The freelance economy: iPros rally, but are they getting a fair deal?
As Australia's manufacturers shut up shop, more and more workers will be going freelance. Henry Belot -- himself a freelance writer -- looks at what it will mean when we give the boss the flick.
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News that Holden will close operations in Australia from 2017 is just the latest sign of a dramatic transformation in Australia’s labour market. With 40% of US workers predicted to be freelancers by 2020 and a 45% increase in the number of freelancers working in the European Union since 2004, many more Australians may be forced to re-conceptualise job security and join the swelling ranks of freelancers.
Tui McKeown, a senior lecturer in management at Monash University, believes we’re witnessing a fundamental change in our workforce construct. “The move from blue- to increasingly white-collar occupations was led by the IT surge in the 1980s, but many other professionals are now seeing freelancing increasingly as the norm,” she told Crikey.
In November 2012, the Australian Bureau of Statistics reported that almost 980,000 Australians listed themselves as “independent contractors”, which was roughly 9% of the then 11.5 million employed Australians. And while this 9% was a slight decline on 2010 figures, it’s a clear increase on the 221,000 employees who said they worked on a contract basis six years earlier. Back in 2004, 19% of these freelancers worked in property and business services, while another 18% worked in education. In 2012, 29% worked in construction and a 21% in administrative services.
In Europe, studies of workforce participation reveal similar trends. Research published last month by the European Forum for Independent Professionals reports the number of independent professionals working in the EU has increased from 6.2 million workers in 2004 to 8.9 million in 2013. This makes freelancers the fastest-growing group in the EU labour market.
When the United States Government Accountability Office last assessed its independent workforce in 2006, it reported 42.6 million “contingent” or independent workers, which equated to roughly 30% of the entire workforce. According to a 2010 study published by US Software Company Intuit in co-operation with Emergent Research, 40% of the US economy will be comprised of “contingent workers” — otherwise known as freelancers — by 2020.
But an army of iPros (as self-employed professionals are termed) doesn’t necessitate an equal spread of the spoils. According to a recent study commissioned by The Loop, an online community for professional creatives, 97% of surveyed Australian freelancers worked more hours on a project than they costed for. The study, which was conducted by Longergan Research and surveyed 1127 of The Loop’s subscribers, found that 46% of freelancers had not been paid for contracted work on at least one occasion, with the average freelancer failing to receive payment from an employer 11% of the time.
McKeown says it shouldn’t really surprise us. “A key challenge is accepting freelance work as a legitimate and sustainable way to work,” she said. “Questions such as ‘when will you get a real job?’ are still commonly reported by iPros. Issues of trying to get a bank loan and of reluctant systems founded in traditional employment create real barriers to being treated as a ‘business of one’.”
But the increasing number of freelance workers in Australia and abroad has created new opportunities for online entrepreneurs or “middlemen” who assist freelancers in obtaining contract work. In Australia, these organisations include Newsmodo, 99Designs, The Loop’s Freelance Pro, or the lucrative Freelancer.com, which trebled its share value on its first day of ASX trade in mid-November.
According to Nikki Parker, the regional director for North America and Oceania for Freelancer.com, the company “works with freelancers to educate them on the best ways to approach an employer, bid on projects and promote their past work through uploading samples and previous work to assist them to get their first job”.
But Parker told Crikey that the average job on the service is only $200, which “makes it cost effective and simple for start-ups, solo-preneurs and small businesses to get the necessary work done to help grow their businesses”.
“The global market is what dictates the price of certain projects on Freelancer.com, but it is also up to the employer to feel comfortable with the amount paid and the experience of the freelancer hired,” said Parker. She adds that “more often than not we see employers accepting freelancers based on the promise of quality over the cheapest price”.
That’s something that Pip Jamieson, co-founder of The Loop (which launched Freelance Pro in November), disputes. In reference to Freelancer.com, Jamieson stated on The Loop website that “these types of platforms exploit creative, devalue their work and create an environment that encourages fast turn-around at the expense of quality work. Getting sub-standard creative from these channels only costs businesses more money in the long term.”
But while online services fight to secure the loyalty of Australian freelancers, the risk remains that traditional 9-5 organisations may miss out on the value of iPros. McKeown says “research shows that knowledge sharing, innovation, creativity as well as the flexibility iPros bring to an organisation is not being realised by many engaging organisations and therefore not being fully utilised and captured (which just seems plan daft)”.