What pays more – internal employment or freelancing?

19 July 2018

The guarantee of a regular wage paid to one’s account is the main reason why the vast majority of working people still prefer internal employment to freelancing. This is the result of an international Paylab Data Research survey, which took place in May and June 2018 over a sample of 42,800 respondents in 11 European countries. The overwhelming majority of employees (78%) still believe internal employment is a better form of working relationship with an employer than external collaboration (freelancing).

This is mainly due to the guaranteed regular income and greater job stability provided by an internal employment contract. Only 6% of respondents, especially IT experts, see external employment as a better form of labour contract. What people like most about freelancing is the greater freedom and flexibility.

Agency work, i.e. working through an intermediary, is regarded as the worst form of employment. A total of 11% of respondents did not know how to assess the benefits of the employment types.

Internal Employment

People who are active in the labour market still consider being an internal employee (i.e. receiving a standard wage from which the employer deducts taxes and social security contributions) as a better form of labour contract than other forms of work.

What people appreciate most about internal employment is the regular income and greater sense of certainty. Apart from the monthly net wage being paid to their account, this is also largely related to the regular social and health deductions paid for them by the employer. It is also associated with a certain stability and guarantee of social benefits in the event of the loss of employment, retirement, illness, or parental leave.

Working internally is associated with higher job security too, since an internal employee is protected by labour laws and possibly trade unions. If the employer wants to fire him/her, he/she is subject to several months' notice period or the payment of severance pay. Some internal employees also have additional financial rewards included in their employment contract, such as a Christmas bonus and year-end bonuses - see the Paylab overview for how many employees receive these types of benefits.

The third thing respondents appreciate most is the work environment that the employer provides for them. Other valued benefits of internal employment include career advancement and guaranteed paid vacation.

The cost of labour has been monitored by Paylab.com for several years. Compare your salary to people in the same position and see what your labour market cost actually is.

GRAPH: Paylab asked respondents what in their opinion the greatest advantage of being an internal employee is - i.e. a regular employee, compared to an external employee

Freelancing

In practise, if you are an external employee, you can work for multiple companies at the same time, invoice them for your services, and keep your own accountancy. According to the Paylab Data Research survey, this is considered to be a more beneficial form of work by 6% of employees. This opinion prevails especially among employees working in IT, as well as experts in economy and accounting, construction and real estate, management, administration, and marketing.

In which sectors is the preference for external cooperation/freelancing the largest?

1.    Information Technology

2.    Economics, finnance, acounting

3.    Construction industry and reality

4.    Management

5.    Administration

6.    Marketing, Advertising, PR

See typical jobs for the freelancers and digital nomads

According to survey respondents, the greatest benefits of external employment are freedom of movement and flexible working hours. This is mainly related to a more benevolent approach to attendance and to being present at the workplace at a specific time, which is more typical for internal employment.

The third most valued benefit is the possibility to work for several companies at the same time, followed by the ability to independently decide on the workload as well as a greater sense of independence.

GRAPH: Paylab asked respondents what in their opinion the greatest advantage of being an external employee is, i.e. a freelancer and invoicing for theirservices, instead of being an internal employee.

About the survey

The international Paylab Data Research employee survey regularly monitors trends in employee compensation and benefits. The survey is conducted online in 11 countries via local salary portals on the total sample of 42,800 respondents working in the variety of job positions. Bulgaria - Zaplatomer.bg (7,890 respondents), Czech Republic - Platy.cz (9,134 respondents), Slovakia - Platy.sk (3,252 respondents), Hungary - Fizetesek.hu (4,978 respondents), Slovenia - Placa.si (973 respondents), Croatia - MojaPlaca.hr (7,564 respondents), Serbia - InfoPlate.rs (1,314 respondents), Lithuania - Manoalga.lt (3,090 respondents), Latvia - Algas.lv (2,440 respondents), Finland - Palkkadata.fi (1,290 respondents).