Getting a desirable career – a permanent position with benefits, recurring income, and retirement package at a respectable organization-is something of yesteryear. Some claim that these days, the principle of focusing on a single profession is out of date, especially with the gig economy.
In order to further their learning and acquire varied experiences, the new fashion is to invest their energies in many kinds of occupations. One of the common employment arrangements embraced by these individuals is contract employment. Let’s look at the pros and cons that are possible.
In pay terms, contract workers typically earn higher wages. No other advantages are predicted. During a deal, no holidays or unpaid leave. A fixed wage and a (variable) performance-related bonus mostly pay permanent workers. Additional benefits can include, in some cases, retirement, dental, paid leave, stock options and preferential rates on loans and mortgages. Although a reasonably rational comparison should be the overall reward, many individuals are slightly biased and drawn to the “guaranteed” higher pay of contract employee jobs. In order to determine the two choices, it would be more prudent to take an objective and risk assessed approach.
In short, the pay of a permanent career provides you a healthy net income, with a number of benefits to shield you from certain risks and add to your retirement savings. A fair comparison of the wages of the contract worker is to measure the disposable income by taking out the portion you will allocate for unexpected expenditure and retirement (which in turn is based on your risk appetite).
2. Job Security
As a contract employee, at the end of each contract, you need to find a new position. But there are also situations in which your client will employ you after the contract as a permanent employee if they see your value. If the company is doing well and not on a decreasing trend due to shifts in business model and technology, there will be greater work protection for permanent workers. Re-organization will alter your position, but your job will only be at risk of downsizing.
The availability of contract employee jobs would be more susceptible to economic conditions. For example, the first to cut contracts and contract employee services would be when an organization wants to downsize. The last to go would likely be permanent employees, especially high performers who clearly add value to the organization (if ever). There will be severance payments or other benefits equal to months of pay for those who are to be let go (depending on length of employment).
The other angle to consider is whether the position of the business and work you are in is on the increase. If so, the probability of making several or recurring contract offers is high and you have basically no chance of project gaps. Furthermore, your salary is likely to rise much quicker than that of a permanent employee.
Vice versa, it’ll be just as real. If your work is easily replaceable or the market is shrinking, once your current one ends, you will face the dilemma of seeking a new contract. Even if you have a permanent employment, due to downsizing, you will still face layoffs. The benefit of working in a big corporation as a permanent employee is that you probably have a chance to re-skill yourself in a different role.
In conclusion, job protection is more important to your position in the job (i.e. the abilities you have) and the industry in which you are. You have more flexibility in re-skilling yourself if you are a permanent worker in a big organization. If you are a contract employee, you would be on your own, and you would be under constant pressure to keep your skills up-to-date and marketable.
3. Career Progression
Continuing as a contract employee means that your hard skills and expertise are being sold. In a specialized area, you will be the top expert, but it is doubtful that you will step into general leadership positions. There are 2 options open to permanent workers. To gain expertise in a special area, they can concentrate on a “technical path” or they can pursue a “management path” to be developed into an executive.
That’s where the difference is greatest. Contract workers can shift horizontally, but if he has not been in a management role before, a business would seldom hire a contract employee into an executive position. By nature, permanent workers will have the channel for vertical movements. They will get the preparation, experience and opportunity needed to move up gradually.
As a young adult, a management position seems far away, so it does not matter to pick a contract staff job. However, after a few years of seeing what management looks like, if you plan to become an executive one day, you should seriously consider it. You need to prepare to move into permanent employment if you do. If you have moved up to the management tier, you can still switch positions, but the jump from individual contributor to manager would require you to gain faith from the senior level to give you the chance.
The choice between contract and permanent employment is not easy, but by being more cautious in comparing the compensation packages and deliberately self-assessing your risk appetite, you can mitigate your prejudices. If you have done well in acquiring your hard skills, improving your soft skills and choosing the right form of job in an insurrection industry, it makes no difference whether a contract worker or a permanent role.
As a matter of fact, you will get preferential benefits (e.g. bonus, paid training and vacation) even as a contract employee if you have outstanding skills (both hard and soft) in your career. Employers, regardless of their form of jobs, store great resources and will go all the way to hold them as long as they are needed.
It is also a good idea for you to try both if you have just joined the job market or in your first 5 years. After 10-15 years or when you have substantial life event shifts, the option will become more important (or plans, such as getting married, having children). This is because your risk appetite will shift, you are likely to commit to longer-term arrangements, and you need to take retirement savings seriously.
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