How do freelancers change the job market, Christoph Hardt?

robotspaceship: Why are more and more companies turning to freelancers; do you have an idea?

Christoph Hardt: Absolutely! This is mainly due to the increasing specialization of jobs.

Can you give an example?

Imagine you need Search Engine Advertising in your company. A few years ago, you had a generalist in the office who did your marketing. But now you need to be searchable on Google. And for that, you need a Search Engine Analyst who sets up Google Analytics, calculates the various conversion points somehow. That means you need writers who can write good, short, and catchy advertising texts. You may also need proper writers because you want to replace SEO with SEA in the long run. And then suddenly, you have many different and very specific job profiles that one person can no longer cover. So, as a company, you naturally ask yourself whether you need to hire all these different people who might only have two hours of work a day – or if you rely on freelancers. The answer is pretty clear.

Does this apply to all industries?

This applies especially to companies that are not huge corporates and therefore need to manage their resources. We've called it the "return of Taylorism" – the division of labor is getting larger. There are more and more specialized areas. But there's also another reason.

What is it?

Many companies work from project to project. If you rely on freelancers there, you don't have to hire new staff separately, but at the end of a project, you don't have to let anyone go either. The third reason is that the innovation spiral is turning faster and faster. Take the example of AI – many companies now have to figure out how to work with it. In this phase, it might not be necessary to hire someone permanently into the company.

So, freelancers bring flexible and cost-effective expertise to you?

Absolutely. Imagine it takes six months to fill a position. That was often the case in the past, especially in 2021 and 2022. Freelancers are a great means to bridge resource gaps during those times.

Then there's the other side, the freelancers themselves. Their numbers are also increasing. Why?

Statista says that around 25 percent of workers in Europe already work as freelancers. The number is lower in Germany. But there are many industries where we've had an employee market for decades. This means that people could choose where they want to work. Many chose to work flexibly. Plus, you can earn more money.

Which industries are those?

Classic: IT. And it's currently leading the way for other industries.

So, overall, more freelancers in the future?

I assume so. Some time ago, we conducted a survey among freelancers on our platform – it revealed four groups.

What are they?

We called the first and smallest group the "nostalgics." They would actually prefer not to be freelancers, but they were laid off and saw it as a last resort. Then there are those who prioritize family time. These are often people between 30 and 40 with small children who say they need more flexibility. Then there are those who are very entrepreneurial and say that they not only like to work as freelancers but want to start their own businesses. They work as freelancers because it gives them time to build their companies. The last group believes that as freelancers, they can earn more money. If you can charge a daily rate of 800 to 1000 euros, you certainly earn more than in a permanent position if you are booked for 250 days a year.

At Malt, you connect freelancers and companies. What are the biggest pain points there?

Depending on who you ask, it varies. For freelancers, the biggest obstacle is constantly acquiring new projects. At the end of a project, when you should already be focusing on the next one, there's no time for that. This means you could fall into a financial hole. The second major factor is the lack of strategic career development. In a company, you always take the next step, and people believe that you can do your job based on that development. Many freelancers lack this reputation, even though most of them are constantly developing themselves, whether in seminars or coaching.

Because companies better document that?

Yes, exactly! Also, companies take care of the training of their people; there are certifications and so on. In the corporate context, this is now properly institutionalized – it doesn't exist in the same form for freelancers.

Let's travel a bit into the future. You said that around 25 percent of all IT professionals in the EU are already freelancers – what will it look like in 10 years?

If we look at the past years, we can see that the percentage of freelancers has steadily grown. There haven't been any big leaps. But it's been a continuous uphill trend.

Will it continue like that?

Yes, I assume the trend will not wane.

What makes you think so?

If we look at more liberal labor markets, we find that the percentage of freelancers is higher there than with us. In the USA and the UK, for example. At the same time, we can see that in Gen Z, the percentage is also higher. From this, we can deduce two trends: the more modern the labor market, the more freelancers. And: the younger generation is even more inclined towards this topic – that won't change.

However, Germany doesn't seem to be made for freelancing. There are many hurdles. What needs to change here to make it easier?

You can simplify some things tax-wise, for example. But the biggest problem is that you quickly fall into the trap of bogus self-employment. Unfortunately, there are not just "the" five tips, and if you follow them, everything is fine. However, you can be employed, and then you can't be falsely self-employed. From my point of view, this is a huge problem, especially considering the trend that more and more people are working independently.

What should happen there?

We live in a time when the shortage of skilled workers is one of our biggest problems. That means we should do everything to make the job market as flexible as possible. This doesn't mean that we should allow precarious conditions – but if someone chooses to work independently and earns well, it should always be possible.