Worst of coronavirus crisis for IT contractor hiring may be over, says REC

The first green shoots of a labour market recovery for IT contractors – albeit with roots still firmly planted in negative territory – bloomed in May, defying the coronavirus crisis.

Describing its data for all agency staff as “bleak,” the REC said its Report on Jobs shows hiring freezes remain, as workforce “expansion” is still off-limits due to the pandemic.

The ‘lingering uncertainty taking its toll’ seeped into the IT contractor market too, where demand is just 18.1, the report says, way off 50.0, the score above which roles are in growth.  

But 18.1 marks an uptick on where REC agencies put IT skills demand on a contract basis in April -- a frail 11.9. Even April’s larger seasonally adjusted score, 12.5, signals a turnaround.  

'Worst may well be behind us'

“Demand for temporary, contract IT staff decreased in May, but at a slower rate than it did in April,” a spokesman for the Recruitment & Employment Confederation (REC) told ContractorUK.

“This, and the feedback we’re getting from recruiters in person, indicates that the worst may well be behind us, and the [IT contractor] labour market is slowly starting to recover.”

Moreover, in the days since the report’s data was collated, REC’s CEO Neil Carberry has taken to LinkedIn to report a shift in the feedback from ‘on the ground’ decision-makers.

'More temps out'

“There’s definitely a sign that the wheels are starting to move; just slowly – but starting,” he said in an online video.

“Whether that’s more temps out, or more jobs to fill...certainly it’s positive momentum -- for the first time in a couple of months.”

In the IT contractor market, the pool of skills identified by the confederation’s recruiters as being “in short supply” remains extremely narrow, however.

In fact, there are just five which the agents say they struggled to find among contractor candidates in May; Analysis, Data Science, Database Development, IT and Technology.

'Highly competitive'

“The number of people looking for work has risen at the quickest rate since July 2009, making it a highly competitive market,” says James Stewart of KMPG, which co-authors the report.

“With a potential July stimulus package from the government set to include a focus on retraining and skills, adaptability will be the key to success for job-seekers”.

In the permanent IT staff market, skills shortages are more visible, as agents are struggling to find the skills not easily found among contractors (except Analysis), plus six more.

The six are; C#, CNC, Design Management, Development, Java and Software Engineering.

'Jobs market is starting to stabilise'

Meanwhile, Indeed.com says occupations enjoying small hiring spikes likely reflect the requirement for workplaces to adjust to new social distancing measures, “as more types of business are allowed to open.”

The jobsite’s economist Jack Kennedy also said: “Vacancies plunging at the start of April [is the gist of the latest ONS data]. But [our] latest job postings…indicate the jobs market is starting to stabilise.”

At the REC, Mr Carberry said: “[Since] lockdown rules have been eased…the slight improvements that we can see in the placements’ and vacancies’ data have continued.

“I’m also hearing from business leaders all over the country that things are starting to look up. There is a long way to go, but it’s time to talk about how we recover from this crisis.”

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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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