Contractor fortunes are faring better than most would have expected heading into June. With the EU referendum less than a month away, clients continue to tap into the contract market to meet demand without leaving themselves vulnerable to an unfavourable outcome. Demand for contractors in the finance sector has rebounded to a degree, whilst construction contractors are enjoying rising demand due to the ongoing talent shortfall which experts warn will intensify if a Brexit occurs.
In this month’s ContractorCalculator Market Report:
- Brexit fears continue to boost contractor placements as clients prioritise temporary hires over permanent staff, shows the Recruitment and Employment Confederation’s (REC) Report on Jobs for April 2016.
- IT contractor engagement is set to rise over the coming years as companies seek the capacity to drive innovation and progression, reports Tomorrow’s Tech Teams by Experis.
- The Aberdeen & Grampian Chamber of Commerce’s (AGCC) 24th Oil and Gas Survey points towards mounting skills shortage concerns in the sector.
- Morgan McKinley’s London Employment Monitor shows that finance contractor demand in the capital rebounded in April, despite a subdued month overall.
- Construction contractor demand and day rates are benefitting from ongoing skills shortages in the sector, reveals a new study from the REC.
Contractor agency billings see marked rise as Brexit concerns intensify
Contractor placements have accelerated as clients seek to mitigate the impact of an unfavourable outcome in the EU referendum, whilst still retaining capacity to meet rising demand.
The Recruitment and Employment Confederation’s (REC) Report on Jobs for April 2016 reveals that contractor agency billings have risen at their fastest rate in 13 months. When compared with the seven-month low recorded for permanent staff, for REC chief executive Kevin Green this indicates uncertainty in the labour market:
“Employers are turning to temps and contractors to provide a flexible resource, as a way of hedging any possible change to the UK’s relationship with Europe, and the implications this would have on the economy.”
Overall demand for contingent staff also improved from March’s 33-month low, and the rising demand has led to a substantial increase in day rates – the rate of increase being the strongest recorded since July 2007.
London led April’s sharp rise in contractor placements, so understandably the finance sector rose to second in the demand league table. The construction sector climbed up to third, whilst engineering and IT came in seventh and ninth respectively.
Contractors key to IT sector meeting demands for innovation
IT contractors are likely to play an instrumental role in delivering innovation as service providers in the sector struggle to meet the requirements of the increasingly demanding IT department model.
Tomorrow’s Tech Teams by IT resourcing specialist Experis shows that few companies possess the necessary combination of skills and qualities to drive progression and innovation.
As a result, an increasing reliance on contractors is expected over the coming years, with the proportion of contractors across the overall workforce expected to rise from 24% to 28% by 2020. Meanwhile, 69% of IT managers plan to engage more with contingent staff during this time.
A shortfall in candidates with the necessary blend of legacy and emerging tech skills is reported by 76% of IT managers. This combined skillset is prioritised by 62% of businesses. The skills shortage means that only one third of managers believe they have the necessary combination of skills and resources to facilitate any sort of transformation.
With firms estimating that 29% of staff will need to be replaced, the door is wide open for contractors who continue to upskill, as ContractorCalculator CEO Dave Chaplin highlights: “Firms want candidates who are the complete package, and contractors who possess the necessary qualities will be able to command substantial fees.”
Of these qualities, soft skills are becoming essential for contractors, who are increasingly being required to contribute to aspects of strategy and business development.
Oil and gas contractors could be solution to growing skills shortage concerns
Oil and gas contractors in the UK’s Continental Shelf (UKCS) have been presented some positive indications that prospects may improve, despite an overall negative sentiment in the Aberdeen & Grampian Chamber of Commerce’s (AGCC) 24th Oil and Gas Survey.
The report highlights decommissioning and renewable energy as potential sources of contracts in the North Sea, with 85% and 63% of contractors expecting to increase their involvement in either area respectively.
Meanwhile, mounting concerns over industry skills shortages continue to go unaddressed. In addition to operators cutting 15% of their permanent workforces over the past twelve months, there has also been a sharp reduction in the number of contractors undertaking both staff development and research and development.
This is in spite of the fact that half of respondents identified skills shortages as a factor currently constraining business, with 43% noting that the loss of staff to other companies is having a similar impact.
“With the talent pool decreasing, and concerns over skills shortages mounting, contractors who decide to hang in there could eventually be considered vital components in ensuring the UK oil and gas sector retains its functionality,” concludes ContractorCalculator CEO Dave Chaplin.
Contractor demand picks up during ‘a month of contradictions’
Contractor demand in the capital saw significant improvement during April, despite a largely subdued month punctuated by poor macro figures and uncertainty generated by the upcoming EU referendum.
Morgan McKinley’s latest London Employment Monitor highlights an 11% increase in professional vacancies, compared with March, which was accompanied by a 5% rise in job seekers.
Despite this, overall vacancies were still down by 22% on April 2015, although the report nods towards the UK’s flourishing Fintech sector as a major factor behind the short-term improvement.
“It certainly felt like an uninspiring month,” admits Morgan McKinley Financial Services operations director Hakan Enver. “Hiring was restricted and organisations were slow to release jobs. So the numbers were somewhat comforting and perhaps there is light at the end of the tunnel.”
However, the economy continued to slow down in April. Inevitably, this was largely attributed to concerns over a potential Brexit. With the finance sector expected to be amongst the hardest hit, experts now fear an exit of bankers and a negative impact on Sterling if the UK opts to leave.
Construction contractors benefit from recruitment crisis
Demand and day rates for contractors in the construction sector are both rising at a healthy pace, as ongoing skills shortages and the resulting recruitment crisis take their toll on firms.
According to a new study from the Recruitment and Employment Confederation (REC), 63% of recruitment agencies report that demand for construction contractors has risen over the past year, whilst 69% say that the shortage of skilled tradesmen is now the first or second most significant risk to their business.
Whilst contractors are currently riding a wave, REC chief executive Kevin Green expresses concern that a Brexit and the likely resulting sector slowdown could pose questions as to the sustainability of this trend:
“The UK is close to full employment and building firms are already struggling to find the people needed for major infrastructure projects. If Britain leaves the EU there’s no doubt that recruitment for some construction roles will become even more of a challenge.”
This sentiment is echoed by many recruiters, 59% of whom anticipate that a vote to leave the EU would intensify skills shortages. Meanwhile, only 5% believe the sector’s prospects would improve.