Contractors were the flavour of the month during November, with demand for their services mostly increasing and reports by organisations as diverse as PCG, Boox and the Chartered Institute of Personnel and Development highlighting their importance to UK plc. Less positive is the ongoing contraction of the UK’s financial sector and the worrying news that London’s standing as one of the leading global financial centres is under threat.
In this month’s ContractorCalculator Market Report:
- IT and engineering contractors are in the top five of the Monster Employment Index online demand table
- Contractors underpin innovation and create and sustain jobs, shows new PCG-commissioned research by Cranfield’s Professor Andrew Burke
- Contractors earn twice the UK average salary and increased ‘projectisation’ by clients is driving up demand, highlights a report by contractor accountant Boox and Dr John Glen of Cranfield School of Management
- Financial IT contractors may be facing poor market conditions in 2013 as the UK’s financial sector continues to contract, suggests November’s Morgan McKinley London Employment Monitor
- The Chartered Institute of Personnel and Development’s (CIPD) latest Labour Market Outlook indicates that clients use contractors to help manage risks arising from economic uncertainty.
IT and engineering contractors in top five most in-demand online industries
IT and engineering contractors appear fourth and fifth respectively in October’s Monster Employment Index year-on-year growth league table of online demand. Online hiring of IT contractors also saw strong month-on-month gains, with demand increasing by 11% in October.
Conversely, three other core contracting sectors – marketing, banking and finance, and construction – are in the bottom five for year-on-year growth, despite marginal gains for marketers during October.
“While we can’t predict what will happen in the coming months, it is very encouraging to see online hiring levels increase compared to the same time last year for the third consecutive month,” said Julian Acquari, managing director of Monster UK & Ireland. “We’re noting some diverse areas of strength…for professionals as well as technicians.”
Contractors underpin innovation and job creation, says Cranfield report
Contractors and freelancers underpin the UK’s current and potential economic growth in a global knowledge economy, as well as helping create and sustain employment. These are the key findings of a new PCG-commissioned report, The Role of Freelancers in the 21st Century British Economy, by Professor Andrew Burke of the Cranfield School of Management.
Contractors and freelancers allow large organisations, entrepreneurs and high-growth SMEs to innovate. Burke found that large corporations “prefer freelancers to contractor firms using employees, because they believe that freelancers are higher quality and more motivated.”
And contrary to the common belief that temporary workers are in some way responsible for taking jobs away from ‘real’ employees, Burke’s research proves exactly the opposite.
In the modern economy much employment would not be created and some would be unsustainable without the availability of freelancers
Professor Andrew Burke, Cranfield School of Management
“Freelancers are used to serve different functions to employees. By using freelancers for these distinct roles, businesses are able to create sustainable value-added, which underpins employment,” explains Burke. “Simply put, in the modern economy much employment would not be created and some would be unsustainable without the availability of freelancers.”
Contractors typically earn twice the UK average salary
Contractors’ annual average earnings are £50,820, which is roughly twice the UK’s £26,093 national average. The Boox Report, by contractor accountant Boox and Dr John Glen of Cranfield School of Management, also found that increasing use by clients of outcome-focused projects is driving up contractor hiring and increasing the sector’s economic significance.
Glen explains: “The increased projectisation of work and an increasing preference for employees to hire contract workers has all led to today’s self-employed workforce becoming an economic powerhouse.
“Employers value the skills and expertise this diverse group of workers bring to an organisation,” continues Glen. “The rise in the number of self-employed workers is also beneficial for government, because it is a key driver of wealth creation, employment and diversity.”
The report also points out the oft-spoken fallacy that an increasing number of contractors are forced into contracting because they cannot find a job: “There are three very clear motivators for going freelance: 30% want to be their own boss, 25% are prompted by a major event, such as redundancy, and 19% go in search for a better work-life balance. Struggling to find work is the motivator for just 4% of people going freelance.”
Financial IT contractors facing uncertain 2013 as City jobs plummet
Financial IT contractors continue to suffer as a result of the UK financial sector’s ongoing consolidation. The latest Morgan McKinley London Employment Monitor shows that financial hiring fell by15% in November, compared to the previous month, and is at its lowest level for 2012. Year-on-year, the number of new jobs fell by a quarter.
The outlook for 2013 is also looking increasingly bleak, as Morgan McKinley Financial Services’ operations director Hakan Enver explains: “London is starting to fall behind competing financial centres. During 2012, the number of jobs in London fell below that of New York for the first time in 12 years.”
The UK’s financial sector is the second largest consumer of IT contractor services, after the software industry, and its fortunes closely correlate with financial IT contractor demand.
The only positive aspect is that financial firms often turn to IT as a source of competitive advantage when trading conditions are poor, so whilst hiring of financial professionals is falling, demand for financial IT specialists may be sustained.
Clients use contractors during uncertain times and to reduce short-term costs
Contractors deliver cost savings, productivity improvements and help organisations manage risk during times of economic uncertainty. This is according to the latest Chartered Institute of Personnel and Development’s (CIPD) Labour Market Outlook, which also highlights how much temporary working, including contracting and freelancing, has grown during the recession.
The report shows that 37% of contractor client organisations use contractors and temps due to the current economic uncertainty, 30% use contractors because they fit with the hirer’s business cycles and 25% use contractors to contain short-term costs.
Another key finding is that contractors contribute to increasing productivity within the organisations that hire them. “More than a quarter (36%) of employers who have increased the proportion of workers on temporary contracts say that productivity has improved, compared with 16% who say it has had a negative impact,” says CIPD.