IT contractor rates - average hourly and daily contract rate analysis

The latest "Report on Jobs", sponsored by KPMG and the Recruitment and Employment Confederation (REC) shows that the demand for permanent and contract staff has suffered severe declines over the past few months.

The Report is the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.

In December, the demand for all types of worker (permanent and contract) fell faster than at any time since the survey was launched in October 2007. Naturally, candidate availability (for both permanent and contract workers) has surged to record levels.

Contract Billing Declines

The December report showed a fifth consecutive monthly fall in agencies' temporary/contract staff billings. Moreover, the latest decrease was the sharpest in the survey history:

"Over half of the survey panel registered a reduction in short-term staff appointments, citing a sharp downturn in demand from clients. There were a number of reports that companies had released contractors following the end of projects and as part of downsizing strategies."

Out of the seven categories of contract / temp employment referred to by the guide, engineering and construction employment has suffered the worst in the past few months, although contract roles in IT and accounting / finance are not far behind.

In terms of contract / temp pay rates, 23.8% of recruitment agents say that rates were lower in December than in the previous month. This percentage has been rising steadily over the past quarter, from 14.7% in October and 21.7% in November - confirming the general downward pressure on contract pay rates across the board.

Expert Comment

Although the latest Report on Jobs shows a pretty dire outlook for the jobs market, Mike Stevens, Partner and Head of Business Services at KPMG makes points out some positives:

"There are however two factors which have not been present in previous recessions and which might moderate the impact on job losses. The first is that we have moved toward a bonus culture where a significant part of total pay is a bonus depending on both performance and the employer's profits. Thus salary cost should fall in time of recession reducing the need to cut staff. The second factor is that the UK has been a magnet for foreign workers for the last 5 years and recession may mean that these people choose to return home, where they can live more cheaply, if work is no longer available."

You can access the PDF Report summary here.