Despite the tough economic climate, more than half of IT chiefs expect to see salaries for permanent IT staff increase over the next year, according to a survey by recruitment group Rethink Recruitment.

None of the respondents predicted a fall in salaries for permanent staff, while 45 per cent expect no change and 55 per cent believe pay rates will rise. On the contract side, 22 per cent of CIOs expect contractors’ rates to rise, compared with 5 per cent who predict a fall.

The survey follows recent news that IT staff are turning down permanent jobs in favour of higher-paid contract work. This could explain why IT directors are now becoming aware that they need to raise salaries for permanent staff to counter the preference for temporary positions.

Fifty-eight per cent of respondents in the Rethink survey also said they planned to increase IT projects over the next 12 months, highlighting that the credit crunch is doing little to damage IT directors’ confidence.

“IT directors are reasonably confident about the outlook over the next 12 months, despite lingering economic uncertainty,” said Michael Bennett, director at ReThink Recruitment. “IT departments savaged headcounts after the dot-com and Y2K booms, but we appear to be a long way from a repeat of that scenario. Since the market collapsed in 2001 and 2002, IT directors have been much more restrained in their hiring, so IT departments do not have a skills surplus.”

Almost three-quarters of respondents voiced concern about attracting high calibre candidates, and 81 per cent were concerned about retaining key personnel over the next year.

“There appears to be no end of the candidate market in sight, with skills acquisition and retention still a pressing concern for IT directors,” said Bennett. “We are still seeing acute shortages of candidates with .NET proficiency, for example, and project management experience remains highly sought-after. Normally, in a downturn, you would expect to see IT departments shedding staff and utilising greater numbers of contractors. The focus on increasing permanent headcounts is a good barometer of robust demand over the longer term.”