When contractors make up nearly a third of the workforce, not understanding how they work is a significant missed opportunity. But it’s been nearly impossible to benchmark contractor rates in any sort of consistent or meaningful way. Until now.
Globally, CXC engages, manages and payrolls 12,000 contingent workers on an annual basis. We have complete visibility over these contractors, allowing us to provide our clients with valuable insight into the performance of this workforce.
Now, we’ve published our Contingent Workforce Salary Benchmark Report, giving you the opportunity to assess how your contractors are paid against the market: as well as the factors that have contributed to shaping contractors’ pay over the last few years.
Here is a snap shot of the report, taking a look at COVID-19 impact on contractor pay rates.
Between 2019 and 2021, contractor rates for males have consistently remained higher than female rates, with male contractors being paid more than female contractors by $185–$222 per day. In fact…
Male contractors’ pay improved over COVID-19, while female contractors’ pay reduced.
This trend matches Australian Bureau of Statistics (ABS) data, which suggests that, although full-time male worker were significantly affected by COVID-19, part-time male workers were largely unscathed. On the other hand, female part-time workers were hit hardest by the pandemic. This is because “women were more likely to have lost jobs that were part-time and lower paid compared with the loss of full-time jobs for men”.
According to Bankwest’s Gender Equality Report, for full-time workers, the gender pay gap decreased from 24.7% to 20.1% in 2020. However, in the contractor space we saw the gender gap increase from 25.22% in 2019 to 28.03% in 2020. In 2021, it is now sitting at 22.21% (Refer to Figure 1).
Four of the six age groups were negatively affected by the COVID-19 pandemic in 2020, where their average pay rate remained stagnant or sharply declined. The greatest loss of wages occurred in 25–35-year-olds, who were paid 9% less, followed by 45–55-year-olds at 1.2% and 35–45-year-olds who were paid .1% less (Refer to Figure 2). This is consistent with Government studies on the effect of COVID-19 on demographic groups, who found that 20–29-year-olds had the most job losses and workers over 40 have had the greatest loss of wages.
The strongest wage growth was among 55–65-year-olds whose pay rose by 2.2% from 2019 to 2020.
The effects of the COVID-19 pandemic have been mixed depending on location. We saw a number of contractors accept lower pay rates from 2019 to 2020 – the biggest of which being South Australia, who were paid 9.7% less. Pay for Queensland, Tasmania, Western Australia, Victoria and the Norther Territory also went backwards (Refer to Figure 3).
One of the most significant outliers was the Australian Capital Territory, where pay rose by 19.8%. from 2019. This is not surprising, as most of our ACT contractors are in the public sector; estimated staffing in government rose during the pandemic to levels not seen since 2015. In Canberra, talent shortages have been “endemic in most key specialist markets” for the last five years, meaning contractors can use this demand to negotiate a higher pay.
Despite Victoria experiencing a six-month lockdown, the state experienced only a moderate lowering of pay; however, in this state we saw the biggest reduction in contractor numbers, 25.6%. Victoria had the greatest mass migration, which saw 18,438 people leaving the state to work overseas.
Now in 2021 we see contractors pay rates bounce back to above 2019 levels for five Australian states and territories – which is indicative of a growing skills shortage (Refer to Figure 4). Many experts predict that the decline in overseas migration has led to increased bargaining power for workers and the ability to negotiate a higher rate.
Contractors in Western Australia have seen the biggest increase between 2020 and 2021 of 16.2%. The ABS calls out the continued strength of the mining industry, lack of dependency on the service industry and easing of restrictions to be attributed to their strong performance.
In our data, the biggest exception to this was Tasmania, where we saw a steep 33.5% decline in pay from 2020 to 2021. Reports released from Deloitte highlight Tasmania’s above average performance during the pandemic, but highlight a slow down in the economy and per-capita income.
If we look at 2020 in detail, we can see that the pandemic had varying effects on pay rates. Interestingly, in the first quarter of the year, pay rates for all job families rose by over 10%. As the year wore on, pay increases slowed down dramatically – however, still ending on a positive.
The rates of IT contractors tell a different story (Refer to Figure 5). Rates hit their lowest point as soon as the pandemic became a reality for Australia – in around April to June. According to the National Skills Commission, even emerging roles were significantly affected by the pandemic from February to July, even though they could be done remotely.
However, from our data, rates for IT professionals bounced back quickly in the last two quarters, ending the year higher than at the start of it. This is not surprising. According to the Sunsuper job index, contingent work was the strongest type of work to recover, rising 19.5% in September 2020 compared to 12.6% for permanent workers.
Want more? For the full Contingent Workforce Salary Benchmark Report, complete the form below.
As one of the world’s top suppliers of contingent worker management solutions, CXC is perfectly positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across 5 continents, and with decades of experience, we can assist with every aspect of your program.
If you would like to find out more about how we can help with your contingent workforce solutions please contact us.