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  • Freelancers are on the rise, despite much financial instability.

    Freelancers are on the rise, despite much financial instability. | Photo: Pixabay

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While self-employed people typically enjoy a good work-life balance, they are more likely to face persistent financial instability.

The number of people engaged in self-employed work in the UK is rising, but there’s growing concern over the fact that 80 percent of these people apparently live in poverty, according to data released by HM Revenue and Customers.

Research from IPSE, a membership body that supports freelancers and contractors, indicates that between 2008 and 2015 the number of freelancers in the UK increased by 36 per cent to almost 2 million people. But as The Independent reported on Friday, many aren’t financially secure.

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“There are a lot of benefits to working for yourself; from dictating your own working hours, to negotiating your own rates, to being your own boss,” Chris Bryce, CEO of IPSE, told the Independent.

But Helen Barnard, head of analysis for the Joseph Rowntree Foundation, warns that many people freelance because they are unable to find secure work.

“Many self-employed people work in low-paid industries, like cleaning or taxi-driving, and are unlikely to employ anyone else or grow into a bigger business,” Barnard said. “The typical self-employed person earns 40 per cent less than an employee and is more likely to live on a low income. During the recession, many more people became self-employed, but income from self-employment fell much more than employees’ wages.”

Poverty is also the behind rising debt levels among self-employed workers. According to TUC and Unison, 6 percent percent of self-employed workers with credit commitments allowing them to borrow money as needed from a bank were in serious debt in 2012. By 2014 that number almost tripled to 17 percent.

Many freelancers will likely have an unstable future as they get older. Unlike employees, they do not receive pension contributions from their boss.

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Freelancers also often have to do administrative tasks that most employers have an entire HR department to deal with, and that’s necessary work that doesn’t pay.

Rich Preece, spokesperson for accountancy software company Intuit, said, “As more people go self-employed, sell services in their spare time, or alter their working patterns to earn additional income, one of their key challenges will be to ensure that managing the financial and tax aspects of their multiple revenue streams doesn’t take away time from actually bringing in money.”

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