Value of Freelancing
Why value freelancing?
- During these uncertain times, businesses are looking for a highly skilled, flexible workforce that can provide specialist expertise at short notice. Freelancers bring flexibility, help businesses to manage risk and unlock innovation and talent. IPSE believes this is the roadmap for economic growth and the future of working patterns.
- Unfortunately, we believe that freelancers are overlooked. This vital sector of the labour market should be cherished and encouraged yet policy and lawmakers tend to focus exclusively on the traditional models of employers and employees.
- IPSE’s mission is to demonstrate the economic value of freelancing to those in power and ensure freelancing is both considered and supported in all areas of regulation and policy. To this end we undertake extensive research and have an active lobbying team. IPSE sets out to achieve: recognition of freelancing as a valid way of working, fairer taxation of freelance businesses, better regulation for freelancers and easier access to the market for freelancers.
The value of freelancing in numbers
- There are at least 1.9 million freelancers in the UK, when counting just those who work in professional and technical occupations. There has been a 36% increase in their numbers since 2009.
- Professor John Kitching of Kingston University estimates that freelancers contributed £237 billion of output to the economy.
- 3 in 5 Business leaders agree that it would be difficult for their businesses to operate without freelancers.
- 62% of Business leaders believe that working patterns are becoming more suitable to freelancers.
- 78% of the public believe that encouraging a flexible labour market is important to stimulate economic growth.
- Only 2% of freelancers would prefer to work as an employee.
- Freelancers are generally happier with their life situation than employees.
- There has been an 82% increase in the numbers of independent professionals, such as freelancers and contractors since 2000.
- Sources: 1. Kitching, J., Exploring the UK Freelance Workforce in 2015, Kingston University, Small Business Research Centre, April 2015. 2 Oxford Economics, The Economic Impact of Personal Service Companies, 2016. 3 IPSE survey data, November 2010. 4. ComRes survey data, July 2011. 5. Nye, L, Understanding Independent Professionals in the EU, 2015, June 2016
Freelancers are overlooked in policymaking
- Because policymakers tend to think in terms of ‘employers’ or ‘employees’, they can overlook or misunderstand freelancers.
- Rather than being seen as distinct from employees or employers, freelancers are affected by laws that apply to both.
- As small businesses, freelancers should not be constrained by employment legislation, nor should regulations clearly designed with large corporations in mind negatively affect them.
- Often a piece of legislation will attempt to define what constitutes a ‘genuine’ freelance business. Different laws will apply different tests, leading to confusion in the marketplace.
Who are freelancers?
- Freelancers are an extremely diverse group working across the business world, in fact, anyone working independently in a knowledge-based industry.
- There are many different names for people working in a freelance way, such as; Independent Professionals, Contractors, Portfolio workers, Consultants, Interims or Nano-businesses
- Freelancers work at all levels of a business, from the boardroom down, and they enable businesses to access skills and expertise not available in house. Freelancers are therefore vital forces for economic growth.
- Research has shown that freelancers allow businesses to reduce the risk of starting new projects, ultimately creating innovation and new employment.
- Freelancers are businesses. Most work either directly with their client companies or indirectly through agencies.
“Freelancers are the UK’s smallest and most flexible businesses. As such they are the enablers of the economy and their targeted skills allow businesses to better manage their growth”
Chris Bryce, Managing Director, IPSE
Case Study: IR35 and employment status
- IR35 is a prime example of legislation which fails to recognise freelancing as a valid way of working
- IR35 is a tax law introduced in 1999 that treats commercial fees paid to a limited company in a way similar to salary, where HMRC believes “disguised employment” to be occurring. It betrays a suspicion of freelance workers that ignores the vital economic contribution they make.
- The IR35 legislation has had a severe impact on the freelance community. There is a total lack of clarity for freelance businesses to understand whether it applies to them or not.
- It is IPSE’s core belief that the UK’s flexible labour market is unique compared to other European economies. It should be supported, promoted, and encouraged as one of the country’s main competitive advantages on the international stage. IPSE’s objective is to demonstrate the economic value of freelancing to those in power and ensure freelancing is both considered and supported in all areas of regulation and policy.
How does IPSE achieve this?
- IPSE does this with extensive lobbying activity, speaking to ministers and senior civil servants at the highest levels of Government.
- This lobbying activity is supported by comprehensive research, with expertise from senior lawyers, academics, and polling specialists.
- By quantifying and valuing the freelance marketplace IPSE are creating a business case for freelancing which provides a clear sector and voice.
- IPSE also hosts “National Freelancers Day” every year to highlight the value of freelancers to the UK economy.
Working with Industry
- IPSE works closely not just with the Government and the civil service to defend the interests of freelancers, it also works with industry.
- IPSE enjoys close relationships with major trade bodies such as the CBI and FSB. We also work very closely with the agencies that place freelancers, both via their respective trade bodies, REC and APSCo, and directly through our own affiliate programme. This enables the organisation to campaign robustly for change where freelancers are affected by bad industry practice.
- Working closely with industry bodies also allows IPSE to have greater strength when campaigning for policy change on major issues such as IR35. Sector specific issues can also be dealt with more effectively.
- For more information on the way in which we work with industry please see our newsletter or Freelancing Matters magazine for regular updates.