Australia’s sole traders have been warned they are mortgaging their futures as they cut back on superannuation contributions in the face of the soaring cost of living.
The latest Hnry Sole Trader Pulse, the only nationwide survey of self-employed people in Australia, reveals around a quarter of independent earners (24%) plan to cancel or delay planned super contributions to cope with skyrocketing costs and surging inflation.
Women are also more likely than men to cut back on super – 31% versus 20%.
The figures are especially stark given that superannuation is not compulsory for sole traders, the 1.5M individuals with an ABN who make up around three quarters of the nation’s small businesses. A full 43% said they had never made a superannuation contribution as sole traders.
Despite this, the number of sole traders is currently growing at a rate of 50,000 a year because they value the freedom and flexibility that independent earning can bring.
The survey also found:
- While quarterly income continues to improve from the nadir of the Covid lockdowns, economic conditions are biting;
- Sole traders are having to work additional hours, cut rates and make substantial cost savings in order to cope with inflation;
- This is beginning show up in declines in their wellbeing. Fewer individuals believe they have the right work-life balance than 12 months ago when the survey began. According to one respondent, a sole trader in the health sector: “Mental health is a booming industry, unfortunately”;
- Sole traders are more pessimistic about the medium-term outlook for the economy than they were during the depths of lockdown;
- Sole traders are drowning in paperwork, spending seven hours – or effectively one working day – per week managing their financial and tax affairs. Additionally, around half have yet to submit their tax returns and their levels of stress are rising as the October 31 deadline for lodgement nears.
As the survey marks 12 months, it provides a compelling snapshot of the sentiment of self-employed people in Australia, such as tradies, freelancers, and consultants – the fastest growing sector of the economy.
The research was carried out by Resolve Strategic between 4-10 October on behalf of award-winning fintech Hnry, Australasia’s largest and fastest-growing digital accountancy service which caters expressly to sole traders.
Commenting on the survey results, Karan Anand, Hnry Australia Managing Director, said:
“Sole traders have started to see the hard won financial gains that were a crucial lifeline post COVID start to plateau this quarter,” Mr Anand said.
“With increasing inflationary and interest rate pressure, uncertainty in the economic outlook and financial admin taking them out of action for a full day every week, it is no surprise that almost half of the self-employed – and vastly more women than men - are not contributing to their super.
“These pressures are compounded by the data that shows that just three weeks out from the tax filing deadline, only 50 per cent have completed their tax returns.
“That’s why Hnry plays such an important role in the lives of sole traders. They are the engine room of the economy, dynamic and diverse. Hnry saves them time, money and hassle so they can focus on their businesses and their lives: we make it easy for them to manage their finances by automatically paying their taxes for them on time and in full, and streamlining their super.
“We also know that, overwhelmingly, sole traders consciously choose working for themselves because of the myriad positive benefits it brings: lifestyle, flexible working conditions, a chance to pursue their passion and choose their own future.
“Most Australians are facing tougher economic time at the moment and we really admire how the self employed are pushing through. We are here to support them.”
The Hnry Sole Trader Pulse is Australia’s only regular, comprehensive regular snapshot of self-employed people in Australia, such as tradies, freelancers, and consultants.
Some 1.5 million Australians classify their primary occupation as “self-employed;, with total estimated earnings of around $90 billion a year.
Hnry – which streamlines tax, accounting and invoicing for sole traders by paying and filing taxes as a person receives income, with taxes are paid automatically and in real time - recently won the People’s Choice Award at the 2022 FinTech Australia Finnie Awards.
Hnry is an all-in-one digital accountancy service designed expressly for independent earners such as contractors, freelancers, tradies and the self-employed. Hnry takes care of all the financial admin, including invoicing, expenses, payments, taxes and filings, enabling sole traders to get on with the job rather than having to worry about tax and compliance.
Founded by James and Claire Fuller, the company launched in New Zealand in 2017, expanding into Australia in 2020. A $15m capital raise earlier this year is spearheading Hnry’s growth in Australia, supported by the appointment of Karan Anand as Managing Director of Hnry Australia.
Hnry won the People’s Choice Award at the 2022 FinTech Australia Finnie Awards and the 2022 Finder award for Best B2B Innovation!