Contracting in Engineering - the phenomenon
The phenomenon of contracting is still on the increase in the engineering industry and gone are the days when temping was viewed as simply a filler between permanent positions. On the contrary it is becoming a way of life. A very good one at that. The question is - Why?
The financial incentive
Quite simply, and rather unsurprisingly, one of the overriding factors is money. Every engineer knows that contracting is seen as easy money - with stories of junior workers earning significantly more than their permanent superiors above them.
"Some of our candidates opting for the contracting option have seen their salaries double in a matter of months, simply because they are paid by the hour rather than on a set annual salary basis', says Dean Ball, operating Director of Michael Page Engineering. Many people question why employers pay such premiums for freelance engineers when they could simply offer higher salaries for permanent staff. But in many firms, engineers' salaries are set by finance departments, where the politics of an office and strict salary structures dictate that permanent engineers do not earn huge salary increases - no matter how hard they work. A contractor's pay is, in contrast, set by the project management team and these high hourly rates seem insignificant when compared to the hefty penalties the management team will face if projects are not completed on schedule."
Mr Ball went on to comment, "As well as offering significant financial rewards, contracting gives candidates a level of freedom over their own destiny, answering to no-one but themselves."
In the interests of the employer
Freedom is of course also in the interests of the employer, and contracting offers flexibility within the labour market. Specific skill sets are often only needed on a project for a set time. After that time, these employees simply become a drain on the company. In addition, freelances are drafted in to deal with peak and troughs in work throughout the seasons. Engineering work is never consistent throughout the whole year and contracting will provide secondary workers as and when they are needed.
Another huge advantage for employers is the fact that freelance engineers, having worked for a variety of companies within a short space of time, bring with them new ideas and working practices.
Some pit falls to consider
Having so far sung the praises of contracting there are of course pit falls to be considered. It is not a way of life for the faint hearted. In any downturn, contractors will be the first to suffer and salaries can very greatly from year to year. Yes the salaries can be high. However, they come with none of the security of a permanent position in terms of pension, health care, company car etc. Freelancers have to organise these themselves. They are also directly responsible for all of their own financial affairs in terms of tax and other accountancy issues, which can be a strain. Current Inland Revenue rules (IR35) to stop tax dodging have been labelled unfair by many engineers, who view themselves to be in a very vulnerable position with fines of up to 100% of earnings if seen to be avoiding their tax.
Companies are also reluctant to invest in temporary staff for their competitors' benefit, so freelancers can find themselves pigeon holed into one field. In the long term, contractors will find it near impossible to move into senior management within an organisation without a preceding lengthy contract.
Looking at the bigger picture, freelancing is perhaps a phenomenon best suited to the young and adventurous who love the varied work and flexibility that contracting offers and want to make a large amount of money within a short space of time. The worry of where the next job is going to come from plays less on the mind of a single 25 year old than his 35 year old counterpart with commitments and responsibilities.
