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ContractorCalculator Market Report September 2015

Contractor prospects continued to improve throughout August, as cross-sector skills shortages continued to play into the hands of the contingent workforce in the form of increased demand. More contractors are being drafted into roles on a short-term basis to provide clients with access to key skills. The gap between contractor demand and availability is worsening, with contractors within the construction and finance sectors in shortest supply.

In this month’s ContractorCalculator Market Report:

  • Contractor agency billings rise for the sixth successive month, but availability continues to struggle to match demand in Scotland, worsening the already acute skills shortages, highlights the latest Bank of Scotland Report on Jobs
  • Contractor agency billings growth slumps to a 25-month low as cross-sector skills gaps persist, according to the Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
  • Contractors are increasingly required for short-term access to key strategic skills, says the Recruitment and Employment Confederation (REC) JobsOutlook
  • Contractor vacancy growth is being driven by the buoyant finance sector, according to new survey data from the Association of Professional Staffing Companies (APSCo).
  • Badenoch & Clarke’s Q2 Market Insight 2015 shows contractors in the accounting and finance sector are benefitting from skills shortages, which is in turn reducing permanent hires.

Contractors benefit from increased opportunities in Scotland

Overall contractor prospects have improved in Scotland, with the gaming and financial sectors enjoying a renaissance of contractor demand. This is according to the Bank of Scotland Report on Jobs for July 2015, which highlighted growth in terms of contractor agency billings for the sixth successive month.

“These results show an economy demonstrating both confidence and growth in the second half of 2015,” highlights Donald MacRae, Chief Economist at the Bank of Scotland.

While the number of contractor vacancies in Scotland grew at its fastest rate since January 2015, contractor demand continued to exceed availability, the numbers of which declined for the twenty-seventh month running.

Nonetheless, the statistics make good reading for contractors, as ContractorCalculator CEO Dave Chaplin highlights: “This report reflects an ever-improving market for contractors. The gap between demand and availability continues to prove that there are plenty of gaps to fill for any contractors short of work.”

The core contracting disciplines of engineering & construction and IT & computing came in second and third place respectively in the demand league table, while accounts & financial came in sixth place despite enjoying “a solid rise in temp offerings”.

In contrast, Scotland’s interim market remains stagnant, with the executive & professional category showing no growth, alongside a continued slump in Aberdeen’s oil and gas sector.

Contractors struggle to meet client demand, as skills shortages worsen

Contractor agencies are still struggling to ease worsening skills shortages as the gap between client demand and contractor availability widens. The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs shows that the rate of growth in terms of contractor agency billings fell to its lowest level in 25 months during July 2015.

Over two fifths of recruiters reported a fall in contractors seeking work, amounting to the steepest decline in eight months, prompting a warning from Bernard Brown, Partner at KPMG: “It is clear we are in the grip of an industry wide skills shortage, which shows no signs of abating.”

The skills shortage is most severe in the construction sector which has jumped to first place in the demand league table. The potential implications of this are highlighted by REC chief executive Kevin Green:

“If construction companies don’t have the people they need, both infrastructure projects and house building will be constrained, and this will have an impact on wider economic growth.”

Engineering came third in the demand league table, while other core contracting disciplines IT & computing and executive/professional came in eighth and ninth respectively, despite both showing strong demand growth.

Contractor clients increasingly looking to contractors to plug skills gaps

Contractors are being increasingly required by clients to provide short-term access to key strategic skills, suggesting that contractors who invest in training and development are more likely to enjoy lucrative contracts.

The Recruitment and Employment Confederation’s (REC) JobsOutlook for August 2015 reports that 79% of contractor clients are looking to contractors to ease the skills shortages within their own organisations.

Skills shortages are rife across many of the core contracting disciplines, including construction, technical and managerial/professional, while similar struggles in the permanent labour market demonstrates the extent of the issue.

In addition to improving skills, contractors are encouraged to seek work from larger clients, as the report shows that microbusinesses are only a quarter as likely as a large employer to hire a contractor.

ContractorCalculator CEO Dave Chaplin is concerned that the current situation could stunt the UK’s economic recovery: “The JobsOutlook shows that 95% of clients have no capacity for additional work at the same time as highlighting acute skills shortages in both the permanent and contract labour forces.”

Contracting vacancies record modest growth, driven by financial sector

Growth in contracting vacancies across the core contracting sectors remained stable at 0.7% year-on-year, according to new survey data from the Association of Professional Staffing Companies (APSCo).

Growth was largely driven by the finance & accounting sector, where contracting vacancies increased by 11%. These new figures correlate with a recent study by recruitment consultancy Robert Walter, which attributed much of a 15% vacancy increase in the finance sector in quarter one year-on-year to the proliferation of SME businesses.

“Despite the fact that employment levels remain close to record highs, there has been no drop in demand for contract professionals. This cements the fact that the flexible workforce is now an essential element to any strategic workforce plan, enabling employers to bring in high-level or niche skill sets that would be near-on impossible to secure on a permanent basis,” highlights APSCo Chief Executive Ann Swain.

The finance sector was also prominent with regards to average rates growth, recording a 7.5% increase year-on-year. Meanwhile, the engineering sector recorded an uplift in rates of 6.1%.

Finance contractors temporarily drafted into full-time roles

Contractors in the accounting & finance sector are benefitting from a continued skills shortage, according to the Q2 Market Insight 2015 from Badenoch & Clark. The report notes that a shortage of quality candidates is the biggest issue facing clients recruiting in 2015, with 52% of respondents expecting to encounter an issue. Consequently, the sector recorded a 12% increase in contractor vacancies year-on-year.

Reportedly, more than one in four clients expect to draft in contractors to fill the gap, temporarily filling permanent vacancies with contractors because there are simply not enough permanent candidates available.

In the wider scheme of things, contractors across multiple sectors may have benefitted from uncertainty caused by May’s General Election. The survey shows that 83% of clients were reluctant to spend on permanent hires in the build up to the election, while the time taken for the market to uplift was slower than anticipated.

However, the study warns that contractors shouldn’t get complacent, as 81% of surveyed clients are hoping to facilitate growth by boosting their permanent headcount over the next 12 months.

Published: Tuesday, 1 September 2015

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