London's temp billing growth reaches 15-year high

Matthew Fryer, Brookson

Opportunities abound in London for contractors, freelancers and sole traders, with growth in temporary billings now at its fastest pace in 15 years.

The latest 'Report on Jobs' from KPMG and Markit showed non-permanent vacancies increased at the greatest speed since May 1998 in January - the second consecutive month of acceleration.

London is pulling ahead of the rest of the UK in temp billings too, far outpacing the country as a whole.

Consequently, pay has hit a 44-month high for contractors and others taking on temporary positions. Indeed, around 16 per cent of consultancies recorded increased average temp pay, with no reports of decline.

There has also been growth in the number of permanent positions in the capital, with a sharp rise in staff being placed in these vacancies. This represents the eighth consecutive month of growth in the current cycle but was slightly slower than the rate of growth recorded in December.

On the whole, the south of England saw the greatest increase in permanent appointments, followed by the north and the Midlands. However, in terms of temporary appointments the largest increase was seen in the north.

The Recruitment and Employment Confederation chief executive Kevin Green said: "The squeeze on people’s finances continues to dominate the news but this month’s data shows there is hope for workers. All regions around the country are seeing permanent starting salaries and hourly pay rates continue to grow driven by skills shortages across an ever growing range of sectors."

A lack of skills is certainly beginning to make itself known, with the rate of decline in permanent candidate numbers in the capital remaining marked. Availability in suitable candidates has now been on the decline for eight consecutive months.

Temporary candidate numbers are also being squeezed in London. While easing slightly since December, the drop remained considerable and greater than that seen across the UK as a whole.

However, the rest of Britain is still feeling the pressure and permanent candidate numbers fell in all four regions. Indeed, the greatest decline was seen in the Midlands - making it the third straight month the region has seen the steepest falls.

London saw the second greatest rate of decline in temporary availability, closely followed by the north.

"Skills shortages are now becoming a critical issue as businesses will not be able to contribute to economic growth if they cannot find the skilled workers they need," Mr Green said. "Part of the solution is to develop a careers guidance network that is fit for purpose and raises awareness of growth sectors and current and future skills need."

Conditions do differ among sectors, however. Demand for staff is greatest in the private sector, with engineering professionals the most sought after. Construction has also seen a strong rate of growth for permanent staff but posted the slowest growth in demand for temps.

However, Bernard Brown, partner and head of business services at KPMG, warns that there could still be clouds on the horizon. He explained that global markets fell last week, rattled by the release of recent data. This means employers are likely to remain cautious and be "vigilant to business threats".

Matthew Fryer Brookson

I am a chartered tax advisor with a specialism in the freelance contractor sector advising contractors on how to structure their affairs and recruitment businesses and end hirers on the effective…