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Contract market stabilises but skills shortages persist, shows latest Report on Jobs

Contractors are experiencing a stabilisation of the contract market, although demand in some specialist disciplines remains strong, and skills shortages persist in these areas.

January 2015’s Recruitment and Employment Confederation (REC)/KPMG Report on Jobs shows demand increasing at the same time as contractor agency billings growth slowing. When coupled with a slowdown in falling contractor candidate availability and modest rate rises, this suggests a cooling market with hotspots of demand and hiring around niche skills.

“Businesses are more confident and are focusing more on permanent hiring as the economic recovery continues. This latest Report on Jobs shows how this balance is tipping towards hiring permies,” highlights ContractorCalculator CEO Dave Chaplin.

“However, contractors with specialist skills remain very much in demand, and the mismatch between agency billings and demand shows that skills shortages are resulting in unfilled assignments.”

REC chief executive Kevin Green remains upbeat about the UK labour market: “The number of vacancies for permanent and temporary jobs continues to increase rapidly as confident businesses expand their workforces.”

Contractor demand is also polarising geographically, with the Midlands experiencing the greatest increase in contractor agency billings, while the South saw the weakest increase.

Green continues: “It’s encouraging to see these positive trends aren’t focused just in the South East, with all regions reporting rises in people finding jobs and pay increases with the North and the Midlands both reporting robust growth.”

However, Green warns that skills shortages pose an ongoing problem for clients and employers: “The rate of growth in placements is beginning to ease and while the pressure of skills shortages is benefitting new hires via more generous pay offers, in the medium and long term the situation poses real problems for sustainable business growth.”

Although still well into positive growth territory, three of the five core contracting disciplines slipped down or stayed the same in the demand league table as the contract market softened during January.

Accounting/financial, construction and executive/professional remained in sixth, eighth and ninth place respectively, unchanged from December 2014’s Report on Jobs. In contrast, demand for permanent workers with construction skills grew sharply.

Whilst this signals that construction clients are confident enough about the future to hire more permanent staff, it does mean fewer contracts for contractors.

IT & computing and engineering both climbed a place compared to the previous month, and were in fourth and fifth place respectively, demonstrating that specialist skills from both sectors remain in great demand.

Published: 09 February 2015

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