Contractor skills shortage could lead to increased pay

Tuesday 12 January 2016

A recent report from the Recruitment & Employment Confederation (REC), alongside KPMG, has highlighted an interesting trend in the contractor market. A very definite skills gap has formed, and while this could have a negative impact on clients it might spell success in the short term for contractors.

The REC/KPMG Report on Jobs for December 2015 shows that the number of contractor appointments started rising at a slower rate than it has been doing for the rest of the year. November saw a five-month peak in contractor agency billings, but this has now decreased slightly.

This easing off of recruitment comes at the same time as a strong rise in need for staff, which means there is an increasing gulf between contractor supply and demand. Contractor availability has decreased consistently, although again not as fast as in November when it reached the fastest rate of decline in 18 years.

This is indicative of a skills shortage. Contractors in the construction industry have already experienced this over the last few years, with talented workers specialised in fields such as plumbing or roofing seeing a rapid increase in pay. However, the REC/KPMG Report on Jobs suggests this is coming to all sectors.

It has come at the right time, as the report also found that the hourly pay rates for contract staff increased at their weakest pace in 21 months. However, if the skill shortage continues to grow then this could reverse. Kevin Green, REC's chief executive, said: "With talent at a premium, employers will try to attract staff by increasing starting salaries."

So, what sectors are set to see the biggest rise in demand for contractors? According to Bernard Brown, partner at KPMG, IT security is becoming a more lucrative field, thanks largely to a number of security incidents in the recent past.

He commented: "In the wake of several high profile breaches, companies are investing heavily in their cyber security teams and demand for IT specialists surged in December. This hiring boom has caused a skills shortage in the sector, with recruiters struggling to find enough candidates qualified in IT security to satisfy demand."

However, the sector with the highest demand for contracting staff in December is hotel and catering. Financial contractors were second, but demand for contractors rose in every single category except construction, which saw a marginal decline.


By Victoria McDonnell

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