Skills shortages and the huge role contractors can play in filling them dominate labour market reports in the second quarter of 2012. And it appears that acute skills shortages are not just a UK problem, with Manpower’s latest Talent Survey reporting that workers in core contracting disciplines, such as IT and engineering, are in short supply the world over. Contractor prospects are looking positive, as the flexible knowledge-based services they deliver are increasingly sought after as a solution to a range of economic and labour force woes.
In this month’s ContractorCalculator Market Report:
- Manpower’s 2012 Talent Shortage Survey Research Results show contractors have the potential to fill a yawning talent gap
- The Agency Workers Regulations are forcing clients to reduce their use of contractors reveals the Spring Confederation of British Industry (CBI)/Harvey Nash Employment Trends Survey
- Canny contractors could exploit the desperate skills shortages in UK client organisations highlighted by a UK Commission for Employment and Skills study
- Contractors are predicted to account for a over a quarter of all hiring in 2012, according to the Chartered Institute of Personnel and Development (CIPD) Labour Market Outlook Spring 2012
- The UK’s flexible labour market prevented the economic downturn from being much worse, and could be the solution to current economic woes, suggests the British Chambers of Commerce.
Contractors favoured by major shift in global labour market dynamics
Flexible knowledge workers such as contractors look set to benefit considerably as a result of changing labour market dynamics. A third of organisations worldwide are unable to find the talent they need because, “overwhelmingly, a lack of available candidates with the right technical expertise and employability skills continues to vex employers”.
This is according to the Manpower 2012 Talent Shortage Survey, which also highlights that “emerging [global labour market] trends put unprecedented value on talent as the driver of business success”, suggesting that “this will only increase the competition for proven, talented employees with skills employers need.”
Engineering and IT workers are in the top five of Manpower’s global talent demand league table. This suggests that contractors in the core contracting disciplines are ideally placed to deliver the technical and contracting skills identified by the report as in short supply.
It goes on to say that “individuals with in-demand skills will become more selective as they evaluate their employment options”, indicating that the balance of power has shifted in favour of contractors.
Six in ten contractor clients have cut agency worker hiring due to AWR
Contractor recruitment continues to be harmed by the Agency Workers Regulations (AWR), reports the Spring Confederation of British Industry (CBI)/Harvey Nash Employment Trends Survey.
The report shows that nearly half of clients have been affected by the introduction of the Agency Workers Directive in October 2011. Of these, nearly six in ten firms have reduced their use of agency workers, preferring to employ temporary workers on fixed-term contracts or to use other contracting/temp models.
“Employment law is now seen as a brake on competitiveness by two-thirds of firms,” explains CBI Chief Policy Director Katja Hall, “and 52% expect new rules from Brussels to prove damaging in the next five years”.
On a more positive note, CBI Director General John Cridland identifies that core contracting disciplines are included in the UK’s current growth areas: “Some sectors are clearly more buoyant, with science, engineering and hi-tech leading the way.”
Skills survey reveals ‘skills potholes’ that contractors can fill
Client organisations recruiting for workers with skills in IT, engineering, interim management, finance, accountancy, and media have found themselves unable to fill up to a fifth of vacancies due to a shortage of suitably skilled, qualified and experienced candidates.
The UK Commission for Employment and Skills Survey for 2011 says that this translates into over 144,000 ongoing contract and permanent vacancies. The impact of the skills shortages on client organisations is potentially devastating:
- 47% of those clients with any skill-shortage vacancies say they struggle to meet customer service objectives
- 45% of clients have had to delay developing new products or services, and
- 44% of clients have lost business to competitors.
Clearly contractors who can identify client organisations suffering from these acute skills shortages could generate a stream of contract opportunities that will help clients improve performance.
Employment law is now seen as a brake on competitiveness by two-thirds of firms
Katja Hall, CBI
Another startling statistic revealed by the study is that almost half of the 87,500 organisations surveyed have over-qualified staff. That equates to around 4.5m workers, or 16% of the UK workforce. Depending on their skill set, each of these overqualified workers is a potential contractor or freelancer, suggesting that the UK’s contracting sector has plenty of growth potential.
Contractor hiring forecast to account for over a quarter of all new 2012 roles
Contractors will account for 27% of all new hiring in 2012, says the Chartered Institute of Personnel and Development (CIPD) Labour Market Outlook for Spring 2012. It predicts that this figure will rise to 35% in the public sector, where permanent headcounts have been frozen or are falling, but services must still be delivered.
And as CIPD Public Policy Adviser Gerwyn Davies explains, there is potential further good news for contractors, as some organisations are repatriating customer service, IT and other back-office functions after offshoring strategies have suffered from poor skills availability and customer service.
“The survey highlights the dangers facing employers that focus too narrowly on costs at the expense of quality when offshoring,” he says, pointing out that around a quarter of employers who have offshored roles are now planning to relocate jobs back to the UK.
Almost two thirds of client organisations plan to hire contractors and employees in the second quarter of 2012. Hiring intentions are strongest in the finance, insurance and real estate sector (74%), as well as the voluntary and not-for-profit sectors (77%). This suggests that contractors targeting those sectors for contracts may enjoy increased chances of success.
Contractors have a key role to play in restoring the UK’s productivity and growth
Contractors can play a key role in restoring the UK’s productivity and preventing permanent damage to the economy resulting from economic stagnation, according to the British Chamber of Commerce Quarterly Economic Forecast. In fact, the report points out, it was the flexibility and resilience of the UK’s workforce that prevented a deeper recession.
“Persistent stagnation threatens to damage the economy’s long-term productive potential,” warns BCC Chief Economist David Kern. “Investment in infrastructure [and] policies that support job creation and enterprise…are most likely to benefit the economy.”
The BCC is calling for private investment in infrastructure “to create robust rail, air, maritime, energy and digital networks.” Increased spending in these areas would directly improve contractor prospects across many core contracting disciplines.