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Do Perm Salaries Need A Hike In Londons Never Ending Transfer Market

Do Perm salaries need a hike in London’s never ending transfer market?

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Do Perm salaries need a hike in London’s never ending transfer market?

​Between July 1st – September 1st all English football clubs have the freedom to buy and sell players primarily to bolster their squads and ensure they are set up to achieve their goals for the new season.

Sometimes the motives may be financial. 

It is now more than ever before a talent led marketplace, and to get the talent on board you need to cough up the money. £54m Kevin De Bruyne, £49m Raheem Sterling, £36m Anthony Martial, £29m Roberto Firmino, £22m Heung-min Son (who???)...just a few examples of fees paid to attract the best talent available on the market. Would £60m-£70m and a healthy weekly salary of been enough for Arsene to attract Karim Benzema to The Emirates? More than likely, but he probably wouldn't lend his own mum a fiver so they missed out.

Whilst many would argue these fees are too much, that is what the market dictates and what is needed to get the right squad. I appreciate not every team has the same level of capital to play with but it's all relative.

As a digital technology recruiter, the transfer market allowed me to make comparison with London's constant need for the best tech talent.

Having worked in this particular space for over 5 years, I feel now, more than ever that the demand for permanent technical developers has really reached its peak. I rarely speak to a client these days who doesn't want a Lead iOS developer or their next JavaScript 'Ninja' - these types of candidates are rare and they know it. This makes these people expensive, and rightly so. It is evident there is a shortage of candidates motivated by permanent opportunities at the moment and something needs to change.

With the tech start up scene exploding in recent years, the need amongst these businesses to find talent is immensely competitive. Coming from a start up environment myself, I acknowledge that every penny counts so competing on a financial level with larger businesses probably won't work. This is where equity in the business, occasional remote working, flexi hours...etc counteract the shortfall in salary for the start ups wanting to get the right people to put pen to paper.

I think where the main issue lies is at the senior end of the market. I previously mentioned “there is as shortage of candidates motivated by permanent opportunities”, this isn’t to suggest there isn’t enough talent in London but too many of these candidates are occupied in a contract capacity.

How many times have we all found that ‘perfect candidate’ only to see in the small print “CONTRACT ONLY.” Believing we have the ability to convince them otherwise, we call them anyway only to be told those words down the phone. Whilst I understand people contract for a number of reasons, the main driver for the most part is usually dictated by monetary purposes.

The average day rate for a Lead iOS Developer in London is £500 per day (IT Jobs Watch), based on a 5 day week, working 46 weeks (assuming 6 weeks off) a year equates to a £115,000 gross earnings. The figures on the perm side are an average salary of £63,000 for the same position (IT Jobs Watch), this is nearly 45% less than a contractor. Of course there are arguments to both sides of the coin but where money is concerned there is no real comparison.

When we take into consideration tax breaks we are easily looking at a perm developer being left with at least half less than a contractor. As I say, I fully appreciate that not everybody is purely driven by money, it may be that a contractor doesn’t feel fulfilled in a perm job, they like the nomadic lifestyle of contracting, they may enjoy meeting new people and working in different industry sectors – I understand all of that.

With a growing number of companies investing into enterprise applications that require longevity, product knowledge and developers to really take ownership of the code from the word go has led to more demand for in house, permanent mobile resource which is another key driver for the rise in demand.

When speaking to contractors, they will often say that for the right money and opportunity they would consider a perm position – the reality is this rarely happens. A £450-£500 per day developer (Senior/Lead) will typically start to look at figures of £75k-£80k as a minimum, however only a very small proportion of business are willing to pay this level of money.

The point I am trying to say that as a recruiter I often hear from a client something along the lines of “he wants how much!?!”, or “is she having a laugh!?!” but the truth is we too, much like the transfer market are dictated by the assets that are needed to enhance a team. At this point there are two options, either justify the salary or lose out.

I want to add that of course building a great team isn’t all about spending vast sums of money and I would encourage anyone reading this to do so with an open mind. The issue lays in the demand Vs supply not being conducive to one another in the tech marketplace so something must give. Surely???