Demand and wages for contractors skyrockets

Friday 13 May 2016

It is a good time to be a contractor. The UK workforce is undergoing a massive change, as freelancing and self-employment are becoming more common, and it seems that temporary staff are becoming more valuable. This is supported by the latest Report on Jobs from the Recruitment and Employment Confederation (REC) and Markit.

The most recent incarnation of this report, covering April 2016, has seen sharp increases in both contractor placements and pay, while there has been a slowdown in permanent recruitment. It is thought that this stems from the uncertainty caused by the possibility of Brexit, as well as the implementation of the National Living Wage (NLW).

Kevin Green, chief executive of REC, said: "The UK labour market is going through an unsettled patch, with uncertainty around a possible Brexit and the impact of the National Living Wage changing employer behaviour with a switch from permanent to temporary hiring."

Contractor placements saw a rapid rise in April. Agencies reported that their temporary and contract staff billings increased at the fastest rate in 13 months. Meanwhile, temporary vacancies continue to rise, albeit less swiftly. Still, the contractor vacancy rate increased at a faster pace than it did in March.

This growth was spread out over all the different industries that REC monitors, but the strongest growth was seen among the nursing, medical and care sector. Mr Green said: "The NHS is struggling to fill permanent roles and this is pushing up demand for agency nurses and locum doctors as hospitals try to ensure safe staffing levels."

IT and computing contractors saw a rise in demand, but it was the slowest among all the categories of temporary workers.

Meanwhile, the opposite was seen for permanent staff, showing how beneficial it is to be a contractor in the current climate. There was still an increase in the number of permanent jobs filled, but the rate of growth slowed to a seven-month low. The growth of vacancies slowed to the lowest rate seen since May 2013.

Meanwhile, the amount of pay contractors receive for their work has increased hugely. This is thought to be the effect of the introduction of the NLW, which has inflated wages for temporary staff across the country. The rise in contractor pay reported was the fastest growth seen since July 2007.

Mr Green summed up the decision of employers to switch from permanent to temporary staff as "a way of hedging any possible change to the UK’s relationship with Europe, and the implications this would have for the economy".

By Victoria McDonnell

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