Empowering the Freelance Economy

Majority of people are looking for new work because their pay is not keeping pace with inflation 

Samuel Mather-Holgate, IFA, Mather & Murray Financial
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With the vast majority of pay increases not keeping pace with inflation, two-thirds of workers are searching for a new job 

Less than one in four workers who received a pay rise in the past year had their salary increased in line with the newly announced rate of inflation 10.1% – a finding that has contributed to the rising number of people who are currently looking for a new job, recruitment agency Aspire has said.

A study put to 918 workers by Aspire shows that as many as 38% of people haven’t received a pay rise in the past 12 months. This is despite inflation hitting a 41-year high in late 2022.

Of those who have had their salary increased in the last year (62%), less than a quarter (23.5%) had it raised in line with the most recent inflation rate. 

Most workers (52.1%) who received a pay rise in this period were handed one worth up to 5% of their salary – less than half of the current rate of inflation. Nearly one in four (24.4%) were awarded a pay rise between 6-10%, which still falls short of the UK’s existing inflation rate. 

This pay stagnation has contributed to the rise in the number of people currently searching for a new job. In Q1 of 2023, two-thirds (65.6%) of workers said they are currently seeking a new role – a 13% increase compared to the second half of 2022 when 52.6% were looking and a 4.7% increase year-on-year (60.9%).

Aspire

Added to this, nearly one in two (47.7%) of workers believe there are lots of relevant job opportunities, with how well a job pays standing out as the most important consideration.

“Whether it’s mortgage payments or energy bills, the increased cost of living means that people are exploring their options job-wise. And if they haven’t received a pay rise recently – or if it’s not enough to keep pace with soaring costs – then it’s only natural that workers will look elsewhere,” said Aspire’s Global MD Terry Payne.

Freelancers should look at this development in two ways:

  • If more staff are leaving, freelance work could become available, so make your portfolio and knowledge stick out on social media where hiring companies can seek you out
  • If the majority of people are looking for new work to make ends meet, is there a chance your freelance rates are also not in line with inflation? It might be time to see what your personal inflation rate is and adjust your rate, especially with any new clients. Use this tool to calculate it.

The response to the latest inflation figures seems hysterical when in reality we know that May will be the month we see a significant fall in price rises and then, month-on-month, it will tumble for the rest of the year.

Samuel Mather-Holgate, IFA, Mather & Murray Financial

Are there better-paying jobs out there?

“The good news is that there are plenty of well-paid opportunities out there, as many employers offer attractive starting salaries to hire the talent they need,” said Payne.

“And we’re certainly noticing a gradual rise in the number of people looking to capitalise on what is a really lively jobs market. At last count, there were well over a million job vacancies in the UK, which says it all,” he said.

Payne has a soft side for employers, though.

“You have to sympathise with employers, though,” he said. With costs rising across the board, increasing pay is often easier said than done. In this economic climate, businesses unable to compete on pay need to think creatively, exploring different ways to attract the talent they need – from highlighting diversity and inclusion to offering unrivalled flexible working opportunities.”

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If inflation is starting to drop when will we feel it?

The latest ONS inflation figures indicate that there has been a slight drop in the Consumer Price Index. Here we share personal finance experts’ insights on what this could mean to our personal finances.

For many, the concept of a financially secure retirement, after years of hard work and diligent saving hangs in the balance.

Indeed, My Pension Expert’s latest research revealed that almost half (44%) of over-55s currently in work feel the cost-of-living crisis has rendered retirement entirely impossible.

Lily Megson, Policy Director at My Pension Expert

Samuel Mather-Holgate, IFA, Mather & Murray Financial

“The response to the latest inflation figures seems hysterical when in reality we know that May will be the month we see a significant fall in price rises and then, month-on-month, it will tumble for the rest of the year. Food price increases will be more than offset by energy prices throughout the rest of the year so pay increases should bear this in mind.”

Andy Mielczarek, Founder and CEO of SmartSave, a Chetwood Financial 

“Although the CPI data shows that inflation is finally easing into single figures, the latest numbers show that savers still need to plan carefully. Elevated prices mean that, without careful financial management, people around the UK are still losing money in real terms.
 
“Making the most of the right savings instruments is crucial. At the moment, rising interest rates mean that there are opportunities for those who are in a position to put aside a lump sum and allow that pot to grow. For those looking to secure the most competitive rates, looking beyond traditional high street banks is often the key to making better returns, while fixed-term savings accounts can provide savers with lucrative options.”

Lily Megson, Policy Director at My Pension Expert

“Following last month’s shock increase, Britons will welcome the return of slowing inflation. But we are far from the finish line; the threat to people’s finances prevails as inflation remains at eye-watering levels.

“For many, the concept of a financially secure retirement, after years of hard work and diligent saving hangs in the balance. Indeed, My Pension Expert’s latest research revealed that almost half (44%) of over-55s currently in work feel the cost-of-living crisis has rendered retirement entirely impossible.

“People need support, and they need it now. The Government must commit to taking steps to granting all Britons access to the necessary information to help them regain control of their financial futures. Improving access to independent financial advice, for example, would be powerful start. And in doing so, Britons will start to feel more in control of their finances, despite these continuously testing circumstances.” 

Mohsin Rashid, CEO of ZIPZERO

“After last month’s surprise increase, everyone will be breathing a sigh of relief that inflation figures have dropped again.
 
“Yet, these figures can be confusing. We must remember that while the ‘rate’ is falling, inflation is still devastatingly high. Its impact is being felt every day across the country, forcing consumers to make hard choices and ongoing sacrifices.
 
“This is particularly evident with regard to food, which is increasing at a rate well beyond the average. Our research shows that consumers are being savvy, cutting back on meat and exploring frozen alternatives. Yet, savvy can only stretch so far; Britons’ mental and physical well-being is under threat, with many now having to prioritise feeding others over themselves. Food shoppers must be given some financial relief. Supermarkets pursuing endless price increases are heading down a path of mutually-assured destruction.”
 
Chieu Cao, CEO of Mintago

“It is important we acknowledge that today’s inflation data comes right in the middle of Stress Awareness Month. While prices are falling again, we cannot underestimate the huge impact the cost-of-living crisis is having on people’s financial wellbeing and, in turn, their mental health.
 
“It’s more important than ever that people are given the tools they need to navigate an extremely challenging economic climate. This is best done in the workplace, where not enough support is being provided. Indeed, Mintago’s own survey of over 1,000 UK employees this month has revealed that while 51% of people say their stress has increased notably as a result of the cost-of-living crisis, just 36% benefit from financial wellbeing support through their employer.
 
“By implementing better financial wellbeing support systems for their employees – whether that’s connecting staff with financial advisers, or giving them more control over their pensions – employers could alleviate much of the financial stress that so many people are facing by simply giving them a clearer image of their financial situation. Yes, inflation might be slowing, but today’s data shows there is no room for complacency; UK businesses should act to support staff as a keen priority.”


Have you increased your freelance rates to be in line with inflation yet? If not, what’s stopping you?

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