Contract rates not obeying inflation

[northernladuk]

Sometimes it's a blessing clients don't treat contractors like normal suppliers. People like KDW won't have a clue why but a majority of organisations I've been with put clauses in that the rate is reduced a number of times over a year as the service provided becomes embeded. My public sector client mandated it to suppliers. They wanted a 10% reduction at least after the first year if not ongoing. They've done the messy stuff of onboarding in the first year. Second year should be plain sailing so can swallow a rate reduction which every supplier over year has done.

So technically KDW is more likely to see his rate cut for gigs over a year than rise. But thankfully they don't.

[merseygrit]

Yes contracts don't obey inflation. I'd be interested to hear if others have evidence that rates are generally increasing, staying the same or decreasing recently. Is there a tight labour market, are contractors getting rate increases recently, is it a buyer's market?
I feel like there has been a general jump demand since the pandemic, combined with more flexible working practices that's opened up more supply. Working practices are becoming slightly less flexible, demand has also reduced and contractors generally don't have enough power to require higher rates.

[northernladuk]

Yes contracts don't obey inflation. I'd be interested to hear if others have evidence that rates are generally increasing, staying the same or decreasing recently. Is there a tight labour market, are contractors getting rate increases recently, is it a buyer's market?
I feel like there has been a general jump demand since the pandemic, combined with more flexible working practices that's opened up more supply. Working practices are becoming slightly less flexible, demand has also reduced and contractors generally don't have enough power to require higher rates.

Have a look at https://www.itjobswatch.co.uk/
You can search on roles, keywords, sectors whathaveyou. Just be aware it's built from scraped data from the recruitment boards so it's got all the fake and artificially inflated rates and I've not looked at it since the big change so I don't know how it factors inside gigs in to those figures but it does give some interesting graphs.

Thing is though, doesn't matter what is happening in general IMO. It's the opportunities you've got on the table at any moment in time. Most of us don't have the luxury of turning gigs down week in week out until we get one that is at average market rates. Putting off a lower rate (even inside) while you wait for that top rate outside one means you aren't going to earn as much over the year. Doesn't matter what the general market is doing, it's what contractors you have on the table and there is generally very little you can do to negotiate. You might get a few % off the agent but it's very unlikely you'll move a client off their rate card whether it's below market rate or not.

So don't get wrapped up on what rates should be, just take each one as it's offered, do your best to negotiate and then decide whether to accept or not. Don't be taking lower rate gigs with the sole intention of jumping ship either (IMO again).

[SussexSeagull]

I don't think rates have gone up in the last ten years unless you have a hot skill (and that doesn't last for long) but then again that is fairly much the tale of the wider economy.

That's said I have been to an office twice since March 2020 and that was on expenses so overheads are less. If clients want me back in the office more and expect me to pay for it then it might be time for a rethink.

[Eirikur]

Seems that hardly any clients are matching inflation with the rate, rent is going up, food is going up, bills are going up, contract rates the same last seven years

Perm salaries haven't gone up either, was asked the other day if I was interested in a perm role, I asked what is the salary. £60k, which is lower than what I earned in my last perm role 13 years ago

[jamesbrown]

I find your use of the word "obeying" strangely irritating.

[WTFH]

I find your use of the word "obeying" strangely irritating.

Sounds like "control" to me, so it's inside IR35...

[rocktronAMP]

Sounds like "control" to me, so it's inside IR35...

Maybe cut out personal expenses: Sky, Disney+, Now TV or wait Amazon Prime has jumped the shark form £75 to £95 this September.
Contracting is like feast and famine.
Permanent salaries have not gone up with inflation for decades.
It is a game of luck ; the state of the market at any place and any time - think of the people who are making the Great Resignation become a news story. Take the risk; is the grass always greener n the other side? No it isn't, especially in perm, but contractors don't have the luxury and/or privilege to dictate contract rates or inflation. You have to invest in the correct technology and the philosophy. Is there the same contractor working on ASA 400 and Waterful SDLC since the year Dot? The answer is NO. You want more doe, then learn to operate like a ...? You need to change the colour of your knickers.

[Fraidycat]

Rates have not kept up with inflation for decades.
I mean asset price inflation. The stuff you really want to buy and own.
Over the last 25 years, houses and even gold have gone up around 600%.
But contract rates have only gone up around 150%.

And if inside IR35 might mean your take home after tax has only gone up by 50% compared to say 1997.
You could have expected to take home after tax, 4 or 5K a month back in 1997.
Now if inside IR35 you might only take home 6 to 8K a month or even less.

[some guy some where]

Pay rises (unlike taxes) are only for the super rich - you should know that by now!

Everyone else has been proping them up for years