Preparing for the gig economy
By Ben Stevens
Head of Marketing & Brand
Nearly 70% of Gen Z-ers are either freelancers or plan to do so in the future, according to freelancing platform Fiverr.
For many of you parents mulling that statistic, it really is a remarkable shift in the makeup of the economy you’re used to. These are the youngest members of today’s workforce, and alongside the generation that comes after them, will be the bedrock of the global economy for most of our lifetimes. They are the generation blighted by a global pandemic and its economic ramifications, barely keeping their head above water in a sea of rapid technology advancement. Fewer than 40% of those surveyed are willing to work full-time and nearly 30% want to work from wherever they want. The gig economy, one of flexibility and autonomy yet often an afterthought for the political classes, is very much here to stay.
Is our education system prepared?
So are we heading in blind to this shifting labour market? Is the tried and tested “good degree from a good university” mantra still relevant for young students, or do we need to revisit how we prepare the next generation for the working world? At Oppidan, our work is often anchored by the pursuit of traditional academic achievement – winning a place at a new school, getting A’s at A level or nailing an Oxbridge interview – but in truth, what we really care about is developing the character skills for which these goals are a by-product. These are skills that have a wider application of course, most notably to successfully operate and market the business of yourself, professionally and otherwise.
Unlike nearly all of my peers, I have never been in full-time employment, which for a 32-year-old fills me with equal part pride and horror. After university, I chose to make a career out of skills that in no way were acquired during the course of my education. The hours spent chained to a desk in the library polishing off a 3,000-word essay on gender dysmorphia in Latin America funnily enough didn’t lead to a freelance career in brand and marketing. There are many things that I now know about working as a freelancer that, in hindsight, I really should have known earlier. These aren’t hacks and gimmicks, rather basic principles of operating your life as a business: time management, marketing and the mysteries of accounting and fiscal health.
The arguments for and against freelancing
As the data above would suggest, and set on a background of content creators and digital nomads, there’s a very good chance that your children will consider the gig economy for themselves. So what discussions should you be having and what wisdom can you impart? Of course, the arguments for freelancing are self-explanatory: varied and flexible work, self-governance and no ceiling to your annual earnings. But at what cost?
All of the things that are taken for granted as an employee all of a sudden become your responsibility, from office equipment and insurance to pension contributions and (most importantly) managing finances. Of the swathes of Gen Zers going into the freelance world, I would imagine not many of them can call upon the services of bookkeepers and accountants, at least to begin with. The onus is on them to research their tax situation and budget accordingly so that there isn’t a shock in store when the tax man comes calling (31st January and 31st July in the UK). Speaking of setting money aside, a recent survey by CMC Invest revealed that over 40% of freelancers don’t contribute to a pension, meaning a rethink for those that have drawn up an early retirement. The list of responsibilities goes on ad nauseam, but autonomy is a double-edged sword.
I can’t stress enough how important it is for young people – and you as parents – to thoroughly do their research on what it means to be a freelancer. Learning on the hoof is fine, but preparation can save you a headache (and a lot of money) down the line.
Freelance work checklist
Research your tax situation: it’s important to know what you’ll owe and when, either as a sole trader or limited company
Look out for further tax implications: when is VAT chargeable and what is tax deductible?
Look after your finances: either hire a bookkeeper or use software like Quickbooks or Xero
Set aside money to pay tax: budget properly throughout the year so you can pay your tax bill!
Pay into a pension: set up a self-invested pension plan (SIPP) and make monthly contributions
Build a website: you’ll need to provide information about your service and show off your work
Put together a marketing strategy: if you can’t find clients, you won’t have a business
So, what’s the conclusion?
If we’re to believe the likes of Elon Musk and LinkedIn founder Reid Hoffman, the labour market will be almost unrecognisable in the near future. The COVID pandemic has been a great catalyst to this, provoking a shift to remote work that is now considered to be a bare minimum by the incoming Gen Z. Hoffman, for example, has predicted that 50% of the US population will be freelancers within the next decade, whilst ‘9 to 5s’ and traditional CVs will become redundant.
For those willing to embrace this change, now is the time to get ahead. As a new wave of young people approach the working world, it all comes down to education. Careers departments at schools and universities have long been snooze-fests that force their way into an otherwise enjoyable day and bang the same drum they’ve been banging for years. I’d be curious to see if they are changing their tune to our changing economy, setting up the foundations for those that see themselves as part of the 50%. It may not be for everyone, but it’s important that the next generation are freelance-literate.