Outdated payment systems for freelance work make pensions and mortgages inaccessible to many freelancers.
The number of British workers turning to freelancing is growing at an exponential rate with the arena accounting for almost 5 million members of the UK workforce. Not only are swathes of workers choosing to work in a freelance and flexible capacity, but they are contributing huge amounts to the British economy. IPSE estimates that freelancers contribute £130 billion to the UK economy.
The higher numbers of freelancers are also the result of the changing nature of work. “Work is being disaggregated from jobs and reorganized into a variety of alternative arrangements, such as consulting projects, freelance assignments, and contract opportunities.” says Diane Mulcahy, writting for The Harvard Business Review.
There are all kinds of freelancers. From high skilled to low skilled. And the gig economy, depending on the type of freelance you are and your personality and entrepreneurial skills, can be an advantace or an opportunity. Flexibility, autonomy, and meaning are three of the advantages of embracing the gig economy if you are high skilled. But there are still risks.
Freelancers are far more likely to be refused loans because they don’t meet the standard mortgage criteria of a monthly salary or other form of regular and reliable income. One of the key reasons for this is that freelancers do not receive payments in a timely manner due to the irregularity and inconsistency of poor payment systems. Many employers and recruitment companies are relying on archaic payment systems which do not guarantee regular and reliable payments to compensate freelancers for their work, putting nearly 5 million Brits at risk of being unable to secure a mortgage loan.
Research from ETZ Payments shows that the freelance workforce are not only unable to receive loans due to these inconsistent payments, but a third of workers – 1.4 million people – in London who are working in a freelance capacity have had to turn to pay day lenders or short term finance solutions due to inconsistent payments from their work, while 15% of freelancers across the UK have had to do the same.
Nick Woodward, CEO of ETZ Payments, offers the following commentary:
“The gig economy is becoming more and more attractive and offers immense opportunities for those who want to work in a freelance or flexible manner. What is truly disconcerting is that many workers around the UK are struggling to secure vital loans and mortgages due to inconsistent payment from recruiters and employers. Modern technology that allows fast, faultless and frictionless payments should mean that these issues are a thing of the past and if employers want to retain and recruit the best talent they should look to update their payment systems.”
Founder Dinis Guarda
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