Demand for contractors grows at near-record high in July

18th August 2021
Written by Qdos Contractor

Surge in business confidence sees demand for contractors soar

After having endured the Covid-19 pandemic and navigated recently enforced IR35 reform, contractors will be buoyed by the news that demand for their services rose at a near-record pace in July following the full easing of lockdown measures. 

This is according to the UK Report on Jobs, published by REC and KPMG. The monthly study, which reviewed data between 12-26th July, also revealed that contractor and temporary vacancies expanded at a rate not seen for 24 years, since November 1997. The number of actual placements wasn’t far behind either, with the upturn said to be its steepest since June 1998.

These historic figures are the result of businesses increasingly equipping themselves with the skills and flexibility needed to support their recovery and drive growth, the report suggests. And this is a trend taking place in permanent recruitment too, with job vacancies and placements also rising sharply in July. 

Candidate-short market favours contractors

Rising demand for workers across the board has led to something described as a ‘candidate-short market’, with businesses competing against one another for talent. Needless to say, this has played into the hands of contractors, who are in a strong position to take advantage of the scarcity of available talent and command higher rates. 

Signs of this were evident last month, say REC and KPMG. Candidate availability fell at its  second-sharpest rate in the survey's history - a trend linked to economic uncertainty and a reluctance among workers to change contracts and jobs. Meanwhile, fees charged by contractors and temp staff rose at the second-quickest rate since the UK Report on Jobs survey began. 

As a result, REC’s Deputy Chief Executive, Kate Shoesmith, said that “it’s a good time to be looking for a job” - or in the case of freelancers and contractors, a new contract.

Growth experienced across all monitored regions 

That growth in temporary placements grew in all four monitored regions in England was also welcome news. London and the Midlands saw the strongest increase, with growth softening in the South and North of England. However, even in these areas, growth “remained robust overall.” Similarly, permanent staff appointments rose in all areas covered by the survey.


Impact of IR35 reform not explored, but Qdos data shows reason for optimism 

Following IR35 reform in the private sector on 6th April, much has been made about the opportunities available for contractors. REC and KPMG paint a largely positive picture, suggesting that demand for temporary workers in the private sector increased in July - much like in the public sector. 

The data doesn’t, however, detail the split between umbrella placements and contractor engagements. That’s not to say that this growth is dominated by umbrella opportunities only - Qdos research carried out soon after IR35 reform shows that 35% of contractors were still working outside the scope of the legislation, which could be used as approximate guidance. 

‘Big increases in starting rates for IT contractors’

But the study does focus on specific sector performance and IT contractors was a group that came out on top. 

As reported by Contractor UK, there were “big increases in starting rates, especially for IT contractors”, who REC and KPMG said demand grew from 71.2 in June to 71.8 in July. While on the face of it, this might seem a small increase, it marks part of a wider trend. In June, for example, demand for IT contractors hit a 23-year high. 

In addition to a growing need for IT skills, there was a strong upturn in demand for blue collar workers. This was followed closely by hotel and catering staff - no doubt a knock-on effect of the hospitality sector getting back to its feet following lockdown measures. 

So what conclusions can we draw from this data? Business confidence has certainly returned and companies are scrambling to land the best talent - whether contract or permanent. This can only be a good thing for contractors who, following the difficulties brought on by Covid-19 and IR35 reform, find themselves highly sought after once more.

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Qdos Contractor
Written by
Qdos Contractor
Award-winning providers of insurance for the self-employed, Qdos are the leading authority on IR35, offering industry-leading employment status services to ensure the flexible working industry thrive. Qdos are the Best Contractor Insurance Provider 2022 and won the Queen’s Award for Enterprise in Innovation 2022 and 2017. 

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