PCG: More contracts and better rates for freelancers

Tuesday 4 February 2014

Conditions in the labour market will give umbrella and limited company contractors access to more opportunities and better rates, according to the Professional Contractors Group (PCG).

The 'Economic Outlook: The Freelancer's Perspective' report revealed that as the economy strengthens and the skills shortage rumbles on, freelancers will prove to be the victors.

Georgios Nikolaidis, PCG’s Economic Policy Adviser, said: "Rapid improvements in the labour market and prevailing skills shortages in sectors dominated by independent professionals could mean more contracts and better rates."

Indeed, as businesses set their sights on growth and try to capitalise on increasing domestic demand, unemployment fell to 7.1 per cent for September to November 2013, easing towards the seven per cent target set by the Bank of England.

Self-employment has increased every single year too, with the exception of 2007-2008 when the crisis hit. Per annum, the self-employed population grow by 2.2 per cent.

According to the PCG, this correlates with their figures showing a 63 per cent rise in freelancing in the UK between 2004 and 2013.

"This illustrates the resilience of self-employment and freelancing to economic boom and bust cycles," according to the report.

"With permanent placements seeing their strongest rise since March 2010, one would expect self-employed workers to transition to full-time employment," it continued. "By contrast, it seems that this new way of working is persistent rather than a one-off reaction to the financial crisis."

However, this is not to say there aren't challenges. Mr Nikolaidis claims policy-makers can't allow themselves to become complacent. The economy isn't out of the woods yet and officials must address business investment problems, poor balance of trade and "stagnating productivity growth", he explained.

Success will ultimately depend on how the government tackles barriers to recovery. The Bank of England's monetary policy decisions will also have an effect and there should be considerable caution taken over this.

Meanwhile, until productivity improves, wage increases are likely to remain minimal, effecting contractor rates too.

Labour productivity indicators show output per hour fell by 0.3 per cent between Q2 and Q3 of 2013. The PCG claims this indicates that the UK is still unable to regain the levels it enjoyed pre-crisis.

Nevertheless, evidence suggests that freelancing is a lifestyle choice and with conditions broadly strengthening, more and more people are likely to enter the contracting sector.

A strong demand for high-skilled workers, coupled with poor availability, is causing rates to rise and last month saw expansion continue for the 11th consecutive month.

Indeed, according to the REC, businesses are even relying on agency workers to cover short-term leave and meet demand peaks.

Mr Nikolaidis claims that while there is still risk in the market that cannot be ignored, broadly there is positive sentiment which will help to drive growth in the near future. This will help to erode the factors that act as a barrier to full recovery.

"While these caveats are important and need to be addressed, overarching positive sentiment and rising business confidence should propel growth in the near future," he said.

By Victoria McDonnell

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