and the market looks set to get worse before improvements take place. But there is some cause for hope as new government spending plans could spell a reversal of fortunes, particularly for engineering and construction contractors.
In this month’s ContractorCalculator Market Report:
- REC and KPMG Report on Jobs paints a bleak picture, with demand for IT contractors falling sharply
- Monster Employment Index plummets again this month, with few signs of cheer for contractors
- The numbers of non-EU IT workers coming into the UK is falling
- Massive infrastructure plans may signal an upturn in fortunes for engineering and construction contractors
- Datamonitor survey shows European firms divided over the use of IT as part of their recession strategies.
Demand for IT contractors falls sharply
The most recent Report on Jobs from the Recruitment and Employment Confederation (REC) and KPMG says that IT staff demand is at a six-year low, and 40% lower than the previous month.
This is against a backdrop of falling demand across the board, with only the recession-busting medical and healthcare sectors proving to be resilient and actually registering an increase in demand for workers.
The general fall in demand is matched by an increase in available workers as a result of redundancies. “It is clear that we have not yet hit the bottom of the jobs market, with demand for staff continuing to contract,” says REC chief executive Kevin Green. “Every job must be seen as an opportunity to keep people in work, including temporary, interim and contract positions.”
Steepest decline on record for job index
Industry employment benchmark the Monster Employment Index saw its sharpest fall on record, shrinking by 31% to 111 points. Almost all categories of work declined in the period, with construction and engineering hit particularly hard. Monster also reports that online advertised vacancies reached a two-and–a-half-year low in January.
Healthcare continues to live a charmed employment existence, surging ahead this month, closely followed by the education, defence and social work sectors. Hugo Sellert, head of economic forecasting at Monster Worldwide explains: “Demand remains strong for healthcare, education and other public sector workers as government programmes work to offset private sector job losses.”
Migrant IT workers prompt calls for policy rethink
The Home Office says that 35,430 work permits were issued to IT workers from outside the EU in 2008. Although this figure shows a small reduction in foreign IT workers entering the UK on 2007 levels, it is still a massive increase on 2000 levels, when the UK was suffering a huge IT skills shortage and 12,726 work permits were issued.
Ann Swain, Chief Executive of APSCo, the Association of Professional Staffing Companies, is calling for a change in the law requiring companies to advertise UK vacancies to UK workers before bringing in IT staff from outside the EU.
“There is currently no requirement for companies to advertise vacancies in the UK before bringing workers in on intra-company transfers,” says Swain. “In view of the significant increase in unemployment in the IT sector in the UK the Government should review this rule and consider making companies tap the UK labour market first.”
It remains to be seen how the government will respond to what is, essentially, a call for an end to the free market in employment, which has served the UK economy so well.
Public sector infrastructure spending brought forward
It is clear that we have not yet hit the bottom of the jobs market with demand for staff continuing to contract
Kevin Green, REC
After a tough year, following the bottom falling out of the private housing market and the resulting huge number of contractor casualties, engineering and construction contractors may have cause for celebration – albeit only a small one at present.
The government has offered to bridge the debt funding gap for critical Private Finance Initiative projects until the financial markets have recovered, potentially releasing £11bn worth of construction and infrastructure projects.
In addition, the government has also brought forward nearly £1bn of the national schools building programme, half of which is earmarked for over 100 Local Authorities’ capital budgets.
The speed and size of these projects will provide a huge number of opportunities for contractors in the engineering and construction sectors, and will also have positive knock-on effects for contractors in support sectors, such as IT.
European corporate IT spend offers glimmer of hope for IT contractors
In a recent report published by Datamonitor, European firms were split over their intentions to invest in IT in the forthcoming year. In the UK, 26% of respondents plan to decrease IT budgets, whereas 24% are intent on spending more in 2009. The remaining 50% saw their IT budgets remaining static.
The UK, alongside France and Italy, showed the lowest confidence in IT investment in the year ahead, although overall nearly a quarter of those surveyed across 14 countries plan to increase their IT spend.
According to Datamonitor analyst Daniel Okubo, there is still some cause for optimism: “Enterprises are more interested in raising efficiency than cutting costs. Technology vendors should tailor their sales and marketing to address the specific needs of the enterprises they are targeting.”
Whilst many contractors across all sectors are having a tough time of it, there are significant signs that opportunities are out there to be had, if contractors are looking in the right place.