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Contractor demand growth polarises across Scotland as skills shortages loom

Contractor demand across Scotland is polarising, with IT, engineering and construction surging well ahead of other contracting disciplines. All the signs of an impending contracting skills crisis are showing, as recruiters specifically struggle to hire engineers and technicians.

This is according to the latest Bank of Scotland Report on Jobs for September 2013, which also highlights that although growth remains strong, the rate of growth slowed during the month and, in some sectors, dipped below the long-run average.

Bank of Scotland chief economist Donald MacRae was upbeat about September’s findings: “The number of people appointed to both permanent and temporary jobs increased, while growth in vacancies was marked.

“The engineering and construction sectors saw the highest rate of vacancy growth for almost two-and-a-half years.This is further welcome evidence of the strengthening of the recovery in the Scottish economy.”

However, this month’s report is evidence of problems to come. Agency billings continue to grow, but at a slower pace, while vacancies and demand by clients continue to increase. That means clients want contractors, but agencies can’t fill assignments quickly enough, hence their billings growth slows.

When coupled with yet another month of fast-rising pay rates and reduced contractor availability, the Scottish contracting market shows all the hallmarks of skills shortages starting to impact.

Two contractor centres of excellence received a special mention for September activity. Dundee, the UK’s video gaming capital, experienced the highest increase in contractor hiring, suggesting that this major contributor to the UK’s creative industries is performing well.

Aberdeen, Europe’s oil and gas capital, saw both the strongest reduction in contractor availability and the sharpest increases in rates. This comes as no surprise as the oil and gas sector is both booming and suffering from acute skills shortages.

At the other end of the contracting sector demand scale, the accounts and financial industry was well into growth territory, but growth rates were a long way below IT and engineering and construction. That points to a recovery in Scotland’s financial sector, but perhaps not as strong as might be hoped.

The executive and professional category, which accounts for interims, saw a significant fall in demand growth. In contrast, across the whole UK, this sector is well into growth territory, indicating that interim management contractors currently on the bench in Scotland may wish to investigate interim assignments elsewhere in the UK.

Published: 21 October 2013

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