Fujitsu Services has confirmed that it is asking contractors to swallow a 15 per cent pay cut because of prevailing economic conditions.

The company said about 450 staff employed by agencies would be hit, but not temporary staff or those on fixed term contracts.

Fujitsu said:

This programme is designed to realign our costs with the external market. This decision has been taken following an analysis of external market trends, which in summary established that:

* The freelance contractor market has been directly affected by the economic downturn and as a result demand for contractors in the UK has dropped and in turn so have rates of pay.

* Independent market commentators indicate that overall rates for contractors have dropped across the UK by c20%

* Most sectors have undertaken projects to rationalise the costs associated with contractor usage

* Many direct Fujitsu competitors have completed a contractor headcount and rate reduction exercise

The pay cuts come in over the next month. Fujitsu said it hoped the action would help it stay competitive and protect permanent staff.

Organisations including IBM, BP, CapGemini and Leeds City Council have taken similar action alongside, or instead of, job cuts.

The contractor who contacted us was particularly disappointed because they were just a few weeks into their contract.

Last month Fujitsu froze pay for permanent staff who were expecting April pay reviews. ®