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Is freelancing the future of work?


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Business Spotlight - epaper ⋅ Ausgabe 11/2022 vom 26.10.2022

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Bildquelle: Business Spotlight, Ausgabe 11/2022

Freedom, flexibility and worklife balance — this is what freelancing can offer. And today, it’s easier than ever for companies to hire non-permanent staff on a project-byproject basis. But does the carefree contracting lifestyle live up to the hype?

“Although there’s more uncertainty around the cost of living right now, overall, the pandemic has led to greater openness and freedom,” says Suzanne Ives, who has two different non-permanent roles: as a part-time university lecturer and a small-business owner in the UK. “I’m lucky — every day is different, I can pick and choose, mix my own professional ambitions and support my family.”

The flexibility Ives loves was a faroff dream during her two decades as an employee in finance and strategy. In her mid-30s, she decided to study to become a midwife, later adding further qualifications to become a lecturer. At the same time, she helps her ...

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... partner run their motorbike-transport company. “Midwifery was fulfilling, but giving something to the next generation was my end goal,” Ives told Business Spotlight. “Growing as a person fills you with confidence. I’ve become someone who’s open to risk. I’m not frightened to put myself in any situation.”

Flexibility and meaningful work

All the things Ives values as a freelancer — balancing different roles, growth and personal fulfilment — are now increasingly on the workplace agenda of large companies. In his influential annual letter, Larry Fink, the CEO of investment giant BlackRock, wrote: “No relationship has been changed more by the pandemic than the one between employers and employees.” Five days in the office and ignoring well-being are out; flexibility and meaningful work are in.

Increasing numbers of workers are leaving traditional employment relationships, having seen that a new way of life is possible. In the US and the UK, resignations hit historic highs in 2021 and 2022.

Marie-Hélène Chrétien, a procurement manager at Airbus in France, has lots of experience of buying in services, and she has witnessed these changes first-hand. “Time has become very important in the post-pandemic workplace,” she says. “Companies are seeing their staff leave for more flexible roles, and the marketplace is now very competitive.”

“I like the way freelancing keeps you on your toes”

The increase in freelance services Chrétien says, to retain talent, companies must look at their culture, systems and processes. Company culture is changing: organizations increasingly work in project mode, and competition is making recruitment harder. This opens up space for more non-permanent staff to fill talent gaps. At the same time, there has been a rise in digital talent platforms, such as Toptal, Freelancer, Upwork and Fiverr, which allow businesses to find skilled freelancers with a mouse click.

A 2020 report by Harvard Business School and Boston Consulting Group explored how these platforms offer companies more flexible access to talent. The study shows rising numbers of people turning to freelance work during the pandemic and a corresponding rise in the number of companies joining digital talent platforms. Furthermore, nearly half of all respondents expected to use the platforms significantly more in the future. This underlines the report’s conclusion that on-demand workforce strategies are here to stay, and companies will need them to stay competitive.

Simon Brown leads a technology team at the broadcaster Sky in London. He joined as a permanent employee just before the pandemic, after more than a decade freelancing — or “contracting”, as it’s known in IT. His current role involves hiring contractors, and he highlights the flexibility, productivity and innovation they bring. “You get what you pay for,” Brown says. “Most contractors bring in top-draw experience and get the job done. They often write high-quality code that more junior employees can learn from.”

Freelancing for all? What’s to stop all of us going freelance? For one thing: regulations, particularly laws to combat tax evasion. Chrétien explains that France (like many other European countries) has laws designed to prevent freelancers from being “disguised” employees. “Individual freelancers are seen as a greater risk to larger corporations, who prefer to work with agencies,” she adds. “The digital-platform model could work well here, as long as the platform providers are knowledgeable in hiring out qualified people.”

The introduction of tax legislation in the UK’s private sector has had a disruptive impact on the IT industry, according to Brown. He says that those changes, along with the overall trend towards hybrid workplaces, have made being an employee more attractive again. The IT industry quickly adapted to remote working, and as recruitment is so competitive, most companies have not tried to force employees back into the office full-time. “Ninety per cent of our work can be done using Teams, Slack and email,” he says, adding that he knows a number of employees who have moved to the countryside in the past two years.

Recognizing more than the monthly salary Additionally, with greater freedom comes greater risk. There’s no guarantee that a short-term contract will become a longer one. If the company strategy changes, freelancers can be shown the door with minimal warning. It can also be difficult to get a lease or a mortgage without an employment contract. “It very much depends on your personal situation and appetite for risk,” Ives says. “It’s quite scary but also brilliantly exciting!”

People need a stable income for lots of reasons, including loan repayments or supporting their children through university. “For the most part, I made those commitments when I was younger, so I have more personal freedom,” Ives says. “It’s not the case for everyone.” Brown adds that he rides a motorcycle and, as a contractor, he worried that an accident could have meant weeks without an income. And while he was happy contracting, he admits the financial package that comes with employment, including a pension, is a real plus.

Not just a career but a lifestyle choice As this shows, even if the worlds of permanent and non-permanent employment are converging and “blended workforces” are becoming more common, freelancing remains an individual lifestyle choice. Since the pandemic, most employees can expect some more flexibility, but the rich variety of working for different clients, perhaps in different sectors, from one week to the next is mostly still reserved for freelancers.

Brown says he’s pleased with his career but hopes full-time employment won’t make him get too comfortable: “I like the way freelancing keeps you on your toes and sharpens your skills. I still like to read up on the latest developments and keep challenging myself.”

5 THINGS FREELANCERS IN GERMANY SHOULD KNOW

1.False self-employment, when a freelancer acts as an employee, may be considered fraud. The consequences can be serious for the freelancer and the employer. If 83 per cent or more of a freelancer’s income is from a single client or if they have a long-term contract with one employer, alarm bells will ring with the authorities.

2.Freelancing on the side offers flexibility, extra income and reduced risk, but there are restrictions. Generally, you may work up to 18 hours a week in a side job, and it’s necessary to inform your health insurance company, as it can affect social-security obligations.

3.All invoices written and received must be kept for ten years, in case the tax office has any questions.

4.Paperless registration of a new business is possible via the Mein ELSTER platform, meaning a tax office visit is generally no longer necessary.

5.The Institut für Freie Berufe, in Nuremberg, offers a free advisory call to those considering selfemployment for the first time.