Each year, more and more Australians are turning to independent earnings to redefine their relationship with work.
The nation’s 1.5 million sole trader sector grows by 50,000 annually, comprising everyone from independent contractors and disability support workers to tradies and creatives – all taking the leap to make a living on their own terms. But their potential to truly thrive is being hampered by a Government too slow to react to this ever-changing workforce.
The sole trader boom should come as no surprise. Self-employment has long offered the freedom to pursue dream careers and – in many cases – reap the financial benefits. It provides the flexibility to truly embrace a positive work-life balance, whether to accommodate childcare as a new parent or dip your toe into a new industry whilst continuing to earn in traditional employment.
Plus, since the pandemic gave people a taste of life beyond the 9 to 5, job mobility has remained at its highest rate in a decade. More people are seeking part-time or project-based work, while 48% of Australians now either have or are planning to start a side hustle, to turn their passions into profit.
And it pays off – sole traders account for two thirds (61%) of Australian small businesses, providing a vital contribution to the stability and growth of our economy.
Why, then, is Government support falling short for such an essential part of our workforce?
With soaring inflation, increased interest rates and reduced consumer spending, sole traders are feeling the squeeze. Hnry’s October 2023 Sole Trader Pulse – the only nationwide survey of independent earners in Australia – reveals that less than half (46%) of sole traders feel positive about their financial performance over the past three months. Only 47% feel positive about how their business will perform in the next quarter, and 41% believe we’re heading for a recession.
This state of sole trader uncertainty is concerning. As an essential sector of the economy prepares for economic downturn, this will have a knock-on effect – not just for the businesses that engage them, but also the consumers that benefit from their products or services.
Support does exist – but not only is it notoriously difficult to find, it varies state-to-state. New South Wales offers a 40% toll rebate for sole traders, a benefit not afforded throughout the rest of the country, for example.
And while the Victorian Sole Trader Support fund provided $3,000 COVID relief grants, applicants had to be a tenant or licensee in a commercial location – unsuitable for the many independent earners who have always worked remotely. Plus, the grants ended last year, despite the economic fallout of the pandemic continuing to have a long-term effect.
When the Government implemented small business COVID subsidies, applicants needed to be GST-certified, neglecting the many independent earners who missed the earnings bracket to qualify. Clearly, politicians don’t understand who sole traders are and what they do – a one-size-fits-all approach for SMBs and sole traders is not enough to appropriately support the unique needs of one of the fastest-growing demographics of the Australian workforce.
And with Labour’s proposed IR reforms in the mix, sole traders are facing more uncertainty. Our research reveals that 43% are unaware of the details, 40% claim vague awareness, and only 17% feel well-informed – driving further confusion about how Government legislation will impact them, and if it will be beneficial or detrimental.
Looking globally, it’s clear to see Australia is falling behind. In Canada, you can claim benefits when taking maternity leave from self-employment totalling 55% of your regular income, while France runs a micro-enterprise tax scheme with differing effective tax rates for sole traders in certain professions.
To better define and support this thriving sector, the Government should introduce an appropriately geared minimum living wage for sole traders – helping them account for the likes of sick leave and holiday pay that salaried employees don’t worry about. Plus, providing targeted tax relief – especially for independent earners who are just getting started – would mark a huge step towards making trading as affordable, accessible and simple as possible.
Here at Hnry, we contribute by freeing sole traders of the time and money spent on tax and financial admin – which robs independent earners of a day per week on average – so they can dedicate this back into building their careers. From automatic superannuation contributions to support long-term financial planning, to a pay-as-you-go model which means you only pay as you earn, we empower sole traders to drive their economic contribution with confidence.
With interest rates recently reaching a 12-year high, the future looks increasingly precarious for sole traders. And with this sector continuing to grow, now is the optimum time for the Government to carve out a more nuanced approach to ensure this essential workforce receives the support it needs not only to survive, but to thrive.
The lasting economic benefits are impossible to ignore.
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