Contractors are experiencing greater market certainty across most core contracting disciplines, as the first reports on market conditions for early 2013 emerge. The data shows strong market demand, particularly in the core contracting sectors of IT and engineering. One labour market survey goes so far to suggest that the UK’s labour market may become permanently wedded to the benefits of flexible contractors. A third of UK employers will look to the flexible workforce to meet staffing and skills demands in 2013, increasing to nearly half for certain disciplines in some sectors.
In this month’s ContractorCalculator Market Report:
- Contractor demand reaches a six-month milestone of unbroken increases, with skills shortages emerging in core contracting sectors, reports the January Recruitment and Employment Confederation’s (REC) /KPMG Report on Jobs
- Oil & Gas UK’s 2013 Activity Survey predicts tens of thousands of new UK contracts and jobs will arise as a result of over £100bn in new North Sea investment in production and exploration
- The legacy of the recession may be a UK labour market conditioned to the benefits of hiring flexible workers, suggests the latest Chartered Institute of Personnel and Development (CIPD)Labour Market Outlook (LMO)
- Financial IT received a small boost in early 2013, however the financial sector’s hiring remains well down on previous years, says Morgan McKinley’s London Employment Monitor
- Michael Page’s Marketing 2013 report suggests marketing contractors should target IT, telecoms and media, and beef-up their digital marketing skills to maximise their potential during the year ahead.
Contractor demand growth unbroken for six months
Contractor demand has increased steadily over the last six months, to the extent that it has sparked a ‘war for talent’. Skills shortages in areas such as IT and engineering are driving up contract rates and reducing contractor availability.
These are Recruitment and Employment Confederation’s (REC) chief executive Kevin Green’s thoughts on the January REC/KPMG Report on Jobs: “This is good news for workers,” notes Green on skills the shortages, “but also highlights the need to address the current skills disconnect, which presents a major barrier to growth in key sectors of our economy.”
Engineering and IT contractors are in short supply generally, and specifically recruiters cannot hire enough building services engineers and IT developers. A surge in permanent hiring in the oil and gas sector, alongside huge investment in North Sea capacity, is likely to further spur demand for oil and gas contractors.
Nearly all the core contracting sectors performed strongly during January. The accounting and financial sector has leapt up to third place from sixth in December 2012, which is the third month the sector has been in positive territory.
Tens of thousands of new contracts and jobs forecast following North Sea investments
Oil and gas contractors, alongside those in other disciplines such as IT, engineering and management/marketing, look set to benefit from tens of thousands of new contracts and jobs generated by huge increases in North Sea investment.
This is according to Oil & Gas UK’s 2013 Activity Survey, which is the first review of the UK oil and gas sector following Chancellor George Osborne’s decision to remove the energy company windfall tax he originally imposed on oil and gas production in 2011.
Some employers are clearly using flexible working and reduced hours to adapt to trading conditions
Gerwyn Davies, CIPD
“After two disappointing years brought about by tax uncertainty and consequent low investment,” explains Oil & Gas UK’s chief executive Malcolm Webb, “the UK continental shelf (UKCS) is now benefitting from record investment in new developments and in existing assets and infrastructure, the strongest for more than three decades.”
In addition to investment in production, which should generate fresh onshore and offshore contracts, Webb highlights that exploration in the North Sea is undergoing a renaissance: “The survey results lead us to forecast 130 exploration wells over the next three years, which, alongside the use of new and improved sub-surface technology, should result in many more barrels being discovered.”
Increased contractor use is forecast to be a major legacy of the recession
The increased use of contractors and other flexible workers is predicted to be one of the legacies of the recession. “Some employers are clearly using flexible working and reduced hours to adapt to trading conditions,” comments Gerwyn Davies, Labour Market Adviser at the Chartered Institute of Personnel and Development (CIPD), discussing its latest Labour Market Outlook (LMO).
“The challenge for today’s employers is to find innovative ways to deploy the skills available to them as they look for ways to grow in current market conditions. It will be interesting to see whether a return to growth reveals a labour market permanently adapted,” he adds.
The LMO also shows contractor demand remaining high, despite “stalling economic growth” in the first quarter of 2013. This is the fourth consecutive quarter of hiring growth, which the CIPD attributes in part to increased contractor hiring.
“The number of people employed on temporary contracts will also continue to boost employment levels during the first quarter of 2013, as employers report that 29% of new recruits will be employed on this basis,” it says
Financial IT contractors to benefit from New Year City jobs boost
The prospects for financial IT contractors focusing on London’s financial centre have experienced a New Year boost. January’s Morgan McKinley’s London Employment Monitor shows new jobs rose by 76% during the first month of the year.
The UK’s financial sector is the second largest consumer of IT contractor services, after the software development sector, and the fortunes of financial IT contractors correlate strongly with hiring in the sector.
It seems that contractors with financial skills are in particular demand, as Morgan McKinley Financial Services’ operations director Hakan Enver explains: “The IT market is seeing demand for those with expertise in finance and risk to create more sophisticated reporting solutions.”
Despite this boost, the amount of new City jobs in January 2013 was down by 18% when compared to January 2012, which shows the sector has a long journey before it reaches pre-recession levels of contractor demand.
Marketing contractors facing cautiously optimistic outlook for 2013
Marketing contractors are likely to experience an upswing in demand during 2013. Recruiter Michael Page’s Marketing 2013 report highlights that 80% of clients are planning to increase headcount during the year ahead.
IT and telecoms and the media are the hot sectors for marketing recruitment, with fast moving consumer goods (FMCG) and retail looking less positive. Brand management is tipped to be the most important function for 2013.
Paradoxically, the public sector is shaping up to be a growth market for marketing interims. Although 37% of public sector clients are planning to reduce permanent headcount, 44% say they are planning to hire contractors
The report also shows that contractors with digital marketing skills may be able to capitalise on their skills by targeting end-user clients directly, as according to the report “there is still a very competitive market for candidates with a proven digital track record, with 41% of employers saying they would hire an external agency if faced with a shortfall of digital skills in their department.”