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UK’s Contract workers enjoy the biggest pay rise since 2017

18/12/18 Peter Livingstone Director

The latest figures from KPMG and the Recruitment and Employment Confederation’s (REC) monthly publication compiled by IHS Markit ‘Report on Jobs’ – reported temporary pay rises at the fastest rate since July 2017. 

Contract rates of pay for interim and temporary workers have risen at the fastest rate in eleven years as seasonal pressures combine with no-deal Brexit emergency planning. Pay rates grew the most since the eve of the financial crisis in July 2007, while starting salaries for permanent staff rose at one of the fastest rates in nearly four years.


The latest official data from the Office National Statics (ONS) showed that vacancies expanded by 5.5% year-on-year in the three months to October. This was similar to the 5.4% rise seen over the third quarter. As a result, the total number of job vacancies stood at 845,000, the highest seen on record.

The main findings for November were:

Slower rise in staff appointments

Permanent placements and contract and temporary billings both increased at softer rates in November. Though strong, the upturn in permanent staff appointments was the second-weakest since October 2017, while contract and temporary billings expanded at the joint-weakest rate for just over two years.

Vacancy growth edges down to 25-month low

Though elevated by historical standards, the overall rate of vacancy growth edged down to the least marked for just over two years in November. This was driven by a slightly softer increase in permanent job openings, as contract and temporary vacancies rose at a fractionally faster pace. IT & Computing led a broad-based expansion of demand for permanent staff during November, closely followed by Engineering.

Candidate availability continues to tighten…

The overall availability of staff continued to decline sharply in November. This was despite the rate of reduction easing to the weakest since March 2018, helped by softer falls in the supply of both permanent and temporary candidates.

…leading to further upward pressure on pay

Tight labour market conditions and greater competition for workers led to further marked rises in pay for both permanent and contract staff. Notably, temporary wages increased at the quickest rate since July 2007. Permanent starting salaries meanwhile rose at one of the sharpest rates seen in the past three-and-a-half years.

Recruitment & Employment Confederation chief executive Neil Carberry said:

 “Today’s report backs up what recruiters across the country are saying to us. High employment rates and a lack of willingness to change employer in this uncertain climate means fewer people are looking for jobs – despite rising pay and jobs being available.

 “After a long run of strong performance, it seems that employers are getting more nervous as well. Although permanent and contract placements continued to increase, the pace of growth has slowed since earlier in the autumn.

Commenting on the latest survey results, James Stewart, Vice Chair at KPMG, said:

 “Despite the uncertainty around Brexit, companies are still recruiting. It’s very much a candidate’s market at the moment and demand for workers is driving a sharp increase in starting salaries. It’s been getting harder and harder for firms to find good staff and with UK immigration policy likely to tighten, this trend isn’t going to get any easier. 

 “Concerns about a no deal Brexit are putting a handbrake on the supply of candidates as the value of job security and stability shoot up people’s personal agendas.  However, candidates who are prepared to take a chance and job hop can often bag a pay rise as a result.  This is especially apparent in sectors like IT, engineering, and finance where quality candidates now come at a sizable premium.

 “Such high and sustained levels of employment are relatively new territory for the UK and put us in an elite international group, along with the US, Germany and Japan where greater automation is already the norm. Will we see a move to greater automation in the UK?"   

Peter Livingstone, Director of Contract and Interim comments: “The latest labour market data published by the Office of National Statics (ONS) showed that the UK unemployment rate stood at 4.1% in the three months to September, among the lowest recorded since 1975.

With the UK at nearly full employment, it is not surprising to see the increases in both permanent and contract/temporary rates.  The uncertainty around Brexit and the crisis in the STEM arena with shortfalls of 173,000+ skilled workers, it should be expected that professional contractors in the high-technology sector are experiencing increasing pay rates and contract extensions as businesses strive to meet customer and project deadlines.

The shortage of STEM professionals is a problem for employers, society and the economy, and in this age of technological advancement, the UK has to keep pace. In the long term, an immigration system for a Global Britain that supports research and innovation must be a priority.”

For more information on Redline Group's Contracts Division, please contact Peter Livingstone, Director of Contract Division on +44 (01582) 878852 or email

Redline has undertaken research into candidate offer to acceptance ration for many years. For a copy of our most recent research on the Offer Vs Declination Analysis, please click here

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