The freelance gig economy fuels our industry

The changes in personal tax for the self-employed, announced by Phillip Hammond on Wednesday, mean many stand to lose thousands of pounds a year.

According to the 2014 Gen Y and Freelancing report, 29% of all graduates said freelancing was part of their career strategy. Since then, this number has steadily increased and now it’s estimated that freelancers make up 40% of the design and media workforce.

Freelancers might be getting the raw end of the deal, but this knock on effect isn’t an individual tax issue, it’s an industry wide one

Most of us in agencies are seeing an increase in clients who want to engage us in one-off projects, often to prove a concept before they dive in fully. The freelance economy allows us to take this approach and to be as agile and fluid as possible – because it’s what the sector requires and needs from us. Therefore, it’s somewhat jarring to see the very foundation of this (freelance workers) getting penalised.

Having a bank of talented freelancers allows us to dial our resources up and down, without having to commit to an ongoing resource that clients may not want, or, be able to pay for. It also allows us to bring in the best mix of talent for each job. In order to have an integrated approach and the best expertise for each project, you need to be able to call in this resource as and when you need it. Having everyone on your books at the same time is not only more wasteful, it’s just not commercially viable as a business.

Whether it’s an app build, a web design a VR brief, an above the line campaign, social or digital, we need the help of the best designers, tech supremoes, UX maestros, and content kings and queens. Ultimately, we want the best talent for the job, and sometimes the best talent works on a freelance basis.

Any initiative that appears to punish that talent worries me greatly. Freelancers don’t have the income guarantee of the in-house day job, or the ‘perks’ that come with it – whether that’s holiday pay, maternity or paternity leave, or pension schemes. There will be consequences to this move and I expect the first backlash will mean we see an increase in freelance day rates.

As budgets are increasingly squeezed, this new barrier adds fuel to a fire that many agencies (particularly smaller and start-up agencies) are already fighting against. On top of this, the costs trickle down, meaning brands won’t get as much bang for their buck. We need better, more innovative and savvier creative work, not creativity on a shoestring.

In an industry that is only making an average of a 6% margin, this is a recipe for disaster. If Theresa May presses on with the policy, then the added pressure on freelance budgets will ultimately limit talent and offer less value for money for clients. In the long run, everyone will suffer, not just the white van man.

Fiona Scott is the chief executive officer of customer engagement agency, PSONA.

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