Contractor management service providers, Professional Representation Network, says the average annual earnings of the Top 100,000 contractors in the country is now approximately £80,000 per annum, compared to a national average income of £27,000.
The study looked at the earning power of contractors/self-employed professionals across the 650 parliamentary constituencies. Contractors are most heavily concentrated in IT, financial services, oil and gas, engineering and construction.
Its research found that in 31 of the areas, the average income of contractors put them in the higher rate income tax/dividend bracket.
The highest earners are in Central London and the City of London where nearly 20,000 contractors have average earnings of around £120,000 per year.
Kristian Gourlay, Director at Professional Representation Network, said: “These findings illustrate the healthy state of contracting in the UK today. Such high levels of earnings suggest that for an increasing number of highly skilled professional people, working as a contractor is now a very attractive and rewarding career choice.”
“Most people recognise that the days of a 'job for life' are over, so their perceptions of the risk/reward balance of being a self-employed contractor versus permanent employment are shifting.
“Increasingly, what we are seeing is that many of the best opportunities as well as the highest pay are going to contractors. More and more employers are choosing to engage workers with the expertise they need on a contract basis rather than recruiting permanent employees for the most highly skilled and best paid roles.
“As UK business moves towards higher and more specialised skills, and areas like technology, finance, energy and engineering continue to grow, contractors’ earnings should continue to outpace those of employees.”
The research found that 26 out of the top 30 areas where the highest paid contractors live are in London and the South East, but Edinburgh and Greater Manchester are also up there.
For example, Edinburgh South has an average contractor income of £57,000 (ranking 9th), while Altrincham and Sale West is £38,800 (rated 18th).
There are several good reasons why Edinburgh offers such attractive pay rates to contractors. It is the second largest financial centre in the UK after the City and has the second largest gross value added of any UK region after London. With a number of new banks such as Tesco Bank and Virgin Money setting up headquarters alongside long-established financial institutions such as Royal Bank of Scotland and Standard Life already based there, the market for contractors is buoyant.
Manchester’s importance as a financial, commercial and industrial centre is a key reason why contractors living in Altrincham and Sale West – one of its commuter suburbs – are commanding such high rates of pay. The growing strength of its digital and media sectors based in the new MediaCityUK hub is an example of the extensive and highly paid work opportunities on offer for contractors basing themselves in the North West.
Kristian Gourlay said: “The fact that we are seeing such high average earnings in large pockets across the country highlights how successful UK based contractors are in making the most of their skills whilst also retaining greater control over their own careers and lifestyle than is normally possible in conventional employment.
“Clearly London and the South East is a flourishing environment for contractors seeking highly paid specialist work in a variety of sectors particularly in financial and professional services but also in IT, pharmaceuticals, creative and infrastructure.
“However, contractors in many other parts of the UK are benefitting too. As well as Edinburgh and Manchester competing with South East for the best talent, contractors in areas such as Sheffield, Belfast and Renfrewshire all commanding higher than average UK incomes, putting these locations within our Top 50 highest earning parts of the country.”
Aberdeen is another up and coming 'hot spot', ranked just outside the Top 50, thanks to its large cluster of oil and gas contractors living in and around the city. The oil and gas industry makes a major contribution to the local economy and with its continued robust prosperity Aberdeen is likely to continue its climb up the league table in the future.
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Susie Hughes © Shout99 2014