Skills shortages ease but contractor demand and rates remain low
Skills shortages may have eased according to discrepancies between the REC index and the CIPS Employment index, however demand and rates for contractors in the IT sector remain low.
The two indices, detailing demand for staff and actual employment growth, have fallen sharply in recent months but have now come into line, suggesting a significant easing of skills shortages across all sectors since last year.
REC's Report on Jobs also recorded an easing of skill shortages with the availability of permanent staff improving at its fastest rate for thirty months in August. The availability of contract staff also increased, rising at the fastest rate since April 1999.
In the growth of pay rates for permanent IT staff, recruitment consultancies reported that salaries had fallen to a new survey low in August as a greater number of candidates chased fewer jobs. Growth of contract pay rates dropped to their weakest point since March 1999.
Demand for Permanent Staff was recorded at 35.8 per cent in August, down 31 per cent on the previous year and ranking eighth out of eight other sectors where it had previously ranked second. The sharpest falls in demand were seen at the higher end of the labour market in IT and Computing, Executive/ Professional staff and Accounting/Financial staff.
The only permanent key skill reported to be in short supply in the IT sector was Java programmers.
Average weekly billings from contract staff continued to rise in August. However, following the sharp easing in growth over the spring, the rate of increase remained weak and well down on that recorded at the start of the year. Growth of billings was again explained in part by a preference to use temporary or contract staff rather than take on permanent employees in the face of economic uncertainty.
Demand for contract staff was recorded to be at 38.2 per cent where it was previously at 52.7 per cent, falling one position from its place last August to take eighth place. IT contracting was the only sector to record falling demand in August.
The availability of temporary and contract staff rose for the third successive month in August, rising at its fastest pace since April 1999. The recent improvement in staff availability has followed twenty-four continuous months of deteriorating availability, with skill shortages hitting a peak last October. The marked turnaround in availability of contract staff has been attributed to lower demand and recent redundancies.
The only key contracting skill reported to be in short supply in the IT contracting sector was for Technicians.
Demand remains low Jobstats reports that the average hourly IT contracting rate is currently £30 per hour with the average annual rate at £38,300 per annum.
The top 5 contracting skills (by the number of adverts referring to them) are currently:
Support - Average rates: £21 per hour/ £34,500 per annum
Unix - Average rates: £40 per hour/ £40,200 per annum
Design - Average rates: £37 per hour/ £40,100 per annum
Management - Average rates: £34 per hour/ £43,400 per annum
SQL - Average rates: £37 per hour/ £36,900 per annum
The top 3 contracting locations are:
London - Average rates: £38 per hour/ £45,900 per annum
City - Average rates: £40 per hour/ £49,500 per annum
Berkshire - Average rates: £23 per hour/ £40,700 per annum
An easing in the growth of contractors' rates was again reported by recruitment consultancies in August. Even after accounting for seasonal influences, the rate of increase was the weakest since March 1999 and well below the peak recorded just over a year ago. Weaker growth of pay in part reflected pressure from clients to cut costs but also the ability of an increasing number of consultants to offer lower pay due to greater staff availability.
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Richard Powell, UKTECH