Day rates increasing for freelancers

Wednesday 23 July 2014

There is industry consensus that the pay rates of the self-employed are growing, with the PCG being the latest organisation to add it's findings to the growing body of evidence suggesting rising pay.

The Freelance Confidence Index revealed that at a time when permanent workers are experiencing wage stagnation, day rates for the self-employed are rising.

Indeed, contractors have been reporting growing pay packets for some time, with the latest 'Report on Jobs' from the Recruitment and Employment Confederation and KPMG showing that hourly pay rates have increased at the sharpest rate since November 2007.

Georgios Nikolaidis, economic policy adviser at the PCG, said: "While pay in traditional employment continues to stagnate, a widening skills shortage in freelancer-rich industries has driven strong demand for independent professionals. Businesses are increasingly utilising highly specialised freelancers to cover for skills unavailable in-house and this trend is expected to continue in the months to come."

The Freelance Confidence Index showed that the average length of time a freelancer is out of a contract is now just under two and a half weeks, as of the second quarter of the year.

Contract availability for the self-employed is also increasing, with almost a third of freelancers seeing an increase during the last quarter.

It is perhaps unsurprising that the self-employed are now more optimistic when looking forward for the next twelve months, rather than the next three months. The PCG claims freelancers are also more optimistic about the economy.

However, conditions vary across the country and the majority of opportunities are located in London and the south-east. Indeed, half of all work undertaken by freelancers is taking place in these locations.

Nonetheless, demand for the self-employed is only expected to increase. "We have seen almost half a million more people choose to go into self-employment over the last year and this rate of change is only set to continue as individuals and businesses wake up to the benefits of independent working," Mr Nikolaidis said.

Yet businesses need to beware of declining contractor availability and ensure they have policies and structures in place to compete against other organisations vying for the self-employed.

Contractor availability fell in June at the greatest rate since March 1998, while permanent staff availability also declined at a speed not seen since October 1997.

However, Bernard Brown, partner and head of business services at KPMG, claims that workers aren't swayed by pay packets alone and employees aren't loyal to their monthly paychecks.

"Once again employers seem ready to ‘splash the cash’ in what appears to be a desperate attempt to lure skilled staff from competitors.  Yet despite offering starting salaries at a rate that has not been seen during the survey’s 17 year lifetime, it is clear that candidates are not easily swayed," Mr Brown said.

This means rising rates could be in vain if they're not backed up by an attractive package, including good working conditions.

By Victoria McDonnell

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