UK businesses are paying more for contractors as skills shortages and economic uncertainty drive demand for temporary support.
That’s based on the latest data from the Association of Professional Staffing Companies (APSCo) – the trade body for the professional recruitment sector.
The data – provided by Bullhorn – showed a 3% month-on-month increase in contractor roles in October, while these figures were up 6% when compared to the same period in 2019.
According to the report, the amount invested in attracting these individuals has inflated at a much higher rate than demand. In October 2022 staffing firms reported a 7% increase in contract revenue when compared to September, while annual comparisons showed a 14% uptick in October.
Pre-Covid levels saw the greatest increase, with sales up 48% since October 2019. With contractor costs inflated above the rates of demand, the data suggests that the costs of employing contractors are increasing as individuals are able to command higher rates in a tough skills climate.
Ann Swain, CEO of APSCo commented, “The contract labour market has been heavily relied on as skills shortages remain rife. With talent in increasingly short supply since Brexit and Covid, temporary staff have been hugely valuable in filling gaps.
“However, what we’re also seeing is further reliance on these individuals in an uncertain market where fewer businesses are confident in committing to permanent increases in headcount. The spike in contract sales revenue does show the level of fees contractors are able to command in such a skills-short market.
“While we fully expect rates to increase in a cost-of-living crisis, the pre-Covid comparisons show a significant increase which is being driven by more than just the economic climate.”
Jack Birch, Senior Manager on the Interim recruitment side of Procurement Heads, said, “We have seen a big uptick in businesses going for interim hires as a part of longer-term needs, whether for permanent roles that haven’t yet been filled or indeed where sign off for permanent headcount is proving more challenging.
“We have taken on a number of specifically project-based interim mandates that require significant spend analysis with supplier bases, and where several new SRM programmes are kicking off.
“The spaces we are seeing demand for interim procurement and supply chain professionals include Financial & Professional Services, Industrial and the Public Sectors. The Public Sector has remained very buoyant for last 18 months and is continuing this trend, with new projects kicking off now to run well into 2023 and beyond.
“The Industrial space, notably defence, is another one seeing strong interim growth and ongoing demand, with defence spending having been backed heavily by the government for some time.
“More recently we’ve had a number of supplier risk-based remits with Financial & Professional Services organisations.
“Mirroring the data, Procurement Heads’ average interim mandate duration is 34 weeks, which reflects the nature of longer-term projects – some of which are extending to 12 months plus – alongside shorter term interim cover for specific project-based work.”
