Skills shortage drives contractor boost

Friday 13 November 2015

The latest Recruitment and Employment Confederation (REC) and KPMG Report on Jobs has suggested that an ongoing skills shortage could be helping to drive up demand for contractors across a number of key sections.

This was exacerbated during October thanks to a drop in contractor availability, forcing companies to compete more to attract the right freelancers for their needs. However, the number of employee roles available also rose, reflecting growing economic confidence throughout the UK marketplace.

Candidate availability for permanent roles was also down, meaning that some companies may need to make short-term use of contractors if they are unable to find the right employee for the job on the first attempt. The decline in availability was at its slowest rate since the beginning of the year, but was still substantial.

This suggests that it is increasingly a contractor’s marketplace in terms of agreeing rates with new clients, and freelancers should be aware of the supply and demand situation when negotiating.

The fact that contractor agency billings grew at the fastest rate since July 2015 suggests that businesses are indeed calling on freelancers to deal with staffing problems, even as they are trying to recruit employees. In addition to this, 17 per cent of agencies said that the hourly rates contractors are paid has risen compared to the previous month - the highest figure since April 2015.

While the hunt for staff is at its most intense for permanent positions in the private sector, this does not mean that the need for contractors is falling, as the statistics for agency billings make clear.

While there are plenty of opportunities for contractors in this environment, the report’s authors also drew attention to the need to make sure that young people had the necessary skills to keep high-expertise roles supplied in the future.

REC’s chief executive Kevin Green said: “There remains a big question about sustainability. Employers report an increasing number of skills shortage areas in both the public and the private sector. Starting salaries continue to rise as businesses battle to attract the people they need but it’s unclear how much longer this trend can continue.

“The government must focus on alleviating the skills crisis which threatens economic growth. We need a balanced approach to immigration so that businesses can bring in the people they need right now. Domestically, young people must be better incentivised to acquire the knowledge and skills that are needed most by hirers. A real commitment to delivering world-class careers advice and work experience would be a big step in the right direction.”

Overall, the area that saw the biggest growth in demand for contractors and temporary workers was the Midlands. By contrast, demand was lowest in the north of England, where overall economic growth has been more muted. In terms of sectors, nursing, medical and clinical positions were the areas where freelancers were most in demand, while contractors were least needed for management positions.

By Victoria McDonnell

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