Contractors are certainly not immune to inflation and fluctuating market demand – witness the rate cuts recently imposed on IT contractors by several big banks. But contractors do have much greater control over what they can earn than employees, and can take swift steps to improve their pay when inflation bites into their disposable income.
Those contractors who are willing refugees from the corporate rat-race will recall that promotion is often the only route to increasing pay above the rate of inflation, or that which was imposed on an organisation-wide basis.
And with many promotions comes management responsibility; indeed, in some organisations the roles of specialists are still so undervalued that there is no other route to an inflation-busting pay rise or performance related pay, other than to climb that greasy corporate pole towards becoming a ‘suit’.
But for many contractors, management, its responsibilities and accountabilities is an anathema. Contractors are frequently specialists who are incredibly good at what they do, have little interest in doing anything else and have chosen to escape the downsides of corporate management by becoming contractors.
Having made the transition, contractors become master of their own destiny. Gone are the anxious times around annual pay reviews or at the end of periods when team or company targets should be met. Contracting allows contractors to focus on what’s important to them; getting even better at what they do and being properly rewarded for it.
Unlike employees, contractors don’t have to endure below-inflation, organisation-wide pay reviews, or the messages from the management they refused to join that they should be grateful for keeping the job they’ve got.
Contractors have many more options, and whilst not completely inflation-proof, they can change and adapt their contracting career to meet their personal and financial needs, often in a matter of weeks.
In the first instance, if they don’t like the rate of pay at their current contract, contractors can switch contracts to one that pays better. Even those financial IT contractors being punished by the banks right now have options: not all banks are cutting rates, because they know they’ll attract the best contractors as a result; and this will ultimately pay the banks dividends through reduced project-creep and costs, plus improved project outcomes.
If there are no contracts out there paying a higher rate than the one they are in, contractors can invest in their skills very quickly and move into a new skills market that does pay better. Taking a week out to learn a new skill on an intensive course is not an option open to many employees.
And if the UK market simply does not offer contractors the opportunities they are seeking, as knowledge workers they are highly mobile, so can seek contracts elsewhere in Europe or in a high-growth economy desperate for highly-skilled workers. If the rate is right, contractors can easily relocate almost anywhere in the world within weeks, on a temporary basis.
Contractors still have to grapple with rising costs of living and increasing business expenses, of course. But they don’t need to accept the erosion of the value of what they can earn, and so can choose, through chasing different markets and targeting alternative customers, to award themselves pay rises when it suits them.