Around two out of three contractors, freelancers and small business owners have not increased their day rate in the past year despite the impact of inflation, new research from Workwell & IPSE shows.
Latest Government data shows pay for employees rose at a record 7.3% but the study by Workwell & IPSE found day rates for self-employed workers are not keeping pace.
Workwell, a leading provider of services to flexible workers and recruiters in the UK and overseas, collaborated with IPSE, a community of over 35,000 self-employed people.
The research found 58% of contractors, freelancers and small business owners have not increased their day rates in the past 12 months while 9% have even cut their rates.
Only a quarter (24%) of those who have not raised day rates plan to do so in the next 12 months. Around six out of 10 (59%) say then will not increase their day rate while 17% didn’t want to say.
The study found the average day rate charged by contractors, freelancers and business owners questioned was around £300 but around 45% said they do not have a day rate.
The biggest reason for raising the day rate among those planning to or who have already done so is rising costs. Around 58% said they increased or plan to increase their rate because of cost pressures while 42% made the move because of the cost of living and rising inflation.
Around a third (32%) say they have expanded their offering while 21% say the level of competition in their sector means they can increase their rate. However 11% who raised their rate admit they were undercharging previously. Among those who have increased their day rate the average increase was 10%.
Chris Mollan, Head of Accountancy Services at Workwell said: “The cost of living crisis is hitting everyone and contractors, freelancers and small business owners are not immune so it is surprising to see so few increasing their day rates in response."
“Pay rises are at a record level for employees which demonstrates that employers are willing to pay extra for workers they value which should apply to contractors, freelancers and small business owners providing important services."
“Keeping running costs down is important for contractors, freelancers and small business owners if they are not going to increase their day rate and that should include ensuring they have the best possible business support.”
Workwell’s award-winning accountancy service is designed to help contractors, freelancers and business owners to manage their business easily and tax-efficiently. Clients are supported by their own dedicated accountant and have online accounting to access and manage their accounts easily, from anywhere. It also provides umbrella company solutions for contractors.
Workwell enables businesses in the UK and overseas to more easily and compliantly benefit from flexible workforces. Its services for recruiters and end hirers are designed to take away the risk, hassle and complexity of contingent labour supply.