As the skills shortage gap widens even further and the continued increase in contractor agency billings not come at all close enough to fill the ever growing gap between supply and demand, contractors are finding themselves at an advantage with increased demand which means more contracts and also the opportunity to negotiate higher pay rates.
December's Recruitment and Employment Confederation’s (REC) report further supported this trend showing that agency billings continued to increase at a much slower rate than previous months. The increased lack of suitably skilled candidates is led by the continued decline in contractor availability.
Kevin Green, REC's Chief Executive added "Skill shortages are a real threat to continued growth in many industries. With talent at a premium, employers will try to attract staff by increasing starting salaries."
The ever increasing skills gap has been advantageous for contractors, with rates steadily increasing over December. The increase in pay will be caused by clients keen to pay higher rates in order to secure suitably skilled talent.
REC's December report highlighted that professional, managerial, engineering, technical, driving and distribution are the sectors most likely to experience a skills shortage for agency staff over the next three months.
Meanwhile education, engineering, technology and professional are the four sectors most likely to experience the greatest demand for staff over the next three months.
Despite the recent Markit/CIPS UK Construction PMI reporting an increase in staffing within construction, REC's report indicated that there was an increase in demand for every sector except the construction industry.
Looking into geographical trends, with its strongest rise in pay rates and contractor vacancies, the Midlands continues to be an increasingly prosperous region for contractors. London however has had the slowest rise in contractor vacancies.
The skills shortage is, on one hand, an ever increasing issue for the UK labour market, but on the other, has given contractors the opportunity to thrive and operate in a market where they have increased leverage to negotiate higher pay rates for their highly sought after skills.