Permanent or contract? Operations staff face uncertain prospects

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Robert Walters, chief executive of the eponymous recruitment company, says that banks will look for contract rather than permanent staff at the next economic downturn.

When cost cutting is in the air, operations staff can suddenly seem very

vulnerable. Middle and back office people are often culled vigorously

during mergers or reorganisations.

But appearances can be deceptive. Walters told eFinancialCareers that as fast as staff

leave through the front door, replacements slip in through the side

doors. The only difference is that those leaving are 'permanent' staff,

while those arriving are on contract.

&quotThe financial services sector is a very volatile market, and it could be

accused of overreacting,&quot he says. &quotIf one moment there's a headcount freeze, in the

next there will be booming demand for contractors.&quot

In general, says Walters, banks often like to hire permanent staff in times of

expansion, and contract staff when times are bad.

&quotAt the moment there is uncertainty,&quot about banks' hiring plans, he says, because

of doubts about world economic prospects. &quotBut if there is a

recession, demand for contractors will go up,&quot as demand for permanent staff


About 35% of Robert Walters 216.8 million (€343 million) turnover

worldwide comes from the financial services sector. The company expanded its

contract business after demand for permanent staff fell in the early 1990s

and following the Asian crisis of 1997.

Walters listed various advantages in being a contract worker, including

paid overtime and higher hourly rates of pay. He said that even taking into

account the lack of paid holidays and benefits, contractors still tend to be

remunerated around 20% more generously than their permanent colleagues.

Many banks also regard a stint as a contractor as excellent preparation for

permanent work: &quotContract work is a good way to gain experience&quot, says Jacqueline Black at


Yet according to Walters, most people still want &quotproper jobs&quot rather than a

series of contracts, in spite of popular talk of people taking their

careers into their own hands through flexible working.

&quotChoosing to be a contractor was just a fad. In fact there are very few

people that do a project and then spend a few months painting on a Greek

island. Most people want permanent employment.&quot

Contracts are most popular among Australians and New Zealanders keen to

spend time in Europe, he said.

In one area in particular, this demand for permanent employment looks like

being met. In the IT sector, the passing of Y2K meant the end of many

contracts. At the same time, Walters says that banks have begun to realise

that in IT it is often more realistic to hire permanent staff.

&quotIT managers are hired to manage projects that turn out to be never

ending,&quot he said.

But if Walters is right, those in other support functions - financial

control and settlements for example - may find fewer permanent openings


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