Contractors are going through a period of particularly intense demand. This is evident from the labour market surveys reviewed in this month’s market report, which all consistently point to sustained demand now and for at least the next 12 months across all core contracting disciplines. Competition for contractor skills is so intense that it is showing as cooling demand simply, because recruiters and clients cannot find enough suitably qualified contractors to fill assignments.
In this month’s ContractorCalculator market report:
- February 2014’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs shows contractor demand cooling, driven by a worsening contracting skills shortages
- Contractor demand grew in Scotland, alongside rates and agency billings during February 2014, shows the latest Bank of Scotland Report on Jobs
- The UK labour market is “firing on all cylinders”, according to the latest Manpower UK Employment Outlook
- The Recruitment and Employment Confederation (REC) JobsOutlook for March 2014 reports that against a backdrop of growing contractor demand, skills shortages are worsening and rates are increasing
- London’s financial district is hiring again, driven by a buoyant contract market providing opportunities for financial and IT contractors, says the Morgan McKinley London Employment Monitor.
Contractor demand cools slightly during February, but rates and skills shortages increase
The previously rapid demand increases for contractors cooled slightly during February, but contractor availability decreased sharply, while pay increased and agency billings fell. These are the symptoms of a contracting skills shortage, because agencies simply can’t find enough suitably skilled contractors to fill assignments.
The latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs reinforces the worsening skills shortages by confirming that contractor vacancy “rates of expansion…remained substantial”.
“The number of candidates available to fill vacancies continues to fall and this is becoming a business-critical issue in highly skilled roles,” warns REC CEO Kevin Green. “Recruiters are struggling to source the managerial and technical skills that employers require and this will only get worse as the economy strengthens.”
The number of candidates available to fill vacancies continues to fall and this is becoming a business-critical issue in highly skilled roles
Kevin Green, REC
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.”
Contractor vacancies, rates and agency billings in Scotland all increased during February
Contractor vacancies, rates and recruitment agency billings in Scotland all increased during February 2014. The latest Bank of Scotland Report on Jobs also showed that the Labour Market Barometer, an index that provides a snapshot of the Scottish labour market’s general health, was at the second highest point in its history.
The strong Barometer performance was matched with sharp increases in both contractor and employee demand, as Bank of Scotland chief economist Donald MacRae explains: “February’s Barometer reached 63.9 – the second highest in eleven years of the survey – amid a continued surge in demand for staff. The number of people appointed to both permanent and temporary jobs rose sharply.”
Accounts and financial was the best performing of the core contracting disciplines. IT & Computing fell two places to fourth, and engineering and construction rose two places to fifth. Despite these shifts, all contracting sectors were strongly in growth territory.
Contractors in all core contracting disciplines received hiring boost
Construction and energy contractors have benefitted from the bad weather at the start of 2014, and finance and business services, where many core contracting disciplines are found, is also performing well. This is according to the latest Manpower UK Employment Outlook, which also shows that that hiring has increased across all nine of its industry sectors for the first time since 2008.
ManpowerGroup UK managing director Mark Cahill believes this is significant: “The UK jobs market has reached a turning point. Whilst the overall outlook has been consistently positive now for a number of quarters, it’s actually been six years since the employers we’ve interviewed have reported positive hiring plans in every single sector.”
The report also shows that large employers, which are the more typical contracting clients, are adding to headcounts as a result of greater optimism about business prospects for the year ahead. Cahill himself is upbeat about the prospects for the UK labour market: “At last we can confidently say that the jobs market is starting to fire on all cylinders.”
Contractor demand and rates to increase over the next 12 months
Contractor demand will increase over the next 12 months, including a short-term burst of hiring in the next quarter, reports the latest Recruitment and Employment Confederation (REC) JobsOutlook for March 2014.
It highlights that rates increased sharply in the first quarter of 2014 and skills shortages in core contracting disciplines are worsening. REC chief executive Kevin Green explains: “We...know starting salaries for new joiners and hourly pay rates for temporary staff have increased sharply at the start of 2014.
“Another factor for employers will be the growing scarcity of skilled candidates. As that becomes more apparent in a range of sectors, from white collar IT and management roles to drivers and caterers, businesses will be keen to do what they can to hang on to the staff they have.”
The report concludes on a positive note: Overall demand for contractors “is now 200 percentage points above the January 2012 base – up 65 percentage points in the last month alone”.
Financial and IT contractor prospects in London’s financial sector improve
Financial and IT contractor prospects were further improved during February 2014 as London’s financial district continued to generate new jobs. This is being driven by the contract market as “hiring managers seek to test the water” and “a significant proportion of firms [are] still cautious about investing in human capital”.
These are just some of the conclusions of the latest Morgan McKinley London Employment Monitor. It also shows that job availability increased by 11% compared to the previous month.
“After a marked surge in City recruitment in January, this month’s monitor has continued to register an upward curve,” explains Morgan McKinley Financial Services operations director Hakan Enver. “It’s evident that, on the whole, firms remain confident to hire and, importantly, they are continuing to create new positions rather than simply taking on replacement hires.”
The monitor is also upbeat about future prospects: “Looking ahead to the rest of 2014, we predict City firms will continue to add to their head count.”