Fastest rise in contractors for 7 months

Monday 8 July 2013

The UK job market is showing more signs of life as both permanent placements and temporary billings rose in June, according to a new report.

According to the Recruitment and Employment Confederation (REC) and KPMG Report on Jobs published earlier today (July 8th), billings for temporary and contract staff rose at the fastest rate for seven months, indicating that flexible workers remain an integral part of the UK labour market. Permanent staff also fared well, with permanent placements expanding at the fastest rate for more than two years.

Demand for both permanent and contract staff shot up over the course of last month too and overall, the number of job vacancies of any duration rose at the quickest rate in three years. But difficulties in filling those roles with permanent staff seem to be paying dividends for contractors. The availability of candidates for permanent jobs fell at the same time as the availability of flexible workers improved. As some companies struggle to fill their vacancies, employers are more likely to turn towards independent workers to fill this void. Contractors stand poised and ready to take advantage of this noticeable talent shortage.

Average pay also improved – permanent staff starting salaries improved at the quickest pace in 23 months throughout June. But among contract workers pay growth rose more sharply than at any time since March 2008, reflecting the rise in demand overall.

Contractors have traditionally enjoyed plenty of demand from the public sector, though in recent months budget cuts have taken their toll on hiring. As a result, contract vacancies in the public sector remained flat from May. However, permanent hiring rose for the first time in six months, indicating that after a period of organisational change public sector bodies are beginning to stabilise.

In the private sector, permanent vacancies and contracts alike rose more sharply than at any time since data first became available in December 2011, demonstrating burgeoning confidence among UK businesses. Not only are they turning towards flexible workers to help them cope with new demand, but they are becoming more willing to commit to permanent hires.

Encouragingly, all nine employment categories posted growing demand, but the sectors that play host to large numbers of contractors are performing particularly strongly. Among both permanent and contract workers engineering was the most highly sought discipline, with a sizeable increase in vacancies. Accounting and financial services contractors may have fared the worst among flexible workers, but even this sector demonstrated a slightly higher number of vacancies overall.

But Kevin Green, REC chief executive, says that recruiters are concerned about skills shortages in the UK.

“Our main concern is that the soaring success of the jobs market and signs of economic recovery could be undermined if the government does not do more to address the growing skills gap,” he explained. “Roles in engineering and IT are in ever increasing demand as recruiters struggle to source the talent that businesses need to succeed.”

Bernard Brown, partner and head of business services at KPMG, added: “The latest figures reveal permanent placements enjoying their highest growth rates for over two years and temporary roles being filled at the quickest pace since Christmas.  Perhaps the sun has finally come out to shine on the jobs market and economy at large?”

By Victoria McDonnell

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