The overall UK employment rate hit a record high this May with 75.6% of UK residents now in employment. According to the REC/IHS Markit’s Report on Jobs, these encouraging figures were reinforced by the 71.2% of women in employment, which is the highest percentage reported since records began. Equally, it was revealed 80% of men are in work, which is the leading figure registered since the early 1990s. As a result, it is no surprise to also find that recruitment agencies have reported a robust increase in contractor billings since December 2017.
What is the cause?
The latest rise in contractor billings is the strongest increase in five months and continues a trend that has been growing for over five years. It is largely thought to be because of the high demand for skilled candidates across the job market. Though, in some cases, agencies have reported the increase in placement of temporary staff was partly due to a lack of available permanent staff, which has led many employers to extend their vacancies to contractors.
Candidate availability and pay rates
Despite the rise in contractor billings and a growth in demand, the availability of contractors and temporary staff continues to decline at a steep rate. In fact, the REC reported in May that the number of contractors available for temp work had decreased at the fastest rate since last November, and it was a much quicker decline than the historical average. This was observed across the UK with the Midlands experiencing the steepest drop.
Perhaps unsurprisingly, due to the imbalanced ratio of contractor availability to temp job vacancies and demand, agencies have perceived a marked inflation in pay rates with the Midlands showing the sharpest increase in pay, following closely by the rest of the UK region.
What can contractors now expect?
REC director of policy Tom Hadley argued that, though higher pay rates is a positive strategy, businesses’ should not solely rely on this to attract candidates. He remarked:
“Because of the lack of candidate availability we are seeing employers paying higher salaries to attract the right people. This is only part of the solution, with employers also having to think about providing a more flexible working environment and progression opportunities. With skills needs and candidate expectations continuing to evolve, employers are having to radically re-imagine their hiring procedures.”
Nonetheless, it is encouraging to see a rise in contractor placements and pay rates as it suggests employers are feeling much more assured in their hiring decision. Yet, the job market is becoming increasingly competitive and so as Hadley proposed, employers must begin to consider the expectations of candidates including flexible working environments and better benefits packages; adapting their hiring strategies to appeal to more contractors if they wish to land the staff they need.
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