Contractor demand continues to grow both in the UK and abroad, and the outlook for contractors across all core disciplines remains positive. Signs of recovery in the UK’s financial sector include improving demand and prospects for finance, accounting and financial IT contractors. Ongoing but targeted capital investment in the global oil and gas sector offers contractors with the right skills highly paid assignments. And the global construction and infrastructure engineering sector is at its most optimistic since the financial crisis began.
In this month’s ContractorCalculator market report:
- Sharp increases in contractor demand drive agency billings to a 15-year high, with falling contractor availability and resulting skills shortages producing good opportunities for contractors. But they are also a cause for concern, says December 2013’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- The latest Bank of Scotland Report on Jobs indicates that Scotland’s financial sector is undergoing a renaissance, alongside strong demand growth in all core contracting sectors
- Both contractor clients and employers are finding IT, engineering and construction skills are in increasingly short supply. This news from the REC’s JobsOutlook: The UK’s post-recession labour market report is good for contractors, but worrying for organisations that can’t increase capacity without hiring more staff
- A survey by energy consultants DNV GL predicts that the oil and gas growth areas of 2014 will be in maximising the return on existing assets alongside using technology to exploit previously inaccessible reserves
- The outlook for international construction and infrastructure engineering markets is the most positive since the financial crisis began in 2008, shows Turner & Townsend’s latest cost survey.
Contractor demand in the final month of 2013 ended on a high
Contractor agency billings during December 2013 grew at their sharpest rate since July 1998. The latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs showed the month saw the market going contractors’ way, with growing skills shortages leading to rising rates.
“Increasing demand for temp workers has driven up hourly pay rates for agency workers for the eleventh month on the trot,” highlights REC’s head of policy Kate Shoesmith. “Growing confidence means more and more employers are willing to invest in their workforce and take on more people.”
But KPMG’s partner and head of business services Bernard Brown warns that skills shortages could undermine confidence and derail the recovery: “Some uncertainty still remains because the availability of staff to fill roles has seen a steep fall – the biggest for almost ten years.”
Increasing demand for temp workers has driven up hourly pay rates for agency workers for the eleventh month on the trot
Kate Shoesmith, REC
December’s 15-year high was driven by growth in the IT & computing sector, and each of the core contracting disciplines of engineering, construction, finance and interim was well into growth territory.
Contractor demand growth increases in Scotland, with signs of financial sector recovery
Contractor demand during December 2013 increased in Scotland, with a strong performance from the finance and accounting sector indicating that the country’s financial sector is starting to recover. The Bank of Scotland Report on Jobs showed that accounts and financial contractors have moved up into sixth place in the demand league table.
“The number of people appointed to both permanent and temporary jobs rose sharply, while the number of vacancies increased strongly, reflecting strong demand from employers,” notes Bank of Scotland chief economist Donald MacRae.
IT contractors moved from third to second place, which could be a further indication of the financial sector’s recovery, as financial services are the second largest consumer of IT contractor services. Engineering and construction contractors also experienced marked increases in demand, and the demand for interims reached a 42-month high.
IT, technical and construction leading contractor skills shortages
Contractor clients, and their permanent employer counterparts, are “struggling to find staff for IT [and] engineering” and “the same problem [is] developing in other sectors such as construction”. This is according to the Recruitment and Employment Confederation’s JobsOutlook: The UK’s post-recession labour market report.
The report highlights that “the role that flexible work has played both in helping businesses survive and in keeping people in work is evident”. It also notes that “as the recovery gathers pace there is a shortage of candidates with the right skills to fill the growing number of vacancies”. This is good news for contractors in the short- to medium-term, but ultimately should be addressed to keep client companies in the UK.
The report also includes some additional statistics around pay comparisons between permanent employees and temporary workers. In 2010, one in five temporary workers earned more than their permanent counterparts, falling to one in ten during 2013.
And in 2013, “temporary workers were more likely to earn as much as permanent employees compared to 2009”. This suggests that what the Agency Workers Regulations (AWR) may have done is level down the earnings of temporary workers, so there are fewer who enjoy better pay than before the regulations were introduced.
Oil and gas contractors should focus on gaining skills for mature fields and “new frontiers”
Oil and gas contractors seeking to future-proof their careers should focus on developing skills in areas such as enhanced oil recovery (EOR) to maximise the output from mature fields. Clients also need contractors with “deep technical ability” to help them extract oil and gas from previously inaccessible “new frontiers”.
These are the conclusions that can be drawn from a survey by energy and engineering consultants DNV GL, Challenging climates: the outlook for the oil and gas industry in 2014. The survey also highlights that skills gaps remain one of the sector’s major barriers to growth.
Contractors may also wish to consider where to look for contracts over the next 12 months. The USA, Brazil and Australia have been identified as the “top investment destinations” for the year, indicating that’s where contract growth is likely to be found.
At the other end of the project life-cycle, another opportunity for contractors will be a drive to “extend the life of existing assets and increase the return on these investments”. EOR is likely to play a role in this, but skills and technologies that enable streamlined operating costs will also offer contractors opportunities.
Engineering and construction contractor prospects “the most positive” since 2008
Engineering and construction contractors, particularly those who are internationally mobile, look set to benefit from the “most positive” global outlook “since the financial crisis began in 2008”.
Construction consultant Turner & Townsend’s latest cost survey, A brighter outlook: International construction cost survey 2013, highlights that many construction markets are increasing the number of projects, creating more contracts and jobs.
According to Turner & Townsend’s chief executive officer Vincent Clancy: “Some key markets around the world are showing sustainable signs of growth.” These include the UK, the USA and some countries in the Middle East, Africa and Asia.
Conversely, less attractive markets for contractors include China, South Korea and India, where there will be fewer projects than in the last 12 months. As future World Cup hosts, Brazil and Qatar have been singled out as growing both the number of projects and associated costs, and may offer good opportunities for contractors.