Slowing IT contractor jobs market turned demand lumpy in August 2022

A “slowdown” hit the IT contractor jobs market in August 2022, even if tech opportunities on a temporary basis did still expand, technically-speaking.

The slowdown was due to economic conditions worsening as the covid bounce petered out – at a time of political uncertainty, signalled the Recruitment & Employment Confederation.

The confederation found that IT contractor demand last month was 57.4 – the lowest score since February 2021, a month when hiring buoyed due to the-then PM’s lockdown roadmap.

'Critically important'

But in an echo of political moves lending certainty or uncertainty, the REC measured its members’ latest activity before Boris Johnson’s successor unveiled help with energy bills.

“[An] energy package and any further support from an Emergency Budget [are] critically important to businesses,” said the REC’s deputy CEO Kate Shoesmith.

“Only [then can businesses] grow if they have the right hiring and retention strategies.”

'Not fizzing like it was'

Appearing to take issue with any drop in hiring appetite (“there were no real signs of a slowdown in in employer demand”), is Neil Carberry, REC’s chief executive.

In line with his assessment, demand for IT contractors in August (57.4) increased, given that any score over 50.0 in the REC’s Report on Jobs indicates growth on the prior month.

But Mr Carberry conceded that the market (for all applicants not just technology candidates) is no longer “fizzing like it was,” and that the “post-pandemic jobs rush” is “abating”.

'Candidates playing it safe'

The REC’s CEO also spoke of a “lowering of confidence” in the jobs market as a whole but “primarily,” this was due -- he claimed after the report -- to “candidates playing it safe”.

According to technology recruiters at Volt, IR35 reform might be behind both growth in demand slowing, and candidates holding back.

“The reality is that the cost of engaging IT contractors is prohibitively expensive for many firms,” says Volt’s regional director Adam Wooldridge.

“This has been driven predominantly by the recent IR35 changes which has reduced the number of ‘outside IR35’ engagements available.”

'Contractors often holding out over IR35'

Mr Wooldridge continued in a statement to ContractorUK: “[By contrast] ‘inside IR35’ contracts remain challenging to fill given that the additional tax burdens are often passed on in part or entirely to the contractor. For this reason, contractors will often hold out -- for an outside IR35 assignment or take a permanent role.”

Anecdotally, LinkedIn posts appear to mirror the lumpiness that began in August.

“Candidates, please please please do not leave it until your start date to withdraw your acceptance,” appealed TREBE Recruitment director Beth Ebert.

“We’re all human so it’s normal to have doubts …[or] reservations about any new job but…if you have no intention of starting the job, please let your recruiter know [well] in advance.”

'Nature of the beast'

Meanwhile, Stirling People Solutions director Adam Stirling has had to advise about candidates not playing it safe, but not succeeding either.

“The law of averages dictates that not everyone that I support and arrange interviews for will be successful. It's unfortunate, but it is the nature of the beast.

“Finding out that you have been unsuccessful sucks! There's no other way to put it,” he said. So it’s incredibly important [us agents] get this bit right…[and deliver the bad news well].”

'Survive this winter'

Yet it is also incredibly important that agencies and the organisations they supply now have some certainty about their energy costs.

“We need critical support to make sure businesses can survive this winter,” appealed the REC’s Ms Shoesmith, speaking on the eve of Ms Truss’s energy bill support package.

“Overall [in August], recruitment activity continued to increase month-on-month. But…it’s the pace that is changing. Partly as we are over the post-lockdown surge -- but partly as economic conditions are changing.”

'What sort of slowdown is this?'

In a LinkedIn post after publication of Report on Jobs, Mr Carberry said, “The big question is what sort of slowdown is this?”

Attempting to answer his own question, he added: “The post pandemic sugar rush was always going to slow down, but these numbers suggest a hard landing is not yet baked in.

“Talking to REC members around the UK, my takeaway is that shortages won't abate quickly, and [that issue] requires the concerted action by businesses and [the] government”.

'In short supply'

In August 2022, shortages of IT contractors revolved around those skilled in Development; Digital, IT/Technology and Software.

The same candidates were scarce for permanent positions, but REC member agencies recruiting for full-times roles also said they were "in short supply" of .Net, Data Engineers, CAD, and Technical Sales.