The UK’s labour market is in ruder health than it has been in years, according to figures from the likes of the Recruitment and Employment Confederation (REC) and KPMG. Their most recent Report on Jobs, published at the start of the month, found the nation’s new permanent placements held a 45-month high.
Impressive? The number of new contractors starting work was even more so – this group posted the biggest gain in 15 years in December 2013, which eased only slightly through January.
According to REC and KPMG, this growth was more or less consistent across all the regions they monitor, as well as in all sectors.
So while the economic upturn is clearly an exciting time for people looking for permanent posts, not to mention for the recruiters and employers who vie for them, the picture is arguably even rosier in the contract world. But why is post-recession Britain seeing this accelerated demand for temporary workers? And will it last?
Here are six reasons we at Sonovate believe 2014 will be a bumper year for the contract workforce.
Post-recession workers are going nomadic
One of the most important trends triggered by the 2008 downturn was for employees to stick with their jobs, fearing they’d have trouble finding another. The outlook couldn’t be more different today – a recent survey carried out by CareerBuilder found more than a quarter (26 per cent) of Britons in employment plan to move their talents elsewhere at some point this year.
For many of these potential jobseekers, going down the contract route might well prove an attractive option. Whether they’re looking for a change in career or a better work-life balance, contracting ought to suit their newly awakened desire for flexibility.
Contracting has become ‘the norm’ in some sectors
Another reason demand for contractors will continue to surge through the foreseeable future is that in some sectors tipped for rapid growth, it’s become the de facto employment model.
One of the most notable among these is the IT industry. A recent report from the Association of Professional Staffing Companies called contracting “the new norm” in technology. It found that in 2013, the sector posted 11 per cent more contract positions than permanent ones.
Contractors are increasingly motivated by lifestyle rewards, not financial ones
Contractors command high salaries, which might be offputting to employers who see them as prohibitively expensive. The growth in demand might also give rise to fears they’ll expect bumper pay packets as 2014 winds on. However, a recent survey carried out by Parasol shows today’s contractors aren’t as ruthlessly money-motivated as the stereotype suggests.
The agency asked its employees why they’d chosen careers in the contract world and fewer than a third (29 per cent) said earnings potential was the main attraction. The remainder said lifestyle factors – like freedom, flexibility and the chance to work on a multitude of assignments – were more important than the cash.
These stats suggest that even at a time salary growth is sluggish, people are seeking out careers in contracting without necessarily expecting disproportionate remuneration.
Today’s companies need the added agility
Of course, it’s not just the benefits to job seekers that will make contracting work more widespread as the recovery takes hold. In post-recession Britain, businesses are no longer concentrating on weathering the economic storm – instead, they’re seeking a new competitive advantage in a fast-moving market by upping their investments and penetrating new markets.
This requires greater levels of agility and adaptability than ever before – something contractors are far better poised to deliver than new hires.
New projects are driving demand for temporary talent
Along the same lines, new business projects are often significantly safer in the hands of temporary than permanent members of the workforce. A company might be looking to start using big data to inform business decision-making, for instance – an innovation that’d be better off in the hands of a crack team of contractors than in-house developers with a different area of expertise.
Similarly, for an important, one-time project like an acquisition or a product launch, it makes sense to bring in the top talent on a temporary basis.
Improved access to funding
Running a contract business requires a high level of cashflow. Traditionally there were two main ways this could be achieved, either via an invoice factoring agreement with a bank or using existing cash within the business. This is no longer the case, and accessing the funds needed to run contractors is no longer as difficult as it used to be. Sonovate provide a flexible way to fund your contractors with many benefits over traditional finance methods and are providing hundreds of agencies with the contract finance they need to succeed in 2014.