COVID-19 sees contractor earnings drop by 1/4 in Q2
The “devastating” financial impact of COVID-19 on the UK’s freelancer and contractor workforce has been revealed, with independent professionals on average reporting a record 25% drop in earnings in the second quarter of 2020.
These statistics were revealed in IPSE’s Freelancer Confidence Index, which cited the record 5.5 weeks out of 13 in which contractors spent not working in Q2 as the driver of this record downturn in business. In monetary terms, the fall in income, which wasn’t helped by a reported 3% drop in day-rates, saw independent workers on average earn £15,709 in Q2, down from £20,821 in Q1.
“Devastating” Q2 for freelancers and contractors
While IPSE has said not all groups of freelancers were impacted equally, with self-employed managers experiencing a 35% drop compared to technical freelancers, whose income was hit by 16%, the data is a big cause for concern, explained Inna Yordanova, the association’s Senior Researcher:
“It’s been clear for some time that the economic impact of Coronavirus has fallen particularly hard on freelancers, but in this quarter’s Confidence Index, we can measure just how much. Freelancers’ average incomes have fallen by a devastating 25% since the first quarter of the year – and for many, by even more than that.”
Lack of COVID-19 support to blame
However, such poor business performance came as “no surprise” to Xenios Thrasyvoulou, founder and CEO of PeoplePerHour, that collaborated with IPSE on the report. But the apparent plight of freelancers and contractors hasn’t been helped by the startling lack of COVID-19 support for independent workers, IPSE’s Yordanova added:
“Almost two thirds of the highly skilled freelancers covered by our Confidence Index work through limited companies and therefore could not get support through the Government’s Self-Employment Income Support Scheme. With such a financial cliff-edge and limited Government support, it is not surprising freelancers’ confidence in their businesses over the next 12 months is drastically low – or that so many are leaving self-employment.”
Confidence remains worryingly low
Flailing contractor confidence has seen 61% of contractors take the view that their day rates will continue to fall over the next 12 months, by an average of 11%. It should be noted these figures are slightly less pessimistic than Q1, when a 20% fall was predicted. But even so, and despite this marginal improvement, confidence freelancers and contractors have in their own business sits at the second-lowest score since IPSE began the study in 2014. Similarly, economic confidence was said to have made gains but “remained deep in negative territory.”
It therefore comes as no surprise that IPSE – that recently criticised the Government for the record fall in UK self-employment – urged Westminster to improve the COVID-19 support available to independent workers:
“Freelancers are a vital and extremely productive part of the workforce who have historically always been essential to recovery from economic depressions. If they are to play this crucial role, however, the Government must make sure that in the event of a second wave, all freelancers have the support they need. Otherwise, going through another full lockdown and the resultant slump in work and income could be utterly devastating for them.”