Market Report: Initial IT recovery hopes dashed

The latest REC Report on Jobs has realised fears that last month's jump in demand for IT freelancers was a freak 'blip.'

Last month, the 'IT & Computing' freelancing sector rose from eighth place (in eight sectors), to sixth place, overtaking the 'Executive/Professional' and 'Nursing/Medical/Care' sectors, according to REC's report.

REC issued a statement saying the jump could be 'just a blip,' adding the sector would have to maintain its position for at least a couple of months if it was to signal any sort of a recovery.

However, in the most recent report, demand for IT freelancers snapped back to last place again.

The report found the freelance IT sector exhibited the strongest rate of decline amongst all other sectors - 'as has been the case since the bursting of the dot-com bubble in mid-2000,' according to REC - along with 'Accounting & Financial' sector in November.

Agencies' average weekly billings for general freelancers rose for the eleventh consecutive month, increasing for a second consecutive month.

Margins on temporary and contract workers continued to slide at a significant rate in November as competition in the market remained intense and employers and clients sought to further reduce costs. The further contraction marked the nineteenth successive month margins had fallen.

A freak 'blip' of recovery before returning to previous levels

Average hourly rates continued to rise modestly, but the rate of growth eased for a fifth consecutive month to the slowest since February. This was attributed by REC members to a further improvement in availability, as well as to pressure from clients to reduce rates in the face of strong competition.

Availability of temporary and freelance workers rose for the nineteenth successive month in November. However, the rate of improvement slowed sharply, roughly halving since September.

The only key skill reported to be in short supply in the freelance IT sector was 'CAD Programmers.'

At the permanent end of the market, the number of people placed in employment rose for the ninth consecutive month, the rate of increase accelerating for the second month in a row to hit a five-month high. One of the strongest improvements was seen in the Engineering sector.

The general rate of increase in demand was subdued, however, as demand at the top end of the market for executive, professional and IT staff continued to deteriorate.

Agencies reported the availability of staff to fill vacant positions improved for the eighteenth month running and salaries rose for the second successive month, increasing at the fastest pace since June.

Demand fell sharply for IT staff, though the rate of decline eased to a five-month low.

The only key staff skill reported to be in short supply in the IT sector was 'Java Programmers.'

Brett Walsh, Head of UK Human Capital at Deloitte & Touche, said: "The Report on Jobs suggests the UK labour market is currently weaker than that suggested by the official unemployment claimant count figures, and good availability of staff - especially at the top end of the labour market - continues to hold down pay pressures. The latest survey points to a pick up in the demand for staff, and the rate of decline in press recruitment advertising has eased in recent months. But the public sector remained a key driver behind this growth."

Tim Nicholson, Chief Executive at REC, said: "Stronger overall demand will quickly highlight skill shortages in several sectors. Although staff availability is still relatively good, employers currently experiencing difficulty recruiting the skills they need must take steps now to secure their future. Staff retention and developing home-grown talent should be moving to the top of employers' agendas."

According to Jobstats, the average rates advertised are £20 per hour for freelancers and £35,700 per annum for employees.

The five most popular skills:

Management 33.7 per cent - £22 per hour, £40,500 per annum

Support 25.2 per cent - £15 per hour, £31,800 per annum

Analyst 18.3 per cent - £20 per hour, £34,900 per annum

Design 17.5 per cent - £28 per hour, £39,000 per annum

Finance 15.9 per cent - £27 per hour, £44,600 per annum

The five most popular locations:

London 27.5 per cent - £22 per hour, £42,500 per annum

City 6.1 per cent - £25 per hour, £48,900 per annum

Berkshire 4.3 per cent - £20 per hour, £38,400 per annum

Surrey 4 per cent - £23 per hour, £37,000 per annum

South East 3.5 per cent - £29 per hour, £38,800 per annum

(Note: Hourly rates refer to freelancers, annual figures to permanent workers)