Crystal Umbrella

Anxious contractors working through umbrella companies may be heartened to hear that they should not have to worry too seriously about employment prospects for the coming year, following news that there is unlikely to be a dramatic rise in unemployment over the next twelve months, according to Work Wise UK.

Commenting on figures just released by the Office for National Statistics, Work Wise UK’s Chief Executive, Phil Flaxton, believes they bode well for 2011. For those aged 16 to 24, employment remained at 70.8% over the three-month period from September 2010 and total employment actually increased during the same period. This seems to have occurred largely as a result of more people opting for self-employment – a trend that may indicate the umbrella contracting market is starting to pick up.

Mr Flaxton reported that several business leaders are confident that the private sector will absorb some of the job losses which are expected in the public sector; he also believes that the UK’s still-prevalent skills shortage will help ensure that unemployment levels stabilise and may even fall. Skilled professionals on the contractor payroll are likely to draw some comfort from this view.

Even so, he cautioned against wild optimism; many believe that the record low employment seen over the last ten years was an effect of the previous government’s massive creation of new jobs in the public sector, and that’s clearly about to change. Flaxton also believes that growth in the private sector sufficient to absorb all the public sector’s job losses will take several years to achieve, a view shared by the CEBR and the Institute of Directors.

New figures just released from the Annual Survey of Hours and Earnings courtesy of the Office of National Statistics shows that contractors working within the private sector are earning less money than those who work on public sector contracts.

According to the statistics, there has been a 3.1% rise in the average take home pay for public sector workers in the third quarter of 2009, with an average weekly wage of £539. Meanwhile, private sector earnings have only seen a 1% increase with average weekly wages totalling £465.

The Annual Survey figures also confirmed that those working in the public sector were experiencing a rise in employment opportunities. The second quarter of 2009 saw employment within the public sector rise by 13,000 to over six million. By contrast, employment in the private sector over the same period fell by 230,000.

However, the Institute of Employment Studies (IES) believes that pay within the public sector is set to decrease.

Duncan Brown, Director of reward services at the IES, Duncan Brown commented: “Private sector pay is rapidly going to escalate back up to three per cent, but in the public sector you’re going to see the reverse.

“Clearly now the government is serious about freezing pay in the public sector. You’re going to see that, very evidently, with some very different effects to the private sector – there’s been remarkably little industrial action in the private sector, whereas in the public sector you’ve got stronger unions.”

Capita Group, which provides a variety of professional services, has announced that they have secured a number of substantial contracts this year. These contracts, worth approximately £767 million, were secured during the first quarter of 2009. Capita is one of the top outsourcers in the UK.

One of these contracts was secured with the Learning and Skills Council. The value of the contract is £68 million, spread over a four-year period. Capita also secured a contract with the Office for National Statistics. According to the terms of the contract, Capita will provide a number of temporary employees who will all be trained to work on the Census that is scheduled to occur in Wales and England in 2011.

According to Capita, the outsourcing market continues to remain solid despite the economic crisis. The company has said that its strategy of acquiring smaller business has proven to be quite effective. Capita added that they would continue to utilise this growth strategy throughout the rest of the year as well.

Capita has a number of bids that are still outstanding. They have estimated these bids to be worth more than £3 billion with each worth a minimum of £10 million.

Capita said “We remain confident that the areas across the group that are potentially affected by the current volatile economic climate represent less than 10% of our group revenues and this risk has been factored into our business plans for 2009.”