Umbrella contractors may be better off accepting a pay cut to stay in work rather than leaving and facing a period of time with no income, according to a study.

Researchers at the University of Alcala in Spain found that most people who are unemployed for a long spell of time earn less when they finally find work again.

It was found that it was in Spain, Italy and Portugal that long term unemployment had the biggest negative impact on salary.

This follows news that one expert has said that IT contractors and others who work in the area are leading the way out of the recession.

Dan Hawes, co-founder of Graduate Recruitment Bureau, said that some sectors are recovering better than others, with financial services, investment banking and IT being ahead of the rest.