IPSE’s latest Freelancer Confidence Index, released last week, shows contractors and other freelance professionals remain gloomy about the immediate outlook, both for themselves and the wider economy. The figures reveal that the Business Confidence index, which measures contractors’ confidence in future vs current performance of their company, is languishing at -7.0, up marginally on Q3’s score, but down from 0.2 a year ago. Expectations for the wider economy are even worse; the UK Economy Confidence Index dropping to -43.3, down a whopping 14.4 points from the same point 12 months ago.
A common theme came out of the survey, across income bands freelance workers blame the government for their gloomy outlook. The top three factors cited for lowering business performance are government policy areas, Brexit, IR35 and government policy around hiring freelancers. Professor Andrew Burke of Trinity Business School, Dublin, sees positive news in this: “this could be seen as quite reassuring because it means they believe changing Government policy in these areas could have a positive effect on the performance of the UK’s freelance businesses.” Another positive is that contractors are aware that the tools for improving their business prospects are in their own hands. Respondents cited their reputation, innovation in their service offering and targeting new markets as the key tools.
The quarterly survey is produced by IPSE, a body representing freelancers, contractors and other self-employed professionals, alongside PeoplePerHour (PPH). Other results from Q4 2017’s survey show that contractors expect to see their profit margins squeezed over the coming year. Fully 81% expect their input costs to increase over the next 12 months, anticipating costs of around 10%. IPSE’s head of research, Suneeta Johal, explains that this is to be expected: “With inflation rising over the quarter it is unsurprising that freelancers also stated that they expect their business costs to rise. Ultimately, this means that freelancers expect their finances to feel squeezed throughout 2018.”
Meanwhile there is varying opinion about the trends for day rates, mainly differentiated by role. While a small majority of all freelancers expect to see rates go up, the average expected change is modest, higher-paid consultants expect rises of around 1-2%, whilst mid-level contractors are bracing themselves for a small reduction, of about half a percent. Lower paid workers are hoping for a hike in rates of an average of 10%, although the report observes that this is due to a minority of these freelancers expecting very large increases.
PPH’s founder and CEO, Xenios Thrasyvoulou, says that the expectations for reduced rates don’t tally with his customers’ experience though; PPH’s freelancers have, he says seen an increase in rates over 2017, and expect them to raise further. Mr Thrasyvoulou urges contractors to make use of one of the most valuable benefits they have, their flexibility, saying: “While there may not always be a surplus of large scale projects available to keep all self-employed professionals working at capacity, flexibility and variety are two of the key attractants of this way of working and there are always shorter projects available for those who wish to enhance their income and utilise spare capacity.”