How Coronavirus will change the contractor landscapeJuly 1, 2020
Lockdowns are easing and businesses are reopening (bring on the weekend with its hairdressers and beer gardens!). However, there is no denying the damage that lockdown has wreaked – first and foremost on the families of those directly affected, but also on the economy, both globally and at home.
As we return to a sense of 'cautious optimism,' we take a look at what the post-Covid economy looks like in the UK and, most importantly, what it means for contractors and self-employed people.
A changed landscape
The UK economy was already experiencing a turbulent time before the coronavirus hit (thanks to Brexit), but the picture is in many ways very different today. Predicted to suffer a 10% contraction this year, the UK economy – like most in Europe – is suffering from a slowdown in demand thanks to social distancing and reduced spending, as well as the broader 'economic scarring' of many businesses closing their doors for good.
As a result, the outlook is fragile. Despite reopening, companies will be finding it difficult to plan ahead with so much of their day-to-day functioning still in flux. The outlook is also increasingly competitive: with such a significant portion of the workforce enduring furlough or having lost their jobs, the number of applicants per position (as opportunities and contracts open up) will be knocked right out of whack.
Finally, the economy we face is a conservative one, with a reduced appetite for investment. With typical hubs of collaboration and conversation (co-working spaces, industry events, places of personal and professional mingling) still on the back-burner, we'll see innovation and the socialisation of new ideas decline. And, whilst the coronavirus has no doubt opened up many opportunities for innovation that weren't in the spotlight before, whether or not those ideas will find their feet (and funding) remains uncertain.
The new normal
It can't all be doom and gloom, though. Whilst contractors have undoubtedly been thrown into an unsettling state of limbo, we believe a lot of what makes up this new picture could work in their favour. Here are a couple of reasons why.
Firstly, there is no doubt that lockdown has opened the business community's eyes to the benefits of working from home. From reduced overheads to increased productivity, we're seeing numerous firms embrace and embed remote working for good moving forward. This 'virtualisation' of the workday is nothing new for contractors, who already know that a laptop and strong internet connection is all you need to sustain a healthy, flexible career.
For the wider workforce, however, this represents a reduced barrier to entry when it comes to setting up a new venture or making the jump from full-time to freelance. Whilst the 'home office' may have presented an initial challenge to adapt to for most, the work-life balance experienced by many may accelerate the shift towards a fully freelance economy.
Secondly, increased uncertainty may cause the nature of career aspirations to change. Having grown up through the 2008 financial crash and now Covid-19, the younger generation will become even more distrustful of the job security offered by 'big business.' As a result, we may see a resurgence of graduates entering the trades – from carpentry to craftsmanship – compelled by the promise of a steady 9-5 with sturdy earning potential. Entrepreneurialism amongst the youth (whilst already on the rise before the pandemic) may become even more appealing at a time where the institutions seem to have no more control than us.
Opportunities may open up from the supply side, too. As the wealth gap widens, companies that have fared well through the crisis will continue to do so, whilst those that have laid off staff will be much more open to the idea of engaging short-term talent, as and when they need it. We're already seeing an increase in redundancies coming out of lockdown as the Coronavirus Job Retention Scheme (CJRS) starts to cost businesses more to keep their employees on furlough than to lay them off. This increase in unemployment should give rise to a skills shortage, meaning greater opportunity for short term contracts to plug the gaps.
What this all means
Ultimately, as the landscape shifts, both existing contractors and newly freelance workers will need to be on top of their game. In an increased competitive space, marketing yourself well will be key to standing out, securing work and building sustainable contact networks.
Contractors will also need to be increasingly strategic in their approach, opting to diversify their skillset for the sake of agility or, conversely, become even more specialised in their chosen field.
It's a lot to think about, especially for anyone new to independent or contract work. More than anything, it will help to have the 'basics' sorted – your limited company set up and ready to go, a finance and business management system in place so that the stress of accounting won't slow you down. That's where Ember comes in.
We're automating accounting for contractors, which means you'll never need to know the word 'ledger' to use our software, or pay £150 to an accountant every month to take care of it for you. Ember gives you more control with less manual graft. It's your basics covered, plus access to a host of start-up and contractor resources – from discounts on complementary services to blog posts that keep you informed on the latest legislation.
We're here to help.
If you're currently between contracts or struggling to find work, switch your accounting over to Ember and we won't charge any fees until you land that next role.