Growth of Contractor Rates at 89 Month High as Billings and Vacancies Rise

Contractor rates of pay rose sharply throughout May with pay rate growth at its highest level since December 2013. Simultaneously, contract vacancy numbers grew, as well as the agency billings, as the availability of contractors fell. The statistics were highlighted as part of the REC (Recruitment and Employment Confederation) / KPMG Report on Jobs of May 2014 which also detailed the continuing and worrisome worsening of a skills shortage in Britain. With the UK economy now picking up steam many employers are starting to look to hire more skilled staff. But they are facing problems. Not only are all their competitors poaching from the same pool, they are also all finding that there are not enough skilled job-seekers to go around. As Kevin Gree, CEO of REC notes, ‘the big issue remains that employers are finding it hard to find the talent and skills they need.’

Most commentators from the contracting sector are still sure that contractors will fill these gaps being created. The CEO of ContractorCalculator, Dave Caplin thinks that contractors are the only workers out there suited to filling the talent shortage as the larger companies keep searching for skilled permanent workers:

“Contractors are not just hired to work on projects. As highly skilled and experienced flexible workers, they can provide cover and help with capacity management, giving employers the breathing space to find an employee with the right profile.”

Each of the main contracting sectors achieved an increase in growth throughout May. And for once, engineering was removed from first place (into second place) by blue collar contract work, perhaps reflecting the nature of the economy at the moment. Construction contractors were still 4th on the list with IT and Computing dropping down to 7th (a sign of the IT skills shortage?) Professional & Executive jobs rose to 6th place whilst Accounting & Finance fell back to 8th place.

In terms of regional performance, the Midlands stood head and shoulders above the others, with the speediest growth in Britain for brand new contract assignments, with the South, North and London coming after.

At the same time though, the Midlands region also felt the most severe drop in availability of contractors, highlighting the anticipated mismatch of supply and demand (and consequent skills shortage) that many felt would be arriving soon.

Lastly, there was also a drop of the growth in demand for contractors across the public sector during the previous 3 months, as that demand still sits significantly below the demand for the private sector. Public sector contracting is still growing, but has also clearly experienced a slow-down.