Are Engineering and Trade Temps actually costing your business more?

Many businesses assume that hiring contractors or temporary staff is significantly more expensive than employing permanent workers. But is this perception accurate?

In this article, we’ll break down the true costs of hiring permanent employees and explore the benefits of strategically utilising highly skilled temporary contractors in an evolving business landscape.

The hidden costs of permanent employees

Before dismissing contractors as too expensive, consider the fixed costs associated with permanent employees:

1. ACC (Accident Compensation Corporation)

Employers must contribute to ACC levies, which vary depending on industry risk. These can range from $0.30 to $2.00 per $100 of an employee’s salary. High-risk industries such as construction or manufacturing typically incur higher ACC costs.

2. Kiwisaver Contributions

Employers are required to contribute a minimum of 3% of an employee’s salary to their Kiwisaver account. For an employee earning $90,000 per annum, this equates to an additional $2,700 each year.

3. Training and Development

Investing in employee growth is essential but costly. Skilled engineering temps, however, arrive with existing expertise, reducing the need for extensive training. Industry benchmarks estimate training expenses between 1% and 5% of an employee’s salary—ranging from $900 to $4,500 per year for a $90,000 salary.

4. Fringe Benefit Tax (FBT)

Providing perks to employees, such as company vehicles or subsidised benefits, can result in FBT liabilities. Temporary contractors are not subject to this tax, allowing businesses to offer perks without incurring additional financial obligations.

5. Employee Benefits

Permanent staff often receive benefits like vehicles, health insurance and paid leave, which, while important for retention, add significantly to employment costs. Contractors, on the other hand, manage their own benefits, offering businesses more budget predictability.

6. Insurance Costs

Employers must cover professional indemnity and public liability insurance for permanent staff. Contractors typically have their own insurance, reducing this burden.

7. Overheads

Beyond salaries, permanent employees incur additional costs, including office space, equipment, and administrative support.

8. Productivity and Leave

With temporary staff, businesses pay only for hours worked—reducing business costs for annual leave, sick leave, and public holidays.

Grow your labour capability fast

If you need staff quickly – whether it’s for peak production, staff leave or to make a planned project happen on time, skilled temps are the perfect solution. With a committed contracting pool of skilled engineering and trade contractors Techtrade can have the right staff on your doorstep within days. We are driven to provide you with a quick and effective skilled labour solution.

The bottom line: weighing the costs

While contractors and temporary staff may initially seem more costly due to higher hourly rates, strategically utilising temps can provide significant cost savings compared to the long-term commitment and overhead associated with permanent employees. These overhead expenses typically represent between 15% to 20% of an employee’s salary, directly impacting your profitability. Employing temporary staff during periods of business growth or seasonal fluctuations offers financial flexibility, allowing you to scale labour costs up or down as necessary.

At Techtrade, we recognise the immense value that permanent employees bring—stability, commitment, intellectual property retention, and team cohesion. However, understanding the strategic advantages of temporary and permanent staff allows businesses to optimise their workforce. Skilled temporary hires offer immediate scalability without long-term financial commitments, reducing overall employment overheads.

So, the next time you consider hiring a temp contractor, remember: the true cost isn’t just about the hourly rate—it’s about the total value they bring to your business.

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Looking for specialist engineering or trade temps?

Techtrade has a strong team of engineering and trade temps – ranging from machine builders, mechanical and maintenance fitters to fabricator welders, industrial electricians and riggers. You can view profiles of some of our top available temp talent here.

Find out more about Techtrade here, or to discuss how a temp solution would work for your business give Mike a call on 021 991 186.