With evidence that many areas of the economy are gradually improving, stabilising or at least experiencing a slow in decline, contractors in some sectors can be reassured of their long-term prospects. But the challenge will be to keep finding contracts in the interim.
In this month’s ContractorCalculator Market Report:
- The Monster Employment Index holds steady, with minor increases in engineering and construction, and marginal falls in IT and telecoms
- The IT sector’s crash is confirmed by the Computer Weekly SSL’s Q2 survey on IT appointments, but the good news is that the slowdown is declining
- IT contractors should prepare for a long haul, according to The IT Job Board’s latest IT recruitment report
- Construction sector woes impact on civil engineering, despite a slowdown in decline, according to the latest CIPS/Markit information
- Over 50% of contractors working as interim managers now contract in the public sector, says research from the Interim Managers Association.
Monster Employment Index
The Monster Employment Index has held steady, with no movement on last month’s index, suggesting that the UK jobs market may have stabilised. It is worth noting, though, that there has been little movement since February, and compared to last year the index is down 37%.
Contractors in construction and engineering could benefit from the minor increases in demand for workers in those sectors, but IT and telecoms contractors and management and marketing interims have all seen slight falls in demand.
But, despite some indicators showing improvement, we are not yet out of the woods, according to Hugo Sellert, head of economic research at Monster Worldwide, who warns: “The UK economy’s sustained contraction in the second quarter means labour market conditions will remain challenging in the foreseeable future.”
Highly skilled contractors can still win good contracts, as Sellert explains: “Competition for top talent is still fierce, however, as companies seek to attract the most qualified workers from the growing pool of unemployed workers.”
Depths of the IT sector’s suffering revealed
The latest survey on appointments by Salary Services Limited (SSL) on behalf of Computer Weekly confirms that opportunities for IT contractors have fallen by two thirds in the last year.
But the survey also reveals that the rate of IT contracting decline is falling, with only 18% fewer contract positions advertised compared to the first quarter. According to Computer Weekly, there are still more opportunities than in the dotcom crash of 2003.
IT contractors can also take cheer from Computer Weekly’s positive view, that “…the focus is no longer on how far the market will go down: the question now is when significant recovery starts to get underway.”
Against this backdrop of cautious optimism, however, IT contractors have suffered average rate cuts in the last year of 4.5% for those in junior positions and 3.3% for more experienced and senior IT contractors.
Will IT worsen before it improves?
New research published by The IT Job Board under the title, “The State of the UK’s IT Recruitment Market”, forecasts that IT contractors will continue to see tough times in the short term, but that the IT sector’s skills shortage means that long-term growth in demand can be expected.
As Teresa Sperti, head of international marketing at The IT Job Board, explains, IT contractors who hang in there will benefit: “As a result of increasing demand and candidate supply shortages, we predict that the long-term IT recruitment market will be particularly buoyant.” But, warns Sperti, clients must do their bit to attract high quality contractors: “Organisations need to actively consider how they will mitigate the risk of a longer term skills gap, to ensure they remain competitive within their marketplace.”
Though August saw a reduction in the rate of deterioration in the construction sector, it is still the sick man of the UK economy
David Noble, Chartered Institute of Purchasing and Supply
The IT Job Board’s data is broadly in line with Computer Weekly SSL, confirming a 57% fall in demand compared to last year. The research also confirms the upturn in fortunes for IT contractors in the financial sector, as reported in last month’s ContractorCalculator Market research.
The IT Job Board’s research also calls into question the common belief in the IT contracting sector that organisations turn to contractors during a downturn, as permanent roles have increased as a total percentage of jobs and contracts advertised compared to last year, albeit only by 0.6%.
Construction contraction slows, but civil engineering activity falls
Contractors working in the beleaguered construction sector may be slightly cheered by the results of this month’s Chartered Institute of Purchasing and Supply/Markit Purchasing Managers Index (CIPS PMI) for construction, which shows the rate of decline in the sector is slowing.
Despite this move in the right direction, the sector has a long way to go, as David Noble, Chief Executive Office of the Chartered Institute of Purchasing and Supply, explains: “Though August saw a reduction in the rate of deterioration in the construction sector, it is still the sick man of the UK economy.”
Of greater concern to contractors working in the engineering sector, civil engineering saw a fall in activity. Noble says: “Civil engineering, which had so far proven less volatile than the other two sub-sectors, performed the worst in August, reflective of the instability of the industry as a whole.”
Interim management contractors turn to public sector
Against a backdrop of rising demand overall, the Interim Management Association’s (IMA) Ipsos Mori Market Audit for the second quarter shows that 51% of interim management contractors now work in the public sector.
And the survey found that the total number of assignments completed in the second quarter was up 22% on the first quarter, a welcome change for contractors who have been suffering from the impact of the recession.
Interim management contractors with public sector contracts can find themselves working in local government (30%), health (25%), non-departmental government bodies (10%), central government (9%), education (8%), police and crime (5%) and defence (3%).
But public sector dominance of the sector may be brief, as enquiries from end-user client organisations about future interim manager contracts were: 67% from private sector and 33% from public sector clients.
Published: Tuesday, September 08, 2009
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