Growth in IT contractor demand sinks to 26-month low

The summer slowdown that hit the temporary technology labour market in July extended in August, returning the weakest monthly growth reading for IT contractors in more than two years.

The Recruitment & Employment Confederation scores IT contractor demand at 58.7 in its latest Report on Jobs, representing the lowest figure since June of 2013.

It also represents the fifth month in a row that the IT contractor index has dwindled despite still positive demand for such workers, as a +50 score signals growth on the previous month.

Seasonal factors are to blame, suggests the report, which talks of candidates ‘taking the summer off’ and ‘shelving their plans’ to find a new opportunity until September.

But as the index for IT contractors measures only demand, the indication is that recruiters and hirers – the parties who generate that demand - must have shut down for the summer too.

Kevin Green, chief executive of the REC, believes that longer-term shifts are underway. In fact, August saw the UK jobs market “entering a new phase.”

He explained: “Because of the scarcity of talent available, we expect that employment will continue to grow but at a slower speed than we have seen over the past two years.

“Likewise, unemployment is likely to slow its rate of descent as we move closer to full employment.”

To tackle what he called “worsening skills shortages”, Green also believes that end-users will focus on retention – a move which, unfortunately for some clients, will promote pay growth.

However with candidates “having their pick of the job market” at present, companies need to offer more than just cash, according to Bernard Brown of KPMG, the report’s co-author.

“To attract and retain the best”, he said, “[hirers] need to offer a bespoke package of benefits, including flexible working…to suit the individual and their priorities and commitments.”

Java contractors should expect to be wooed by attraction or retention strategies, as such temporary computer workers were scarce in August.

Although no other IT contractors were in short supply, the REC’s member agencies did report a dearth of full-time applicants for digital media, development, Java and .Net positions.