The freelancing economy is huge—much bigger than most people realize. In 2016 alone, the 55 million freelancers in the US earned $1 trillion. Eyal Moldovan, general manager of Payoneer, explained that freelancing continues to grow at a very high pace because companies want to employ people but take fewer risks. The global payment platform’s Global Gig Economy Index also revealed that many professionals voluntarily choose to freelance for lifestyle reasons.
“Platforms make it possible for them, and the work-from-home and gig economy is suitable for them,” Moldovan said.
According to Forbes, a global media company focusing on business, investing, technology, entrepreneurship, leadership, and lifestyle, the fastest-growing freelance market is the US. In the second quarter of 2019, the growth of freelance earnings in the country increased by 78% since the same quarter in 2018. The US is followed by the UK (59% growth), Brazil (48%), Pakistan (47%), Ukraine (36%), the Philippines (35%), India (29%), Bangladesh (27%), Russia (20%), and Serbia (19%).
There are several reasons why the freelance economy is growing so fast in these countries. For one, a key driver of the growth in freelancers' earnings is government-proposed outsourcing for the industry. Ukraine, for instance, has created a special taxation regimen for IT outsourcers and product companies that release them from the value-added tax. Some freelancers in several economies are taking an entrepreneurial approach. They outsource their projects they win to counterparts in lower-skilled countries so they can make a profit.
“In India, when they take a project outsourced from overseas, they do subcontract to lower-income countries that are less competitive, like Bangladesh,” Moldovan said.
However, with unemployment rates rising due to the coronavirus pandemic, the freelancing market is also at risk. Many of them do not have the same resources or protections that most employees in many countries.
How the Pandemic Impacted Freelancers
Freelancers have played a meaningful role across most major industries. A study revealed that freelancers are active in all industries, including B2B, retail sales, and education. While they make up 35% of the US’s workforce, freelancers largely work without benefits—no sick leave, no unemployment, no paid time off. As this pandemic progresses, their fate is getting bleaker and bleaker.
Since the pandemic started, laid-off Americans who signed up for unemployment benefits have already received funding. A recent survey conducted by the Freelancers Union, however, found out that 85% of freelancers who applied for government relief still have not received funding. Many of them are still waiting to hear back from government relief programs. There are about 80% of respondents who have yet to receive relief, while 22% have been denied funding. At the same time, only 12% of these freelancers who applied for unemployment insurance received it, 9% of those who applied for an EIDL loan received it, and 5% of PPP loan applicants received funding.
While there is a program called Pandemic Unemployment Assistance (PUA) for freelancers and those who are self-employed, the survey suggests that very few applicants have actually gotten economic help from the government. “The numbers show the dire reality that freelancers are facing. To this day, I would say the overwhelming majority of freelance workers have not seen a dollar, and the CARES act has not been working in their favor,” Freelancers Union president Rafael Espinal said in an interview.
Recent analyses revealed that the pandemic will affect freelancers in three broad areas: health, finance, and employment. Since independent workers don’t have the same benefits that full-time employees do, including sick leaves and health insurance, they are at risk of being severely affected by the virus. Many of them are still working in these times, putting them at risk of contracting the virus. Payments to these workers are also being deferred in a lot of industries as companies scramble to trim costs.
Without these payments, freelancers would find it difficult to support themselves during this crisis. According to Analytics India Mag, an online site that chronicles technological progress in the space of analytics, artificial intelligence, data science & big data in India, a recent report showed that a 60% drop in new freelancing assignments were seen as of the last week of March. Writers, performers, designers, photographers, among others, are seeing a dramatic decline in work and are thus, out of paid assignments.
More Freelancers in the Future
As the new work-from-home reality of coronavirus leaves its mark, experts believe that we could expect more freelancers in the future. Recent data has revealed that freelancing will grow in a widening range of professional areas. Hayden Brown, president and CEO of Upwork, said that this growth is largely driven by the fact that people feel more secure having more than one income source.
“We have heard from many independent professionals, particularly in the last ten years since the 2009 recession, that they feel a heightened sense of security having multiple sources of income via various clients they serve,” Brown said.
While freelancers are facing a particularly dry season amidst the pandemic, this could also be the moment when self-employment is reshaped for the years to come. According to Fortune, an American multinational business magazine headquartered in New York City, Brown said that we can anticipate that more workers will seek out independent contracting arrangements even after this pandemic. Sarah M., for instance, is one such worker leaving her job at a school due to job security.
“COVID-19 is likely to put that institution, already on the shaky financial ground, into an even more precarious position. Being self-employed actually feels more secure to me than working for a struggling small college,” she said.
Organizations also believe that the majority of the US workforce will be freelance as soon as 2027. “Remote work, and the talented freelancers who work remotely, will increasingly be the norm. The trends supporting this started well before the current crisis, and maybe accelerated by the changes everyone is making to adapt to new realities,” Brown said.
However, freelancers hope that one day, their independent careers will involve benefits. “I have been freelance long enough that ordinarily I feel that I have some security; for every quiet time, there is an equally busy time to counterbalance. I wish that my career provided some kind of retainer for the quieter times, although it’s hard to envision how that would work,” Megan K., a freelance set designer, said.