Companies'' contractor rates ''must reflect economic recovery''

An expert has emphasised the fact contractor''s pay rates should reflect the growing optimism of the economy.

It is essential that companies effectively handle the question of how much pay they should offer contractors, an expert has claimed.

Jonathan Chapman, management education fellow at the Cranfield School of Management and co-author of Managing Reward Risks: An Integrated Approach, has highlighted the fact that businesses must plan an effective response to the economic conditions and that this must be reflected in their remuneration policies.

He said that recent changes in the market have placed a burden on members of the rewards profession and that this will affect the way that organisations approach these problems in future.

Mr Chapman added: "Changes to how employee pay and benefits are taxed are of major concern to all employers who fear the changes will make it harder for them to compete effectively to recruit and retain valuable talent."

In addition to permanent positions, the way in which firms handle the rates for contractors such as umbrella company users would also be affected by these changes.

A recent report by e-skills UK has shown that some IT contractors, including those working in user support, ICT strategy, planning and telecoms and computer engineering, experienced pay rises in the first three months of 2010.