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Contractor prospects impacted by Brexit fears, warns REC’s Green, as skill gaps widen

Contractor demand continued its long-term growth trend during January 2016, but now may be the time for contractors to secure a longer-term contract before Brexit fears cause uncertainties and a market slow-down over the summer.

This is according to the Recruitment and Employment Confederation’s (REC) Report on Jobs for January 2016, which also warns of worsening skills gaps.

“Organisations in sectors such as construction and manufacturing are finding it increasingly difficult to recruit due to entrenched skills shortages,” warns REC chief executive Kevin Green.

“The other factor which may create uncertainty in the jobs market is the EU referendum, which now looks likely to happen in June.”

Ongoing pressures on contractor clients caused by the widening gap between supply and demand led to a further moderate increase in contractor rates.

However, the report also shows that contractor agency billings dipped to its slowest rate of growth in four months, which alongside increasing demand and rates is usually indicative of a mismatch between supply and demand.

“As we have come to see on a regular basis of late, market conditions are favouring contractors,” highlights ContractorCalculator CEO Dave Chaplin. “Growth trends have continued unabated, meaning now is a good time for contractors to secure a contract that will tide them over any uncertainties caused by the referendum over the UK’s European Union (EU) membership.”

Whilst contractors continued to benefit from rising demand and rates, both increased at a moderated pace. Contract vacancy growth dipped slightly below December’s figures, potentially as a result of worsening skills shortages putting a halt to projects.

Similarly, panellists attributed the further rise in contract rates to pressures derived from the shortfall in talent. However, the rate of growth eased to the slowest seen since October 2013. Notably, contractors based in the South enjoyed the largest increase in rates.

Contractors in particularly talent-deprived sectors are experiencing contrasting fortunes. Whilst a lack of sufficient candidates in the blue collar (encompassing manufacturing) sector has seen it shoot up to the top of the demand league table, construction contractors are experiencing adverse effects.

With skills shortages continuing to stifle projects, demand for construction contractors saw a marginal decline in January, leaving the sector bottom of the demand league table. Meanwhile, the finance and IT sectors sit in fourth and fifth place respectively, with engineering in seventh.

Published: 09 February 2016

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