Average contractor income dropped by 25 per cent during lockdown

A survey has revealed just how big of an impact lockdown has had on contractors and their incomes, with an average drop of 25%.

The latest Freelancer Confidence Index, carried out by the IPSE and PeoplePerHour, found that the drop in income was driven by a record fall in the average number of weeks contractors worked this quarter.

Adding to the reduced working, was a three per cent fall in average day rates, leading to average quarterly earnings declining by 25% from £20,821 in Q1 2020 to £15,709 in Q2 2020.

Inna Yordanova, Senior Researcher at IPSE, said, “It’s been clear for some time that the economic impact of coronavirus has fallen particularly hard on freelancers, but in this quarter’s Confidence Index, we can measure just how much.

“Almost two thirds of the highly skilled freelancers covered by our Confidence Index work through limited companies and therefore could not get support through the government’s Self-Employment Income Support Scheme. With such a financial cliff-edge and limited government support, it is not surprising freelancers’ confidence in their businesses over the next 12 months is drastically low – or that so many are leaving self-employment. Recent ONS data shows a drop of 178,000 freelancers since last quarter.”

“Freelancers are a vital and extremely productive part of the workforce who have historically always been essential to recovery from economic depressions. If they are to play this crucial role, however, the government must make sure that in the event of a second wave, all freelancers have the support they need. Otherwise, going through another full lockdown and the resultant slump in work and income could be utterly devastating for them.”

Xenios Thrasyvoulou, founder and CEO of PeoplePerHour, added, “Unfortunately, it is no surprise to see that freelancers’ earnings fell significantly during the last quarter. When the government announced their support package for self-employed workers, we made it clear that many full-time freelancers would struggle to provide the three years’ worth of accounts to receive the relevant benefits. This has undoubtedly led to a large drop-off in income for many who have lost clients during the pandemic.

“On a positive note, we still strongly believe that freelancers – particularly those who are able to work remotely – will thrive as a long term impact of the changes we have seen. More businesses are turning towards low-risk strategies, which leads favourably towards the on-demand nature of freelance work. If we’re able to suppress a second wave, we hope to see an increase in freelancer confidence over the next quarter.”

To find out more about contracting please contact Jaime on 01206 591 000 or email jaime.thorpe@contractorumbrella.com.