Contractors across most sectors are enjoying strong demand for their services on the run-up to the end of 2014. Whilst the fortunes of oil and gas contractors are starting to wane due to falling confidence and a focus on cost reduction in the UK market, the financial sector in the UK’s twin finance capitals of Edinburgh and London is bouncing back strongly. In the background, skills shortages in IT, engineering, construction and technical contracting quietly persist, sustaining and driving up demand for contractors with those skill sets.
In this month’s ContractorCalculator Market Report:
- October 2014’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs shows that contractor prospects are improving, driven by falling candidate numbers and skills shortages
- A focus on maintaining and developing niche skills will keep oil and gas contractors in work, as the 21st Aberdeen and Grampian Chamber of Commerce (AGCC) Oil and Gas Survey highlights the UK oil and gas market is softening
- The Recruitment and Employment Confederation (REC) JobsOutlook for October 2014 also points to worsening skills shortages that are resulting in an increasing number of new contracts for core contracting disciplines
- Financial and IT contractors are enjoying a renaissance in demand for their services in London’s financial sector, according to October’s Morgan McKinley London Employment Monitor
- The recovery of Scotland’s financial sector is providing a contract bonanza for IT and financial contractors, says October 2014’s Bank of Scotland Report on Jobs.
Falling contractor availability and skills shortages underpin future prospects
Contractor skills shortages and sharply falling candidate availability identified by October 2014’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs are keeping prospects buoyant. Contractor demand growth is showing no signs of slowing, after 18 successive months of increases.
“The good news about our jobs market continues,” notes REC chief executive Kevin Green. “The number of vacancies is continuing to rise, with businesses in all sectors of the economy looking to hire more staff.” However, Green warns that: “Ongoing candidate shortages are a major barrier to growth.”
Recruiters told the REC that they are experiencing difficulties in finding suitably skilled contractors in a number of areas. These included accounts and transactional finance, developers and IT security, plus engineers in general although there is a particular shortage in the nuclear and rail sectors.
The number of vacancies is continuing to rise, with businesses in all sectors of the economy looking to hire more staff.
Kevin Green, REC
Oil & gas contractors must focus on niche skills to stay in contract as market softens
Oil and gas contractors must focus on retaining and building on niche geosciences and engineering skills to ensure they remain in contract as the UK’s oil and gas market starts to soften.
The 21st Aberdeen and Grampian Chamber of Commerce (AGCC) Oil and Gas Survey highlights that falling confidence and a focus on cost reduction has resulted in a focus on permanent recruitment and contractor numbers being cut.
According to the report: “Half of operators reported a reduction in contract staff in 2014 and almost two-thirds expect a further reduction in contract staff in 2015.”
On a more positive note, for contractors at least, oil and gas clients continue to face skills shortages in areas requiring niche skills. During the past year, 60% of contracting and services firms have had problems recruiting technical staff, and 55% experienced difficulties with hiring managerial and professional workers.
Contractor skills shortages worsen, creating new contract opportunities
Contractor skills shortages are worsening, according to the Recruitment and Employment Confederation (REC) JobsOutlook for October 2014. The result is increasing new contract opportunities in the core contracting disciplines of engineering and technical, IT and computing and executive and professional.
The JobsOutlook goes on to say that “the anticipated shortfall in availability of technical and engineering agency workers” is “dominating concern”. It predicts “acute shortfalls” of interim management contractors in the third quarter of 2014.
“We are seeing increasing evidence that skills shortages are worsening,” explains ContractorCalculator CEO Dave Chaplin. “This is good news for contractors in those skills areas affected who have an increasing number of high quality contracts to choose from as a result.
“However, it is less positive for UK plc, as the shortage of key skills means new projects will be delayed or even cancelled by contractor clients who simply can’t recruit a team with the right skills.”
IT and financial contractors enjoy hiring renaissance in London’s finance sector
IT and financial contractors are enjoying a hiring renaissance in London’s financial sector, with total City workers expected to reach pre-recession levels of 714,500 by the end of 2014. Morgan McKinley’s London Employment Monitor for October 2014 shows that hiring during the month showed an increase of 2% year-on-year, although on a monthly basis there was a slight dip in vacancies.
In addition to directly benefiting finance and accounting contractors, the fortunes of financial IT contractors are directly correlated to the health of the financial sector, which is the biggest consumer of IT contractor services outside of the software development sector.
“The positive trend in hiring across the City paints a rosy picture as the capital carries on strengthening, which is great news considering how hard the City was hit during the global financial crisis,” believes Morgan McKinley Financial Services operations director Hakan Enver.
“October has been another positive month with employment in the City continuing to remain strong,” he adds.
Financial and IT contractors benefit from Scotland’s financial sector bounceback
IT and financial contractors are also benefitting from the bounceback of Scotland’s financial sector, shows October 2014’s Bank of Scotland Report on Jobs. Candidate availability continues to fall and recruiters can’t find enough suitably skilled contractors to fill vacancies. This presents opportunities for contractors elsewhere in the UK who do not find the prospect of working in London’s financial sector attractive.
“The number of people appointed to jobs increased, as did starting salaries,” says Bank of Scotland chief economist Donald MacRae. “A rise in vacancies confirmed business confidence remains high. The recovery in the Scottish economy looks set to continue into 2015.”
Other core contracting sectors are also performing strongly. According to the report, the Bank of Scotland Labour Market Barometer, which provides a snapshot of overall conditions in Scotland’s labour market, “remained elevated by historical standards in October.”