Reply to: Merrill Lynch contractor 11% rate cut

[BrilloPad]

And another article...

http://news.hereisthecity.com/news/b...ews/7899.cntns

'I'm one of those IT contractors you have read about who is soon to take a cut in pay. I'm not particularly happy about it (especially as the costs of travel, fuel, food and other necessities are on the increase), but I'll take it on the chin - for now.
It's what my old dad used to call a 'swamp' issue - don't get bogged down worrying about something you can't change, so I won't. I appreciate, of course, that we are currently in unprecedented times, as firms attempt to come to grips with their subprime problems. And, from their point of view, it's only right that the pain should be spread around - among shareholders, executives, permanent staff and contractors.

I'll also admit that I was always the first in the queue during the good times, threatening to go elsewhere unless my daily rate was upped. So, in fairness, I guess I should take the hit in good grace. But I won't. The firms that are imposing these pay cuts on IT contractors, of course, think that the boot is on the other foot now. Hiring firms believe that they have us over a barrel - in the same way we had them on the run in the good times, when decent IT contractors were in short supply yet IT projects were stacking up like there was no tomorrow.

But there are two things that those faceless executives who have imposed these draconian measures on the little people like me need to bear in mind. Firstly, working in the City can be a stressful experience. And, although the pay has been good working in the financial markets, I and people like me are more likely to think seriously about taking our transferable skills out of the sector if the spoils of war won't be as good.

But perhaps more importantly, I don't actually expect all banks to institute pay cuts for IT contractors. We know full well that some firms are doing rather better than others at the moment, and they will continue to offer top rates for competent IT professionals like me. And firms who try to get away with paying less will just end up with second-tier IT folk on their payrolls. What we'll see, I predict, is that firms will fall into one of two categories, with some gaining a reputation for being tight on pay (and finding it difficult to attract staff), and others bagging the best IT staff.

And, even when the good times return, this stigma will stay with those parsimonious firms who thought it expedient to cut our paywhen it suited them. In the short term, they may save some money, but over a longer period this will come back to bite them on the behind. Who, after all, wants to go work for a firm which will simply cut your pay if the going gets tough ? I also predict that the firms that are imposing pay cuts now will soon end up having to pay a big premium to get back the very staff they will soon be losing because of the pay cuts. Many of us will just wait it out until we can see which firms will offer us the best deal, and then we'll be off, leaving those firms who have stiffed us to resource their IT needs by hiring the duds and misfits who still make up part of our cadre.

My revenge will be simple and sweet - I'll watch from afar (from my position at a higher-paying rival) as the firms which have taken such a short-term view on IT contractor pay become entangled in a mess of their own making. And I'll demand a huge premium when I'm eventually called back in to help sort it all out'.

[BrilloPad]

http://news.hereisthecity.com/news/b...ews/7898.cntns

Here are a few of your comments on this subject:

1. 'Investment banks treat temporary staff like supermarkets treat farmers - disgracefully'.

2. 'This is a 'big fish eats little fish' world - and investment banks are 'big fish'.

3. 'I have no problem with recruitment agencies being squeezed by the larger corporations. It's common for agencies to take substantial margins. I feel that agencies should absorb these cuts. If not, perhaps firms like Merrill Lynch should deal with the contractors direct and just cut out the middle men'.

4. 'Contractors get their annual bonus built into their daily rates. Bonuses will be down this year, and permanent staff will see their compensation cut at year-end. The contractors are just taking their pain at a different time and in a different manner - but it's the same thing'.

[BrilloPad]

The IB I'm at is also considering an across-the-board 10% cut. I would much rather they cut 10% of contractors & staff, which they have done in the past.

They considered it at the IB I am it. But we are too poorly paid.

[ChimpMaster]

The IB I'm at is also considering an across-the-board 10% cut. I would much rather they cut 10% of contractors & staff, which they have done in the past.

[BrilloPad]

Well, if they can cut everybody by 11% just like that, I would suggest there has been a large number of management errors for an extended period if they've been paying over the odds like that for everyone.

Like I say, any idiot can do such a job, all you need is the right brand of bulltulip.

I disagree. Well - the management are very poor at ML. But the paying over the odds bit. Credit Crunch widely reported - it is not as bad as media make out (it never is) but they are using the perceived job cuts as an excuse.

I still think most job cuts in city among traders - there have been some IT losses out there but I still get emails/phone calls.

[threaded]

Just another bad management error I guess.

Well, if they can cut everybody by 11% just like that, I would suggest there has been a large number of management errors for an extended period if they've been paying over the odds like that for everyone.

Like I say, any idiot can do such a job, all you need is the right brand of bulltulip.

[BrilloPad]

At ClienctCo they discussed slashing rates by 10% - but then decided we were too poorly paid already!

[eliquant]

I dunno Merrills is not a bad City employer although they shipped loads of IT staff to Camberley outside of London to cut costs which did create a little exodus here and there as I remember.

Just another bad management error I guess.

[NickFitz]

Merrill should now be an immediate target for any recruiter in the City arena (which unfortunately I am not)

How is the Rutland market?

[DodgyAgent]

Very good point Dodgy. It's rare for contractors to leave mid-contract and quite disingenuous for Merill to cut rates mid-term. Anyone still there will not stop to think twice if they need to serve notice to get another contract.

If I had my rate cut mid-term I'd be enjoying long lunches. I'd also look for another gig with "immediate availability", and if I found one I'd phone in sick for four weeks.

Merrill should now be an immediate target for any recruiter in the City arena (which unfortunately I am not)

[swamp]

Very good point Dodgy. It's rare for contractors to leave mid-contract and quite disingenuous for Merill to cut rates mid-term. Anyone still there will not stop to think twice if they need to serve notice to get another contract.

If I had my rate cut mid-term I'd be enjoying long lunches. I'd also look for another gig with "immediate availability", and if I found one I'd phone in sick for four weeks.

[oracleslave]

Much as I empathise with the principle that rates should go down as well as up according to economic climes. I also believe that generally a lot of this is about politics. I am not sure that a client is going to gain anything by cutting contractor rates. Maybe they will save a few quid but they will end up demotivating their contractors and thus compromising (what little there is ) quality. basically I am not sure that it is worth the hassle unless the whole contractor market is going down (which it is not).

You can spin it any way you like but contractors are not businesses. This is not a negative point that I make, because on the [positive side many of them are very loyal. Contractors may be independent in many ways and different from permies but they are still individuals. Contractors will not look at this in a business like manner (if they do then they will look at other options). Instead they will take it personally and any loyalty will go straight out of the window.

Any decision to reduce rates for contractors is therefore more than likely to be some pathetic gesture from some pathetic middle manager trying to stick his nose in the sunniest hole to save his own skin.

Good post Dodgy

[DodgyAgent]

Much as I empathise with the principle that rates should go down as well as up according to economic climes. I also believe that generally a lot of this is about politics. I am not sure that a client is going to gain anything by cutting contractor rates. Maybe they will save a few quid but they will end up demotivating their contractors and thus compromising (what little there is ) quality. basically I am not sure that it is worth the hassle unless the whole contractor market is going down (which it is not).

You can spin it any way you like but contractors are not businesses. This is not a negative point that I make, because on the [positive side many of them are very loyal. Contractors may be independent in many ways and different from permies but they are still individuals. Contractors will not look at this in a business like manner (if they do then they will look at other options). Instead they will take it personally and any loyalty will go straight out of the window.

Any decision to reduce rates for contractors is therefore more than likely to be some pathetic gesture from some pathetic middle manager trying to stick his nose in the sunniest hole to save his own skin.

[Sysman]

Come on folks, they do have to protect their bonuses somehow:

City bonuses defy credit crunch and hit new record of £13bn

[OwlHoot]

What are you calling small? Some of these issues are very serious global problems, which we're trying our best to solve!

Exactly, and we're better at it than most barbers and taxi drivers, and certainly the Government.