Contracts recover after April drop

Tuesday 11 June 2013

As the UK jobs market appears to be picking up once more, demand for contract and temporary workers is on the rise again.

The latest Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC) shows that billings for contractors and other temporary workers rose in May after April’s disheartening drop.

Across the UK billings were weakest in the Midlands, where the increase was smaller than anywhere else. In London, billings rose slightly slower than the national average, but made a welcome return to growth with the fastest rise since January. In contrast, the north reported the most solid performance, completing a tenth successive month of expansion.

Average hourly pay also rose throughout May, while the rate of improvement accelerated. However, the capital bucked the trend again - although contractors were enjoying higher hourly rates, the rise was much smaller than in the UK as a whole. In fact, there was barely any difference between May and April’s findings. Similarly, although pay has risen in the south of England for fourteen months in a row, the marginal rate of inflation was so small that contractors were taking home almost the same amount as they did in April.

When it comes to availability, it appears that contractors are in a strong position to take advantage of staff shortages in different industries. The availability of permanent staff demonstrated a slight decline over the course of the month, just as the availability of contract and temporary staff increased. This could point to a gap in the market, which contractors are ready and waiting to fill.

Contractors are also now in a better position to take advantage of opportunities in both the public and private sectors. While private sector vacancies for temporary staff rose at the sharpest rate for six months, the public sector began to show signs of life again after April’s noticeable drop in the number of available roles for flexible workers.

And of course, the sectors that demonstrated the biggest demand include those which are home to high proportions of contractors. Reflecting what are by now well-documented skills shortages in key industries, the report showed that engineering is the single most highly sought discipline to fill permanent roles. It is also the sector facing the second strongest demand for contractors, suggesting that as the need for specialist expertise becomes more acute, self-employed professionals in the industry will be able to make the most of more favourable business conditions.

“The latest figures certainly give the strongest indication for some time that the jobs market is on an upward trajectory,” says Bernard Brown, partner and head of business services at KPMG. “However the pay-off seems to be a slowdown in salary growth as new starters’ pay has slowed to its lowest level since the turn of the year.”

REC chief executive Kevin Green said that employers are finding it even more difficult to find workers with the skills that they need to prepare for an upturn in the UK economy. Most of those who are currently unemployed, he added, do not have the right expertise to fill the fast-growing gaps.

By Victoria McDonnell

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