Small businesses may need to re-think their rates if they want to attract highly-skilled talent, according to Badenoch & Clark.

The recruitment specialist has pointed out that firms are already competing for top talent and rates are the main weapon.

Badenoch & Clark’s sales director, David Fleming, said that more companies are now making counter offers and increasing hourly rates as the battle to secure talent heats up. This is likely to lead to wage inflation in the next few months.

There is a renewed optimism in the economy and employers are searching extremely hard to find the best people to recruit into their firms. As competition increases, demand is likely to follow suit. This should bode well for umbrella company contractors and employees looking for a change in the early months of 2011.

The January Report on jobs from the REC and KPMG showed that both permanent and temporary staff billings increased last month. January is always a busy month for recruitment as candidates consider their career options, but this January was particularly active as firms embracing the upturn looked to increase the size of their workforce.

Only 6% of employers expect to down-size their workforce in the coming months, whilst nearly 25% intend to hire additional workers. In the short-term, 86% of employers also plan to either maintain or increase the amount of agency staff they use.

Roger Tweedy from the REC said that this continued usage of temporary workers was extremely encouraging. Private sector employers seem to understand that agency staff provide a necessary flexibility while economic concerns continue.

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Only 25% of temporary workers in London saw a decrease in the number of freelancers and umbrella company contractors in the companies they worked with last year.

Results from a survey by Poolia also showed that 33% of respondents saw their earning capacity increase in 2010 through a combination of increased working hours or commanding higher hourly rates. Another 40% said there had been no change in their rates.

Interestingly, the survey also found that 60% of the respondents intend to study towards a professional qualification this year.

Gavin Warner, the operations director at Poolia, said clients seem likely to maintain their level of temporary workers this year, especially in banking, financial services and retail. Anyone with the requisite skills and experience who is prepared to be flexible in their work structure should be well placed to secure some great short-term opportunities.

The story is a bit different for interim managers who saw a decrease in demand of 8% in the second half of last year. Despite this, average daily pay rates increased from £592 to £613 for a full-time interim manager during the period. Part-time interim managers also saw their pay increase from £568 to £601.

XpertHR predicts that private sector organisations will prioritise recruitment this year. This does not just mean hiring more staff but improving their recruitment procedures as well.

Employment relations editor, Noelle Murphy, said public sector HR departments will be prioritising redundancies, cost cutting and change management whilst in the private sector; the focus will be on organisational and leadership development.

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IMS Executive Ltd recently conducted a survey of 2,000 public sector Interim Executives, including those from umbrella companies, to find out how willing they would be to reduce their daily rates.

They discovered that many had already cut their rates to the bone but of those who charge between £500 and £900, 53% would think about a cut of between 10% and 24%. Of those interims and freelancers who charge at the lower end, a few would contemplate a reduction of up to 40% if it meant they could remain working.

The most highly specialised interims argued against any sort of rate cut saying it would be short-sighted. They believe that they have a proven track record of implementing change management projects that have saved millions of pounds for the government.

Tony Shearing, the Sales and Marketing Director for IMS executive Ltd pointed out that it made economic sense to take on short-term skilled interims who have skills and experience that are rarely seen amongst permanent staff. Since the employer is not responsible for Interims’ NICs, pension contributions, holiday or redundancy pay, they are also cheaper than regular employees.

Only a third of all public sector change projects manage to meet all of their objectives, on budget and on time, Shearing points out. But government departments still often make the mistake of seconding permanent staff into those roles in the mistaken belief that it will cut costs.

Clients should think about which candidate can provide the best value for money rather than how little an experienced interim will be prepared to accept. The best justify the client’s investment by delivering the desired results.

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Robert Walters, a specialist recruitment agency, says that the HR sector is now actively looking for people with human resources and corporate responsibility skills. This should come as positive news for contractors who possess the requisite skill set.

The agency notes that they have noticed an increase in the number of vacancies in learning and development, staff with expertise in compensation and benefits and generalist HR workers.

Martyn Wright, the MD of Robert Walter’s HR division, said that this trend shows that companies are now focusing more on the need to retain their key talent.

This view is backed up by a recent survey of 194 HR managers in the financial services sector in the Capital. Morgan McKinley carried out a telephone survey and found that the top priority for 42% of managers is the structure of remuneration packages and pay rates, while 41% felt that headhunting by competitors is their second most significant concern. 30% of HR managers identified a shortage of talent as their third most pressing concern.

More than a third of the survey’s respondents expect to create new jobs shortly and 55% of managers think that finding candidates with the right experience and skills is going to be more difficult than it was last year.

Although remuneration packages continue to be a high profile issue, only 17% of managers expect the bonus element to increase. 47% expect average salaries to rise whilst 48% expect no change.

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There are more opportunities available for IT contractors according to the latest Monster employment Index report. 11% additional PAYE and freelance vacancies were advertised online in May compared to the previous month.

IT was amongst the best performing sectors, along with education and training, legal and administrative and transport and logistics. Online postings for vacancies in education grew by 13% and there was a 12% increase in the legal sector.

Monster UK’s managing director, Julian Acquari, noted that the UK job market is slowing growing, despite the recent turbulence in the financial markets of Europe.

Investment in business improved during the first quarter of 2010 and this has brought about the increase in online job availability. Another positive sign is that HR positions are also showing positive year-on-year growth.

Just one sector registered a decline. Healthcare and social work dropped 2% during May but this might be expected since the majority of healthcare vacancies fall into the public sector.

Overall, the Monster index increased by 7% in May, but this jump could in some ways be attributed to the brief slowdown that was experienced in April. May’s figures were up 19% on the corresponding month last year.

Regionally, Northern Ireland showed the most momentum whilst Scotland experienced the least growth.

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According to new research by reThink Recruitment, pay rates for IT contractors in the north of the country are increasing more than three times quicker than the rates for equivalent contractors in the south.

The report found that northern based IT professionals have witnessed a 6 per cent rise in their average contract rate compared to IT contractors in London, who noticed just a 2.5 per cent increase.

The IT profession has historically been popular with contractors who run their own limited company, although the sector is still attracting first time interim workers who wish to use the services of an umbrella company or straight PAYE at their recruitment agency.

A spokesperson from ReThink Recruitment said that the high cost of living in places like the Bracknell and the Thames Valley is now forcing IT contractors to seriously consider more cost effective assignments where the accommodation fees do not take such a significant chunk out of their contracting income.

The report found that IT professionals in the north can now earn an average weekly income of £625, rising to £640 in some regions. The slower growth rate of rates in the south has been largely attributed to the credit crunch and a reduction in freelance recruitment in the financial sector.

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