IPSE research: “Remarkable recovery” in freelance earnings and confidence to pre-pandemic levels

New research by IPSE (the Association of Independent Professionals and the Self-Employed) and PeoplePerHour shows freelancers’ earnings and confidence in the economy saw a “remarkable recovery” to pre-pandemic levels in the first quarter of 2021.

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In Q1 2021, freelancers’ average quarterly earnings stood at £20,778, 20 per cent up from £17,283 at the end of 2020. The rise is due to an increase in both their day rates and the amount of work they did at the start of this year. Freelancers’ average spare capacity (the number of weeks they go each quarter without work) dropped from 4.3 weeks to 3.7 weeks. Although this is still not quite back to pre-pandemic levels (3.3 weeks in Q1 2020), on average, freelancers compensated by raising their day rates (£445 on average – the highest since Q3 2019).

Freelancers’ confidence in the UK economy also dramatically rose both for the short- and long-term. Short-term (3-month) confidence increased from -27.8 to -4.3, which is the highest it has reached since Q4 2015, before the EU referendum. Long-term (12-month) economic confidence rose from -27.7 to -0.2 – also the highest since Q4 2015.

The key metric that has not significantly recovered is freelancers’ confidence in the performance of their own businesses. Freelancers’ three-month confidence in their businesses dropped from -11.9 to -13.9, while their 12-month confidence remained stable at -15.6. This is the first time since 2014 that freelancers have had less confidence in their business than the economy. This seems to be driven by the changes to IR35 taxation and their impact on hiring freelancers with ‘Government regulation related to hiring freelancers’ and ‘Government tax policy’ cited as the two main factors negatively affecting their business – above the pandemic.

Andy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed), said: “The roadmap to opening up the UK has driven a remarkable recovery in freelancers’ earnings and also their confidence in the economy. Economic confidence among freelancers is in fact now at its highest level since before Brexit. After a dark year in which they were disproportionally 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. Above all, the recent changes to IR35 are clearly damaging freelancers’ confidence in the future of their businesses – not unreasonably as they see the chaos now running through the contractor hiring market. In fact, this is the first time since IPSE’s Confidence Index began in 2014 that freelancers have had less confidence in their businesses than in the economy. 

“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. 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.”

NOTES TO EDITORS

For the full report, contact the IPSE press office

IPSE, the Association of Independent Professionals and the Self-Employed, is the only dedicated representative body for the UK’s self-employed community, including freelancers, contractors, consultants and independent professionals.

PeoplePerHour is the UK’s leading freelance marketplace. Founded in 2007 the site boasts over 2m users across 150+ countries, and has paid out in excess of £100m to freelancers since. Since its inception PeoplePerHour has become an invaluable resource for small businesses in the UK and outside, allowing them to hire expert talent as and when needed, 'on-demand' thereby staying lean and flexible while they grow. The company's mission is to empower people worldwide to live their work dream, building their business from the ground up and becoming financially and professionally independent.

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IPSE Press Office: 0203 053 0606/07508 122637
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IPSE - the Association of Independent Professionals and the Self-Employed

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