Demand for IT contractors dwindled in December

The labour market ‘paralysis’ that an agency staffing body warned of came to an end in December 2019, though not for IT contractors -- for whom conditions actually worsened.

In fact, at odds with the first upturn in full-time placements for a year thanks to certainty finally creeping back, demand for IT skills on a contract basis fell last month from 48.8 to 48.6.

Although only miniscule, the drop positions IT contractor demand at its lowest index score since August 2009, showed the index’s compilers the Recruitment & Employment Confederation.

'Key' shortage sector

Reflecting on the finding from its quarterly Report on Jobs, REC’s chief executive Neil Carberry said IT remained one of the “key” sectors suffering from not enough skills supply.

But availability of IT freelancers is being depressed more by IR35 reform -- which he fears may hurt the wider jobs market, just as it gets back to its feet from Brexit and political uncertainty.

“The [labour] market has been sitting on its hands waiting for certainty…[so] businesses can invest again. That’s happening now but government can embed a positive trend”.

Mr Carberry also said: “That means reforming the Apprenticeship Levy, getting immigration right and stepping back from counterproductive tax policies.”

'Delicate period'

Elaborating on the latter, the REC boss said: “Feedback from recruiters shows that the upcoming IR35 changes are affecting both placements and the availability of flexible workers.

“This is a delicate period for the jobs market, and is the worst time to push through sweeping changes to the way we tax contractors.”

Pre-empting the drop off for contractors in IT (the sector which Hays predicts will be hardest-hit by IR35 reform), the confederation last week told the government of five reasons why it should shelve the April 2020 framework, pending a review.

'Lingering uncertainty will continue to weigh on hirers'

One of the five is that the recruitment industry is already overloaded – Key Information Documents, Swedish Derogation clause repeals, holiday pay changes and Brexit are all already incoming for April.

James Stewart, vice-chair of KMPG, which co-authors Report on Jobs said: “UK business will be hoping for quick government action to get the UK back on the path to growth including an investment in upskilling the workforce.

“[But] lingering uncertainty around the Brexit deal to be secured will continue to weigh on employers’ decision-making around hiring and investment over the coming months, as well as job-seekers’ desires to seek new opportunities.”

'Skill shortages'

In IT, such new opportunities look ‘hot’ for contractors in the following areas, as all nine were scarce in December: Analytics, CAD, CNC, Data, Data Science; Development, Java, IT and Technology.

Analytics, CAD, CNC, Data, Data Science, Development, IT and Technology were the "skill shortages" on a a permanent basis too, the report shows, alongside Business Intelligence, IT Security, Database Development, Software, Software Engineering and Technical Sales.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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