Skills shortage affecting UK jobs growth

Friday 25 July 2014

The UK skills shortage is getting worse, according to new figures from the Recruitment and Employment Confederation (REC) and KPMG.

July's JobsOutlook survey revealed that businesses across multiple sectors are suffering from a dearth of talent.

Twenty-six per cent of employers expect to face challenges when it comes to recruiting for temporary roles, while 22 per cent predict the same to be true for permanent staff.

The situation is more intensive in certain sectors and 34 per cent forecast a shortage in engineering and technical contractors to fill temporary positions. Thirty-two per cent also expect to struggle to secure talent for permanent vacancies in the sector.

For the self-employed, the latest figures show the high level of demand for contractors and the availability problems that are now plaguing businesses. This suggests that companies are going to have to become more competitive if they want to secure the flexible labour they need.

The REC and KPMG also found that the reasons why employers choose temporary agency staff are changing. Sixty-four per cent told the JobsOutlook survey that they draw on the self-employed to gain 'short-term access to key strategic skills'. Sixty-one per cent say they use temporary workers to cover leave, 49 per cent employ contractors to respond to growth and 30 per cent do so to keep running costs down.

Over the next quarter, 47 per cent of employers intend to increase their use of agency staff. This trend will continue over the year, with 42 per cent claiming they will up their use of temporary workers during the next four-to-12 months.

However, these percentages aren't as high as those for permanent staff, with 87 per cent of employers intending to take on more employees in the next three months and 78 per cent planning to do so over the next four-to-12 months.

REC chief executive Kevin Green said: "Employers are going to have to work harder to attract candidates as the labour market booms and competition for talent hots up. Skilled individuals are scarce in technology, engineering, construction and HGV driving, and companies are already increasing pay to encourage people to jump ship and join their workforce.

"However, attracting talent goes beyond focusing on pay packets – workers are increasingly looking for more flexible hours, better benefits packages and nicer work environments. Your company brand and reputation are crucial to ensuring you are more appealing than your competitors to the workers you need to attract."

Financial remuneration does still have some part to play and the Freelance Confidence Index from the PCG showed that contractor daily rates are continuing to rise in a bid to attract candidates. Hourly rates are now increasing at the sharpest pace since November 2007, bucking the current trend for stagnating pay which is being seen among permanent candidates. This is particularly the case in freelancer-rich industries, where demand continues to be high.

Indeed, the average length of time a freelancer is currently out of a contract is just under two and a half weeks, as of the second quarter of the year. Almost a third of freelancers have seen an increase in contractor availability over the last quarter.

By Victoria McDonnell

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