Freelancing continues to grow as a method of working. It is becoming so ubiquitous in some countries that governments have been left scrambling to catch up as they realise that their traditional tax base has suddenly shifted.
The UK is a prime example. Freelancers, of course, still pay tax and social security contributions. However, the companies that engage them are no longer paying the employer’s contributions that would have to under a traditional employer-employee working relationship. As such, the company wins, while the government misses out.
Of course, there are ways in which the freelancer misses out too. Employees enjoy enrolment in pension schemes to which their companies contribute. Those schemes may be a long way from being as generous as pension schemes used to be, but at least they still exist. For many freelancers, pension schemes are just a vaguely worrying concept that is, for now at least, entirely unachievable in an increasingly expensive world. According to a study by the Freelancer & Contractor Services Association (FCSA) and FreeAgent, 35% of self-employed people have no plans in place to fund their retirement.
Then there is sick pay. The same study found that self-employed people would rather receive sick pay than any other benefit. All those who’ve worked freelance for a while know that feeling of waking up unwell and thinking “If I had the option, I would call in sick today.” Sadly, for many freelancers it’s simply not an option. Taking time off sick went out the window along with retirement planning as the gig economy grew.
So are freelancers intentionally giving up their future security and benefits like sick pay and holiday pay? Or are they being forced into it by the shifting economic climate as companies look for ever more ways to lower their overheads?
The answer, as ever, is not black and white. Some freelancers took the plunge into self-employment long before the global financial crash of a decade ago. They voluntarily ditched security for the benefits of being their own boss, flexible working hours and the ability to work in their pyjamas (it may be a cliché, but there’s a reason that a cliché becomes a cliché!). Conversely, there are those who feel they were forced into freelancing by circumstance, whether it be redundancy, a shakeup in their industry or simply an intolerable employer/working schedule.
Of course, not all those who voluntarily became freelancers found that they enjoyed the lack of future fiscal certainty. Meanwhile, some of those who felt they were backed into self-employment suddenly found themselves feeling more liberated than they had at any point in their working lives to date!
FCSA chief executive Julia Kermode hits the nail on the head when she comments,
“For many people who work for themselves, self-employment is a career choice and those who choose it know that this way of working does not come with statutory benefits. However, it is clear from our research that many have not made appropriate provisions to cover benefits that employees receive.
“The government should find a way of offering additional benefits specifically to those people who want and need them.”
This is a lovely idea. However, one suspects that governments are more likely to be focused on how they can claw back some of the tax income that they’re losing through the employer contributions lost to the rise of the freelance workforce. Funding additional benefits for freelancers, to make up for those that they used to receive from companies, is likely to be somewhat further down the priority list.
Freelancing in its nature provides flexibility and freedom (as, indeed, the very name suggests). Freedom from traditional working hours, routines and approaches can be a very liberating thing. However, freedom from financial security and a certain future can be quite the opposite. As the trend for freelance working continues, it looks like it will be up to innovative freelancers to make their own future – whether in the field of professional translation or any other sector – that strays from the path of traditional retirement and finds new ways to provide the financial security that we all need as we age.