Coronavirus has seen freelancer and contractor confidence plummet to new lows, but industry commentators have tipped demand for independent professionals to bounce back when the UK begins its economic recovery.
Self-employment association IPSE’s latest study into the attitudes of freelancers in Q1 of this year painted a worrying picture. Due to the Coronavirus crisis, these workers’ 3-month confidence in their business dropped by more than 300% and over 100% when they were asked about the economy.
These are the lowest levels recorded since the survey began in 2014. It marks a drastic decline in confidence, which had improved following the previously historic lows resulting from Brexit uncertainty.
It’s not hard to see why independent professionals are so concerned, taking the view that the pandemic will have a prolonged negative effect.
Rates fall and spare capacity rises
A combination of decreasing rates, which fell by 8.4% in Q1, and an increase in the time spent not working on contracts, which rose from 2.6 to 3.3 weeks, have contributed to freelancers’ bleak outlook. These figures were compounded by the average predicted drop in earnings in the next 12 months, which stood at 20.1%.
Such is the despondence surrounding the economy that IR35 and government regulation relating to hiring independent professionals was not freelancers’ major worry. 82% of those surveyed said the state of the economy was the top factor lowering business confidence in Q1.
Confidence at “unimagined lows”
Inna Yordanova, Senior Researcher at IPSE, expressed her concerns that, “after budding signs of a recovery in the confidence of the freelance sector last quarter, the Coronavirus crisis has driven it to unimagined lows.”
Adding to freelancers’ woes is the lack of Coronavirus support available to the newly self-employed and those who work through personal service companies, explained Xenios Thrasyvoulou, founder and CEO of PeoplePerHour – that collaborated with IPSE on the research:
“Not enough has been done to help maintain the income of many freelancers who are either more newly self-employed and do not meet the threshold for government help, or who are limited companies. Freelancers urgently need support and reassurance from the government to keep this vital industry afloat.”
Demand predicted to increase
As worrying as the situation is, freelancers and contractors have been urged by IPSE and a leading independent expert, to remain optimistic. The report states the surge in imposed remote and online working will create new opportunities for independent professionals, as businesses who have never before made use of these practices start to experience the benefits: “Beyond the period of the next 12 months, it is likely that things may improve significantly for the freelance sector.”
IPSE is of the opinion that “a significant proportion of organisations may discover the business performance benefits of remote working and will continue to use it in the future. In the long term, we are likely to experience an increased receptiveness to outsourcing work to freelancers who are the ‘core remote workforce.’”
The self-employment body also said contractors have already reported that firms are adopting this approach, positioning them well to minimise costs and maximise efficiency. This point was expanded on by sector expert, Professor Andrew Burke, Dean of Trinity Business School, who thinks freelancers’ fortunes may improve when Coronavirus has been defeated.
“When the post COVID-19 economy restarts, many organisations that were previously sceptical about remote working may be more open to flexible work and freelancing. As many of these firms will also be struggling with their cash flow to begin with, the variable cost ‘pay as you go’ freelance workforce model will be particularly appealing.”
To read IPSE’s Freelance Confidence Index Q1 2020, please visit the IPSE website.