Contractor billings and pay rise again

Tuesday 8 October 2013

September was another strong month for contractors with billings and pay both rising yet again, according to the latest Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC).

The data published today (October 8th) shows that billings for contractors and other temporary workers has continued to rise dramatically, with last month’s growth only slightly below August’s spectacular 15-year peak. Given that permanent appointments through REC member recruitment firms also increased considerably, with a striking rate of growth which was the highest in 40 months, it appears that the UK labour market is definitely showing signs of continual improvement.

“This month’s figures show the jobs market continues to be the success story in the UK economy with all regions and sectors experiencing growth,” says REC chief executive Kevin Green.

It seems that demand for the specialist skills contractors can contribute remains strong - vacancies grew at a pace approaching that of August, the fastest in six years, indicating that businesses are confident enough in their own performance to be willing to hire new staff.

“Improved market conditions, higher activity levels amongst clients and generally stronger levels of confidence amongst employers are certainly one of the major factors underpinning the latest rise in placements,” says Bernard Brown, partner and head of business services at KPMG.

But they may well struggle to fill these unoccupied positions, since candidate availability among both contractors and permanent staff took a hit. With vacancies potentially staying empty for longer in the absence of the right talent, the chances are that those contractors and freelancers who are not already on assignment will be able to fill those skills gaps.

Indeed, it seems that it is a shortage of crucial skills that dominates the job market. Among both contractors and permanent workers, engineering staff were some of the most highly sought: they were in greater demand than workers in any other sector when it came to contractor hiring, while among permanent staff engineering took second place to the burgeoning construction industry.

Encouragingly, growth was distributed across the UK with the Midlands a hotspot for contractors. The region posted the fastest rise in billings throughout September, while improvement was slowest in the south of England. Meanwhile, it was the north which saw the biggest improvement for permanent employees, indicating that growth is not necessarily being driven by the economic hub of the south-east alone.

Mr Green says that professional contractors are enjoying much better market conditions than their counterparts in roles which require fewer specialised skills.

“There is a real two speed labour market in place,” he says. “We have a buoyant, candidate driven market for skilled and professional roles, versus an oversupply of candidates for jobs that don’t rely on a specific skill set.”

As a result of this real competition amongst businesses to attract increasingly scarce skilled professionals, average pay has risen among both contractors and permanent workers. Hourly rate increases have sped up for temporary workers, meaning that wages are rising at a pace close to July’s five and a half year peak. For permanent staff salary growth also sped up to the quickest rate since February 2008.

By Victoria McDonnell

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