August is another strong month for contractors

Monday 9 September 2013

Contractors are continuing to be highly sought, according to new figures, as it has emerged that demand rose sharply in August.

Last month saw billings for contractors and other temporary workers shoot upwards at their fastest rate since July 1998, according to the latest Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC). This indicates that, as the UK’s economy is gradually returning to economic growth, businesses are looking for extra staff to help them deal with rising demand. Indeed, billings actually rose in every English region, the data shows, with recruiters in the north registering the most impressive performance.

As a result, conditions seem to have improved for those contractors looking for their next assignment - the availability of temporary and contract workers dropped at the quickest pace for six years, meaning that talent is even scarcer than before for businesses looking to hire short-term workers.

It could be that this explains why rates of pay for contractors continued to grow. Inflation may have been slower than it was in July, but that month had seen the fastest growth in five and a half years.

Among permanent staff, placements continued to rise at a strong rate, but this appears less dramatic at the side of the 40-month high posted in the previous month. The growing number of hires was clearly driven by the most impressive increase in permanent vacancies since June 2007, implying that business confidence is picking up to the point where firms are willing to commit to new employees. As an indication of the improved circumstances in which many businesses find themselves, permanent salaries grew at the fastest rate in five and a half years.

"In the current marketplace, organisations seem increasingly willing to pay more for top talent," says Bernard Brown, partner and head of business services at KPMG.

But the consequences of this increase in vacancies being filled is a scarcity of candidates to take newly advertised roles. This led to a fourth consecutive month in which availability declined - if this continues into September, contractors and freelancers stand primed and ready to take advantage of the demand for interim and short-term talent when permanent staff cannot be found.

The private sector was found to be the biggest driver of growth, with substantial rises in demand for both contract and permanent workers. In contrast, the public sector painted a more muted picture. Demand for permanent staff took a hit for the second month in a row and where new staff are required, temporary workers are filling the void- contractor demand rose, but only by a modest amount.

“Vacancy growth has hit a six year high and fluidity is returning to the jobs market, so over the coming months we expect to see a noticeable improvement in official employment figures,” says Kevin Green, REC chief executive.

Nevertheless, he adds that talent shortages are continuing to take their toll on the labour market.

“The major issue now is the worrying lack of candidates to fill the jobs being advertised,” he explains. “In August, the number of vacancies increased at the sharpest rate in over six years but the availability of staff keeps declining.”

By Victoria McDonnell

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