There's never an easy answer when it comes to deciding which path to pursue. But at least many highly skilled and experienced professionals have this option - especially in this year. Here's a basic rundown of what to consider. It's all up to your comfort levels in terms of what you define as "security" and how you feel about taking risks.
Permanent Jobs:
Most people, when asked to describe the benefits of a permanent job, would say "secure" or "stable". They see it as a guaranteed paycheck every fortnight or at the end of the month. I'm surprised if people still think this way in this day and age of recessions and live and let die. No job or company is completely 100% secure. Performance is still a condition, and of course the profitability of the company and market climate. But aside from that, sure it's relatively stable compared to contracting.
PROS of Perm Roles:
1. Relatively secure and stable - you can expect a certain amount of pay on a regular basis. Can budget your personal finances much easier. Ease of mind.
2. Depending on the company, certain employee perks and benefits - perhaps in-house training and other employee seminars or programs to take advantage of, health and fitness perks, etc.
3. Paid sick days and paid holidays
4. Kiwi saver or employer pension plan
5. You don't have to deal with tax administration, you receive your wages and your employer reports and deducts taxes for you
6. A sense of belonging to a collective group - camraderie
CONS of Perm Roles:
1. Lower pay. You receive significantly less than contracting in terms of hourly wage. As a salaried employee, most often you do overtime which is unpaid and often expected.
2. There is not much room for negotiation in salary once you've taken the job. All you have is your annual appraisal and that is regulated by a certain small percentage.
3. No flexibility in time. You need to also be present during the set work hours, regardless of the situation/workload. No opportunity to take an extended period of time off if needed.
4. You are not completely in control of your own time and efforts.
Contracting
The overall advantage of contracting is your independence and higher pay. You are your own boss and can decide where you want to work and command how much. The downside of it is that you are taking on more risks by constantly having to find a role to keep you going, and to be more financially responsible in your own taxation.
PROS of Contracting
1. Independence and flexibility - you can choose projects/contract jobs/companies you want to work for and when (that is, if there is a contract role available). You can make yourself available to all kinds of opportunities since you're not tied down.
2. Higher pay - contractors command a higher per hour wage, and with long projects, this can translate to a high "annual salary".
3. As a contractor, you are your own business. You have tax-deductible advantages and thus, have the ability to use pre-tax dollars to invest in your career/business.
4. Because you're more aware of your financial situation, you can be more savvy in your own financial planning.
5. Because you are more likely very experienced in your area (since you're hired strictly for that expertise), you are more marketable in that industry, anywhere.
CONS of Contracting
1. You need to sell yourself in gaining continuous contract roles. You have to be comfortable in networking and applying for new roles more frequently.
2. You have to feel comfortable in not having consistent income in between contracts, and IF that stretches out actually earning LESS MONEY not more.
3. To maintain/upgrade your marketability, you need to invest in your own training in different technologies (rather than having an employer pay for it or provide it)
4. As a business (either as a Sole Trader or Limited Company), you now have tax responsibilities in filing GST returns, provisional taxes and your own end-of-year taxes.
5. May not get that "sense of belonging " if doing a lot of short-term contracts.
I'm sure there a several more reasons to place on either side of the equation, pro or con, but it boils down to what you value most (security vs. more money/independence), your personal situation (singleton? providing for a family of 5? rent? mortgage? ) and how you feel about your own skills and abilities. If you're thinking about contracting, see here how 2011 will be a bumper year for contractors. And if you're open to opportunities, link with me at LinkedIn.
