The hidden cost: exploring the impact of the pandemic on freelancer mental health

Introduction

Introduction

Executive summary

The proportion of freelancers reporting mental health problems has risen by over 200 per cent since the start of the pandemic: from 6 per cent to 20 per cent. Over half of all freelancers (52%) also said their mental health had deteriorated during the pandemic.

Of the freelancers who reported poor mental health, nearly three out of four (71%) said this manifested itself in anxiety or depression. Over two thirds (69%) said they had also experienced an increase in negative thoughts, while over three quarters (77%) said they had reduced energy levels and 71 per cent said they had had difficulty sleeping. This translates to one in seven (14%) of all freelancers experiencing depression, anxiety, trouble sleeping and/or an increase in negative thoughts.

The impact of this deterioration in mental health often seems to run into freelancers’ work, too. Of those freelancers who reported poor mental health, three out of five (61%) said they had struggled to concentrate on work, 60 per cent said they had experienced reduced productivity and one in seven (14%) even reported having to delay or cancel projects.

The decline in freelancers’ mental health seems to be largely driven by the financial impact of the pandemic on their businesses. Three out of five freelancers (60%) said the pandemic had had a negative impact on their businesses. It seems likely lack of government support for certain groups may have been a factor as well since more limited company directors (who were excluded from the SEISS grant scheme) reported a deterioration in their mental health than sole traders: 62 per cent compared to 54 per cent respectively.

Freelancers reported a range of different methods they had used to tackle deteriorating mental health. The top strategies freelancers reported were exercising outdoors or at home (65%), adopting a healthy diet (48%) and trying to get enough sleep (46%). Freelancers also spent time on hobbies and entertainment (46%), shared thoughts and feelings with others (27%) and socialised with friends and family (23%) to boost their mental health.

As well as urging more freelancers to look to these methods to repair their mental health, IPSE has devised four recommendations for government to tackle the mental health crisis among freelancers:

1. Make Covid support for the self-employed flexible and fair as we emerge from lockdown.

2. Provide tailored mental health support and guidance for freelancers

3. Promote co-working spaces and extend the business rate relief that exists for small businesses to workhubs

4. Encourage clients to invest in and support freelancers’ mental health

Introduction

There has been a clear increase in general mental health problems over the last thirty years. The amount of people experiencing common mental health problems rose by 20 per cent between 1993 and 2014.1 According to data from Mind, approximately one in four adults in the UK experience a mental health problem each year, while one in six report experiencing a common mental health problem (such as anxiety and depression) in any given week.2

The onset of the pandemic has only exacerbated this, and the Centre for Mental Health has predicted that up to 10 million people in England may need support for their mental health because of the pandemic.3

IPSE’s own research in July 2020 revealed that the number of freelancers reporting poor or very poor mental health rose by 349 per cent compared to before the pandemic.4 IPSE's Confidence Index also showed that freelancers had less work through 2020 than ever before and reported the lowest quarterly earnings on record.5  Even before the pandemic, freelancers were statistically more likely to suffer from isolation and loneliness than their employee counterparts. In fact, nearly two-thirds (64%) of freelancers said they regularly felt lonely due to their work, compared to 29 per cent of office-based employees.6

Beyond the tragic physical impact of the pandemic, there has also been a disproportionate negative financial impact on the freelance sector. The combination of these and the circumstances of lockdown have led to a significant impact on freelancers' mental health. 

This report seeks to understand the impact of the coronavirus pandemic on the self-employed sector, how their mental health has been affected and in turn the impact this has had on their lives and businesses. It also looks to identify some of the things that are helping freelancers to maintain positive mental health and understand the developments that are increasing their confidence in the future of their businesses.

 

Coronavirus pandemic

The impact of the coronavirus pandemic

The coronavirus pandemic has had a devasting impact on freelancers’ businesses. We also know from previous IPSE research that freelancers have reported less work, less income and higher levels of stress as a result of the pandemic.And whilst some groups have received government support through the Self-Employed Income Support Scheme (SEISS) and other schemes, many have been left with little or no support: including those new to self-employment, limited company directors and those earning over the £50,000 threshold.

 

Three-fifths of freelancers (60%) told us the coronavirus pandemic has had a negative impact on their freelance businesses. For those operating as limited company directors this rises to 62 per cent - compared to 54 per cent of sole traders. Interestingly, male freelancers were also more likely to report that the pandemic has had a negative impact on their businesses (62%) compared to female freelancers (55%).

Impact of coronavirus pandemic  

This negative impact of the pandemic was felt in a range of different ways across the sector, with 44 per cent stating that they had experienced periods of no business activity, 37 per cent seeing a reduction in overall workload and a third (33%) reporting a reduction in the number of clients. This backs up previous IPSE research that revealed that average spare capacity (the number of weeks without work per quarter) increased from 3.3 weeks per quarter before the pandemic to 5.5 weeks in Q2 2020, during the first wave.8

One in five (20%) also experienced higher competition from other freelancers for projects, while over one in four (27%) were forced to reduce day rates or fees to remain competitive. There were also one in ten (11%) who reported they had struggled to cover business costs as a result of the pandemic.

The reduction in workload and competition from other freelancers unsurprisingly had a financial impact on the sector, with previous IPSE research showing a 25 per cent drop in quarterly earnings in Q2 2020, at the height of the first wave of the pandemic.9

Interestingly, seven per cent of freelancers revealed that they had expanded their business into other areas in order to try and mitigate the negative effects of the pandemic.

Graph 1: Which of the following, if any, have you and your freelance business experienced as a result of the coronavirus pandemic over the last 12 months?

Note: Percentages do not add up to 100% because respondents were able to select multiple responses

Despite the far-ranging negative impact of the pandemic on the sector, 19 per cent of freelancers actually indicated that the pandemic had had a positive impact on their businesses. One explanation for this is that these freelancers may work in sectors that were largely unaffected by government restrictions or that they were able to adapt their businesses to mitigate the negative effects of the pandemic.

Mental health

Mental health of the self-employed

We know from research by the World Health Organisation that one key factor that can trigger mental health conditions is a reduction in earnings.10 It therefore seems likely that the reduction in freelancers' earnings caused by the pandemic could lead to a deterioration in their mental health. 

IPSE research conducted in July 2020 revealed a significant drop in the proportion of freelancers reporting positive mental health since the beginning of the pandemic. The research showed that prior to the pandemic, 68 per cent of respondents reported that their mental health was either good or excellent. By July 2020 - after the onset of the pandemic and the damage to freelancers' businesses - this had fallen to 39 per cent.11 Nine months on, our latest research shows that 44 per cent of freelancers have good or excellent mental health. This shows a small increase in the number of freelancers with good mental health, but the fact that it remains significantly below pre-pandemic levels suggests long-term damage. 

 

 

Perhaps more concerning are the levels of poor mental health reported by the sector. Prior to the pandemic, only six per cent of freelancers reported that their mental health was poor or very poor. In July 2020, this figure rose to 26 per cent: a 349 per cent increase. Now, in March 2021 when the research was conducted, our most recent findings reveal that one in five (20%) freelancers continue to report that their current mental health is either poor or very poor.

Current levels of mental health 

 

 

More than half (52%) of freelancers also reported that their mental health has deteriorated over the past year. Worryingly, 13 per cent of freelancers reported that their mental health has significantly deteriorated, once again underlining the devastating impact of the pandemic on the mental health of some freelancers. This is in contrast to 31 per cent who reported no change over the last 12 months and 15 per cent who said that their mental health has actually slightly or significantly improved.

Change in mental health over last 12 months 

 

Looking at various demographic groups reveals some concerning differences. Of those who had been in self-employment for less than five years, 28 per cent reported that their current mental health was poor or very poor. As we know that mental health issues can be triggered by financial issues, one explanation for this could be that those newer to self-employment were originally ineligible for the government SEISS grants.

When looking at gender, we know that in July 2020, female freelancers were more likely to report poor or very poor mental health compared to males (33% compared to 22%).12  This is in line with research that shows that women are more likely than men to report a common mental health problem.13 However, the most recent findings show that in March 2021, male and female freelancers reported similar levels of poor mental health (22% of female freelancers and 19% of male freelancers). Interestingly this indicates that female freelancers have seen a significant reduction in poor mental health since July 2020 whereas men have remained largely stable.

Freelancers in the 40-59 age group were more likely to report a deterioration in their mental health over the last 12 months with 56 per stating that it had slightly or significantly deteriorated. This is significantly higher than those aged 60 and above (45%) and those under 40 (47%).

There were also significant differences depending on freelance business structure. Those operating through limited companies were more likely to report a deterioration in their mental health over the last 12 months compared to those operating as sole traders (54% compared to 46% respectively). Once again, this could be linked to a lack of government support as limited company directors were not eligible for the SEISS grant and many were left with little or no financial support throughout the pandemic.

Poor mental health

The impact of poor mental health

Mental health affects all aspects of people’s lives including physical health, home life and work life to mention a few.

Looking at the experiences of those who reported poor mental health reveals that, in the last 12 months, over three quarters (77%) had experienced reduced energy levels and 71 per cent had trouble sleeping as a result. Worryingly, for 71 per cent of those reporting poor mental health, this translated into depression and anxiety and almost 70 per cent (69%) experienced an increase in negative thoughts. An additional 29 per cent also reported that they had suffered physical health problems as a result of poor mental health.

Concerningly, 60 per cent had experienced feelings of inadequacy or failure, or felt an overall lack of confidence while 57 per cent had lost interest in activities that were once enjoyable.

For many, poor mental health also had a negative impact on work-related aspects of their lives. Notably, three fifths reported that they felt unable to concentrate on work (61%) or reported reduced productivity (60%). One in seven freelancers with poor mental health (14%) also revealed that they had to delay or cancel projects as a result.

In general, there were very few demographic differences in the impacts of poor mental health on individuals, although there were some interesting differences between genders.  Most notably, male freelancers were significantly more likely to suffer from an increase in negative thoughts (71%) compared to female freelancers (61%). On the contrary, female freelancers were more likely to report feelings of inadequacy or failure (74%) or reduced productivity (71%) compared to male freelancers (54% and 57% respectively). This backs up research prior to the pandemic that revealed that women were significantly more likely to report feelings of inadequacy or failure compared to men.14

Graph 2: Which of the following, if any, have you experienced as a result of poor mental health over the last 12 months?

Note: Percentages do not add up to 100% because respondents were able to select multiple response

Taking care

Taking care of mental health

In order to tackle declining mental health in the freelance community on a large scale, it is important to understand what measures freelancers themselves have adopted to take care of their mental health over the last 12 months. 

The research revealed that the key things freelancers have done to maintain positive mental health include exercising outdoors or at home (65%), adopting a healthy diet (48%) and trying to get enough sleep (46%). These are all in line with NHS recommendations, which state that having a healthy diet, getting regular sleep, communicating with friends and family and exercising where possible can help those struggling with mental health.15

Other measures freelancers adopted to manage their mental health included spending time on hobbies and entertainment (46%), sharing thoughts and feelings with others (27%) and socialising with friends and family (23%).

Taking time off work (26%), taking time to plan workloads (24%) and networking with others (20%) were also strategies employed by over a fifth of freelancers to encourage positive mental health. However, although taking time off work can have a positive impact on freelancers’ mental health, we know from previous research that freelancers find it hard to take time off work, and 78 per cent say that when they do, they struggle to switch off entirely.16

Collaboration also played a role in supporting positive mental health: 14 per cent of freelancers sought to collaborate with other freelancers, while nine per cent had joined online groups or communities of freelancers for support in the last 12 months.

Interestingly, almost a fifth (19%) practiced mindfulness or meditation while one in ten (11%) directly sought access to resources about mental health and wellbeing to help maintain positive mental health.

Looking at age differences, exercising outdoors or at home was more popular for those aged over 50 (67%) compared to those under 50 (61%). There were also some differences across genders: female freelancers were more likely than their male counterparts to share their thoughts and feelings with others and also spend time on hobbies and entertainment (41% compared to 24% and 54% compared to 44% respectively).

Sole traders were more able to prioritise getting enough sleep in order to maintain positive mental health compared to company directors (54% compared to 45%). Similarly, sole traders were also more likely to spend time on hobbies and entertainment (56%) than limited company directors (43%).

Graph 3: Which of the following measures, if any, have you adopted to take care of your mental health over the last 12 months

Note: Percentages do not add up to 100% because respondents were able to select multiple response

Confidence in the future

Growing confidence amid positive developments

In order to understand how freelancers feel about the future, the research asked about the impact of a range of government announcements on freelancers’ confidence in the future of their businesses. This included government announcements about the roadmap to ease restrictions, the vaccine roll-out and further announcements on financial support for the self-employed.

The roll-out of the Covid-19 vaccination programme and continued coverage of its success was the factor that had the most positive impact on freelancers. In fact, almost two thirds (65%) stated that this had a positive impact on their confidence in the future of their business. Many see the vaccine roll-out as the end to the coronavirus pandemic and a return to a more normal life. This closely aligns to other recent research which found that it is the vaccine roll-out in particular that has driven business confidence to its highest point in a year.17 Interestingly however, men (67%) were more likely than women (58%) to state that the vaccine roll-out had had a positive impact on their confidence.

The announcement of the government’s roadmap out of restrictions was the second factor most likely to have a positive impact on freelancers' confidence in their business, with 44 per cent agreeing.

For a quarter (24%) of sole traders, the announcement of a fifth round of SEISS had a positive impact on their confidence for the future of their freelance business. However, with the newly self-employed (those filling tax returns since 2018/19 and 2019/20) now being included in this fifth round of SEISS we could have expected a more positive response. This suggests that SEISS may not have provided the level of support needed for many sole traders.

For one in five freelancers (20%), the freezing of national insurance contributions had a positive impact on confidence in their business, representing the third factor most likely to have a positive impact on freelancers’ business confidence.

Only 17 per cent of limited company directors reported that the extension of the furlough scheme until September 2021 had a positive impact on their confidence and a significant 77 per cent reported that it had no impact. The government argued that although limited company directors could not access the Self-Employment Income Support Scheme (SEISS), they could access the furlough scheme. However, the furlough scheme is based on salary and the majority of limited company directors only pay themselves a small salary, taking most of their income from dividends, therefore the furlough scheme was not a viable option for most limited company directors. 

Conclusion and recommendations

Conclusion and recommendations

Overall, it is clear that freelancers’ mental health continues to suffer from the impact of the pandemic. 60 per cent of freelancers said the pandemic had a negative impact on their business, and for over half (52%), this translated into a deterioration in their mental health over the last 12 months. It is therefore extremely concerning that one in five freelancers continue to report that their mental health is currently poor or very poor. 

Lockdown restrictions clearly also had a significant impact on freelancers' businesses, with 44 per cent saying they experienced periods of no business activity and 37 saying they had seen a reduction in the number of clients. We can also see that certain groups - notably limited company directors - have experienced a greater deterioration in their mental health because they had to navigate the impact of the pandemic with little to no government support. 

In order to manage their mental health, most freelancers appear to be largely following NHS guidelines on exercising outdoors (65%), maintaining a healthy diet (48%) and getting enough sleep (46%). However, only one in ten (11%) reported that they had directly accessed resources about mental health and wellbeing.

Looking to the future, the success of the vaccine roll-out (65%) and the government announcement of the roadmap out of restrictions (44%) have both been cited by freelancers as improving confidence in the future of their freelance business. However, it remains to be seen whether these positive developments will directly translate into improved mental health for freelancers as the UK begins to open up and restrictions are lifted.

Policy recommendations

1. Make Covid support for the self-employed flexible and fair as we emerge from lockdown.

The SEISS has provided vital support to over 2.6 million self-employed people, with the total amount claimed for the first three grants standing at £19.9 billion, but many have fallen through the gaps.18 As we emerge from the third lockdown and the UK economy begins to re-open, it is vital people are supported through the coming months. It’s welcome that the government has announced a fourth and fifth round of SEISS and extended this to the newly self-employed. However, there are still deep structural problems with the scheme, which the government must urgently address. Government should make self-employment support fairer by expanding support to those groups who have fallen through the gaps.

2. Provide tailored mental health support and guidance for freelancers

A lot of advice, guidance and support exists around mental health, however many freelancers face unique challenges that their employed colleagues don’t have. For example, having to manage irregular income, finding work on a regular basis, and not having access to statutory benefits or HR support. Any information and support around these areas should also be widely advertised and easy to access: our data shows that despite 20 per cent suffering from poor mental health, only 11 per cent had accessed resources about mental health and wellbeing.

There is a gap in the market for those who don’t have an employer or business network to turn to for support and advice. IPSE is keen to develop a mental health advice hub for freelancers, with tailored information and resources for the self-employed and the challenges they face. We can act as a central point of contact to signpost this, and we will be calling upon mental health charities and government to work with us to develop this resource.

3. Promote co-working spaces and extend the business rate relief that exists for small businesses to workhubs

One in five freelancers stated that networking with others helps them maintain their mental health and one in seven (14%) cited that collaborating with other freelancers can also help. Previous research has shown that co-working spaces can play a significant part in combating isolation and loneliness. This can also lead to increased co-operation among self-employed people and encourage the sharing of ideas and resources.

In a post-Covid environment, once workers are confident they can return to offices and these physical premises have prepared appropriate cleaning and distancing measures, the government should promote co-working opportunities and explore ways to incentivise the establishment of new spaces for this purpose. For example, the business rate relief that already exists for small businesses should be extended to include workhubs.

4. Encourage clients to invest and adhere to freelancers’ mental health

It is not only government that has a role to play in enabling a positive environment for freelancers – clients and hirers do too. Clients, in both the public and private sectors, can also help support the freelancers that they engage. IPSE is keen to work with companies and organisations that engage flexible workers, and we have set out a checklist of simple criteria to ensure that the freelancers they use are valued and treated fairly in a way that would support their mental health.

IPSE believes clients should:

  • Make sure that the freelancers that they take on have access to the networks and communication channels they need to work effectively on and off site
  • Ensure that freelancers feel safe working on site and can work remotely if they request to do so and if appropriate
  • Communicate regularly with the freelancers they engage with and provide timely feedback
  • Ensure that they pay their freelancers in a timely and transparent manner.

 

Appendix

Appendix

Methodology

This report is based on the results of an online survey conducted between 15 and 29 March 2021. The respondents were a sample of 622 freelancers working across a range of occupation in the top three highly skilled Standard Occupational Categories (SOC 1 -3).

The survey composition of respondents was: 24 per cent female and 74 per cent male with an average age of 48. Respondents have been freelancing for an average of 12.2 years and are highly educated – 34 per cent have a highest qualification at the postgraduate degree level while 51 per cent have a highest qualification at the undergraduate degree level.

References

1 https://www.mind.org.uk/information-support/types-of-mental-health-problems/statistics-and-facts-about-mental-health/how-common-are-mental-health-problems/ Accessed 24/03/2021

2 https://www.mind.org.uk/information-support/types-of-mental-health-problems/statistics-and-facts-about-mental-health/how-common-are-mental-health-problems/ Accessed 24/03/2021

3 Centre for Mental Health, Covid-19 and the nation’s mental health, October 2020

4 IPSE, The impact of the coronavirus crisis on freelancers’ mental health, July 2020

5 IPSE, Confidence Index Q4 2020, January 2021

6 The Leadership Factor, The Freelancer Loneliness Survey, 2020

7 IPSE, Confidence Index Q4 2020, January 2021

8 IPSE, Confidence Index Q2 2020, July 2021

9 IPSE, Confidence Index Q2 2020, July 2021

10 WHO, World Mental Health surveys, August 2010

11 IPSE, The impact of the coronavirus crisis on freelancers’ mental health, July 2020

12 IPSE, The impact of the coronavirus crisis on freelancers’ mental health, July 2020

13 Mental Health Foundation, Mental health statistics: men and women, 2016

14 IPSE, Women in self-employment, March 2020

15 NHS Trust, Sleep, A healthy diet and regular exercise among the simple self-care steps to good mental health, November 2020

16 IPSE, Taking time off as a freelancer, Aug 2019

17 Lloyds Banking Group, Lloyds Business Barometer, March 2021

18 House of Commons Library, Coronavirus business support schemes: Statistics, March 2021

Acknowledgements

This report was written by Joshua Toovey, Research and Policy Officer and Chloé Jepps, Head of Research at IPSE. 

 

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