The golden rates

Skills shortages are driving up the demand for certain freelances, leading to inflation-busting increases in remuneration and warping the market for permanent staff. Fiona Sibley analyses the findings of our survey of freelance salary levels

PERHAPS there has never been a better time to go freelance. Fulfilling a role traditionally played down as the least secure within the labour market, design freelances currently have plenty of work to choose from, and in certain sectors are earning significantly higher pay than their peers in permanent positions.

‘It’s a candidate-driven market and the best freelances continue to be in great demand,’ says Karina Beesley at recruitment consultancy Gabriele Skelton. Most of the UK design recruitment consultants we polled concurred with this view, with many describing the market as ‘buoyant’, and looking set to continue that way for the forseeable future.

As Design Week’s second survey of freelance rates shows, pay deals remain healthy across the board, both in and outside London. But overall, the rates have increased considerably, with percentage increases cited as an inflation-busting 13 per cent in the past 12 months, much higher than the 4.8 per cent increase that recruiters predicted back in January 2006. And, with predictions for rates continuing to rise by 9 per cent over the next 12 months, it shows little sign of slowing down.

Inflated fees are to be found in any sectors suffering skills shortages, such as digital and packaging, causing rates to shoot up. ‘Over the past two years, rates in some specialist areas in which demand outstrips supply have increased by nearly 100 percent – the freelance has never had it so good,’ says Stuart Newman at Network. Diane Scally at Creative Recruitment echoes this. ‘With more financial security and a good quality of creative work on offer, a good candidate is spoilt for choice. The market may always change, as it is the barometer to economic stability, but for now it is once again a candidate’s market,’ she says.

Digital and packaging are the two specialisms most often cited as attracting preferential freelance rates. In digital, says Bernadette Sturley at MacPeople, ‘There is a distinct shortage of people with the right skills against an insatiable demand.’ Particularly noted is a scarcity of Web developers, programmers and top end designers, following remarkable recovery in this commercial sector. As many digital designers opt for freelance contracts over permanent, fees are generally higher than those for traditional design skills, so these rates appear on a separate table (see above right).

The dearth of packaging designers across the market is due to human resources factors rather than a growth of new business, say recruiters. ‘The lack of recruitment investment at a junior level has resulted in a lack of new talent maturing at a midweight/senior level for both freelance and permanent [positions]. There is a diminishing talent pool being contacted time and time again,’ says Sarah Ellis Jones at Xchangeteam Group. But although Kim Crawford at Periscope cites a ‘dire shortage’ of packaging designers, Sarina Hussain at Major Players considers that many are employed on long, rolling contracts so the turnover is lower.

This paucity of candidates is not just a London problem. Leedsbased recruiter The Book says that freelance packaging designers, artworkers, experienced branding specialists, Web developers and Flash designers are all too scarce to satisfy demand.

Demand for freelances remains strong across a variety of sectors and job titles, particularly print and branding, and for good artworkers. The evidence also shows that candidates with a broad skill base encompassing digital and moving image experience stand to do well. Most freelances are senior, with more than five years’ experience, but there is also plenty of demand for more junior staff to plug smaller gaps, and good middleweight freelances are increasingly sought after too.

In an industry with a high proportion of small-to-medium enterprises, and where workloads vary due to fluctuating levels of client business, there will always be a need for freelance staff. Yet it remains difficult for employers, both of consultancies and in-house teams, to predict their future staffing requirements, and many end up caught short.

This hasn’t been helped by the recovery of the market for permanent candidates following a protracted slump, the knock-on effect of which has been to deplete the freelance pool further. ‘Long-term freelances have been tempted into accepting permanent roles, so there is little scope in the current market for [consultancies to meet] short-term unplanned needs,’ says Crawford.

And what of the bleak picture this paints for employers? ‘[Consultancies] would do well to plan resourcing needs, freelance and permanent, as far in advance as possible,’ says Crawford. And, as demand for both freelances and permanent staff remains strong, it will be a challenge for employers to secure the best talent over their peers. It’s usually the best offer that wins.

Does this confirm freelancing as a better prospect for candidates than permanent employment? Not necessarily, says Beesley. ‘We can also see that clients are increasingly asking for permanent staff and a commitment to their team. This is driven by projects that need continuity and development, as well as the cost of hiring freelances, which drives down their margins,’ she says.

Newman at Network says, ‘It puts huge strains on consultancies trying to keep permanent staff happy, knowing that freelance personnel can earn double without the commitments.’ But, he also warns that the situation may change once the effects of the Inland Revenue’s IR35 legislation, which clamps down on companies paying selfemployed staff tax-free salaries in the wrong circumstances, kick in.

And while it always used to be the case that a permanent position offered greater benefits, employment regulations governing freelancing are changing. As Scally believes, ‘With holiday pay increases for PAYE candidates, freelances’ benefits are nearing that of permanent employees. Candidates are choosing to leave permanent roles to enjoy the benefits of freelancing at a variety of [consultancies]. Freelance is now seen as a career choice rather than a solution.’

‘Freelance activity and, particularly, the number of people wanting to freelance is a good barometer of the state of the market. The moment freelances feel this will change, they will start to accept permanent positions,’ says Nathan Myatt at Workstation. For the time being, fortune may favour the freelance’s wallet, but the pendulum can swing, so, as ever, the best policy is to be nimble if you are make the best of the game.

TOP REASONS FOR RECRUITING FREELANCES
1. Additional projects
2. Unpredictable workload
3. Specialist skills needed
4. Staff holidays
5. Work backlog
6. Maternity/paternity leave

WHAT WE DID
Our results are based on detailed responses from agencies that specialise in freelance design recruitment and deal with staff across all disciplines and positions, both in-house and at consultancies. The response from designers was limited, but was used as a check and comparison.