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By Joey Gardiner, 1 March 2000 00:30

COMMENT IT contractors earn (or think they earn) more than permanent staff. That seems to be the unavoidable conclusion of Silicon.com's latest skills survey. Forty-two per cent of contractors earn more than £55,000 (23 per cent earn more than £70,000), compared to one in ten permanent staff. The vast majority of permanent staff earn under £40,000. Despite the huge disparity in earnings, permanent staff are not clamouring to join the ranks of contractors. Far from it. According to our survey, 72 per cent said they were happy as they were. By comparison, 39 per cent of contractors said they were thinking of changing their employment status. So what's the cause of the apparent unrest among contractors? Are contractors hankering for the security and benefits of permanent status? Or are they by their very nature more prone to change? Could it be the spectre of the government's IR35 legislation (see 'IT industry divided over IR35 tax legislation' www.silicon.com/a30976) , which will limit the ability of contractors to work as one-person companies, that is causing them to reassess? Evidence from the recruitment industry seems to back up the view that IR35 is having an impact. David Bevan, head of strategic development at Best International Group, said it was making the decision to become a contractor much more difficult to justify. "IR35 is causing a great deal of concern," he said. Robina Chatham, lecturer at the Cranfield School of Management and a former IT director, said it was undeniable that the legislation would make it more difficult for companies to employ long-term contractors. "Short-term contractors are of limited use, as it takes a few months to get up to speed. The demand for contractors is likely to decline." And contractors haven't been slow to work this out. However, David Ramsden, director of the Professional Contractors Group, who has lead the campaign against IR35, was non-committal on the possibility of the legislation driving contractors back to the permanent sector. He admitted there was "no doubt that some people would welcome going back into the permanent environment as contractors give up a lot, and have got very little in return". He said most contractors would rather go abroad. But that's not the whole story. It is possible contractors only think they're earning more money than their permanent counterparts: it's a subtle, but significant, distinction. Industry commentators insist that when one weighs up the benefits of permanent employment - often a company car, healthcare, pension plans - the perm is often no worse off. "You have to look at the whole package," Chatham insisted. The trend is for contractors to inflate their earnings when asked, and for permanent staff to underestimate. Chris Setz, director of the Network Professional Association, said contractors aren't necessarily better off, but the fact they're so numerous is indicative of the nature of the people in IT. "The industry is dominated by relatively young men, who are not necessarily making mature decisions. They tend to glory in the money and do down the 'perms' for their lack of enterprise," he said. So the move back towards permanent employment could signal a maturing of the industry. The demographic appears to be getting older, as more people recognise IT as a very real and valid career choice. We now have people who have worked in IT for careers spanning 30 or 40 years. Best's Bevan said: "There's not a huge difference in salaries and conditions between contractors and permanent staff. It comes down to a matter of how you want to live your life." While IR35 is undoubtedly weighing heavily on the minds of IT contractors, more are inclined to find other ways round the legislation rather than let it force them back to working permanently. The desire to go back to permanent employment is just as much about a change in the mindset of IT staff than about a piece of legislation. As the IT sector as a whole matures, we may see contract staff lessen in significance, but not disappear - whatever the government tries to do. A mature industry will contain both permanent and contract staff fulfilling their separate roles, which is vital for the continued growth and flexibility of the industry. ** For the full results of the Silicon.com Skills Survey 2000, together with analysis, opinion and video interviews check out http://www.silicon.com/skillssurvey2000