Contractors continue to experience strong demand in most contracting disciplines, despite a softening of some markets, most notably in Scotland. Skills shortages are worsening, with IT, engineering and construction contractors in particular demand to fulfil infrastructure projects. Media and marketing contractors are also in short supply as clients ramp up sales and marketing activity to take advantage of new business opportunities. The good news is the that growth in the contracting sector is structural, and not recession-driven, according to a Bank of England report.
In this month’s ContractorCalculator Market Report:
- Increased infrastructure spend and client organisations seeking to take advantage of new business opportunities are what is driving up contractor demand, says the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- Contract roles increase by 4.4% year-on-year, according to the Association of Professional Staffing Organisations (APSCo), led by demand growth for finance and media contractors
- The Recruitment and Employment Confederation (REC) JobsOutlook reports that engineering and technical skills within IT, engineering and construction are in short supply
- Scotland’s contract market softens, with varying prospects for contractors from different core contracting disciplines, says the Bank of Scotland Report on Jobs for February 2015
- A Bank of England report confirms that the growth in contractor numbers is structural, and not as a result of recession-related ‘hidden unemployment’ and cyclic market changes.
Contract opportunities increase across core contracting disciplines
Engineering, construction, media and marketing contractors all have increased contract opportunities that are being driven by accelerating economic growth and infrastructure investment, shows the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs.
The demand for media and marketing contractors is accelerating as clients seek to take advantage of new business opportunities. As infrastructure projects ramp up, engineering and construction professionals are in increasingly short supply.
“Recruiters are reporting talent shortages across the economy as businesses expand in response to increasing demand,” explains REC chief executive Kevin Green. “The question now is about sustainability. Skills shortages are threatening economic growth.
“This month’s report again highlights skill shortages in engineering and construction, which threaten to delay major infrastructure projects such as HS2 and new house building initiatives.
“Candidates for marketing and customer service roles are now also becoming hard to fill. Demand for these roles is a sign that businesses are responding to increasing consumer and business confidence.”
Contract numbers increase by 4.4% year-on-year, led by finance and media
Contract vacancies grew by 4.4% year-on-year during March 2015, according to the latest data from the Association of Professional Staffing Organisations (APSCo). The growth of permanent roles saw a slight dip as a result of uncertainty over the election.
The growth in contact roles is being led by increases in the number of finance and accounting contracts (1.5%) and sharp increases in media and marketing (9%) led by a surge in hiring for digital.
“Contract vacancy rates no longer directly correlate with the number of permanent positions,” notes APSCo chief executive Ann Swain. “A record 15% of the UK workforce is now self-employed, which is a sign of our nation’s desire for flexibility, driven by entrepreneurial spirit.
“George Osborne’s Budget announcement that class 2 national insurance contributions will be scrapped for self-employed professionals in the next parliament indicates further Government support for contractors, which, it is worth mentioning, account for a third of the growth in employment since 2010.”
Contractors with technical and engineering skills in short supply
Contractors with engineering and technical skills in the core contracting disciplines of IT, engineering and construction are in increasingly short supply.
This is according to the latest Recruitment and Employment Confederation (REC) JobsOutlook, which also shows that 98% of contractor clients plan to hold or increase contractor headcounts in the next three months, and 99% plan to hire more contractors in the next 4-12 months.
“Confidence is returning to the market and that businesses are seeking to take advantage of increasing demand,” explains REC chief executive Kevin Green. “The government…announced new investment in infrastructure and transport initiatives, which is a further sign of the strengthening economy.”
Green continues: “Questions remain however about where employers will find the skilled workers to carry out these projects, and to respond to growth. Employers are already reporting talent shortages in key industries like engineering, IT and construction.”
Contractors in Scotland face varying market conditions and contract availability
Contractors within different contracting sectors have increasingly varying prospects in Scotland’s contract market, says February 2015’s Bank of Scotland Report on Jobs. This suggests that some contractors ought to consider looking for contracts across the wider UK, where contracting is typically performing better.
As ContractorCalculator CEO Dave Chaplin explains, the dynamics of Scotland’s contracting sector hinges on three key industries: “The dynamics of Scotland’s contract market are quite complex with three key areas of activity that dominate contracting: financial services; video games and oil and gas.”
“The data from February’s report highlights how each of these sectors is faring differently, and provides contractors with some insights into their prospects.”
Oil and gas is faring less well, following the oil price crash. The financial sector centred in Edinburgh is not performing at the same level as London’s financial sector. In contrast, the video games sector based in Dundee is thriving.
Contracting sector’s growth is a structural change, says BoE report
Contracting sector’s growth is a structural change that’s accelerating, leading to improved prospects for contractors. A Bank of England report, Self-employment: what can we learn from recent developments?, confirms that there is no evidence that ‘hidden unemployment’ caused self-employment to sharply increase during and after the recession.
The report highlights that, whilst cyclical ‘pull’ and ‘push’ factors such as changing economic conditions will cause the self-employment rate and contractor numbers to fluctuate, other structural factors are having a greater long-term impact.
“We welcome the report from the Bank of England that confirms the boom in self-employment reflects a structural change to the economy and adds to the mounting evidence that the rise in self-employment is the continuation of long term shifts in the labour market,” says Association of Independent Professionals and the Self-Employed (IPSE) Director of Policy and External Affairs, Simon McVicker.
What is most encouraging for the long-term prospects of contractors are the report’s conclusions that: “Increases in self-employment that are driven by long-term trends are likely to be composed of people who were ‘pulled’ into self-employment as a result of changes in technology, industrial structure or personal preferences, and tax/regulatory incentives.”