Lorence Nye NEN2015

IPSE’s Freelancer Confidence Index

Lorence NyeEconomic Policy Adviser

IPSEAssociation of Independent Professionals and the Self Employed

Introduction to the survey• Running for a year and a half• Weighted to reflect the wider economy• Responded to by 700-1000 freelancers

IPSE conducts a quarterly confidence survey

• E.g. earnings, availability of contracts, and their future prospects • Shows future outlook for 3 months and 12 months• The year view provides the headline confidence figure

Questions cover key indicators of their business’ health

• Analysed by Prof. Burke of Trinity College to produce key data• Raw data is provided to the Bank of England• The report is shared with government departments

Key stakeholders

Key FindingsConfidence markedly down compared to Q2 2015

• Both business confidence and optimism regarding the economy have fallen• Business confidence has been driven lower by government policy e.g. tax relief changes

Earnings lower than Q2 2015• Impact of this is offset by muted inflation

Engagement has increased

New freelancers are more confident than longer term freelancers

Most freelancers are very satisfied with their work• They see freedom and work/life balance as the main benefits

Trend in confidence

• Strong macro-economic performance and low inflation supported sentiment

Confidence strengthened in H1 2015

• Confidence measures are negative for the first time

Confidence saw sharp

decline in Q3

Causes of falling confidenceMain driver behind fall is public policy, competition is a lesser concern

• In the July Budget the government proposed changes to IR35 and Travel and Subsistence tax relief

• Many freelancers said their businesses may not survive the increased costs

• Two thirds predict government’s attitude toward freelancing will have a negative impact within 12 months

• Regulation relating to hiring freelancers is their second concern

• The third concern is competition but far fewer cite this C om petition

R eg ul a tion

Gover nment a tti tude to fr eela nc i ng

33%

55%

66%

Fact ors That wi l l have a N e gative impact on performance wit hin the next 12 mont hs

Freelancer earnings• Have fluctuated this year because

of a particularly strong Q2Day rates

• Day rate fluctuation has driven similar movements in overall earnings

Quarterly earnings

• Freelancers earn about 2.5 times the amount an equivalent employee does

Compared to

employees

£478 £461

£549

£460

Day rates

Q4 2014 Q1 2015 Q2 2015 Q3 2015

£26,777

£24,186

£26,938

£24,574

Quarterlyearnings

Other measuresEngagement • Since Q4 2014 engagement had been

falling, but the most recent survey shows recovery

Inflation

• Freelancers have seen muted inflation alongside the rest of the economy

• Their future outlook shows they fear increased costs in the near future

49%

9%

42%

Business costs past 12 months

Increased Decreased Stayed the same

66%3%

31%

Business costs next 12 months

Confidence for new freelancers• New freelancers are those that have been

working independently for 0-2 years• On their business down but stronger than the

overall figure• In the economy is as low as longer term

freelancers

Confidence

• Around 60% of new freelancers believe their increasing reputation will support growth

• Nearly half of the new freelancers are optimistic about the effect of collaboration with others

• A significant proportion are already looking into new markets

Drivers

Q1 2015 Q2 2015 Q3 2015-5.00.05.0

10.015.020.025.030.035.0

30.427.7

9.813.8

19.0

-3.1

Business Confidence Macroeconomic confidence

New ma r kets

B 2B c ol l a bor a tion

R eputa tion

37%

42%

57%

Fact ors That wi l l have a pos itive impact on pe rformance wit hin the next 1 2 months

New freelancer performance• As might be expected earnings are slightly lower

than the overall freelancer figure• The trend has followed a similar pattern with

strength in Q2• Earnings for new freelancers are about 40%

lower than the overall average

Earnings

• New freelancers are only slightly less engaged than the longer tenured counterparts

• The snapshot figure for the all respondents is 86%

Engagement

83.8%

12.0%4.2%

Engagement snapshotEngaged Not Engaged by choice Not Engaged but seeking

Q1 2015 Q2 2015 Q3 2015

£253

£418 £327

Day rates

Freelancer job satisfaction

65%

31%

2% 2%

FREELANCER’S INTENTIONS

Intend to freelance for forseeable future

Intend to freelance for forseeable future but would consider working for someone else

I want to switch to working for someone else as soon as possible

Don’t know No c hoic e

C ontr ol of hour s

Wor k/l i fe ba la nc e

C ontr ol of wor k

10%

61%

69%

79%

WHY Freelancing

A large proportion of freelancers are satisfied with their jobs

• 96% of freelancers intend to continue to do so for the foreseeable future• Just 2% want to switch to standard employment in the near future• The cite control of the work they do, the hours they put in and their work life balance as the three main reasons they became freelancers• Only 10% said they had no other choice but to work as a freelancer

Key FindingsConfidence is markedly down compared to Q2 2015

• Both business confidence and optimism regarding the economy• This has been driven by government policy

Earnings are lower than in Q2 2015• Impact of this is offset by muted inflation

Engagement has increased

Upstarting freelancers are more confident than their longer tenured counterparts

Most freelancers are very satisfied with their work• They see freedom and work/life balance as the main benefits