Why Have Contract Rates In Automation Not Kept Up With Inflation?

I’ve seen a few people comment about contract rates in Automation on LinkedIn from both sides of the Atlantic in recent weeks. To be honest, I think it’s true. If you Google “average contract rate for a Controls Engineer” the AI overview tells you it’s around £47.50 an hour in the UK and $48.93 in the USA. But I was offering these rates to contractors over a decade ago when I started recruiting Controls Engineers. Factoring in inflation, UK Controls Engineers should be seeing rates closer to £70 or $70 an hour on average.

This begs the question, why haven’t contract rates increased over time? Here are some possibilities I have heard from clients and contractors.

Supply meets demand

Over the past 10 years, there has been a noticeable increase in people taking to contracting. More professionals now see contract work as an attractive option because of the greater flexibility, project variety and a higher day-rate potential it offers.

Despite the demand for automation talent growing significantly in the last decade, it has been offset by the rising number of engineers in the market. With more contractors available and a larger pool of international talent willing to travel, there is stronger competition for each opportunity.

As a result, rates haven’t faced the same upward trajectory as you would expect in a candidate-led market.

Rate pressure from OEMs

It’s no secret that large OEMs and system integrators set the guidelines when it comes to project budgets. However, over time, their margins have been squeezed due to rising material costs, energy prices, global competition, and customer expectations for faster delivery at lower costs.

This shaving down of profit margins has created a knock-on effect where suppliers and contractors further down the supply chain feel the pressure. In order to meet international competition, procurement teams have to prioritise cost control, which often results in stagnating rates for contractors.

Engineers accepting less

This has been especially true in the last 12 months, as work has been scarce. Many contractors now choose job stability over maximising their hourly rate. The importance of staying in work outweighs the importance of an increase in an hourly or daily rate.

While this might be understandable given the market we live in, doing so can impact the overall market benchmark for skilled professionals. Collectively, this normalises the market rates for everyone, regardless of rising inflation or increasing living costs.

Skills standardised by clients

In industries like automotive, standardisation has become the norm. OEMs have global control standards that dictate how software should be written, structured, and tested.

Whilst this ensures consistency across global projects, it also means that engineers are now often seen as interchangeable resources rather than the technical specialists that they are. Unfortunately, while useful, sometimes the more you standardise the job, the easier it becomes to justify a fixed, non-negotiable rate.

This means that the value of problem solving, creativity and system understanding has diminished, and with it the leverage to command higher rates.

Inflation outpacing rates

This is the simplest and perhaps most frustrating factor of them all. Everyone’s cost of living and business overheads, from equipment, insurance, accommodation, food and more, have all surged in recent years.

Despite these climbing costs, neither salaries nor contractor day rates have risen at the same pace globally. In real terms, unfortunately, we are all earning less now than we were ten years ago.

This is not just an automation issue, but a wider economic problem felt by millions. However, this rate stagnation in the automation sector, coupled with inflation, hits contractors especially hard because they carry more costs.

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