To gig or not to gig? The rise of self-employment

Home | Insights | Career and personal development | To gig or not to gig? The rise of self-employment
A self-employed woman gigging inside in her home office, talking on the phone and using her laptop.

As the modern world of work moves away from a processing-based economy to that of a knowledge-based one, freelancing and self-employment continues to rise in popularity. Commonly referred to as the gig economy, there are now 4.8 million professionals, or 15% of the UK workforce working for themselves, having contributed £271 billion to the economy in 2017. However, with this rise also comes complications, as both the policy makers and private businesses navigate these new ways of working.

What is the gig economy?

The gig economy gained momentum in 2009 following the financial crisis, when unemployed professionals took on short-term roles for additional income. Since then, its definition has expanded to include independent contractors such as consultants or freelancers, or those working for the likes of Deliveroo and Uber. Recent developments, including the Pimlico Plumbers case, has seen the term attract negative connotations, with suggestions of exploitation and underpaid workers.

However, according to The Association of Independent Professionals and the Self-Employed (IPSE), it is a mistake to conflate the entire self-employed workforce with the gig economy.

“The gig economy is a new and exciting part of the labour market. It provides freedom, flexibility and work opportunities to many people who might otherwise not have them.” said IPSE CEO Chris Bryce in a statement.

“The many people working in the gig economy have helped swell the number of self-employed to over 4.8 million. However, these gig workers remain a very small part of the wider self-employed population.” he continued.

Despite developments such as the Taylor Review, a government-backed enquiry into modern working practices released in 2017, there is still no statutory definition for self-employment. In campaigning for a legal definition, the IPSE suggests that self-employment includes the following four principles: autonomy in work, control over working arrangements, taking on business risk and level of independence from clients.

In the short-term, other publications such as Source Global Research have coined the term ‘professional gig economy’, referring to experienced independent professionals who have rejected the chance to climb the corporate ladder in favour of a flexible working arrangement.

Why be self-employed?

It is this flexibility that often attracts individuals to self-employment. With an opportunity to choose clients, workload and project types, contractors and freelancers can set their own hours and work to their own pace. In fact, a 2018 survey of IPSE members found that 81% chose self-employment for the freedom to choose projects they actually want to work on.

This often results in higher work satisfaction, especially for those who earn a primary income from independent work.

“People are crying out for greater flexibility and an alternative to the traditional 9-5 working hours,” says Imogen Farhan, Policy and External Affairs Officer at IPSE.

“What’s more, our research has shown job satisfaction among the self-employed is 84% – higher than the 64% among full-time employees.”
Self-employment, or the professional gig economy, is also increasingly popular for working mothers: “Since 2008, the number of mothers working for themselves has doubled, while one in seven working mums are now freelancers.” says Imogen.

Why work with the self-employed?

However, it’s not just individuals that are experiencing the benefits of self-employment.

“IPSE research found that independent professionals deliver higher quality work compared to larger consultancies as they are often very specialised and can offer expertise in specific areas,” notes Imogen.

“It also provides companies with an element of flexibility, as they can access these professionals when needed, instead of hiring them part- or full-time. It reduces costs and overheads.” she says.

With lots of economic uncertainty due to Brexit, as well as developments in technologies, self-employed professionals offer a way for businesses to scale accordingly, adjusting to peaks and troughs in demand, without committing to anything long-term.

What are the challenges?

As with any change to the norm, self-employment, or the professional gig economy presents a range of challenges. 69% of surveyed IPSE members were concerned about not being prepared financially for retirement, while the pension was a significant concern for 46%. Not being able to work because of illness or injury was also troublesome for 60% of surveyed members, as was the availability of work.

For individuals, there is currently nothing in place to cover them in terms of sickness, holiday or parental leave – the hours you work are the hours you’re paid. It also means that self-employed professionals need to be financially savvy, putting savings away in lieu of a pension. There are also certain pieces of legislation, such as IR35, which you should be aware of as a freelancer.

For companies, relinquishing control can be a challenge: “Self-employed professionals aren’t employees, so businesses have less control on how they work and when.” says Imogen.

While the government adapts to new working practices, legislation also remains a concern.

“Businesses have to be careful about how they engage independent professionals and draw up the appropriate contracts that specify key deliverables, ensuring transparency,” says Imogen.

“Businesses need to remember that they are not hiring a person, they are buying an outcome.”

Looking forward

With the number of self-employed professionals doubled since 2000, it’s clear that this style of working isn’t going away anytime soon.

“We need to treat this as a permanent structural change in the labour market,” says Imogen.

“The existing policies are based on an outdated employer model, but self-employment is now mainstream. It’s hugely diverse across every sector so there’s no reason for it not to be embraced.”

Author David Morel Tiger Recruitment Team

Sign up for the latest workplace insights.

Are you: