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The November REC Report on Jobs shows that the September 11 attacks on the US have exacerbated the downward trend in the demand for staff. The number of recruitment consultancies reporting a sharp downturn in the number of people placed in permanent jobs in October and the rate of job losses at UK employers are continuing to gather pace.
Further weak employment figures are signalled in coming months by the recent trend in vacancies, with the numbers of jobs advertised in newspapers running at three quarters of the level of a year ago and recruitment consultancies seeing a sharp drop in demand for staff from employers.
The combination of growing job losses and less vacancies led to fewer skill shortages and the first monthly fall in average salaries awarded to people placed in permanent jobs recorded in the REC survey's four-year history.
Having increased throughout the period from March 1999 to September 2001, average weekly billings from temporary and contract staff fell modestly in October. Consultancies largely attributed the downturn in billings during the month to the economic slowdown, which has placed increasing pressure on clients to reduce overall staffing costs.
The sharpest falls were again reported for permanent staff at the top end of the job market, with demand for IT (and other high-end) staff falling at the fastest rates in the survey's history. Demand for permanent IT staff was reported to be at 30 per cent, ranking eighth out of eighth other sectors. Last October, demand was at 66.5 per cent and ranked fifth.
The sharpest fall amongst the temporary/ contracting sectors was similarly in the IT sector. Engineering/ Construction contractors also saw demand fall for the first time in over two years. Demand for IT contract staff took eighth place with 36.4 per cent demand compared to sixth place at 60.3 per cent demand this time last year.
REC did not report demand for permanent IT or contracting staff in any areas.
Growth of average hourly contract rates of pay for contract staff almost stagnated in October, with growth the weakest in the survey's history. A growing proportion of consultancies also reported that pay rates were lower than in September as a result of weaker demand and increased availability.
According to Jobstats, the latest average rates for IT workers are: £25 per hour for contractors and £36,600 per annum for employees.
Could this graph look completely different in 18 months? |
The top five skills in demand are:
Support 21.1 per cent of jobs (Average rates: £22 per hour, £32,700 per annum)
Design 16.2 per cent of jobs (Average rates: £35 per hour, £38,100 per annum)
Unix 15.5 per cent of jobs (Average rates: £33 per hour, £37,500 per annum)
Management 15.1 per cent of jobs (Average rates: £25 per hour, £40,200 per annum)
SQL 13.3 per cent of jobs (Average rates: £32 per hour, £35,400 per annum)
(Note: Hourly rates refer to contract positions, annual rates to permanent)
The top five locations are:
London 20.4 per cent of jobs (Average rates: £31 per hour, £42,900 per annum)
Berkshire 7.1 per cent of jobs (Average rates: £32 per hour, £39,200 per annum)
Surrey 5.9 per cent of jobs (Average rates: £17 per hour, £36,800 per annum)
City 4.9 per cent of jobs (Average rates: £36 per hour, £46,300 per annum)
Hampshire 3.5 per cent of jobs (Average rates: £20 per hour, £34,500 per annum)
Gerry McLaughlin, previously an IT Project Manager at 20 sites and founder of NamesFacesPlaces the reunion site for contractors, said he believed the slump in the market for contractors was close to its bottom.
He said: "The slump is following the path of the 1990/91 downturn, which was the last severe recession for the profession. Then, major agencies were trading at knockdown prices on the stock market, only to rebound within 18 months to multiples of their bottom levels. Today, agencies which are household names in the contracting profession, are trading at values of as low as one fifteenth of their annual turnover. These will look very cheap in 18 months time.
"The average stock market downturn lasts 11 months. The longest one was The Great Depression which lasted 26 months. The current bear market, which started in March 2000, was 18 months old when it reached its bottom in mid-September of this year. Stock markets anticipate recovery before it actually happens, and start rising half way through a recession. A recession, normally defined as two quarters of negative growth, usually lasts 2/3 quarters. The US economy fell by 0.4 per cent in the third quarter of this year and is expected to fall in the current quarter too. Our markets follow theirs closely. Even if this is a severe downturn, the upturn would be expected to start towards the end of the first quarter next year. If it is a normal downturn, then the upturn would start early in the first quarter next year. The stock market, with its recent rise, is already anticipating it.
"In the 1990/91 downturn, many in the profession were predicting the end of the profession as we knew it. The number of contactors is now much higher than it was then. In 18 months time, everything will look very different. Contractor numbers will be accelerating, rates will be rising, and everyone in the profession will be wondering why they didn’t buy the shares of agencies at their current knockdown prices."
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Richard Powell, Shout99
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