Contractor prospects are improving, with labour market trends and economic surveys continuing to point to a recovery. However, most commentators fear that the recovery is fragile and warn that the spectre of a double-dip recession remains. And following an inconclusive election on 6th May, business leaders are looking to a new government for strong leadership and an economic policy that will lead to sustainable growth.
In this month’s ContractorCalculator Market Report:
- Contract vacancies rose at their fastest rate since January 2008, matched by the highest rate increases for over two years, says the REC/KPMG Report on Jobs
- According to the Manpower Employment Outlook Survey, employers are cautiously optimistic about future demand for workers
- Mixed messages from the British Chambers of Commerce suggest the recovery is on track, but fragile
- Prospects in the UK’s oil and gas offshore sector continues to improve, although not for contractors, according to the Aberdeen & Grampian Chamber of Commerce’s latest Oil and Gas Survey
- The Markit/CIPS UK Manufacturing Purchasing Managers’ Index hits highest level since September 1994, and employment in the sector is at a three-year high.
Engineering and construction contractors most in demand
As the economy gradually recovers, contractors in the engineering and construction category are most in demand, with IT contractors in fourth place, according to the latest Recruitment and Employment Confederation KPMG Report on Jobs. Secretarial/clerical and Blue Collar take second and third place respectively.
“This Report on Jobs highlights continued growth in both temporary and permanent employment,” says REC Chief Executive Kevin Green, “although the rate of growth has slowed slightly compared to previous months.”
Worryingly for contractors working for public sector clients, this latest Report on Jobs registers what could be the beginning of the end of the public sector jobs bonanza. KPMG’s Head of Business Services, Bernard Brown, explains: “It is now becoming increasingly clear that the long-predicted public sector recession has started to hit the jobs market and therefore the upwards trend we have seen over the last couple of months may come to a halt.”
Short-term public sector outlook buoyant
In contrast to the Report on Jobs, the Manpower Employment Outlook Survey – which is forward looking into the second quarter of 2010 – says that the public sector, the UK’s largest employer, is still forecast to hire new workers.
Contractors working in utilities, finance and business services, manufacturing and in the public sector will gain most from hiring decisions in the coming months. Despite a rally in recent months, construction reports downbeat hiring confidence.
“UK plc has learnt hard lessons from previous recessions, but this time around we’re seeing different trends emerge,” explains Mark Cahill, Managing Director at Manpower UK. “[Employers] are also implementing well-managed, complementary, flexible workforces, which is a prudent choice as they adjust to post-recession conditions.”
UK economic recovery ‘weak’
“The recovery is weak and serious risks of a setback remain,” according to the British Chambers of Commerce (BCC) Quarterly Economic Survey, which does acknowledge that a double-dip recession has so far been avoided.
Contractor clients are more upbeat, however, as confidence is back in positive territory. The survey cites this as evidence of the resilience of businesses after the recession. Contractors with clients in the services sector will also benefit from renewed optimism.
BCC Director General David Frost says: “With companies facing an extra £25.6bn in costs stemming from new employment laws and taxes over the coming four years, there should also be a three-year moratorium on any new employment legislation.”
Regulatory threat to oil and gas contractors despite increased confidence
The UK’s oil and gas sector has shown signs of increasing confidence. But the twin regulatory hurdles of decommissioning and the Agency Worker Regulations (AWR) are holding back the industry’s recovery, says the 12th Oil and Gas Survey from the Aberdeen & Grampian Chamber of Commerce.
Contractors are not enjoying the benefits of the increased confidence in the offshore sector because of the concerns oil and gas operators and related service companies have about the loss of flexibility the AWR will cause when they come into force in 2011. As Peter Sharp, employment law specialist at report sponsors McGrigors, explains the AWR is a classic example of the negative impact of the law of unintended consequences.
The flexibility which currently exists in relation to non-permanent staff will be restricted by the Agency Workers Regulations coming into force next year
Peter Sharp, McGrigors
“The flexibility which currently exists in relation to non-permanent staff will be restricted by the Agency Workers Regulations coming into force next year,” says Sharp. “There is concern that once again regulation is being introduced with insufficient attention having been given to the impact on an atypical industry.”
UK manufacturing reaches 15-year peak
Contractors working in the manufacturing sector will be benefiting from the renaissance in the UK’s manufacturing base, as the Markit/Chartered Institute of Purchasing and Supply (CIPS) Manufacturing Purchasing Managers’ Index (PMI) has reached its highest level since 1994 and new exports have hit a record peak.
The weakness of the pound and increased sales to China, mainland Europe, the Middle East, North America and Scandinavia are driving much of the increased output and employment growth in the sector is at a three-year high.
“The real turning point will come when manufacturers feel confident enough to increase their investment and start to build capacity again,” explains David Noble, Chief Executive Officer at CIPS. “The good news is there are already signs this is starting to happen, as employment levels are slowly rising on the back of strained capacity and backlogs of work reported for the first time in over a decade.”
Published: Tuesday, May 11, 2010
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