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JobStats - June 2002 - 7 Rooms Of Gloom: 13 Jun 2002

13 Jun 2002

Market trends

Well I was wrong. I said in my first newsletter that the market seemed to have leveled off and the decline was over. That's how it looked then but it was a false dawn. The market for IT skills has continued to contract pretty much from the moment when I said it had stopped.

Within these 7-Rooms of Gloom there are a few bright spots. The brightest of these is the behaviour of rates for permanent posts which has shown a clear rise over the past six months; no rate band has fallen since Christmas and the top end has seen a clear rise. You don't want to know what's happened to contract rates. It'll only depress you, it certainly depresses me.

How bad could it get

The last major recession in IT was in the early nineties but that was due to the economy as a whole taking a nosedive. This time the economy is in reasonably good shape but a lot of the jobs that drove the boom in 2000 have gone and there are people looking for work who aren't in any sort of job right now. This overhang of spare capacity will keep rates down until the growth in the economy generates the new jobs to absorb them.

It is still possible to find work though and it might even be easier if you're currently between jobs. There are two reasons for this. The first is that you can start immediately. The second is that anyone who had their pay set between September 2000 and January 2002 will be getting more than they are going to be offered in the market. They won't be taking an equivalent role because they'll have to take a pay cut if they move.

There will always be some demand for staff. People retire, they die, they win the lottery. For whatever reason they leave the job they're in and their employer needs to replace them. This level of demand doesn't lead to the perpetual skills shortage that has characterised the IT jobs market. And if there's no skills shortage then don't expect to see your pay go up at the rate it has in the past.

Who wins and who loses

The big winners are the employers. Their wage bill goes down because they can cut contract rates and bonuses and new staff cost less. They get lower turnover of staff because noone can get better money elsewhere.

The staff (obviously) lose. They can't change jobs as easily as they used to and they may get their pay cut.

The big losers though are the agencies who are taking hits from both sides. If a contractor has his pay cut by 10 percent then so does his agent. The agents are also losing out on the finders fee for new permanent staff and on the lower rates offered. For the agencies there's just less business around. Expect some agencies to go bust and look out for rubber pay cheques.

The biggest losers though are the job boards. For them adverts translate directly into cash and they've seen their takings fall by around 60 percent. The boards that were only semi-viable before will go out of business and those with high fixed costs will suffer and need to make cuts. For the best/biggest boards though this represents an opportunity to capture market share and be in a good position to come out of the recession stronger than they went in.

Colleagues reunited

A site that might help you keep your mind off all this bad news is NamesFacesPlaces. This is a similar idea to Friends Reunited but targeted at the IT industry so you can enter where and when you've worked and former friends who you've lost touch with can contact you. Who knows, one of your old work mates might have a job for you.

They offer more than just this though. There are some lively news articles and surveys of interest to IT contractors and links to useful web sites (including, of course, JobStats). They aim to do even more; besides the usual message-passing they have organised reunion events and are planning to organise the sort of corporate 'jolly' that permanent employees enjoy.

They are planning to run an article on JobStats in the near future.


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