Six in 10 contractors stuck on the same day rate as 12 months ago - survey

Almost six in 10 contractors have neglected to increase their day rates in the past 12 months, despite the impact of inflation.

Polled by IPSE and Workwell, 58% of contractors told the two contractor outfits that their rates had not risen, nor fallen, in the past year.

A third of contractors said they did put up their pay over the last 12 months, at odds with the fifth who admitted to having to cut it.

'Rising costs'

“Rising costs” were the biggest reason to raise a day rate, by those who have hiked their pay already and those who plan to (24%).

This quarter who intend to charge more will now be resolute, as inflation came in yesterday at 4% in December, up from 3.9% in November.

But most not having increased their rate or having no plans to, isn’t news to Kieran Scully of banking and financial recruitment firm Morgan McKinley.

'In-demand, emerging tech and specialist contractors saw rate rises'

“[IPSE/Workwell] finding 58% didn't raise rates…is partly correct,” Scully, the firm’s senior technology manager began to ContractorUK.

“It aligns with the majority of people who didn't increase rates having traditional IT roles, rather than emerging tech or specialist roles.”

Scully says “in-demand” areas like Python, Machine Learning and Data Science, “did see rate increases” in the last 12 months.

'AI Roadmaps'

Pointing to these contractors (presumably also the one-third found in the IPSE poll to have hiked rates), the Morgan McKinley IT recruiter said:

“Skilled data experts were able to demand higher rates than the year before, as ‘AI Roadmaps’ were very much front of mind at organisations.”

Natalie Bowers, also a financial tech agent but just for usually wage-rich investment management firms, isn’t witnessing an uplift at present.

'Painful for contractors'

“It’s ‘perm’ galore right now, as is always the case in January, when end-users think of the year ahead - their long-term plans.

“So for contractors it can be painful,” says the boss of Bowers Partnership, who writes today about 'banana skin' interview questions exclusively for ContractorUK.

“What does this look like on the ground? Well, it’s not enough demand and too much supply. So rates right now are static”.

Bowers then mused that, amid organisations' budgets feeling the strain, on rates specifically “it could be worse.”

Out of the 58% of contractors found to have not raised rates in the last 12 months, 59% said they wouldn’t raise them in 2024 either.

'5.5% IT contractor rate rise in 2022, wiped out by a 7.7% cut in 2023'

And for non-financial services contractors, a self-inflicted rate freeze could actually be an accurate read of the market, signals VIQU.

“Rates are down on this time last year…and in Q3 and early Q4, [we] saw the biggest rate drops of [2023],” the IT-business agency told ContractorUK yesterday.

Overall in 2022, IT contractor pay rates increased by 5.5 per cent, added the agency’s boss Matt Collingwood.

But tempering the optimism, Collingwood then said: “Unfortunately, this was wiped out in 2023 with a reduction of 7% on average.

“As for tech contractors who had their assignments extended in 2023, just 12% secured a rate increase. That compares to over 35% in 2022.”  

'Hybrid working'

Uplifts in 2024 could come from Cyber Security and Cloud Computing, “as companies continue to adapt to hybrid working.”

Morgan McKinley’s Kieran Scully expanded on his positive outlook for suitably skilled IT contractors, inside FS or elsewhere.

“The requirements [of this new way of working] are to ensure availability of core systems and software to employees, in a secure manner”.

The IPSE/Workwell findings indicate contractors may be onto this migration, as around one-third had “expanded their offering.”

Twenty-one per cent said the level of competition in their sector meant they can increase their rate, but 11% who did so were probably “undercharging previously”, and the average upwards rate revision is only just in double-digits - 10%.