More than half of the UK’s IT contractors expect an inflation-busting pay hike of at least 10% this year, according to a survey by JSA, the specialist accountant for IT contractors.

Despite this, 50% of the contractors who answered the survey thought that, at best, the IT contractor market would stay static in 2007 and 9% thought it would actually shrink.

The survey reveals a generally high satisfaction rate with contracting, with only 18% of respondents saying they would like to return to full time PAYE employment.

Barry Roback, chief executive of JSA, says: “IT contractors have a strong sense of their own self worth, and the fact that they expect inflation-busting pay rises, is probably a realistic assessment of their current market position. This push on pay rates is likely to be further fuelled by the Treasury’s recent move to close down managed service companies, which will result in take-home pay being reduced for some under the proposed regime. This will inevitably lead to demands for higher gross rates, in order to leave contractors in the same net position, as happened after the introduction of IR35. One way or another, end-users are going to be asked to pay more for the services of IT contractors than they did in 2006.”