Contractors are in increasing demand but there are not enough to go around. That’s the strong message from September and October 2013’s clutch of labour market reports. Three of the five surveys covered in this month’s Market Report show that skills shortages are worsening in core contracting disciplines, such as engineering, IT and construction. However, research by the Chartered Institute of Personnel and Development (CIPD) and Halogen points to high levels of job dissatisfaction and disengagement in the UK’s private sector workforce, which may start to make up the shortfall in contractor numbers.
In this month’s ContractorCalculator market report:
- Contractor demand remains at near record highs but skills shortages are accelerating, highlights September’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs
- The latest Interim Report from recruiter Executives Online shows the interim management contractor market starting to return to pre-recession levels
- Skills shortages and increasing polarisation between core contracting disciplines are the main features of Scotland’s contracting market, shows September’s Bank of Scotland Report on Jobs
- Contractor prospects are looking positive for the rest of 2013 and into 2014, according to the latest Recruitment and Employment Confederation (REC) JobsOutlook
- The Chartered Institute of Personnel and Development (CIPD)/Halogen Employee Outlook suggests that the contracting sector may become increasingly competitive as a quarter of employees seek new opportunities.
Contractor demand sustained at near record highs
Contractor demand remained at near record highs and public sector contractor demand rose during at a record rate in September 2013. The Recruitment and Employment Confederation (REC)/KPMG Report on Jobs for September 2013 also shows that skills shortages are accelerating.
REC CEO Kevin Green explains: “Demand for staff may be up, but the number of individuals putting themselves on the market has dropped for the fifth consecutive month. We can see that the division in the jobs market is getting worse, with vacancies going up as the number of skilled workers to fill them goes down.”
Engineering was top of the demand league table and recruiters reported that engineers and technicians across the board, plus business analysts and a wide range of skilled trades, were particularly difficult to source during the month.
Demand for permanent employees in the public sector fell during September. This, alongside the sharp increase in contractor hiring, is evidence that the public sector is increasingly turning to contractors for specialist skills and to maintain service levels.
Interim management contractor market returning to pre-recession levels
Interim management contractors are benefitting from a level of demand, rates and assignments not seen since the pre-recession days of 2007.
The latest Interim Report for 2013 from interim recruiter Executives Online (EO) shows that the average interim management contractor day rate now stands at £637, only 2% below the record levels experienced before the recession.
Demand for staff may be up, but the number of individuals putting themselves on the market has dropped for the fifth consecutive month
Kevin Green, REC
“What we’re seeing in the interim management sector, with slow but steady improvements in work flow and billing rates, supports the general consensus that confidence is returning to UK businesses,” notes EO managing director James O’Brien.
“The number of interim managers working in full-time assignments has risen to 37% after falling below 30% in 2009 and 2011,” he adds.
The research shows that 32% of clients hire interims because they “needed skills not present in the existing management team, for a fixed-term project”.
And, unlike in other sectors such as IT, where over 90% of contractors find work through agencies, 62% of interims find assignments themselves. Only 38% of assignments come via an interim or recruitment provider.
Contractor demand in Scotland is polarising with some sectors experiencing skills shortages
Contractor demand in IT, engineering and construction is surging ahead of the other core contracting disciplines in Scotland’s contracting market. The intense demand is leading to skills shortages, with recruiters struggling to hire technicians and engineers.
This is according to the Bank of Scotland Report on Jobs for September 2013, which also highlights that the growth in agency billings is slowing at the same time as demand is growing. This, alongside increasing rates and reduced availability, means skills shortages.
“The number of people appointed to both permanent and temporary jobs increased, while growth in vacancies was marked,” highlighted Bank of Scotland chief economist Donald MacRae.
“The engineering and construction sectors saw the highest rate of vacancy growth for almost two-and-a-half years.This is further welcome evidence of the strengthening of the recovery in the Scottish economy.”
Contractor prospects buoyed by strong “intention to hire” by clients
Contractor prospects are looking positive for the final quarter of 2013 and into 2014. This is according to October 2013’s Recruitment and Employment Confederation (REC) JobsOutlook, which confirms that contractor clients’ short- and medium-term intention to hire has doubled over the last 12 months, and nearly trebled over the last two years.
“As business picks up, employers continue to appreciate the value of agency workers,” notes REC CEO Kevin Green. “Temporary agency workers are a vital part of the UK’s labour market, allowing employers to flex their workforce in response to fluctuating demand.”
The report demonstrates the importance of contractors and flexible workers to the UK economy, as four fifths of clients now believe that flexible workers are “increasingly helping organisations to meet their corporate objectives and strategy”.
However, REC warns of impending skills shortages: “Concerns over sufficient availability of agency workers with technical/engineering and professional/managerial skills points to employers’ continuing need for key strategic resources to be engaged on a flexible basis.”
Contracting may become increasingly competitive as employees seek new opportunities
Established contractors may find they are competing for contracts with former employees seeking “new opportunities”. The Chartered Institute of Personnel and Development (CIPD)/ Halogen Employee Outlook shows that a quarter of employees are looking for a new job.
Those seeking to move are doing so for all the classic reasons that drive many workers into becoming contractors: job dissatisfaction, a lack of development opportunities, and disengagement with their employer.
“Talent is on the move again, signalling a decline in fear around job security as the impact of the economic downturn begins to lessen,” explains CIPD research adviser Claire McCartney. She warns that employers risk losing some of their most talented workers, “who might well vote with their feet and take advantage of a somewhat improved labour market outlook”.
The report notes that “job satisfaction levels in the private sector have declined steadily over the last few quarters”, and that a shocking 64% of private sector employees are feeling disengaged or neutral towards their employer. These workers may look to contracting to restore interest in their work.