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City recruiter sees IT contractor pay jump 12%

The upside of a recruiter suffering its highest exodus of contractors for three years due to IR35 changes is that those PSCs who stayed can tap into rates of at least 10% higher.

In a newly published report reflecting on 2017, City-focussed Morgan McKinley said that average IT contractor pay increased last year by 12%.

It was in the same 12-month period however, that the agency saw a three-year high in its contract-to-perm conversions, albeit solely among PSCs working at taxpayer-funded bodies.


“The changes to the intermediaries legislation…were a game-changer for contractors within the public sector,” says Morgan McKinley operations director Victoria Walmsley.

“There has also been an increase in the number of fixed-term contracts available, particularly within small and mid-tier organisations and perhaps some of the uncertainty…seems to have given contractors more interest in longer term contracts which tend to offer more security.”

And uncertainty still prevails for contractors due to two distinct forces from one pressure.

Firstly, “as overall IT spend and salaries start to increase, companies will look for ways to reduce cost, with the primary casualty often being contractors,” Walmsely warned.

Secondly, throughout 2017, both end-user and consultancy clients of the agency “consistently” switched focus “from hiring contractors on day rates to permanent employees and permanent roles.”

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