Home » Business » Careers and Jobs

The Pros And Cons Of Contract vs. Permanent Positions

Dec 28, 2007
An individual can either accept a contract or permanent position based on his or her personal situation and choices. Many people favor a permanent job to make a living. These permanent job seekers are looking for security above everything else. A slowdown in the private sector would force companies to lay off both contract and permanent employees.

Today, there is a healthy division between contract and permanent positions. In addition, the forecasted trend towards the use of the Internet (freelance and self-employed individuals) is becoming increasingly more visible. Both contract and permanent positions in any industrial sector have their pros and cons.

Advantages Of A Contract Job

Companies that contract people to work for them have a different payscale for them than the direct employees that they hire. Contractors cost companies much less than permanent employees. Companies are happier hiring contractors because they don't need to pay benefits, unemployment insurance, or holiday and vacation pay. Generally, it is a recruiting firm that compensates a contractor. Contractors provide companies that are going through a slowdown more hiring options, which involves far less expenditures. Large-scale employment of contractors is a trend in sectors like IT and banking. However, industries that require research and a dedicated workforce, such as the biotech and pharmaceutical industries, often do not contract employment.

In times of economic recession, some firms prefer outsourcing their employment overseas. This move can lead to permanent workers being left without any prospects for immediate work opportunities. It is at times like this that contract positions are most beneficial. Individuals that require freedom and flexibility in their work environment are ideally suited for working on contractual basis. The contract system provides ambitious individuals opportunities to explore new employment prospects and experiences. Contractors never feel constrained by any particular role or organization for a long period of time.

Advantages Of A Permanent Job

A permanent job offers an individual the luxuries of job security and stability. Security at work provides improves and enhances the individual's performance. Companies providing permanent jobs understand the need of promoting higher levels of job satisfaction to improve workforce performance. Besides, employees holding permanent job positions have a higher ladder of earning potential than contractors. The company is also obligated to provide them with more employment benefits and bonuses like health insurance, pay raises and holiday pay.

Permanent employees are entitled to retirement plans sponsored by the company they are employed with. Furthermore, permanent employees have a more secure mindset. These employees are more likely to have higher money-saving tendencies than contract workers do. Contract workers do not receive the same rights as permanent workers in any organization. This may be due to the employment policy the company follows on contract employment. Finally, contract employment is best suited for youth starting out their careers, while permanent employment is better for individuals deciding to settle in life.
About the Author
Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution's Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.
Rating:
Please Rate:
(Average: Not rated)
Views: 156
Print Email Report Share
Article Categories