Umbrella Companies | Short on skills, long on pay: contractors could see a raise

Short on skills, long on pay: contractors could see a raise

The Recruitment and Employment Confederation has announced that the skills shortage gripping British employment could lead to raises for contractors.

For what it’s worth, I happen to like the REC quite a bit. It’s a solid organisation and it publishes its newest jobs report, like clockwork, every month; for the most part I feel like its data can be trusted. That makes it an interesting case that the trade industry body says in its December 2015 report that the skills shortage, which has become quite pronounced at this point, could spell better pay packets for freelancers and umbrella company contractors.

Sure, a skills gap can wreak havoc on employment in the long run, as business owners might find it impossible to meet demand or exhibit any kinds of growth if they can’t find permanent employees with the skills needed to contribute to long-term growth. Meanwhile, with the UK’s strong contracting presence picking up the slack for the time being, the best and brightest freelancers – the ones with the skills these business owners need – are going to be in such high demand that employers will have to become rather competitive on how much they’re willing to pay for the services of these self-employed Brits.

The REC jobs report reinforces this idea, as the industry body’s accumulated data has shown a consistent downturn for contractor availability. This means that there are fewer contract workers free to take these crucial roles – and it’s likely because they’re already busy working their little bums to the bone on the projects they’re already working. With more temporary roles standing vacant and a dearth of freelancers to fill these roles, contractors are only going to get out of bed, so to speak, for the most lucrative projects going.

So yes, that means you’re likely to see better-paying temporary jobs out there for freelancers going forward, at least for the immediate future. If demand settles down or more contractors flood into the workforce this should normalise, but if current market conditions continue there’s always the possibility that we’ll hit some tipping point where employers simply can’t afford to hire on freelancers at exorbitant rates and still remain profitable.

Will this result in the entire economy coming crashing down around our ears? Well I’m not Sean Connery, but I’ll still caution you to never say never again. More likely though is that things won’t ever get to that point. So don’t worry – the sky’s not falling just yet.

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