The latest REC/KPMG Report on Jobs shows that demand for Umbrella Company employees and other temporary/contracting staff grew strongly during September, outpacing demand for permanent staff.

Billings for permanent staff continued to grow, but at the slowest rate in ten months. The rise in temporary/contracting staff billings accelerated on August’s already vigorous pace to become the seventeenth increase in as many months.

Candidate availability in both the permanent and temporary contracting markets declined markedly; however, this has raised renewed concerns about the growing UK skills shortage. Thinning availability appears to have maintained an upward pressure on pay: strong growth in salaries for permanent staff was maintained and hourly pay rates for temporary/contracting staff climbed at the fastest rate since 2007.

Private sector temporary/contracting vacancies grew at a faster rate than permanent vacancies, but at a slower rate in the public sector. Hotel & catering topped the demand league table for temporary workers in September, closely followed by engineering. Demand for another core contractor discipline, IT, also grew vigorously.

REC chief executive Kevin Green said: “Once again more people have secured permanent and temporary jobs via recruiters than in the previous month, a sign of the continued strength of the UK’s labour market. Hourly pay for people on temporary contracts has risen at the fastest pace for nearly seven years, which shows that employers are bringing in temps and contractors with the skills they need quickly and are willing to pay to do so.”

Mr Green went on to note that the skills shortage was not confined to IT and engineering specialists: recruiters were also reporting increasing difficulty in sourcing blue collar workers such as electricians, bricklayers and drivers.

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