In today’s volatile jobs market, UK workers view flexible or freelance working as safer than the traditional 9-5, according to a new study carried out by Fiverr.

The global freelancer marketplace surveyed 500 UK office/white collar workers who have been laid off since December 2022. Based on the results, 47% of respondents have lost faith in salaried work

The findings show that 57% of individuals who were made redundant this year are now planning to explore alternatives to full-time work in their future careers. Meanwhile, 35% plan to keep a side hustle running in their next role.

Months of inflationary cost pressures have squeezed business profits, forcing more employers to make the hard decision to cut down on staffing numbers – particularly in the tech sector. The Fiverr research shows how these decisions are now affecting worker career plans.

Workers see self-employment as more secure than full-time work

Previously, the expectation was that a worker who had been made redundant would immediately begin searching for a permanent contract with a new employer, in order to retain employment protections like pensions and sick pay.

But the Fiverr research indicates that laid off UK workers now want to leave employment, as they no longer view a full-time position as a safe bet.

In the current, troubling economy, workplace uncertainty is on the rise. Tools like AI are putting many job roles under threat. According to Fiverr, 70% of those surveyed said they are now prioritising stability in their future careers, with over a third planning to become a sole trader.

This attitude shift is part of a growing trend amongst the UK workforce towards having greater control of their careers – a ‘be your own boss’ mentality kickstarted by COVID.

Rather than being hit with unwelcome news, such as layoffs, sole traders have control over every business decision. Work schedule is one example. The majority have ditched the office in favour of working from home.

The trend has also proved popular with Gen Z, the emerging workforce. Startups recently published research which shows that more young people are running side hustles alongside their primary income.

Taking advantage of the shift towards flexible and remote working, they are aiming to turn their hobbies and passions into a second job as a way to manage the rising cost of living.

Laid off UK employees speculate their companies over-hired

When Fiverr asked respondents why they thought they had been made redundant, 30% said they believed their company had over-hired. This increases to 39% at companies with 10-49 employees, and 36% for companies with more than 500 employees.

Unsurprisingly, 41% said their company was struggling financially at the time their notice was given. But 30% said they believed it was related to personal performance – with this figure increasing to 41% for those in graduate and entry level roles.

Today’s job market is sparse on talent, with many firms unable to hire for specialist roles such as tech, widening the already substantial digital skills gap.

At the same time, economic crises such as the hiked gas and electricity costs have decimated business cash flow. This has created a difficult balancing act for companies that want to invest in their workforce for growth, while prioritising survival.

The line between success and failure has tightened considerably with the start of the new financial year, as economic uncertainty causes firms to pause recruitment. Office of National Statistics data shows that, between January and March 2023, the number of vacancies fell by 47,000.

Last week, Startups reported that the number of companies proposing redundancies had hit the highest level since the pandemic in March 2023.

Majority of laid off employees feel optimistic about the future

Despite the obvious difficulties and hardship caused by being laid off, many deemed it a blessing in disguise.

72% of laid off UK workers reported that they were ‘relieved’ to now have the opportunity to look for a new role. 66% even stated that they had previously struggled to find meaning in their work.

In fact, 71% of respondents told Fiverr they will look for a fresh start by switching sectors entirely. This includes 67% of those who are in the technology industry, an industry which has been heavily impacted by redundancies.

Layoffs have been making headlines in the industry since mid-2022, with large-sale enterprises like Meta, Indeed, and Amazon announcing thousands of redundancies last month alone.

Bukki Adedapo, UK Country Manager at Fiverr, says: “Being made redundant is never a nice feeling, and is further compounded by the fact that, globally, we’re currently in a very challenging economic climate.

“However, laid off workers are seeking out new opportunities to find careers where they can find more meaning in their work and, through freelancing and self-employment, have the flexibility to make their roles work better around their own schedules and passions.”

Looking to start a side hustle? Read our guide to the top cheap small business ideas for inspiration on getting started.

Only one in ten global workers have in-demand artificial intelligence skills, according to new research by Salesforce.

This is despite of one quarter of global workers ranking AI proficiency in the top three most important digital skills to have, right now.

As a result, both employers and employees are struggling to find their footing as the AI continues to transform the workplace.

Whilst workplaces are in a constant state of flux, what makes this gap malign is the hefty cost it’s incurring on firms. According to Virgin Media O2 research, the digital skills gap is costing the UK economy £12.8bn.

Falling into the gap: what does the digital skills shortage mean for businesses?

Although AI skills are the newest tech buzz phrase, in practice, the skills are rarely used outside of tech. A Salesforce survey of over 11,000 employees found that a mere 14% of respondents say their role involves other related digital skills like encryption and cybersecurity. The number decreases to 13% when it comes to coding and app development.

However, many employers believe that prioritising employees’ digital skills development will have positive impacts on wider business performance. 47% believe it will boost productivity, 43% better team performance, and 40% improved problem-solving capabilities.

What’s more, UK businesses’ search for AI experts increased by 1,000%, suggesting employers are keen on working with professionals who are well-versed in the new technology.

According to research by AND Digital, 20% of workers did not apply for a job and 26% did not seek or achieve a promotion because of their lack of digital skills.

Virgin Media’s data suggests a similar pattern. 21% of respondents say they need digital skills so they can get a job with a higher salary because of the cost of living crisis. 31% believe they have been passed over for a promotion or pay rise because of a lack of digital skills.

Paramjit Uppal, founder of AND Digital, says, “UK organisations are still failing to sufficiently upskill employees, and it is directly impacting business and wider economic growth.”

“This is because we have not come to a shared understanding of what the skills gap is or what digital skills means.”

Bridging the gap

The lack of upskilling opportunities appears to be a hurdle to overcoming the disconnect. Nine in 10 businesses believe they should prioritise digital skills development for their employees. However, 58% of knowledge workers have never received digital upskilling from their employer.

Furthermore, the recent economic climate has had a significant impact with workers forced to prioritise paying rising bills over self-funded training.

Claire Bacall, Chief for People Evolution at AND Digital, explains, “People who feel disenfranchised or ill-equipped for the pace of change to the extent that they see their career prospects being limited is unhealthy for organisations.”

In the first seven months of 2022, there were over two million digital skills related vacancies posted out of a total of 8.5 million vacancies.

Demand at this level suggests organisations need to consider other mechanisms beyond recruiting to address their skills deficits.

“Organisations need to create an environment for people to feel that they can fully participate in the digital economy, evolve their knowledge and skills to capitalise on change and continue to feel engaged and relevant,” summarises Bacall.

Up the upskilling

As running costs recruitment freezes rise, businesses need to seriously consider in-house upskilling.

83% of business leaders agree that their organisations need to be fit for our digital present and future. However, 82% of people leaders believe skills-based experience is most important when evaluating candidates.

Externalising the cost of upskilling to employees is not the solution, particularly because conducting upskilling in-house can enhance employee retention and satisfaction.

Both businesses and employees need to be ready with an arsenal of skills that will help them navigate the new digital workplace.

Read more:

• Over half of SME owners understand AI but are hesitant to adopt it
• The King’s Speech: what can businesses expect from the Autumn Statement?

A recent report shows a huge jump in the number of SME owners protecting their homes, cars and other assets with Personal Guarantee Insurance (PGI).

The survey compiled by Purbeck Insurance showed that in March 2023, more SME owners applied for PGI to mitigate the risk of business failure than at any time previously. 

The volume of PGI applications from start-up businesses was particularly strong, up 37% in Q1 2022, with a marked increase in finance for investment in growth initiatives, where the volume of applications was up 196% compared to Q1 2022: the highest level recorded to date.

The increase in PGI applications

With the COVID-19 pandemic having caused significant financial damage to the small business economy worldwide, business owners are still currently looking for ways to mitigate risk and protect their personal assets. In addition to key man cover, many founders are seeing personal guarantee insurance as essential to their business continuity plans.

Todd Davison, MD of Purbeck Insurance believes the government’s lack of support has contributed to the huge rise in PGI takeup: “It is perhaps no surprise that March was a record month for applications for Personal Guarantee Insurance after the UK Chancellor failed to deliver much cheer to the small business community in this years’ spring budget.”

In general, SMEs are more vulnerable to economic shocks. They are less likely to have large cash reserves or fast access to credit to bail them out of emergency business situations. 

Plus, this large jump in PGI takeup could also indicate that small business owners are being asked to provide personal guarantees to secure loans, which has further increased the demand.

Looking ahead

As SMEs look to survive the turbulent events of the past couple of years, it is likely that the demand for personal guarantee insurance will increase. 

However, according to Davison, the news isn’t all downbeat. “We have seen more businesses securing personal guarantee-backed finance for growth than ever before using PGI to ease the financial worry that comes with that commitment.”

According to a report by This is Money, Revolut has been cautioned by UK regulators just a month after the modern payment app indicated to customers that their banking licence was imminent. 

Auditor BDO said £477 million of revenue from Revolut – around three-quarters of its turnover – could not be verified and may have been misstated.

Revolut has hit out against what it described as ‘misreporting’ of the auditor’s opinion in this case.

What is Revolut?

Revolut is a digital challenger bank that offers a range of financial services, including foreign currency exchange, budgeting tools, and cryptocurrency trading. The company has gained significant popularity in recent years, attracting millions of users worldwide.

Revolut’s confidence in obtaining its banking licence came down to figures: In January 2022, the bank had reported a £26 million profit for 2021, alongside a tripled turnover of £636 million during the cryptocurrency boom. However, the release of those results was delayed, missing the December 31 deadline.

As a result, the Financial Conduct Authority (FCA), the UK’s financial regulator, has been keeping a close eye on Revolut’s operations. The FCA has reportedly issued several warnings to the company over the past year for failing to meet its regulatory obligations.

Industry Concerns

Concerns over Revoluts’ long-delayed 2021 accounts have been compounded by wider industry problems. 

Recently, huge players in the banking sector – for example 167-year-old Credit Suisse – have been ‘bleeding billions’ after critical banking mistakes. As a result, regulators are feeling immense pressure from venture capitalists and investors to be stricter about their processes in an attempt to mitigate any uncertainty or concern surrounding holdings and investments.

What is a challenger bank?

Numerous companies have emerged in recent years to challenge the ‘old ways’ of finance and disrupt and revolutionise the industry. These businesses are seeking to make people’s lives easier with clever, tech-based solutions, from quick and straightforward mortgage applications to unique takes on loyalty rewards, such as fellow challenger bank Yonder.

A digital challenger bank is a new type of bank/fintech company that aims to ‘challenge’ the big four UK banks: Natwest Group, Barclays, Lloyds TSB, and HSBC. Revolut is considered one of these new kinds of banks.

What’s next

Revolut has acknowledged its issues and committed to addressing them, as the bank may face further regulatory action if it fails to meet the FCA’s expectations. 

Revolut has already faced regulatory scrutiny in the past over its failure to report suspicious transactions to relevant authorities.

Only time will tell if it can fulfil all the new requirements necessary to truly challenge the banking status quo. 

Photo source: Aleksandrs Karevs

LinkedIn has unveiled a new values-based filter for online job searches, to help businesses meet growing demand amongst job seekers for purposeful work.

The changes mean that businesses can automatically showcase their core values, such as diversity, equity, and inclusion (DEI), social impact, and environmental sustainability, when advertising jobs on LinkedIn.

Startups recently wrote about the increased focus on meaningful work post-COVID. Rising vacancy rates mean candidates have more opportunity to seek out job openings that align to their personal set of values.

With the update, LinkedIn has sent a clear signal to hiring managers – defining your value proposition will be crucial to sourcing talent in 2023 and beyond.

Employers embrace values-based recruiting

Values-based recruitment (VBR) is not a new idea – but it is on the up. The term refers to the strategy of hiring people who share similar beliefs to the business. This helps companies to find workers who are motivated and passionate about their jobs, as well as being qualified for the role.

Like many business trends, the switch was accelerated by COVID-19. With everyday life put on pause, many of us took time to contemplate what we want to do with our lives and careers.

Experts have already taken note of the benefits that principled employers can enjoy. When staff members feel motivated to achieve a personal, as well as professional, goal, this tends to bring a direct uplift to employee engagement.

Now, recruiters are beginning to take advantage. LinkedIn says it had observed a 154% increase in values-related terms on entry-level job posts between 2020 and 2022, as organisations trial new ways to lower their staff turnover rate.

How does the LinkedIn values-search tool work?

With its latest announcement, LinkedIn has unveiled a suite of tools designed to help principled job seekers find relevant opportunities.

LinkedIn reports seeing a 154% increase in values-related terms on entry-level job posts between 2020 and 2022.

Companies can now list the values they prioritise, such as supporting working parents, promoting diversity in hiring, and implementing carbon neutrality initiatives. Thanks to a new search filter, job seekers can then search for vacancies based on these specific criteria.

Since debuting the new features in October, LinkedIn has reported that more than 40,000 companies have incorporated value commitments – like mission statements and information on company culture – into their profiles.

Additionally, an “I’m Interested” button on company pages lets job seekers share their profiles with prospective employers, streamlining the process of identifying enthusiastic candidates.

How the ‘pivot to purpose’ will attract young talent

Gen Z employees, who are fast becoming changemakers in the world of modern work, are much more likely to look for meaningful job opportunities compared to older colleagues.

According to a separate LinkedIn survey, Millennials and Gen Z workers place the most importance on working for organisations that resonate with their culture and values. Not promoting this information is one of the most common mistakes in job adverts.

On average, 87% would switch roles if their new company’s values were more closely aligned to their own. The figure falls to 7-in-10 for Gen X.

For SMEs, remaining a desirable workplace for young job hunters is an important consideration for long-term growth. In just two years time, so-called ‘Zoomers’ will constitute 27% of the workforce. Other reasons to consider Gen Z in your recruitment strategy include:

1. They’ll help bridge the skills gap. 

Gen Z will be the UK’s most qualified generation. Some 80% have higher education qualifications, compared to 15% of Boomers. This will no doubt prove key to plugging the skills gap in years to come.

2. They’re attuned to new ways of working. 

Coming of working age post-COVID means Gen Z are well up-to-speed with hybrid working, with 75% saying they prefer it to full-time office working patterns.

3. They are digital natives. 

This age group has grown up with the internet in all its glory. As global connectivity soars, Gen Z employees can help firms keep up with technological advances and bridge the growing digital skills gap.

Alongside values-based initiatives, another business offering that is popular with the younger generation is employee perks.

A poll by household money-saving tool Nous.co revealed that 71% of Gen Z – those aged 27 and under – consider non-salary benefits to be important. In comparison, just 36% of 55-64 year olds said the same.

Greg Marsh, CEO and founder of Nous.co, says concentrating on benefits packages is a smart decision for targeted support during the cost of living crisis.

Startups recently reported that redundancy rates are on the rise as staffing costs become increasingly unaffordable for SMEs.

“For startups, getting benefits right is basically a hiring hack,” Marsh attests. “It can be far cheaper to give benefits than just to ramp salaries – particularly if those benefits are thoughtfully designed from a tax perspective.”

More on this: Our guide to the top benefits and perks has over fifty ideas of desirable schemes and bonuses to introduce to your workforce.

Record high numbers of UK businesses are looking into potential redundancies, as months of crippling overheads, labour shortages, and stagnant economic growth batter SME cash forecasts.

In March 2023, an average of 76 employers distributed HR1 forms – a notification which must be completed when an employer proposes making 20+ redundancies – according to official labour figures released by the Office of National Statistics (ONS) last week.

This number is a 90% increase from the same period in 2022, when just 40 employers were found to have proposed layoffs.

The data suggests that business confidence is flattening as the delayed effects of record high inflation begin to weaken bottom lines.

Monthly insolvency statistics for March, released by the government on Tuesday, paint a similarly bleak picture. The number of registered company insolvencies last month was 2,457. This is 16% higher than in the same period during 2022 – higher than during the pandemic.

Déjà vu: businesses succumb to cost pressures similar to COVID-19

The latest ONS findings on proposed redundancies show that, in 2022, an average of 41 employers per week handed out HR1 redundancy notices.

Companies have now drawn up their payroll year end statements for FY 2022/23. The staffing costs appear to have become untenable for many, causing the number of proposed redundancies to upsurge alongside insolvencies.

So far in 2023, the number of employers who have proposed 20+ redundancies has been increasing month-on-month by around 44%, since January, for an overall average of 66 per week.

In tech, the situation has been dire for some time. Layoffs have been making headlines since mid-2022, with large-sale enterprises like Meta, Indeed, and Amazon announcing thousands of redundancies last month alone.

The influx in redundancies spells trouble for the UK economy. Job losses reduce spending in local areas, jeopardise economic recovery and heighten the risk of further layoffs.

Notably, the last time planned redundancies reached current levels was November 2020, during the second COVID-19 lockdown. At the time, companies were forced to let go of thousands of team members to manage the financial impact of the crisis.

Government business population estimates show that, in 2022, employment in small businesses (with 0 to 49 employees) was 12.9 million (48% of the total).

Debbie Porter, managing director of Bakewell-based Destination Digital Marketing explains, “Small businesses cannot keep accepting increases in costs across the board like this and still remain profitable. Inevitably businesses will fold and people will lose their jobs.”

Smaller organisations struggle to stay afloat as government lifelines wane

Startups has been tracking the various financial pressures that have perforated small business bank accounts over the last 12 months. Chief amongst them has been the rise in energy bills, which has sent costs spiralling upwards across the supply chain.

Despite having to contend with hiked business gas and electricity prices for over a year, the data suggests that most employers had managed to delay making reductions to headcount. Until now.

Earlier this month, we reported that the end of the Energy Bill Relief Scheme (EBRS) – the government’s support policy for helping SMEs grapple with mounting energy price rises – would lead to a surge in business closures from early April.

According to research from the Federation of Small Businesses (FSB) 28% of small firms which signed up to fixed energy contracts last year are predicted to either downsize or close after the scheme was pulled on April 1.

The growing redundancy rate could be a result of the fallout from the government’s decision to close down the EBRS and weaken a key pillar of support for SMEs.

Another argument is that the delayed response to inflation could be as a result of hiring woes caused by the digital skills shortage. Many firms are already struggling to hire for specialist roles, such as tech.

In this barren jobs market, firms may have decided not to cut staff numbers in case they struggled to rehire talent if the economic downturn proved short-lived.

How can I avoid making redundancies?

The ONS data indicates that today’s employers are at a cliff edge when it comes to making cutbacks. Lots of the small-scale budgeting tips proposed by experts – have a penny for every time you’ve been told to switch to energy saving light bulbs – simply don’t cut it anymore.

However, while drastic changes like firing staff are often thought of as the go-to solution, there are still alternative options for small business owners to explore. Crucially, in the midst of talent shortage, cutting job roles might also do more harm than good.

One way to limit labour costs without causing redundancies is to reduce staff hours to short-time working. For example, you might ask an employee to work a three-day week, instead of a five-day week (although remember, any changes to an employee’s contract must be made with their permission).

Workers who have experienced a fall in real wages are expecting a corresponding salary increase, while small companies find it increasingly difficult to offer a competitive rate.

We recently published an analysis of UK pay rises that provided stark reading for employers.

Data from the ONS shows that average weekly earnings in the private sector had increased by 4.97% (excluding bonuses) between January 2022 and 2023 – unaffordable for most small employers.

To increase staff satisfaction without raising wages, business owners might explore alternate routes to paying staff. Our guide to employee benefits has over fifty perks and subsidies that can relieve financial stress for colleagues, without stemming cash flow.

Making redundancies: what to consider

For some companies, the squeeze on profits will simply be too much. If you explore all of the options above, more extreme action might need to be taken.

Take time to properly research and understand the legal considerations if you are unable to avoid making layoffs.

Asha Kumar is an employment partner at Keystone Law. Kumar advises that, for those “who have to make tough decisions about their workforce, it’s important to vigorously adhere to fair redundancy procedures to avoid any future Employment Tribunal claims.

“They also need to ensure that, in addition to an individual redundancy process, they comply with the collective redundancy consultation process where this is triggered by the number of employees being made redundant within a 90-day rolling period.”

More on this: learn everything you need to know about the redundancy process in our guide to making redundancies for small business owners.

In the latest chapter of the post-Brexit policy reality, the government has introduced the Data Protection and Digital Information bill. The changes aim to recreate a UK equivalent of the European Union’s GDPR law.

The government has presented the bill as a common sense policy that will reduce costs and burdens for British businesses and charities.

It’s claimed that the proposed data regime can save the UK economy more than £4 billion over the next 10 years, and remove barriers to international trade.

In theory, this should help accelerate data-driven trade, which generated 85% of the UK’s total service exports according to government figures, and contributed an estimated £259 billion for the economy in 2021.

The bill, which was co-designed with key industry and privacy partners, gives organisations greater flexibility over how they can comply with the regime while maintaining high data protection standards.

The bill is outlined in an over 200-page long document, with some of the main changes being:

• Any controller or processor is exempt from the duty to keep records of processing unless they are carrying out high risk processing activities
• Removing the need for a Data Processing Officer
• Profiling to determine if AI has been used for data processing purposes
• Introduces new obligations on providers of electronic communications networks, including notifying the Information Commissioner’s Office if anyone has contravened the direct marketing rules

Michelle Donelan, Secretary of State for Science, Innovation and Technology, said of the bill, “Our new laws release British businesses from unnecessary red tape to unlock new discoveries, drive forward next generation technologies, create jobs and boost our economy.”

Some changes welcomed by SMEs

The Data Protection and Digital Information Bill seemingly is claimed by the government to position the UK as a pioneer in data protection regulations. The big sell is this will be a simple, business-friendly framework that will be cost-effective to implement whilst promising to retain a status of adequacy with the EU.

Certain aspects of the policy are welcome changes by SMEs. Alan Jones, CEO and co-founder of encrypted messaging app YEO Messaging, applauds the permission to use anonymous data for R&D purposes. “The move away from restrictive cross border data restrictions is positive, providing data is anonymised – this can only benefit us all.”

The ‘Britishisation’ of the GDPR law will also bring tactical changes to marketing strategies for some SMEs who rely on intense marketing and data gathering practices of many consumer focused applications. This is because there will now be stricter penalties on the use of unauthorised personalised data with the aim of inhibiting nuisance calls and targeted pop-ups.

Jones believes the restriction is warranted. “The use of identifiable personal data harvested through interaction on a specific application is frivolous, an invasion of privacy and to date, has been uncontrolled.”

“SMEs adopting data harvesting for resale or targeting will undoubtedly have to change tactics and enhance the declaration of their use of data to the user. This may be more restrictive, but we see this as a ‘cleaning up’ exercise where the user wins.”

In practice, this means there will be more penalties enforced for the use of unauthorised personalised data. This will inhibit things like targeted pop-ups, and instead, create a stronger sense of transparency and trust amongst users.

The real risk of the Bill

Although the “common-sense led” data policy sounds welcome, some red flags emerge when looking further into the details of the bill.

“Frankly, I am a little concerned with the self-policing approach. The removal of the requirement for a business to have a Data Processing Officer may see a more relaxed attitude within small businesses,” confesses Jones.

This policy relaxation is accompanied by what Open Rights Group preemptively identifies as a regulatory race to the bottom. The group argues the bill could encourage irresponsible business practice, harming Britain’s global reputation.

Abigail Burke, policy manager at Open Rights Group says, “The bill weakens data subjects’ rights and corporate accountability mechanisms, politicises the Information Commissioner’s Office, and expands the Secretary of State’s powers in numerous, undemocratic ways.”

The relaxation of policy is designed to entice organisations to bring their business to the UK under less restrictive data protection regulations. However, there is an asterisk written next to this proposition that cannot be overlooked.

If the proposals are considered to diverge too far from the EU’s data protection regime, the UK’s adequacy status could be at risk. This decision ultimately rests in the policy circles of the European Commission, and while there isn’t much appetite from Brussels to go against the UK’s policy, a risk remains.

According to the Open Rights Group, conservative estimates found that the loss of the adequacy agreement could cost £1-1.6 billion pounds in legal fees, alongside the cost resulting from disruption of digital trade, investments, and the relocation of UK businesses to the EU.

Business as usual

The concerns flagged by the Open Rights Group, however, don’t seem to be shared by SMEs. In practice, not a lot is changing for them.

Charles Brecque, Founder of Legislate, says “From our perspective, we’ll continue to follow the rules and do what they’re supposed to do. So, in our case, there’s not a big impact from that perspective.”

To entrepreneurs, the real positive or negative impact of the bill remains to be seen. Brecque explains, “It’s natural for there to be updates to the bill, now that the UK has more autonomy on these sorts of laws and rules.”

“I think with the bill, [the government] obviously tried to be a bit more pragmatic on certain aspects. But, I guess only time will tell if it has a positive or negative impact.”

Although Jones does have some concerns on specific parts of the bill, he also says that in practice, and because of YEO Messaging’s business model, not a lot is changing.

“Fortunately, as a company focused on privacy we will see little change to our approach,” he reveals. “All data including messages whilst in transport and at rest are encrypted. So, again no data is identifiable to an individual.”

Not all businesses will tread the same path, maintaining GDPR-level data standards. Diverging from a European model of data protection carries risks that could, at scale, put a question mark on the UK’s adequacy status.

While scrutiny and some cautionary optimism is certainly warranted, the tangible effects of the policy on different types of businesses and industries remains to be seen.

Younger people are taking advantage of the shift towards flexible and remote working to turn their hobbies and passions into a second job.

According to new research commissioned by Connectd, 92% of startups founded by Generation Z entrepreneurs (those aged 16-24 years old) start off as a side hustle.

The survey, conducted by independent pollsters Censuswide, explored the motivations and actions of 50 Gen Z founders and compared them with the same number of entrepreneurs over the age of 25.

The findings imply that the post-COVID cultural shift towards online and flexible working is bolstering UK entrepreneurship, not hampering it.

The new generation of entrepreneurs

The Connectd research illustrates a trend that has been emerging over the past three years. Young workers are increasingly looking for multiple sources of income to speed up their career and earnings progression.

This could be a result of the cost of living crisis. The majority of Gen Zers have come of working age during a global pandemic; undoubtedly the biggest upheaval to office culture in recent history. Almost immediately after they began work, the UK entered a period of slow economic growth and wage stagnation.

That Gen Z is more likely to explore diversifying their income by starting a side hustle could be a result of rising worries over job security and low pay. We recently reported that new graduates in the UK are being awarded a starting salary that’s £5,000 less than they expect, on average.

But Connectd founder and CEO Roei Samuel believes the findings are more reflective of changing workplace culture.

Increasingly, staff are rejecting the traditional ‘9-5’ working pattern in favour of greater work-life balance. Flexible working arrangements – such as remote or hybrid – have also enabled people to pursue passion projects around their main income.

71% of 16-25 year olds in the UK are either planning to, or already do, work as a freelancer. This group cited the ability to choose their own working hours and ‘be their own boss’ as a top priority.

“Gen Z has grown up attuned to the gig economy and flexible working, which means they thrive on having more autonomy in employed roles than ever before,” comments Samuel. “They’re increasingly bringing this agile mindset to their personal entrepreneurial journeys.”

Side hustle era could remove major gender barrier to starting a business

It’s not just younger generations that are benefiting from the new era of side hustle entrepreneurship.

Time is a major, gender-specific barrier when it comes to starting a company. In most countries around the world, women are still expected to be the primary caretakers of children and do more unpaid housework than men, giving them less time to pursue a business idea.

As flexible working frees up more hours for employees to launch a side gig, a recent survey by GoDaddy found that the number of women-led businesses has surged from 36% to 47% within the last 12 months.

The same report shows 78% of female entrepreneurs started their own business as a way to have more flexibility and opportunity in their career.

The fact that more people feel able to start a business is undoubtedly a good thing for the economy. While GDP figures show that the UK has avoided a recession for now, growth remains flat.

Small businesses currently make up 99.9% of the UK business population. Entrepreneurship at any level, even a small side hustle like dropshipping, should be encouraged to help reverse the economic lull.

Gen Z side hustles: a force for good?

When exploring Gen Z motivations for starting their own business ventures, the Connectd research also found a significant desire to make a positive impact on the environment and society.

Over two-thirds (68%) of Gen Z founders stated that they started their company to make a difference in this respect, compared to 54% of over 25s.

Unanimously, 100% of Gen Z founders surveyed said it was important to them that their business had a low impact on the environment. 

Another key trend explored in the research is Gen Z’s motivations to ‘build in public’, publishing key information about their business successes and failures in an open and transparent manner online.

Public transparency and honesty when growing their business was highly important to 86% of Gen Z founders in Connectd’s research, compared to 63% of founders over 25.

“Our research shows how Gen Z entrepreneurs are uncompromising with their ESG credentials, as they look to underpin successful business growth with strong ethics,” says Samuel.

“This should act as a timely reminder for investors and advisors who are looking to support Gen Z entrepreneurs and share in their future successes.”

Want to start your own side hustle? Check out our guide to the top cheap small business ideas for tips on getting started without massive investment.