What’s so good about freelancing, and why do people go self-employed?

Freelancing isn’t for everyone. If you value having a regular pay cheque, paid holidays, paid time off for illness, unfair dismissal protections and an invitation to the Christmas party, it's probably not for you!

What’s the position of UK freelancers in 2023?

But despite these disadvantages, there remains a vibrant and significant minority in the UK who work independently – about 13%, writes Andy Chamberlain, director of policy at The Association of Independent Professionals and the Self-Employed.

So why are there still so many freelancers out there in the UK, and do we expect the total number of freelancers to grow?

We ask this at an important time; about a week away from chancellor Jeremy Hunt unveiling Spring Budget 2023, which may contain proposals that affect sole trader freelancing.

How many people work for themselves?

Since 2002, the UK has added around one million self-employed to its workforce. The total number of people working for themselves is now 4.3million.

Interestingly -- perhaps worryingly, that total number is down from its peak at the start of 2020, just before the pandemic hit, when it reached 5.1million.

The Office of National Statistics (ONS) – where all the figures quoted so far have come from – has never been able to clearly identify the reasons behind this precipitous drop in self-employment. But it seems some of the factors include:

• people previously mislabelling themselves as self-employed,

• the implementation of the changes to IR35, and

• self-employed-run businesses closing due to lockdowns.

There is another very interesting question about where the previously self-employed people have gone, but that is a question we’ll have to deal with at another time!

Could the number of freelancers grow again?

The current freelancer population figure of 4.3million has been relatively stable for about a year. We saw a persistent and dramatic decline in 2020 and 2021 which seemed to have ‘bottomed-out’ by the time we hit 2022.

Some of us expected freelancer numbers in the UK to start growing from there, but it hasn’t – the overall number has stayed roughly the same. Will 2023 be the same?

My prediction, for what it's worth, is that we will see modest growth over the next 12 months as the economy picks up (this assumes of course that the economy does pick up, as most forecasters suggest).

Are aspiring freelancers biding their time?

Starting a business in a cost-of-living crisis is a daunting prospect and it may well be that wannabe freelancers are biding their time and waiting for things to normalise before taking the plunge.

Last year we undertook research with YouGov into the attitudes of employees towards freelancing.

We found that that two in five (39%) have considered becoming a freelancer. It would only take a small fraction of those to act on this impulse to move the dial and increase the overall number of self-employed once again. We also asked why individuals were interested in becoming a freelancer which brings us on to the first part of this article’s headline question.

What’s freelancing’s appeal?

The research found that the main attraction of freelancing is flexibility (49%), followed by being your own boss (48%) and an improved work-life balance (48%).

What’s more, we found that over three in 10 employees believe that they could make more money as freelancers.

This chimes with what established freelancers say. In 2019, we surveyed over 2,000 freelancers again with YouGov, and asked with corresponding multiple choice answers why they do it.

The results were: more flexibility (88%), the freedom to choose where they work (83%), when they work (84%) and for improved work-life balance (73%).

It seems there is a trade-off that freelancers are willing to make, which employees are not -- more autonomy for less security.

Freelancing versus employment: pros and cons

Freelancing is inherently riskier than employment. Freelancers can never be certain of when their next contract will come, and they know that their current ‘big client’ could stop using them at any time.

If they want to go on holiday, it won’t just be the flights and accommodation they have to pay for, it very often means no money coming in at the same time! If they get sick they have to find a way to fund themselves through illness – there is no employer to support them.

On the flip side, freelancers are, well, free. They get to choose the work they do; when they do it and how they do it. When they want to go on holiday they don’t have to ask permission, they just go.

They don’t get involved in office politics, they don’t have to endure appraisals and, typically, they don’t have to manage others, unless their client-role specifies it, or if they take on a self-employed person themselves. Freelancers are their own boss and that is very attractive to a significant proportion of the workforce.

Freelancers are a fundamental part of our workforce, deserving of greater support

There will always be employees, and for the foreseeable future at least they will make up the majority of the workforce.

But as we hope the chancellor (himself a former self-employed business-owner) recognises on March 15th, freelancing is here to stay and, with the right economic conditions and government support, it could well become an increasingly popular option. Freelancing isn’t for everyone, but it is for some, and they aren’t going anywhere.