Pros and Cons of Taking Contract Jobs

Elliot Jackson 11.06.2019

There has been an increase in contract roles and more prevalent hiring approach for businesses of all sizes across sectors.

This is a number which has risen steadily year-on-year, with the trend set to carry on. As more candidates broaden their portfolio to this type of employment, recruitment activity will continue to thrive. These opportunities will enable candidates to view the changing requirements of a contract role with more flexibility.

What is a contract job and why is it beneficial?

Most companies are looking to adopt contract staffing where they recruit and hire new employees on a contract basis for a given amount of time. This offers the company various benefits along the lines of flexibility, cost savings, and staff quality. By engaging an additional staff for a given period of time, a company is able to reduce on headcount for budgeting purposes. It becomes more manageable since the company only gets to pay an all-inclusive daily rate. Downsizing makes it more affordable for a company to acquire new employees which in turn reduces the burden of setting up and keeping track of payroll and accounts. 
Companies tend to face more challenges as they grow, implement new technology, as demand cycles or even as mergers take place. This might increase the restrictions in place for hiring permanent staff which can be solved by hiring a pool of contractual staff who are skilled for a given period of time. 

With the high unemployment rates globally, it is hard for a company to find new employees to hire with the right skill set. Globalization has made companies to aggressively move their products, operations, and technology into new markets for them to sustain competitive growth. Shareholder value also plays a part in pressuring companies to drive efficiency by cutting on cost. Growing the contract labor force would help the employer save on cost benefits are other expenses. While there will still be work to be done, contract jobs offer flexibility. This takes place when new contractual employees are hired hence bridging the resource gap as the company retains headcount thus maintaining a work-force balance. The company also enjoys a high set of skills and talent offered by contractual employees to support a project for a specific period of time.

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A mutual exchange: benefits of contract jobs for employees

Contract jobs are beneficial for employees as they are able to get exposed to a variety of work projects. By working on different projects, they are able to pick up new skills that will improve their portfolio. Being a contractual employee, one is not entitled to getting bonuses like full-time employees. However, if they prove themselves to the company, they can be fairly compensated which leads to an increment in salary. Contract roles are also very suitable especially for those entering a new phase such as being a fresh graduate in the job market, a new mom or in the case of restructuring within the company. Moreover, contract jobs offer a quicker turnaround for the interview process as compared to full-time positions.

 

It’s not all sunshine - the cons of contract jobs

 

As much as contract jobs offer many benefits, there are always two sides to a coin. Employees hired on a contract basis aren’t entitled to the same employer-paid benefits as full-time employees. You might have varying insurance plans or leave entitlements compared to full time employees. There would not be bonus entitlements but some companies do offer completion bonus at the end of the contract. In some cases, be prepared to acquire your own retirement and insurance accounts privately for yourself and your family because there would not be comprehensive plans for contractors. 

Job stability is also not guaranteed as chances of the employee turning into a permanent one depending on their work aren’t assured. Working on a contractual basis might seem as being uncommitted as one gets to move from one career path to the next which might not augur well with potential employers. Constantly looking for new job opportunities or readjusting to new environments after every contract term might be a bit disorienting to the employee.

Flexibility is important in the face of a slowing economy

Contract work seems to be perceived as being less valuable since we live in a culture that drives us to strive towards full-time employment. However, most candidates are being more open to it while others prefer contract jobs as they play a big part in motivating them to strive to be better in order to prove their worth to employers for their term or stay to be extended. Although permanent jobs offer more stability, contract jobs have their additional benefits for both the employee and employer at large.

In summary, the general landscape of job opportunities this year has been relatively slow compared to the past two years and the global economy seems relatively more unstable and companies are taking a hit. Bearing this in mind, one might have to consider taking up contract roles. We are a market specialist that provides advice and guidance on how to be in the best position despite the situations. 

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Elliot Jackson - R1434168's picture
Associate Director, Head of Contracting & Interim | Singapore
ejackson@morganmckinley.com.sg

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