Freelance earnings and confidence in economy bounce back to pre-pandemic levels
Research by self-employment trade body, IPSE, in conjunction with freelance job platform, PeoplePerHour, has found in the first quarter of 2021, freelance earnings made a “remarkable recovery”. The study shows average quarterly earnings in Q1 were 20 per cent higher than at the end of 2020 (£20,778 compared to £17,283).
The study attributes this significant rise down to an increase in day rates and the amount of work freelancers carried out in this period.
It also found that the average spare capacity – the number of weeks freelancers can go each quarter without work – dropped from 4.3 weeks to 3.7 weeks in Q1. While this is still not back to pre-pandemic levels (3.3 weeks in Q1 2020), freelancers have mitigated this by raising their day rates – £445 on average, the highest since Q3 2019.
Confidence growing but room for improvement
According to the research, freelancers’ confidence in the UK economy has also risen for both the short and long-term. Confidence in the short-term (3 months) increased from -27.8 to -4.3, which is the highest since Q4 2015 – just before the Brexit referendum.
Confidence in the long-term (12 months) economy jumped from -27.7 to -0.2 – again the highest since Q4 2015.
Although confidence in the economy has surged, freelancers’ confidence in their own business performance has not. In fact, business confidence in the short-term dropped from -11.9 to -13.9, while in the long-run, it remained stable at -15.6.
This is the first time since 2014 that freelancers have had less confidence in their business than the economy.
Roadmap to reopening drives ‘remarkable recovery’ in freelance confidence
The report states that lacking business confidence is being driven by recently introduced IR35 reform and the impact the changes are having on the demand for freelancers and contractors.
Andy Chamberlain, Director of Policy at IPSE commented: “The roadmap to opening up the UK has driven a remarkable recovery in freelancers’ earnings and also their confidence in the economy.
“[…] After a dark year in which they were disproportionately hit by the financial impact of the pandemic, freelancers are again seeing cause to hope. Amid the optimism, however, there are also lingering causes for concern.
“Historically, the freelance sector has always been a key driver of economic recovery and it is clearly raring to go. At the same time, however, the IR35 tax change is a blight on freelancers that is undermining them at a crucial and otherwise optimistic time.
Confidence ‘testament to the resilience’ of freelancers
“We urge the government to step in, clear up the chaos left after IR35 and launch a full review and reform of self-employed taxation. It must ensure freelancers have the confidence in their way of working to take up their vital place in our workforce and drive the UK’s economic recovery.”
Xenios Thrasyvoulou, founder and CEO of PeoplePerHour added: “It’s incredibly encouraging to see that freelancers’ confidence in the economy is the highest it’s been for six years. This is a testament to the resilience of the freelance economy, and we hope to see this trend progress as the road out of lockdown continues.
“Whilst it has been an incredibly tough year for all workers, more people have turned to freelancing as a way of maintaining or increasing their income. The freelance economy is more important than ever to the UK’s overall economy, so it’s crucial that the government supports this growth.”