Brexit is driving freelancer confidence in the economy to an all-time low – so why is there a boom in the sector?
We must do all we can to allow the self-employed to take their place as the dynamos of Britain’s post-Brexit economy, says Jordan Marshall, Policy Development Manager at IPSE.
Brexit (sorry, I’ve got to mention it). Across the UK, look at newspapers, TV and even beer mats (you know what I’m talking about), and you find two very different economic narratives. One: Britain is champing at the bit for a new golden era of free trade, heralded by evermore optimistic market reports. Two: we’re literally one leg of the way into jumping off an economic cliff. And all around us are slashed growth, crashing investment and a business exodus.
What’s interesting is that in the latest freelancer Confidence Index from IPSE (the Association of Independent Professionals and the Self-Employed) you can essentially find both. Because while freelancers have never been more worried about the economy since the Index began, in the last quarter of 2018 they also experienced a pay boom. What’s going on?
Well, in terms of economic worries, that’s quite simple. According to the Index, which is based on the responses of over 600 freelancers from a wide variety of industries and backgrounds, there are two factors most likely to have a negative impact on freelancers’ businesses. First, government fiscal policy relating to the sector (particularly the changes to IR35 coming into the private sector next year); and second, of course, Brexit turbulence.
The pay boom in the sector, however, is harder to explain. The survey found freelancers’ day rates rose by an average of 21 per cent in the final quarter of 2018. As a result, their average earnings for the quarter were £24,776 – the highest level since the third quarter of 2017. A small majority (54%) even believe their pay will keep going up in the coming year.
Freelancers themselves believe the two main factors driving their business performance are their brand and reputation, as well as their own business strategies. These are certainly important considerations, but since the Confidence Index began in 2014, freelancers have consistently named these as two of the main positive influences on their business. So, can this really be the whole story?
For that, we may need to look at the bigger picture. It’s not just in the freelance sector that businesses are getting spooked by Brexit economic uncertainty. A recent Recruitment and Employment Confederation (REC) report found that as Brexit uncertainty filters through the economy, both businesses and workers are increasingly reluctant to make long-term decisions. That means that in a lot of cases, there is work available but no workers to do it. The result is a boost in wages for workers across the board – and this effect may be particularly strong for the freelancers who step in to pick up the slack.
Uncertain times, it seems, can be a boost for freelancers and the self-employed. But IPSE’s Index also suggests this is no time to be complacent. Freelancers aren’t at all confident about their overall business performance in the coming year. In fact, their confidence in their businesses for the next 12 months dropped to -9.1 – the lowest level since the third quarter of 2017.
This is likely to reflect deepening anxieties about the economy because, while political and economic upheavals will have an impact right across the labour force, they especially affect the self-employed because of how easy it is to cancel contracts in uncertain times. If the self-employed have experienced a short-term pay boost indirectly because of the turbulence of Brexit, most indicators suggest they stand to lose out in the long-term. Freelancers are, like many others, especially concerned about the prospect of a ‘no-deal’ exit: IPSE research earlier this year found 64 per cent of them believe a ‘no-deal’ would harm their businesses.
However many narratives may be developing about the economic impact of Brexit, one thing is certain: turbulence will always harm the economy, and the self-employed – despite a temporary boost at the moment – will suffer as a result. But as one of the most dynamic and productive sectors, the self-employed will be vital for the UK economy after Brexit, and they must be protected.
To quell the uncertainty in the economy and smooth the way for the self-employed, the government should pursue a deal that supports the UK’s vital services sector, especially financial services and our creative industries. This will also mean we need a reciprocal immigration system that allows for the free movement of skilled professionals. We must do all we can to allow the self-employed to take their place as the dynamos of Britain’s post-Brexit economy.