IT contractor jobs index posts 31-month low

A national index measuring demand for IT contractors showed its weakest growth reading in February since June 2013.

The 31-month low came as the index compilers, the Recruitment & Employment Confederation, warned of ‘disruption to hiring strategies for many businesses.’

The confederation said that the National Living Wage and tax changes from April 6^th were behind the incoming disruption, which threatens to hit professional candidates.

“Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation,” said REC’s Kevin Green. “This could weaken future demand for staff.”

Mr Green called on George Osborne to use Budget 2016 next Wednesday to “avoid further destabilising” the labour market, which he said contained “serious skills shortages.”

However the IT contractor labour market appears to be the exception. In fact, last month, Development was the only IT skill listed as ‘scarce’ on a contract basis by REC agencies.

That means the shortage of Gaming and Java contractors – reported by the agents in January - has abated. But so too, it seems, has growth in IT contractor demand as a whole.

Specifically, the REC scores IT contractor demand at 57.4, meaning it is still growing (as a score +50 signals growth on the previous month), but ranks it eighth out of nine contracting sectors in terms of growth. Last year, it ranked sixth.

A financial services giant seems to have cottoned on to this cooling for temporary techies – or has already begun to ‘offset rising wage bills,’ as it has cut IT contractor pay rates by 10%.

One affected IT contractor told ContractorUK that cost-cutting measures were first put in place by the firm in December, such as enforced leave for all techies who bill by the day.

Meanwhile, for all job candidates, Mr Green is alarmed about the outlook. “Serious threats are looming just around the corner,” he warned. “In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter.”