Freelancers earn less now than 20 years ago, says report

New research released this week by independent think tank, The Resolution Foundation, has found that freelancers are officially earning less than they were 20 years ago. 

The report, The RF Earnings Outlook, describes how ‘this data suggests that typical earnings for the self-employed were lower in 2014–15 than in 1994–95, twenty years earlier’, and how from their from their peak (2006–07) to trough (2013–14), typical self-employment earnings fell by 32% – around £100 per week.

Responding to the news, Dave Chaplin, CEO and Founder of Contractor Calculator, said: “The freelance market is a fast moving dynamic market that enables business to access the high skill on demand services. Freelancers who do not keep their skills updated will inevitably fall behind and earn less money. How you earn your money now could be very different from 5–10 years ago, let alone 20.

“A large proportion of this could be down to IT, which was hugely overpriced in the late 1990s. People with two years’ experience were on £100K+ then. Whilst still very much in demand, the fees have come down to something more sensible, which can only be good for UK Plc. Businesses need IT, and need to access them at a reasonable rate to stay competitive.

“This does not spell the end of freelancing at all. It’s an economic supply/demand coming into play. It will always be cost effective for small firms to rely on freelancer services. It’s how they get started, and freelancers are the mini engines driving productivity forward.”

IPSE, the Association of Independent Professionals and the Self Employed, has also responded to the Resolution Foundation’s report.

Jordan Marshall, IPSE Policy Development Manager, said: “Working for yourself involves a lot of hard work and is not for everyone, but it’s abundantly clear that most self-employed people don’t want to work any other way. Recent IPSE research shows that only 2% of freelancers want to take up regular employment. The self-employed value the flexibility offered by this way of working. We shouldn’t forget that the fastest growing section of self-employment is among the highest skilled professions.

“The Government can take some action to increase the earning power of the self-employed. Extending tax breaks to all forms of training will enable self-employed workers to gain new skills and ultimately charge more for their services.”