Contractor skills shortages remained pronounced in December, as the continued rise in contractor agency billings wasn’t enough to close the widening gap between supply and demand. As a result, the long-term growth trend in terms of contractor rates continued, and contractors find themselves in an increasingly contract-rich environment.
Whilst contractor agency billings continued to increase, the Recruitment and Employment Confederation’s (REC) Report on Jobs for December 2015 shows that they did so at a moderated pace, slower than November’s five-month high.
Meanwhile, demand for contingent staff also increased at a similarly mild rate during December, which alongside slowing growth in agency billings indicates a mismatch between demand and supply as a result of a lack of suitably skilled candidates.
This has been confirmed by the continued marked decline in terms of contractor availability, which remained considerable in December despite easing from November’s 18-year record.
“The UK labour market is in great shape at the start of 2016 but some major challenges lie ahead,” notes REC chief executive Kevin Green.
“Skill shortages are a real threat to continued growth in many industries. With talent at a premium, employers will try to attract staff by increasing starting salaries.”
Contractors also continue to benefit from the increasingly competitive market, as December saw contractor rates continue to climb as clients sought to invest more to secure the necessary talent.
The finance sector remained in second place in the contractor demand league table in December, whilst IT and engineering slipped to fifth and eighth respectively.
Notably, demand rose for contractors in every sector bar the construction industry, which remains at the bottom of the table, despite the recent Markit/CIPS UK Construction PMI reporting an accelerated increase in new business volumes and staffing levels.
Despite falling to fifth in the demand league table, IT contractors with cyber security skills can expect to be particularly sought after due to growing skills shortages, as highlighted by Bernard Brown, Partner at KPMG:
“In the wake of several high profile breaches, companies are investing heavily in their cyber security teams and demand for IT specialists surged in December. This hiring boom has caused a skills shortage in the sector, with recruiters struggling to find enough candidates qualified in IT security to satisfy demand.”
The Midlands remains an increasingly prosperous region for contractors, enjoying the strongest rise in terms of both contractor appointments and pay rates. Meanwhile, London-based agencies reported the weakest rise in billings.