The contracting sector doesn’t appear to be suffering from Britain’s shock decision to leave the EU. Whilst it’s still too early to judge the full extent of the impact of Brexit, signs of recovery are already underway, with demand for contingent staff continuing to rise across many sectors. Contractor fortunes could also be aided by intensifying skills shortages, with firms in the engineering, construction and finance sectors all struggling to source suitable candidates. This could worsen if Britain loses access to the single market, with contractor demand likely to be even greater as a result.
In this month’s ContractorCalculator Market Report:
- Contractors should explore the opportunities available as contingent placements continue to outperform permanent hires, according to the Recruitment and Employment Confederation’s (REC) Report on Jobs for June 2016.
- Contractors are encouraged to capitalise on skills shortages in the construction and engineering sectors, as flagged up in the latest JobsOutlook from the REC.
- Morgan McKinley’s latest London Employment Monitor reveals an upswing in contractor demand in the capital following the EU referendum result.
- A shortfall in talent in areas such as risk and compliance could benefit finance contractors, as highlighted by the latest Financial Services Survey from the Confederation of British Industry (CBI) and PwC.
- New survey data from the Association of Professional Staffing Companies (APSCo) shows finance to be the best performing sector as contractor demand stabilises.
Contractor placements rose prior to Brexit
Contractors fared better than their permanent counterparts as uncertainty meant clients continued to favour contingent hires prior to Britain’s decision to leave the EU in June.
With the labour market still in recovery mode, confidence amongst firms is unlikely to have fully rebounded. Contractors are encouraged to capitalise on this by exploring the immediate opportunities available.
The latest Report on Jobs from the Recruitment and Employment Confederation (REC) shows that, whilst contractor placements continued to rise, permanent placements declined for the first time since September 2012.
Despite this, the gulf between contractor supply and demand widened in June, compounding concerns over a post-Brexit skills crisis.
“So far it is clear that the best way to ensure the continued health of our labour market is by maintaining membership of the single market and access to skills across the EU,” warns REC chief executive Kevin Green.
However, for ContractorCalculator CEO Dave Chaplin, the outcome of the EU referendum has given the contract sector with a chance to prove their worth once again: “Just like the financial crisis of 2008-09, the flexible workforce has stepped in and ensured that clients have access to the necessary skills they need in difficult circumstances.”
Contractors urged to capitalise on skills shortages
Mounting concerns over skills shortages and caution amongst firms could result in a contract-rich environment in sectors such as construction and engineering in the wake of Brexit. Contractors who are currently without a contract should take advantage of the depleted talent pool by sourcing contracts and negotiating more lucrative fees.
The latest JobsOutlook from the REC shows that 79% of businesses are operating with little capacity to take on more work without creating more jobs. However, many firms are reporting difficulties sourcing suitable candidates for roles in engineering and construction.
“Whilst it is too early to draw conclusions about the impact the EU referendum result will have on hiring activity, it is encouraging to see how strong the UK jobs market was in the months leading up to the vote,” comments REC chief executive Kevin Green.
Prior to the referendum, a positive balance of +24% of businesses considered economic conditions to be improving. Despite this, many firms have adopted a ‘wait and see’ approach to hiring, with two thirds planning on freezing permanent headcount over the next three months – suggesting clients may look more favourably upon short-term hires.
Client confidence bounces back as contractor demand rises
London’s finance sector appears to be on the road to recovery following the EU referendum outcome as demand for professionals bounced back in June. Contractors in the capital are urged to waste no time in seeking out new opportunities.
According to Morgan McKinley’s latest London Employment Monitor, vacancies rose by 18%, month-on-month. This figure was just about surpassed by the 19% rise in jobseekers, suggesting competitiveness in the market in recovering swiftly, although demand for professionals was still down by 30% year-on-year.
“A good portion of the jobs available came in during the last week of June, indicating that financial institutions held off on hiring until the referendum results were out,” notes Morgan McKinley Financial Services operations director Hakan Enver, who adds that the latest figures should serve to allay concerns that opportunities in the capital would diminish following Brexit.
“So far, talk of an exodus has been just that: talk. London remains an incredibly attractive city for investors and the UK will obviously remain a strong trading partner with the EU.”
Talent shortfall to generate opportunities for finance contractors
A shortfall in talent in key areas looks set to prove a fruitful source of contracts for contingent staff in the finance sector, as the industry picks itself back up after months of negative sentiment caused by macroeconomic factors.
Contractors with expertise in risk and compliance, systems, software and digital are likely to find particularly strong demand for their services, with firms experiencing the most difficulty recruiting in these areas.
The Confederation of British Industry (CBI)/PwC Financial Services Survey for June 2016 reveals that optimism within the sector continued to fall during the second quarter of the year, attributing it to financial market instability and uncertainty.
Despite this, business volumes increased and headcounts continued to rise, with investment management enjoying a particularly strong increase in staffing levels.
Firms continue to increase training expenditure in a bid to stay ahead of the curve, but the talent pool within the sector is struggling to keep up with technological advancements. For ContractorCalculator CEO Dave Chaplin, this presents a perfect opportunity for contractors.
“The Fintech boom has left finance firms scrambling to keep pace. Contractors who continue to upskill in the right areas will find themselves increasingly sought after.”
Contract vacancies stabilise around EU referendum
Market uncertainty caused by the EU referendum appears to have done little to damage the long-term outlook for contractors, as vacancies stabilised year-on-year.
This is according to the latest survey data from the Association of Professional Staffing Companies (APSCo) which shows that overall contractor demand fell by 0.3%. Once again, the finance sector was the most impressive performer, with contract vacancies jumping by 26% in June.
The survey attributes the strong figures to a rise in demand for compliance experts and back office support teams to pre-empt the impact of Brexit on current benefits and to draw up strategies to manage future agreements on equivalence.
Whilst the finance sector enjoyed a strong upswing, contractor demand in IT and engineering fell by 7% and 10% respectively. Despite this, the omens look good for contractors, as APSCo chief executive Ann Swain highlights.
“It seems that, despite cynicism from various commentators who have hypothesised on the immediate and sustained effect that the UK’s decision to leave the EU will have on hiring sentiment, we are yet to witness any significant impact.”