It has been a turbulent few months in economic, political and social landscapes. For contractors, there have been huge variables from Brexit, to IR35 concerns that have influenced the state of the job market. Nonetheless, various sources including the IHS Markit/REC Report on Jobs indicate a soar in contractor demand. As a result of this, firms have begun increasing their payment rates in a bid to entice the best contracting talent to their companies.


Contractor demand on a high

This substantial contractor demand has been reported by over 38% of UK recruitment agencies. From IT to Engineering, a rise in job vacancies combined with the decline of skilled professionals has lead to a fervent determination from employers to attain new talent as well as retain the current staff they have. According to the IHS Markit/REC Report on Jobs, recruitment consultants marked a reduction in temporary candidate availability for the fifty-third month in a row as of November 2017. Alongside reports by the Office for National Statistics (ONS) that there has been 4.4% increase in job vacancies in the past three months, contractors are in a strong position for pay rate negotiation in the market.

In particular, the market has seen a reduction in the availability of IT contractors, which has fuelled a steady increase over the past few months in demand for experienced professionals. There are now more than 20 technology skills that are scarce throughout the computing sector and across the country, including Application Support; Automation Testing, CAD, Cyber Security, Cisco, DevOps, Digital, GDPR, IT, Java Development, Matlab, Oracle Fusion, Pen Testing, PHP, Python, Software Development, Gaming and UX, to name some of the most sought-after ones. Thus, IT contractors who can demonstrate experience in these areas could find themselves with a significant pay increase, due to employers’ flexibility with pay to fill vacant roles.


Pay rate increase

REC Chief Executive, Kevin Green acknowledged, “Employers are having to offer more money” to secure the top talent. The Report on Jobs discerned steep pay inflation for contractors throughout the UK. This further confirms that with a decline in skilled candidates combined with contractor demand growing, firms are increasing pay rates so as to secure the best candidates available. London catalogued the sharpest increase in hourly pay rates with average regular pay (excluding bonuses) rose by 2.1% in the three months since August 2017 compared with the same period a year ago.

This is applicable to contractors in both the public and the private sector. In the public sector, the growth of demand for temporary workers remained stronger than that for permanent staff, while the private sector sustained the sharpest overall surge in demand for staff.



The decline in candidate availability is said to be a consequence of the leave vote. Kevin Green explains, “We already know that EU workers are leaving because of the uncertainties they are facing right now. We, therefore, need clarity around what future immigration systems will look like. Otherwise, […] employers will face even more staff shortages.”

The shortage of skilled professionals combined with a lingering uncertainty of what a post-Brexit future holds has worked in favour for contractors. Employers are desperate to fill job vacancies but equally hesitant to make permanent decisions due to the insecurity of the market. Thus, they are choosing to hire contractors who are more suited to short and medium-term projects as they can help produce a quicker return investment than permanent hires.


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