Contractors continue to do well relative to other parts of the UK labour market and this looks set to continue throughout 2012, as market conditions are ripe for the skills and flexibility contractors can offer. The eurozone crisis and wider global economic slowdown are impacting negatively on client hiring intentions, but skills shortages continue to drive up demand in the core contracting disciplines of IT, engineering and interim management. The major blot on the UK’s contracting landscape is in Scotland where, despite the fact that client demand and contractor availability continue to rise, billings and placements fell in November.
In this month’s ContractorCalculator Market Report:
- The latest Monster Employment Index suggests that a ’two-speed‘ labour market is emerging in the UK, with core contracting disciplines performing well
- Interim management contractor assignments increase by 22% against a backdrop of “testing economic conditions”, reveals the Interim Management Association (IMA)
- Contractors can fill skills gaps and reduce the impact of employment legislation for the UK’s medium/large firms, says the British Chamber of Commerce (BCC)
- The Manpower Employment Outlook for the first quarter of 2012 paints a bleak picture of work prospects, but highlights that there are still huge numbers of work and contract opportunities
- Falling agency placements and billings reveals a market mismatch in Scotland is failing to connect increasing numbers of contractors with sustained demand from clients: Bank of Scotland Report on Jobs.
IT and engineering contracting performing well as a ‘two-speed’ UK labour market emerges
IT and engineering contractors experienced increased online demand during November 2011 and have seen significant year-on-year growth: 25% and 32% respectively. Online demand for construction contractors also grew in November, and has grown a remarkable 25% year-on-year.
The Monster Employment Index for November 2011 shows many other sectors are performing less well, and a ‘two-speed’ UK labour market is starting to emerge, with core contracting sectors performing well. The overall index stayed at 140 points in November, showing no growth on October’s index, but increasing year on year by 8%.
“The UK continues to face an uncertain economy against an unstable eurozone backdrop, creating a challenging environment for online recruitment,” explains Monster UK & Ireland spokesperson Michael Gentle. “This is mirrored in the overall muted growth in this month’s Index as employers continue to take a cautious approach to hiring.”
Interim management contractor assignments increase 22% despite testing economy
Interim management contractor assignments increased by 22% in the period July to September 2011, compared to the previous quarter, reports the Interim Management Association’s (IMA) Quarterly Survey. Client enquiries to IMA member firms rose by 68%, suggesting that this upward trend is set to continue. The IMA’s Jason Atkinson says: “With the summer period historically slow for hiring and the UK economy continuing to struggle, it’s quite remarkable that the uptake in assignments has increased by 22 per cent.”
Demand for interims in the private sector now accounts for 65% of all completed interim assignments, up from 61% in the previous quarter and continuing a trend that has seen a reversal of public sector dominance of the sector. Banking and finance dominates private sector assignments, accounting for 43% of all completed assignments. Across all assignments, 36% are project/programme management, 23% gap management, 15% business improvement and 14% for change management.
“The rise in completed private sector assignments is also encouraging, with the figures showing interim usage in the private sector now similar to 2007 levels. This clearly shows that businesses are confident that appointing an interim manager will boost their bottom line,” adds Atkinson.
Contractors can solve the UK’s medium/large firms’ skills challenges in 2012
Contractors are ideally placed to provide a solution to the UK’s medium and large firms’ skills and regulation challenges. According to the British Chambers of Commerce (BCC) in its latest Workforce Survey, UK businesses employing over 50 people would like to grow but “are frustrated by a lack of skilled labour in the UK and burdensome regulation”.
Of concern to contractors is likely to be the fact that many large client organisations with the potential to increase foreign direct investment and create new contracts have a poor view of the UK labour market. When asked if the UK workforce is more skilled than other EU countries, 72% disagreed, and 54% disagreed when asked if they thought the UK has a more flexible labour market than other EU countries.
The report also exposes the assumption that large firms can cope with complex employment legislation as a fallacy, citing the fact that 88% of large firms claim the latest new legislation proposals on paternity leave and pay will be “detrimental to their business”. Employment legislation does not apply to contractors, so perhaps gives employers another reason to turn to the flexible market rather than hiring permanent employees.
The UK continues to face an uncertain economy against an unstable eurozone backdrop, creating a challenging environment for online recruitment
Michael Gentle, Monster UK & Ireland
Although 53% of larger firms use temporary workers, the BCC says that “22% of firms currently using agency workers said that they would be using fewer” following the implementation of the Agency Workers Regulations (AWR).
Contractors will benefit from ‘wait and see’ approach to hiring
Contractors will benefit from the ‘wait and see’ approach the UK’s employers and clients are adopting in the face of ongoing economic uncertainty. The Manpower Employment Outlook for the first quarter of 2012 paints a picture of pessimism and retrenchment, except in a few sectors and primary and secondary industries, such as utilities and manufacturing.
However, in many organisations jobs will still need to be done and contractors present a flexible and lower risk alternative to permanent employees whilst uncertainty reigns. “Employers have now adopted a wait and see approach to hiring; they are cautious about the economy and the fear of a Euro-wide contagion is weighing heavily on their minds,” explains Manpower UK Managing Director, Mark Cahill.
There are also huge opportunities for tenacious contractors with the right skills who are prepared to be flexible: “We should not lose sight of the fact that there are still hundreds of thousands of vacancies out there,” says Cahill. “Employers continue to look for skilled and motivated candidates who show a real desire and determination to work. Those with a ‘refuse-to-lose’ attitude will find work.”
Scottish contractor market failing contractors despite demand and availability increase
Contractor placements in Scotland fell in November for the first time since September 2009, ending 26 months of unbroken growth in placements and agency billings. However, the Bank of Scotland Report on Jobs also reveals that demand continued to grow for the twenty-fifth consecutive month and reported an increase in the number of available contractors, suggesting that there is a market mismatch.
There was sustained growth across all but one of the contract and temporary staff categories, with IT and computing and engineering and construction in second and third places respectively, behind nursing and medical care. Secretarial and clerical was the only category to experience falling demand.
The fastest rise in temp billings was in Aberdeen, which may be due to renewed hiring in the oil and gas and offshore renewables sectors. Average rates rose, but at the slowest pace since January 2011.
According to the Bank of Scotland’s Chief Economist Donald MacRae, Scotland is starting to suffer the impact of wider global economic malaise: “Weaker trends in appointments to jobs coupled with a slowing in the numbers of vacancies for both permanent and temporary positions show the effects of the global slowdown percolating through to the Scottish economy.”
Published: Tuesday, January 03, 2012
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