In this blog, Creative Informatics researcher Inge Panneels asks: How do we make sure freelancers aren’t overlooked when we gather data on the cultural sector?
A question made all the more pertinent by the economic impact of the COVID-19 pandemic, Inge suggests that compulsory collection of more granular and carefully coded data through HMRC might facilitate better representation of a fluid, freelance workforce operating in the creative industries.
This blog is based on a full research paper (publication forthcoming). For access and to discuss the issues raised in this blog, please contact Inge at firstname.lastname@example.org. She can also be found on Twitter @ingepanneels
The trouble with data
The economic crisis of Covid19 has made it clear that sole traders, freelancers and one-person companies routinely fall outside of government data statistics and therefore make policy responses more difficult. While the pandemic has magnified these issues, how data on the Creative Industries is gathered and analysed has presented problems historically too – primarily due to inconsistencies and deficiencies in definitions, classification and coding.
The mapping of the Creative Industries (CI) as we know it today, was pioneered by the UK in the late 1990s as a method of gathering data on this newly minted industry. The first Creative Industries Mapping Document published in 1998 was updated in 2001, and a mapping blueprint published in 2010: Mapping the Creative Industries: A Toolkit. Mapping ‘as shorthand for a whole series of analytical methods for collecting and presenting information on the range and scope of the creative industries’ (British Council: 2010), was considered to be predominantly of use in terms of policy development and could no longer exist simply in tables and graphs.
However, mapping is only valuable if it is understood how the creative industries (and those who work in them) are defined, why the mapping is undertaken and for whom, and finally, how results can connect with key audiences and policy agendas.
Defining the creative industries, and those who work in them
The description of the Creative Industries by the Department for Culture, Media and Sport (DCMS) was defined in the UK Government’s Creative Industries Mapping Documents (2001) as “those industries which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property”, yet not every authority agrees on which sectors should be included. According to the DCMS, the Creative Industries comprises of nine sectors (see Figure 1), however the Scottish government, for example, has sixteen, raising questions around whose definitions we should use for mapping purposes. The term ‘freelancers’ is also sometimes tricky to define, and has perhaps been used interchangeably to describe a business model predominant in the creative industries, and elsewhere, to refer to one person businesses. A freelancer might refer to someone who is registered with the HMRC as a PAYE freelancer (a model often used in the film industry for example, where freelancers work for film companies for the duration of the making of a film before moving onto the next project), or they are registered sole traders (a model used by writers or crafts people for example) and are allocated a Unique Tax Reference or finally, they might operate as one person companies (perhaps used by musicians or dancers where there might be a benefit in being a Company).
Problems of classification and coding
As well as issues around definition, mapping the creative industries is also problematised by how individuals and companies are classified or coded. The DCMS uses Standard Industrial Classification (SIC) codes to define the Cultural Industries, which focus on the classification of economic activity as opposed to the Standard Occupational Classification (SOC) codes which are classified in terms of the skill level and content and are mostly used to inform labour market policies. The main advantages of SIC coding are that it has been used as standard for many decades, and can be applied at both micro level (local authorities) and macro level (governmental level), and critically, it can also allow international comparisons to be made. However, while SIC codes became mandatory for companies registered with Companies House on 30 June 2016, it is important to note that not all creative businesses are companies, so will not necessarily be counted through this measure. The DCMS has noted that it may underrepresent microbusinesses, sole traders and SMEs, and as the economic fallout of the unfolding Coronavirus crisis has made visible, there are now more than five million self-employed people in the UK who may fall through the mapping cracks due to issues of definition or categorisation. SIC codes have also been criticised for being unrepresentative of the granularity of the creative industries, and also for being too closely linked to economic success. Interestingly, the DCMS also has responsibility for Civil Society, which includes charities and social enterprises, mutual and community interest groups but this is not accounted for in the Creative Industries definition nor the SIC codes. Could this mean that some new, emerging models of creative entrepreneurship might therefore not be accounted for as an asset to the Creative Industries?
The Craft sector & mapping surveys
As one of the smallest sectors in the CI, the Craft Sector consists of 88% of sole traders of the estimated 23,050 people employed in the contemporary craft sector, although the exact size of the sector is hard to define because many craft businesses are too small to appear in government statistics. Existing research has attempted to plug this gap by triangulating databases provided by the sector agencies with survey results. However, survey responses, or sometimes telephone interviews, make research and data gathering consuming and costly. Surveys have been the preferred methodology for sector specific data collection and analysis, which in turn can feed into national statistics. Creative Scotland for example commissioned a series of sector surveys in the last decade alone, of which the Crafts report was one. As noted earlier, although this method of data triangulation is seen all over the CI, this methodology makes it difficult to make direct comparisons across sectors and timeframes, as different methodologies may be deployed for each sector and each timeframe. Secondly, as research is often only commissioned at irregular intervals (often in response to external shocks such as economic crashes or pandemics) it makes it difficult to get a consistent picture.
Next steps for mapping the creative industries – what do you think?
It was recognised two decades ago, in the DCMS Creative Industries Mapping Documents report (2001), that the provision of robust data on creative industries at both regional and sub-regional level was of utmost importance for informed policy making but that there were inconsistencies across the board.
Since then, significant amounts of research have been undertaken and data collected for and by various industry sectors: if you are a creative working in the sector, you have probably filled in at least one or more questionnaire for your industry body. If SIC codes are so critical to the data collection and subsequent analysis, it is worth noting where the SIC data is collected and how and where it can be accessed. As outlined earlier, the SIC data are currently mostly gathered through Companies House. This data in turn feeds into the ONS and commercially available databases. However, looking at the data on specific sectors, it is clear that a large number of businesses are simply not listed in this particular database such as sole traders and freelancers.
All creative businesses, whether freelance, sole traders, partnerships, SMEs, social enterprises, CICS or (limited) companies will all have to register annual tax returns with the HMRC. It does beg the question whether the HMRC would theoretically therefore not be a better, and more accurate, source for sector information. There is therefore an argument that more accurate SIC data could be collected by making SIC codes declaration a compulsory data entry on annual tax returns, as they currently are already for Companies. It seems a logical route to take for data collection of freelancers.
There are of course caveats on the SIC codes: there is some evidence that SIC codes are sometimes misappropriated as certain codes bestow better tax regimes than others. As such it might require some careful analysis to make sure that SIC code declaration do not advantage or disadvantage certain codes over other in terms of tax regimes thus inviting possible misuse of the codes. It might be worth looking at examples and data collection of such statistic in other countries.
But IF this route were favoured, would there be a merit in doing so? Would it, could it inadvertently exclude or favour certain groups, does it disadvantage those already disadvantaged as they don’t show up in the data and what can we do to make it better? Would the collection of data on freelancers be able to make this workforce of the CI more visible? This is the question worth asking you, working perhaps as a freelancer or sole trader in the creative industries: what do you think?
Please do contact Inge or the rest of the team with your thoughts… Inge can be reached at email@example.com, and can also be found on Twitter @ingepanneels.