What motivates freelancers and their huge economic impact

A recent report from Town Square, one of the fastest growing co-working businesses in the UK, has highlighted the role that freelancers play in the UK economy and how it is undergoing significant transformation that is being shaped by economic fluctuations, policy changes, and societal shifts.

The UK currently has a substantial freelance workforce that contributes significantly to the national economy. With 1.86 million freelancers, their impact is not to be underestimated, with some sources estimating that they contribute as much as £140bn annually.

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While there has been a historical increase in the numbers of those leaving full-time paid employment to become freelancers, recent trends show a difference in how age groups are embracing this work style. For example, there has been a 17% decrease in freelancers aged 30–39 which may have been due to either changing economic conditions or the impact of new regulations like the IR35 affecting contract work.

In contrast, there has been an increase of 13% in freelancing among those under 30 years of age, most probably driven by the changing attitudes of young people towards the world of work and their desire to balance their careers with their social and private lives.

There are also geographic variations and, not surprisingly, London houses a quarter of the UK’s freelancers. Across the rest of the UK, some regions are seeing growth while others are experiencing declines – Wales saw a 17% drop in its freelance population while Scotland had an 8% increase. This suggests that local economic conditions and opportunities play significant roles in freelancing viability and could have an effect on the future of local economies.

Whilst the freelance workforce is broadly gender-balanced, there are disparities in management-based freelancing roles where women are still underrepresented, indicating potential barriers to advancement or persistent gender biases within certain freelance occupations. Also, 15% of freelancers are working mums suggesting that some are balancing their parental responsibilities with work.

The study shows that freelancers in the UK adopt diverse working styles which make different contributions to the economy. The majority handle long-term projects consecutively, focusing deeply on one client at a time, which fosters strong, trust-based client relationships. In contrast, others manage multiple projects simultaneously, adapting their skill sets to meet varied client needs quickly and efficiently, a practice which enhances their agility and relevance in fast-paced sectors.

The growth of the gig economy has also contributed to the growth of the sector, with highly skilled freelancers often engaging in gig work and applying their specialised expertise to short-term tasks. This not only allows for flexibility but also facilitates the cross-pollination of ideas and practices across industries.

So why do people become freelancers? The decision is driven by several factors that highlight the personal benefits and broader economic implications. This includes having the freedom to scale their operations and extend their reach both nationally and internationally without the constraints of traditional employment structures.

Many choose freelancing for the flexibility it offers, allowing them to balance work with personal life, pursue passions, and work in a manner that aligns with their individual values and lifestyle. Also, it’s not all about financial motivations, and freelancers often engage in this type of work to make a meaningful impact on society and fulfill personal aspirations.

For freelancing to continue thriving and contributing effectively to the economy, several measures must be implemented. Freelancers need their roles and contributions to be acknowledged and respected by clients, governments, and society at large, promoting freelancing as a viable and respected career path.

This requires essential legal protections to be put in place to ensure that freelancers can work without undue risk or instability, including fair competition with traditional employees and larger corporations. It is also important to establish strong networks that provide robust support systems crucial for the sustainable growth of the freelance community, offering resources, advice, and peer support.

Given this, policymakers must be proactive in crafting and implementing policies that safeguard the interests of freelancers, ensuring that they are not just seen as a marginal sector of the workforce but as integral contributors to the dynamism of the UK economy. This includes adapting employment laws to provide better protection for freelancers, ensuring fair access to social benefits such as healthcare and pension plans, and offering incentives that encourage self-employment.

Educational institutions have a pivotal role to play in preparing the future workforce to thrive in a gig economy including updating curricula to include skills that are crucial for successful freelancing, such as digital literacy, entrepreneurship, and self-management. Moreover, there should be a focus on nurturing soft skills, such as negotiation and communication, which are essential for freelancers who must constantly advocate for themselves in a competitive market.

Businesses must also adapt to this changing workforce landscape by becoming more freelance-friendly. This means creating more flexible work environments that are conducive to the inclusion of freelancers, and designing contracts that recognise the unique needs and contributions of freelance workers. In doing so, they can tap into a reservoir of highly skilled, flexible, and innovative professionals who can drive business growth in ways that traditional employees might not.

Lastly, freelancers themselves must continue to advocate for their role in the economy, actively participating in forums that shape public and private policies affecting them. By uniting their voices, they can ensure a more balanced and fair work environment that recognises their contributions and addresses their specific needs.

Therefore, this comprehensive report underscores the multifaceted role of freelancers in the UK economy, illustrating not only the array of challenges they face but also the significant opportunities they present for economic innovation and personal empowerment. As the freelance landscape continues to evolve, it becomes imperative that all stakeholders – from government bodies to universities to private sector organisations – recognise support and harness the potential of freelancers to ensure that they thrive in the future.