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IPSE: Freelancers working more hours for less pay

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According to new research from the Association of Independent Professionals and the Self-Employed (IPSE), freelancers are lowering their day rates, whilst also also working more. The IPSE’s Confidence Index for Q4 2020 found that freelancers worked, on average, close to one extra week compared to Q3, while average day rates fell by £16.

The average number of weeks without work for the whole freelance sector fell from 5 to 4.3. Professional freelancers saw weeks without work fall from 4.5 to 3.8, associate professional and technical freelancers went from 5.3 weeks without work to 3.9. However, for managerial freelancers, the figure rose from 5.3 weeks to 5.7 in Q4.

The Confidence Index did find that confidence in freelancers’ business, as well as the wider economy, increased in Q4 2020. However, this was tempered by concern over taxation policy and the imminent introduction of IR35 rules for private sector companies.

IPSE Head of Research Chloe Jepps said: “The last Confidence Index of 2020 shows several concerning trends for freelancers. First and foremost, the average freelancer was working more for less. This is because, when they were more able to work before entering this renewed lockdown, they were cutting their rates to competitively scoop up as much work as possible. It is a worry that this could translate to a longer-term downward trend in freelancer day rates.”

“Concerning, too, is that unlike the rest of the sector, managerial freelancers did not see an increase in work even before this lockdown. While others cut their day rates to get as much work as possible while the going was good, for managerial freelancers, the going never got good.”

Regarding IR35, Jepps added that: “It is indicative of the damage these changes will do that, for the first time since the beginning of the pandemic, managerial and professional freelancers said that government tax policy – not coronavirus – is having the most significant negative impact on their businesses.”

“Altogether, these worrying trends are a sign that now more than ever, freelancers need better government support and protection – not the threat of tax rises and damaging structural tax changes.”