The number of temporary contractor jobs and the rates of pay that contractors are receiving both increased faster than permanent jobs in the month of March.
The figures are the result of a survey by Markit/REC compiled in its latest Report on Jobs. The report showed that, although the number of permanent jobs on offer continued to increase, the rise slowed to its lowest level in six months. Contractor staff billings, however, increased at their fastest pace for four months.
The number of candidates available to take each available role fell further in March, at a slightly faster rate than in February. However, the availability of contractors fell at the slowest rate for around 30 months.
The findings could signal a potential increase in the use of contractors if businesses are unwilling or unable to commit to employing permanent members of staff during a time of uncertainty.
The Business Activity Index fell to 52.7 from 55.6, although the amount of outstanding work rose for the sector, improving to a three-month high. Additionally, the service sector output has increased for 38 consecutive months, the second longest sequence in the survey’s history.
Research from Markit, along with data from the Chartered Institute of Procurement and Supply (CIPS), suggests that this slow growth and the reduced figures in hiring permanent staff could result in companies turning to contractors to provide them with a short-term boost in employees offering specific skillsets.
Chris Williamson, chief economist at Markit commented on the report: “The slowdown in February leaves the PMI surveys suggesting that economic growth could weaken to 0.3 per cent in the first quarter, but there are downside risks to even this modest expansion.
“Despite rising slightly from January’s three-year low, business confidence in the service sector remained at a level which has historically presaged an imminent slowing in the economy to near-stagnation in coming months.”
The fact that the number of appropriate candidates is falling means that the pay that successful candidates can demand is rising. The rate of hourly contractor pay increased at its fastest level for three months, according to the figures.
Tom Hadly of the REC explained: “Temporary hiring is on the up as businesses seek to meet increasing demand while retaining the ability to react quickly to any threats that might be around the corner.
“We have also seen a continuing increase in both starting salaries for permanent positions and hourly rates for temporary employment — a trend likely linked to the introduction of the National Living Wage.”
The Social Market Foundation has revealed that 1.7 million self-employed workers will be earning below the living wage threshold when it comes into force. The figure is predicted to rise to 1.9 million by 2020.
So while the increase for those in employment has been welcomed, there is some concern within the contractor community about what it will mean for them.
Nida Broughton, SMF chief economist, commented: “Policies such as the National Living Wage make it artificially more attractive for firms to engage contractors rather than employees, and ignore a large section of low paid workers.”
With more and more people working on a self-employed basis, there may come a time where the government is forced to reconsider its approach. However, as things stand, the flexibility and financial rewards with contracting can outstrip those of employment, but it remains vital to stay on top of accounting and tax requirements.
UK jobs growth increases to 15 per cent in Q1 2016
Overall, there was a 15.1 per cent year-on-year increase in UK job vacancies in the first quarter of 2016, signalling some very positive news for those looking for contractor jobs.
The figures, compiled by CV-Library, after examining data from its job website, show that the UK’s job market is healthy despite fears of knock-on effects from the struggling steel industry, falling sterling value and the uncertainty surrounding the UK’s future within the EU.
The number of job applications for each vacancy is also up. It now averages at 19 applications per vacancy, up 16.4 per cent on last year.
Another very positive indicator from the data is the fact that the job vacancy increases are spread widely over a number of industries and regions. In fact, growth in Liverpool, Edinburgh and Cardiff outpaced growth in London. These three cities saw the number of job vacancies rise by 34.8 per cent, 25.4 per cent and 22.9 per cent respectively.
CV-Library’s founder and Chief Executive, Lee Biggins, says the UK is in a strong position, regardless of the results of the Brexit vote, which is due to take place in June. He states: “The recruitment industry is often the first to feel the effects of economic fallout, so it’s reassuring to see the labour market remain active during a shaky economic climate.
“Employers are left with many unanswered questions about how a Brexit would impact the labour market, and what the government will do to support struggling sectors; yet job growth is steady, suggesting that UK businesses are in a strong position and continue to create jobs for the UK economy.”