More turn to freelancing and self-employment

A new independent report showing that the number of freelancers in the UK has grown by 12 per cent was endorsed by official Government figures that reveal more and more people are opting to become self-employed.

The report, carried out by Kingston University, shows that UK businesses are hiring more independent professionals to complete specialist project work, with a third using freelancers on a weekly basis and 41 per cent planning to engage in the coming year.

Reflecting this growing trend the Government's latest employment figures published by the Office for National Statistics highlighted a rise in self-employment coupled with unemployment falling by 65,000. The double helping of good news is further proof that freelancing has become a vital component of the UK's economic recovery.

John Brazier, Managing Director of trade group the PCG, who commissioned the report, said: "The findings from the Kingston Report prove that freelancing is now one of the cornerstones of the UK economy. This data is especially important now as it shows that in tough economic conditions, the ability to be flexible is critical – both for businesses and individuals looking for work.

"Flexible workers such as contractors and freelancers now account for six per cent of the UK's workforce, making it a significant constituency within the UK workforce deserving of a voice at policymaking and governmental levels."

Summary

The report says that freelance workers are an important, but hidden, part of the small business population. It tries to present quantitative data on freelancer numbers and their personal and work characteristics, but acknowledges that no official, or widely accepted, definition of freelance status exists in the UK. The term 'freelance' is not a legal concept but, rather, a customary one used to describe particular kinds of worker or work relationships in particular occupational or industry settings. The report defines freelancers as genuine business owners without employees working in a range of creative, managerial, professional, scientific and technical occupations.

Among the findings of the report are:

• Size: Labour Force Survey (LFS) data suggest there are an estimated 1.56 million freelance workers in the UK. This figure comprises 1.35 million working freelance in main jobs and a further 207,000 working freelance in second jobs. Freelance workers constitute 5-6 per cent of all in employment. Since 2008, freelancer numbers have increased from 1.39 million to 1.56 million, a rise of 12 per cent. This marked increase reflects changing labour market conditions due primarily to the economic and financial crisis which led to increased unemployment. The report suggests that freelance working is a 'high-churn' activity, with high levels of entry and exit.
  
• Occupational profile: Freelance workers are unevenly distributed across occupations. Associate professional and technical occupations include 630,000 freelance workers (40 per cent of the freelance workforce), including writers, artists and musicians. There are 576,000 freelance workers (37 per cent) in professional occupations and a further 352,000 (33 per cent) work in managerial occupations.
  
• Industry Profile: Freelance workers are present in all industries. They are most commonly found in 'Professional, scientific and technical activities', 'Education', 'Arts, entertainment and recreation' and 'Information and communication' industries. More than half of the entire UK freelance workforce work in these four industries.
  
• Gender: More than six in 10 freelancers are male, a higher proportion than among employees in comparable occupations. Freelance working mothers number 210,000, 13 per cent of all freelancers. The number of freelance mothers has increased 25 per cent since 2008, double the rate of increase in the freelance workforce as a whole.
  
• Age: One fifth of freelance workers are 60 years of age or older, a slightly higher proportion than in 2008.
  
• Legal Business Form: Freelance workers are much more likely to define themselves as 'working for themselves' than 'doing freelance work'.
  
• Self-Employment Duration: One in seven freelance workers report first becoming self-employed before 1990 and more than 40 per cent report becoming self employed before 2005.
  
• Contribution to business turnover: The report says that it is possible to provide a speculative estimate of the economic contribution freelance workers make to the UK economy. Businesses without employees (excluding financial intermediation) contributed an estimated £202 billion in sales during 2010, or approximately eight per cent of private sector turnover. If freelance workers contribute to turnover proportionate to their presence in the wider group of businesses without employees, their collective sales would be £88 billion. Approximately 44 per cent of businesses without employees are freelancer-owned: 1.51 million freelancers, of a wider group of 3.49 million (excluding financial intermediation). Freelancer-owned businesses might be expected to generate greater revenues than other own-account businesses, owing to the more valuable knowledge and skills exercised, suggesting a slightly higher turnover figure, perhaps £100 billion, approximately five per cent of business turnover.