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Contractor availability falls sharply: now could be the time for renewal rate rises

Contractor availability fell at its fastest rate since March 1998 alongside a seven month high in agency billings and further marked rises in rates. This combination of factors suggests that now could be the time for contractors to be asking for rate rises at renewal time.

This is just one conclusion contractors can draw from July 2014’s Recruitment and Employment Confederation (REC/KPMG) Report on Jobs, which also shows demand continuing to grow across all contractor and temp categories.

“Skills shortages in the key contracting disciplines have brought about a candidate-led market,” says ContractorCalculator CEO Dave Chaplin. “With rates rising across the board, that means the time is ripe for those about to renew their contracts to be asking for rate rises.

“For contractors coming to the end of a long contract who were negotiated down in previous years when skills shortages were not such a worry for clients, it will be an opportunity to ramp up their earnings. Plus, if the client says no, they shouldn’t have any problems securing a fresh contract.”

Although good news for contractors, the worsening candidate shortage may have a less welcome impact on the UK’s ongoing recovery. REC CEO Kevin Green explains: “The UK’s post-recession problem is skill and talent shortages. The economy is going to be constrained by this ongoing talent crisis if employers keep doing business as usual.”

Chaplin believes that, with such high demand for specialist skills in sectors such as construction, engineering, IT, accounting and finance, now could also be the time for permanent employees to consider a contracting career.

“Even with permanent salaries growing at record rates, the potential for significantly increased take-home pay and greater control over work-life balance must be tempting for permies who are unhappy with their current roles,” he says.

Partner and head of business services at KPMG Bernard Brown agrees that employees are starting to seriously consider fresh options: “For the first time in months we are witnessing churn in the labour market.

“It seems that employees are finally beginning to wake up to the opportunities available to them. Indications are that employees’ caution over change is being replaced with hunger for something new.”

Published: 11 August 2014

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