UK contract IT staff at Swiss bank UBS have been given the choice of taking a 10 per cent pay cut or receiving four weeks' notice.

UBS informed outsourced workers that due to the current economic climate, it had decided to reduce rates and those who did not want to accept the new rates would be let go, with some given less than 24 hours to make the call, an insider told the Reg.

UBS was one of the worst affected banks in the global economic crisis, taking more than £35bn of writedowns and credit losses and suffering the biggest loss in Swiss corporate history in 2008. It now plans to eliminate CHF 2bn (£1.5bn) from its annual costs by the end of 2013.

Its statement, posted on its website last week, was an update to these plans and announced further layoffs of around 3,500, which it plans to achieve through redundancies and natural attrition (not replacing staff who leave voluntarily).

The bank has already axed thousands of workers worldwide in its attempts to recover following the credit crunch.

In last week's statement, UBS announced the departments within the bank where the staff cuts would take place, but not the type of employee that would be let go.

"Of the expected 3,500 staff reductions, approximately 45 per cent will come from the Investment Bank, 35 per cent from Wealth Management and Swiss Bank, 10 per cent from Global Asset Management, and 10 per cent from Wealth Management Americas," the bank said.

Many of the IT contractors working for UBS are supplied through large agencies including FDM Group and Harvey Nash, both of which told the Reg they could not comment as UBS was one of their biggest clients.

However, speaking in general, Roy Grimsey, director at Harvey Nash, said that wage reductions for staff, whether contract or permanent, could be useful in the current climate.

"If done in the right way, employees can understand that approach and as long as it gives them visibility and stability in their own role and also gives them the ability, when better times return, to claw back some of that money, that can be a good positive lift to the organisation," he said.

At the height of the crisis, many IT contractors, including those at IBM, Microsoft and BP, were forced to take pay cuts or reduced hours, but in the last two years, fewer and fewer cuts have been reported and confidence in the industry has improved.

A study by giant, the contractor services provider, reported at the start of the month that 32.6 per cent of IT contractors said they thought the financial services sector would create the most IT jobs over the next 12 months, compared to 27.5 per cent at the same time last year. ®

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