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Jobs market ‘firing on all cylinders’ as demand for contractors hits 6 year high

As the UK eases all lockdown restrictions, freelancers and contractors can approach the end of the pandemic with even more optimism. This is after it was revealed that demand for temporary workers rose at its fastest rate for more than six years in May, reaching a point where the need for these flexible workers has […]

By Emma Tait-Barber on 26 Jun 2021
Read time: 3 minutes

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As the UK eases all lockdown restrictions, freelancers and contractors can approach the end of the pandemic with even more optimism.

This is after it was revealed that demand for temporary workers rose at its fastest rate for more than six years in May, reaching a point where the need for these flexible workers has outstripped supply.

The ‘historic’ demand, as it was described, was announced by REC and KPMG in their monthly UK Report on Jobs survey, which pulls together insight based on feedback from around 400 recruitment agencies and employment consultancies.

‘Historically sharp’ rise in temporary appointments

After hiring activity ground to a near standstill during the first lockdown, the study shows that both temporary and permanent hiring activity is gaining momentum as businesses prepare for the full reopening of the economy. Temporary appointments grew at a “historically sharp” rate in May, while permanent staff hired rose at the quickest rate for over 23 years.

Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK commented on the growing appetite for workers across the board: “The jobs market seems to be firing on all cylinders, and we need this momentum to continue for our economy and businesses to fully bounce back.”

Challenges for businesses but opportunities for contractors

For businesses, this ‘candidate short market’ as it’s often referred to as, isn’t necessarily a good thing. It means there’s a high demand for workers, but not enough available workers. This rising demand, together with a decline in the availability of temporary workers to fill positions, has contributed to the most severe shortage of all staff supply for four years.

According to the jobs report for May, reduced availability is connected to a reluctance among workers to change roles – a trend that’s been linked to pandemic and Brexit uncertainty.

But for freelancers and contractors, sky-high demand is positive news. Added to this, such a healthy demand pushed up rates of pay in May too. Fees charged by temporary workers hit a near two-year high, while starting salaries for permanent staff rose by the greatest extent since September 2018.

Hiring upturn in all monitored industries

What’s more, a rise in vacancies for temporary workers in May was seen across all 10 monitored job categories. The jobs report noted that Blue Collar workers – such as builders, plumbers and other tradespeople – saw the sharpest increase in demand. However, “marked increases” were noticed in all other nine monitored sectors, including IT and technology.

Also worth noting was that REC and KPMG said temp billings in London were “broadly stagnant”, with the North of England experiencing the sharpest rise. This was followed by the South of England, while the Midlands recorded a “relatively modest” rate of growth.

Nixon Williams’ take on the news

As Joanne Harris, Technical Commercial Manager at Nixon Williams, said, the soaring demand for temporary workers couldn’t have come at a better time:

“After the introduction of IR35 reform in April, which arrived when freelancers and contractors were still battling the impact of Coronavirus on their businesses, these findings offer real confidence to independent workers arguably when they need it most.

“As we reach what everyone hopes will be the end of the pandemic, the data is a surefire sign that businesses will continue to engage temporary workers, who offer them the flexibility and specialist skills needed to kick on and grow.”

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