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Contract labour on the rise and employers are feeling the pinch

With skills shortages rife, latest research from APSCo shows contractors are in increasingly high demand.

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 the global leader in software for the staffing industry, 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 a 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.”

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