Demand for contractors may have softened, but the future is still positive.

Tuesday 9 April 2013

Demand for contractors may have lightened over the past few months, but self-employed professionals are still in a strong position.

March saw the second month in a row where demand for contractors softened, according to the Recruitment and Employment Confederation’s (REC) monthly Report on Jobs. Although the number of temporary and contract staff billings still rose last month, the increase was the smallest in seven months.

Across the labour market vacancies were rising at a slower rate than they have for the past few months, which was reflected in the weakening demand for contractors to fulfil specific organisational roles.

However, REC also reported a drop in the availability of permanent staff alongside a rise in the availability of contract workers, suggesting that opportunities are available for contractors to exploit a shortage of suitable candidates for permanent roles.

In addition, contract staff saw their pay increase at the highest rate for a year, which could mean that businesses are showing their appreciation for the skills they are struggling to locate elsewhere.

Contractors who work on public sector projects are likely to benefit from the first rise in demand for temporary and interim staff for three months, which coincides with a small drop in the number of permanent vacancies.

For the second month in a row, demand was strongest for IT and computing staff, while engineering and construction workers were also highly sought. This reflects a broader shortage of appropriate skills in these industries which is encouraging businesses to turn to freelance workers.

Freelance workers in the marketing and media industries have also had some good news with the release of the latest employment figures from the Association of Professional Staffing Companies (APSCo). Permanent placements in these industries fell by nearly a fifth over the past three months despite vacancies actually rising by one per cent, suggesting an acute shortage of available candidates with the right skills and experience.

Some businesses were expressly looking to fill the void with interim staff, with vacancies rising by four per cent and placements by eight per cent. Throughout the industry, with such a keen shortage of talent it is likely that demand for contractors to act as stopgaps will continue to rise.

APSCo found a more general trend across a number of sectors for permanent staff to be replaced with the expertise of contractors. Permanent vacancies for professional roles, including IT and finance, have declined by nearly six per cent year-on-year - yet over the same period temporary and contract roles have risen by four per cent.

Ann Swain, APSCo chief executive, said that contract and temporary staff were increasingly seen as the “new way of working” for many companies. Despite having to pay contractors more than permanent staff, she said, employers often find this more economical given the additional costs involved in taking on permanent workers.

Nevertheless, changes to National Insurance announced in last month’s Budget could still have a major impact on employers’ decisions.

In any case, Ms Swain said, the continued use of contractors offered both employers and independent workers a huge amount of flexibility, helping firms remain adaptable as business conditions change.


By Victoria McDonnell

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