Barclays Capital slashes contractor rates by 10%
IT workers get credit crunched
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Barclays Capital is forcing its IT contractors to choose between a 10 per cent pay cut or a quick exit from the company.
The decision, presumably an alternative to cutting jobs as the bank negotiates the current financial crisis, has sparked outrage amongst contract staff, who have to signal their "acceptance" of the wage cut this month.
The forced pay cuts will then come into force from next month and staff can either accept them or work out their notice. Anonymous Barclays contractors told us they would take the cut but had already starting looking for new jobs.
Agencies we spoke to, which all requested anonymity, said they were not surprised at the move and that other city banks were cutting rates and the number of contractors employed.
But Barclays Capital seems to making larger cuts than other institutions and several recruitment specialists criticised the way the bank has forced the changes down contractors' throats.
One said: "This is exactly the worst thing to do. Sack a whole person, and choose that person, rather than annoy everyone and risk losing someone from a profitable part of the business." Nevertheless, other banks are expected to follow BarCap's lead.
Dominic Connor, director at P&D Quantitative Recruitment, said: "This is the sort of sloppy management that got BarCap into this mess in the first place. The sums involved are small but the inevitable but random loss of contract staff is just to make some beancounter look good on a report. Ten per cent across the board is simple minded and bluntly inefficient way to cut costs."
Barclays Capital declined to comment on this story.
Citigroup is today expected to announce sizeable job losses. At an analysts meeting the company pledged a 20 per cent cut in its $60bn annual budget. The bank is resisting calls for it to be split up. according to the FT but will sell off non-core business, cut jobs and radically reorganise its IT system.
Credit checking agency Experian released research yesterday predicting the loss of 10, 000 City jobs over the next three years. Experian reckons 40, 000 UK jobs in banking, finance and insurance will disappear between 2008 and 2011.®
COMMENTS
Red Bren - Civil Servant or political nonce?
I'm not a contractor but have been before, both out of necessity and choice.
Quote = "Contractors already earn a fortune in comparison with permanent staff ".
Answer = Clearly you are incapable of setting up a simple spreadsheet to quantitatively evaluate what a contractor gets against a comparable permie, though the keyword in your statement may be 'earn' as opposed to simply 'be paid'.
Quote = "don't have to pay taxes through PAYE".
Answer = Yes, they do. Just how ignorant are you? Wait, that's an answer with no end.
Quote = "It's why people go contracting".
Answer = No, people go contracting for a variety of reasons. You appear to just be of limited intelligence, imagination, experience, or some combination thereof.
Quote = "I recall when IR35 came in, contractors were discussing how to avoid having to pay their fair share of tax".
Answer = If you are a permanent IT employee, name the IT technical courses and qualifications you put yourself through paying out of your own pocket. How many is that? None, and that is just one of the anomalies of your 'fair' IR35 regulation.
If you think contracting is so profitable then why aren't you contracting? Some risk involved if you're not up to the job, eh? I am not a contractor, but neither am I a bitter, envious, no-talented scared little twat. If contractors can't or don't deliver they can easily be canned, so just the fact of their continued existence proves their necessity to business.
@ Fraser
Contracting - some of us ended up doing it after being made redundant elsewhere. The days of picking up more money than the permies are pretty much over, once you look at the whole package.
Example, contracted via an agency to a large broadcasting company, the on site admin (dumb bint) decided to tell everyone what the agency was billing for my services - I saw a good £6 a hour less than that, but was already getting funny looks - Contractors were severly limited in terms of access rights to do any meaningful work on AD etc. hence they all thought I was getting paid a damn sight more than I was and yet couldn't do half the duties my nominal role demanded....
Then there was the paternity leave, or lack of it. The umbella company were regardedf as my employer for tax puroposes, but would not pay for pat leave, the client was astonished when I walked back onto site after a days off as I couldn't afford to take any more unpaid time away.
Finally, IR35, there are/were loopholes that allowed you to offset stuff against tax, but when we did a round table at the end of contract it transpired that myself and one other lady still had the worst take home pay of anyone in the department.
In my current place I'm fortunate enough to be permy, and in a decent position, but the number of young kids coming in out of uni/1st job elsewhere who are on contract and don't even know what the going rate truly staggers me. I have personally seen two guys, same skillset, agency billing at same rate, being paid differing rate (by almost £4ph!)
AC, cos no doubt some bugger in here will clock this and squeal...
@Omer Ozen
Just a quick clarification of your point 2 re. IR35. You don't just have to pay NI: you have to pay Employer's and Employee's NI. Yes, that's right. To add insult to injury they classify you as an employee for tax purposes and then make you pay the Employer's NI as though you were your own employer too. How sick is that? Of course, IR35 is now a voluntary tax only paid by the kind of contractor who's happy to work free overtime for a daily and as such perhaps it isn't so unfair after all.
IR35 and BarCap: just say no. You know it makes sense.
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